The Nashville Redevelopment Commission isn’t planning to get incremental tax revenue from the building of the Nashville’s newest big development, Hard Truth Hills, because it was never placed into a redevelopment or economic development area.
Resident Pam Gould asked why at the commission’s last meeting.
“They didn’t ask for it,” said commission and town council member Jane Gore.
Town and county redevelopment commissions are able to create economic development areas to capture increased property tax revenue that comes because of development. This is called TIF, or tax-increment financing.
Local government units, like towns, counties and schools, continue to get taxes on the value of the property from before it was developed. But typically, property taxes rise on developed property, and the developers then pay more.
In a TIF area, the increased taxes that the developers pay after “improving” a property go into a special fund which the redevelopment commission manages.
That TIF fund can be used to build roads, run infrastructure like water and sewer, take out bonds to help a project happen, or a few other eligible uses according to state law.
If TIF isn’t used, and development is able to occur without it, the increased taxes flow instead to the government units, like schools, counties and towns, after property is developed and reassessed at a higher tax rate.
The Nashville Redevelopment Commission has never had any TIF revenue to work with, even though it created a TIF district spanning all business-zoned property in town in 2012. Assessed property values dropped at some point since the area was created, and TIF money only flows to the RDC after the local government units have received what they had been entitled to get, said RDC adviser Ed Curtin. If there is no bump in property tax revenue, there is no incremental revenue to go to the RDC.
Hard Truth Hills, which is costing its owners much more than their initial estimate of $5 million, would have been the biggest opportunity for Nashville to generate TIF revenue so far, Gould said. It was annexed into Nashville in January, but it was never put into an economic development or redevelopment area, which is a first step toward getting it TIFed.
Hard Truth Hills co-owner Jeff McCabe said last month that they didn’t need TIF money to build their project, so they didn’t ask for it. He’s also aware of how controversial TIF can be, he said.
The developer doesn’t have to ask for a TIF area to be created. The redevelopment commission and town council can take that step without the developer’s request or approval, Curtin said.
Nashville leaders didn’t do that because “there are people in the community who are vehemently opposed to the town having annexed that area or creating a TIF district,” said RDC President Dan Snow.
“Second, we just, a couple weeks ago, extended the riverfront district out there (to Hard Truth Hills) so they could apply to have a liquor license,” Snow added.
“Please correct me if I’m wrong, but in general, I felt that our role was to respond to requests from local businesses.”
Gould asked if it was still possible to TIF the Hard Truth Hills project.
Curtin said it’s possible, but because most of the construction is done, the town probably wouldn’t see a lot of benefit, because the amount of TIF revenue is calculated from its “base year” assessment compared to its after-development assessment. He didn’t know when the base year assessment was done or what the value of it was at the time.
“It seems like another big fish just swam away right from underneath us here,” Gould said.
She said she was under the impression that TIF was a way for the community to build infrastructure that would support more economic development. For instance, Brown County lost the For Bare Feet sock factory after a serious fire partly because there was a lack of water for insurance-rated fire protection if they were to rebuild here, Gould said. Martinsville, where that company moved, also offered an economic development incentive worth $4.2 million.
“There could be others like that under our nose,” Gould said, mentioning a need to run sewer to more areas to support future businesses and homes and grow the economy. Finding money for such projects has been difficult. “I just thought there was leverage potential for other projects,” she said.
Commission member Roger Kelso said his personal opinion is that TIF should be used to allow the building of specific infrastructure to allow a development to occur; it should not be used as a “carte blanche” special taxing district to fund other projects in other areas of town. Since the owners of Hard Truth Hills didn’t ask for TIF assistance, tax abatement or other public funding to build their project, he didn’t see the justification in making it into an economic development area or TIF district.
“You’re really pushing the edges to TIF something and then use those property taxes on something unrelated to the development of that,” Kelso said.
He said he wants to see a joint, town-county economic development plan develop, which would help work through some of these questions and figure out what would be best for the county as a whole.
Carol Bowden, the nonvoting school board member on the redevelopment commission, said that she supports using various economic development tools on a case-by-case basis.
“I’m thrilled with what Big Woods is doing and on their own, and not taxing any of our systems here as far as finances, but we may need to TIF more if another situation might come up,” she said, about other future development projects.
For instance, the land slated for the Blue Elk mixed-use project between Old State Road 46 and State Road 46 East still hasn’t started; Bowden suggested maybe using the TIF method to put in infrastructure and help it along.
Hard Truth Hills, which includes a new restaurant, distillery and welcome center, will have a pre-opening party at 4 p.m. Saturday, July 7.
