Why do TIFs matter?

TIFs date back to the 1950s, and are legal in every state except Arizona. Only six states have approved more than 1,000 total TIFs, and some states, like New York and North Carolina, have little TIF activity. Tennessee has approved 60 TIFs, according to the state comptroller’s directory. Yet, the incentive is a relatively new phenonenom in Chattanooga.

The first TIF approved for the Black Creek residential development was in 2012, and four have been approved by the city since then, including the one to support the stadium project.

More TIF districts will mean directing a growing share of future tax revenue away from government services and toward efforts supporting private development, for decades.

Kelly says we should expect to see many more TIF proposals. To him, TIFs are an excellent tool to stimulate development and job creation that cannot be delayed, and there are many local and national leaders who agree with him.

Still, TIFs are not without risk. If tax revenue doesn’t increase as expected, the city may have to cut local services to pay for the project debt.

“There is as much of a chance for a TIF project to fail as there is a chance for it to succeed,” according to a paper by the University of Tennessee Municipal Technical Advisory Service on the use of TIFs. The paper was originally published in 2012 and reviewed in 2021.

Opponents argue TIFs can become a tool for political payback, and that TIF interests such as developers, consultants, lawyers and investment bankers, have come to constitute a special interest lobby in some cities.