The
Tennessee legislature adopted a bill that allows localities to devote
incremental sales taxes to be included in tax increment financing projects if
the site meets the definition of an "urban brownfield." Sites must
be in designated "Redevelopment Zones."
*HB 1554 by *McCormick, Favors, Brooks K, Hardaway. (SB 1334 by *Berke, Watson.)
Industrial
Development - As enacted, authorizes industrial development corporations
located in municipalities in which urban brownfield redevelopment
projects are located to prepare and submit economic impact plans for the
development of such projects. - Amends TCA Title 7, Chapter 53.
Fiscal Summary
(CORRECTED)
Other Fiscal Impact - Future incremental property tax revenue will be
redirected from the general funds of participating local governments to
industrial development corporations. This bill is permissive and the
number of economic impact plans that will be adopted is unknown. If two
projects utilize this mechanism, there will be a permissive shift in
local revenue in an amount exceeding $40,000 each year for a period of
thirty years. Any corresponding impact to local sales tax revenue is
estimated to be forgone in an amount that exceeds $100,000.
Bill Summary
This bill authorizes an industrial development corporation located in a municipality in which an urban brownfield redevelopment project is located to prepare and submit to the municipality for approval an economic impact plan with respect to an urban brownfield redevelopment project in the manner provided in this bill. Except to the extent modified under this bill, the present law provisions governing an economic impact plan would apply to an economic impact plan for an urban brownfield redevelopment project.An economic impact plan submitted for approval under this section must provide that the property taxes imposed on the property, including the personal property located within the area subject to the plan, the sales taxes imposed upon sales within the area subject to the plan, the sales taxes imposed upon construction and related development or redevelopment activity in the area subject to the plan, or any combination and amount of such property and sales taxes, will be distributable in the manner described in present law and this bill, described below.
Under present law, upon the approval by the municipality of an economic impact plan with respect to an area, all property taxes levied upon property located within such area by any taxing agency after the effective date of the plan are divided as follows:
(1) That portion of the taxes that is equal to the amount of taxes, if any, that were payable with respect to the property for the year prior to the date the economic impact plan was approved, the "base tax amount," by the municipality are allocated to and, when collected, are paid to the respective taxing agencies as taxes levied by such taxing agencies on all other property are paid; provided, that in any year in which the taxes on any property are less than the base tax amount, there is allocated and paid to the respective taxing agencies only those taxes actually imposed; and
(2) Any excess of taxes over the base tax amount are allocated to and, when collected, are paid into a separate fund of the corporation established to hold such payments until applied for specified purposes.
This bill provides that in addition to the above-described allocation of property taxes, an economic impact plan may further provide that the non-school portion of the local sales tax increment be allocated to and, when received, be paid into a separate fund of the corporation established to hold such payments, along with any other amounts received by the corporation pursuant to this bill or present law, until applied for the purposes described in this bill pursuant to the economic impact plan. In calculating the non-school portion of the local sales tax increment, the plan may also include any new local sales taxes received from construction or related redevelopment activity occurring within the area subject to the plan. Upon the approval by a municipality of an economic impact plan containing all or any portion of the permitted excess local sales taxes, the local sales taxes received by the municipality will be divided and allocated as so provided.
This bill authorizes the corporation to prepare, and the municipality to approve, an economic impact plan that allocates an amount greater than the base tax amount and the base sales tax amount to the taxing agencies. All sales and property taxes allocated for an economic impact plan approved pursuant to this bill would only be applied by the corporation to pay expenses of the corporation in furtherance of economic development in the municipality, to pay or reimburse qualified costs or to pay debt service on bonds or other obligations issued by the corporation to finance any of the foregoing.
ON MAY 20, 2011, THE HOUSE SUBSTITUTED SENATE BILL 1334 FOR HOUSE BILL 1554, ADOPTED AMENDMENTS #1 AND #2, AND PASSED SENATE BILL 1334, AS AMENDED.
AMENDMENT #1 makes the following changes to this bill:
(1) Decreases the acreage requirement in the definition of "brownfield site" from 20 to five acres;
(2) Removes the definition of "renewal community" and adds a definition for "redevelopment zone," which is either an either an area designated as of January 1, 2009, as a renewal community by the federal department of housing and urban development or an area designated as of January 1, 2009, as a low income community for purposes of the federal New Markets Tax Credits program. A redevelopment zone must also be located in Hamilton, Knox, Davidson or Shelby county; and
(3) Revises the requirement, in the definition of "urban brownfield redevelopment project" that the parcel or parcels be located in a renewal community and contain at least one brownfield site to instead require that the parcel or parcels be located in a redevelopment zone and either contain at least one brownfield site or contain a site of at least 10 acres that has remained vacant or substantially unoccupied for at least five years and, at any time within 20 years prior to the effective date of this bill, included a manufacturing, industrial, distribution or retail facility containing at least 1,000,000 square feet.
AMENDMENT #2 changes the required population in the definition of "redevelopment zone" from "300,000 or more" to "80,000 or more."
This amendment also encourages redevelopment of large brownfield sites in "economically disadvantaged areas within large and mid-size counties within the state" instead of in "renewal communities within the state."