Economic and Community Development

Plain English Breakdown

The official source material does not provide specific details on how much funding will be allocated to these new project types and what specific projects will be undertaken by corporations.

Tennessee Economic Development Act

This bill updates Tennessee's laws on industrial development corporations by expanding definitions and powers related to housing developments and economic impact plans.

What This Bill Does

• Expands the definition of 'multifamily housing facilities' to include affordable and workforce housing for low-income, elderly, or disabled residents.
• Adds single-family, condominium, and townhome housing developments as new project types that industrial development corporations can undertake.
• Allows municipalities to approve amendments to economic impact plans without requiring additional public hearings for minor changes.

Who It Names or Affects

• Industrial development corporations in Tennessee
• Municipalities and counties involved in economic impact planning

Terms To Know

Affordable Housing

Housing that costs no more than 30% of the estimated median household income for households earning up to 60% of the area median income.

Workforce Housing

Housing that costs no more than 30% of the estimated median household income for households earning between 60% and 120% of the area median income.

Limits and Unknowns

• The fiscal impact on local governments is uncertain due to multiple unknown factors.
• This bill does not specify how much funding will be allocated or what specific projects will be undertaken by industrial development corporations.

Official Summary Text

INDUSTRIAL DEVELOPMENT CORPORATION PROJECTS

Pertaining to industrial development corporations, present law defines a "project" as an
y land and building, including office building, any facility or other improvement on the land, and all real and personal properties deemed necessary in connection to such, whether or not now in existence, that is suitable for any two of certain outlined u
s
es. One such outlined use is multifamily housing facilities to be occupied by persons of low or moderate income, elderly, or handicapped persons as may be determined by the board of directors. This bill adds that a multifamily housing facility includes
a
ffordable and workforce housing occupied in whole or in part. Present law defines "affordable housing" as housing that costs 30% or less than the estimated median household income for households earning 60% or less of the area median income for the Nashv
i
lle-Davidson County metropolitan statistical area as determined by the federal department of housing and urban development, adjusted for family size. "Workforce housing" is housing that costs 30% or less than the estimated median household income for hou
s
eholds earning 60% to 120% of the area median income for the Nashville-Davidson County metropolitan statistical area as determined by the federal department of housing and urban development, adjusted for family size. This bill also adds to the definition

of multifamily facilities that any reference to "apartment" or "apartments" pertaining to industrial development corporations means multifamily housing facilities that are available for rent.

This bill also adds two new uses to the list of what a proje
ct may be for industrial development corporations, of which a project would need to include two. These two new options are:



Any single family, condominium, or townhome housing development, including, but not limited to, affordable and workforce housing, as those terms are defined above, to be occupied, in whole or in part, by persons of low to moderate income, elderly, or handicapped persons as may be determined by the board of directors.



Any public infrastructure located within the municipality that created the corporation.

CORPORATE POWERS

Present law grants certain powers to industrial development corporations, including the power to acquire and improve, maintain, equip and furnish one or more projects, including all real and personal properties the
board of directors of the corporation may deem necessary in connection with the projects and regardless of whether or not any such projects are at the time in existence. No hotel, motel or apartment building may be purchased or otherwise acquired by a c
o
rporation after July 1, 1988, unless the project is located in a center city area or in a central business improvement district and that involves an apartment or residential building, hotel, motel or of any project acquired prior to July 1, 1988, regardle
s
s of when such project is completed. However, the power to acquire and improve projects does not apply to any of the following:



The contractual rights and obligations that any such corporation assumes with the issuance of any bonds, notes or other forms of indebtedness or any other contract.



A hotel listed in the National Register of Historic Places acquired by the corporation prior to December 31, 1989.



A hotel that contains conference or convention center facilities containing at least 75,000 sq. ft.



A hotel or hotels, and related conference, mixed use or convention center facilities, if any, constructed in connection with a project or series of related projects involving an aggregate investment of public and private funds in excess of $200 million.



A project located in Shelby County.



A project that is a tourism attraction involving an aggregate investment of public and private funds in excess of $75 million that is designed to attract tourists to the state.

This bill adds to this list that the pro
vision does not apply to any apartment building or buildings, including, but not limited to, affordable and workforce housing, as those terms are defined above, to be occupied, in whole or in part, by persons of low to moderate income, elderly, or handica
p
ped persons as may be determined by the board of directors.

ECONOMIC IMPACT PLANS

Present law authorizes an industrial development corporation to prepare and submit to its municipality an economic impact plan ("plan") for such body's approval. However,
before the corporation submits a plan, it must hold a public hearing after publishing a notice in a newspaper for at least two weeks. The governing body of a municipality may approve a plan by resolution, regardless of a local charter provision or other

provision to the contrary. If the plan's area is located within the corporate limits of a city or town, the taxes that would otherwise be payable to the city, town or county that is not the municipality that created the corporation must not be paid to th
e
corporation unless such city, town or county has also approved the plan. For any plan approved by the corporation before or after the effective date of this bill, this bill authorizes the governing body of the municipality, or any city, town, or county
r
equired to approve a plan, to approve amendments to the plan in connection with its approval, and the amended plan becomes effective upon approval by the corporation of such amendment. The corporation is not required to conduct an additional public heari
n
g prior to the approval of any minor amendments to the plan. This bill also clarifies that minor amendments to clarify terms or correct errors in the wording of an economic impact plan that has been previously approved become effective upon approval by t
h
e corporation.

In Nashville, present law requires that prior to a plan's approval by the governing body of the municipality, the plan must be submitted to the mayor. This bill adds for Nashville the same changes as above: For any plans approved by th
e corporation before or after the effective date of this bill, the governing body of the municipality, or any city, town, or county required to approve a plan, may approve amendments and the amended plan becomes effective upon approval by the corporation.

The corporation is also not required to conduct an additional public hearing prior to the approval of any amended plan.
However, while corporations in other counties are not required to conduct an additional public hearing for minor amendments to the pl
a
n, corporations in Nashville are required to conduct an additional public hearing for any amendments to the plan.
BROWNFIELD SITE REDEVELOPMENT

Present law provides that it is the intent of the general assembly to encourage the redevelopment of brownfie
ld sites in this state. A "brownfield site" is real property that is currently, or at any time since January 1, 2000, has been, the subject of an investigation, remediation, or mitigation as a brownfield project under a voluntary agreement or consent. A

"brownfield project" is the screening, investigation, monitoring, control and/or remediation of any abandoned, idled, under-utilized, or other property whose re-use, growth, enhancement or redevelopment is complicated by real or perceived adverse environm
e
ntal conditions. Brownfield projects may address sites contaminated by hazardous substances, solid waste, or any other pollutant. Such redevelopment may include a solar power facility. This bill removes the provision that authorizes a redevelopment to
i
nclude a solar facility.

In addition to the authorization provided above, present law authorizes a corporation located in a municipality in which a brownfield redevelopment project is located to prepare and submit to the municipality for approval an ec
onomic impact plan with respect to the brownfield redevelopment project. This bill adds that such a plan must include the brownfield redevelopment project site, but it may also include area beyond the brownfield site.

Property Taxes

Present law requ
ires such a plan submitted for approval to provide that the property taxes imposed on the property, including the personal property located within the area subject to the plan, will be distributable and used in a certain manner outlined by present law. T
h
is bill clarifies that the property taxes may include either real property or personal property, or both, located within the area subject to the plan.

BALLOON INDEBTEDNESS

Present law provides that balloon indebtedness does not include several character
ized debts. This bill adds to the list of debts that are not balloon-indebtedness any debt that is secured or payable only from tax increment revenues, except for guaranties or security provided by private parties. Present law defines "tax increment rev
e
nues" as incremental property tax revenues to be allocated by a taxing agency to a tax increment agency, which is a housing authority, industrial development corporation and/or community redevelopment agency, pursuant to the tax increment statute.

DIVISION OF PROPERTY TAXES

For any multifamily, single family, condominium, or townhome housing development, including, but not limited to, affordable and workforce housing, to be occupied, in whole or in part, by persons of low to moderate income, elder
ly, or handicapped persons as may be determined by the board of directors, this bill authorizes a plan to provide that all taxes levied by a participating tax agency must be allocated and paid to the tax increment agency, which is a housing authority, ind
u
strial development corporation and/or community redevelopment agency. This bill further authorizes a plan to provide that the amount of the dedicated taxes may be fixed for the term of the plan as of the date of the plan approval by the tax increment age
n
cy or the date of the first allocation of taxes to the tax increment agency.

ON APRIL 14, 2025, THE HOUSE ADOPTED AMENDMENTS #1, #2, AND #3 AND PASSED HOUSE BILL 1306, AS AMENDED.

AMENDMENT #1 schedules the provisions of this bill to be repealed
on Jul
y 1, 2030.

AMENDMENT #2 removes the repealing provision added by House Amendment #1.

AMENDMENT #3 specifies that a brownfield site for which this bill encourages redevelopment
may include a solar power facility.

Current Bill Text

SENATE BILL 1271
By Johnson

HOUSE BILL 1306
By Lamberth

HB1306
001279
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 7,
Chapter 53; Title 9, Chapter 21 and Title 9,
Chapter 23, relative to economic development.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 7-53-101(15)(A)(x), is amended by
deleting the subdivision and substituting instead the following:
Any multifamily housing facilities, including, but not limited to, affordable and
workforce housing, as those terms are defined in § 5-9-113, to be occupied, in whole or
in part, by persons of low to moderate income, elderly, or handicapped persons, as may
be determined by the board of directors, which determination shall be conclusive;
provided, that, any reference to "apartment" or "apartments" in this chapter means
multifamily housing facilities that are available for rent as described in this subdivision
(15)(A)(x);
SECTION 2. Tennessee Code Annotated, Section 7-53-101(15)(A), is amended by
adding the following as new, appropriately designated subdivisions:
( ) Any single family, condominium, or townhome housing development,
including, but not limited to, affordable and workforce housing, as those terms are
defined in § 5-9-113, to be occupied, in whole or in part, by persons of low to moderate
income, elderly, or handicapped persons as may be determined by the board of
directors, which determination shall be conclusive;
( ) Any public infrastructure, as defined in § 9-23-102, located within the
municipality that created the corporation;

- 2 - 001279

SECTION 3. Tennessee Code Annotated, Section 7-53-302(a)(4), is amended by
adding the following language immediately after the language "§ 7-53-101(15)(E)":
, nor shall this proviso apply to any apartment building or buildings, including, but not
limited to, affordable and workforce housing, as those terms are defined in § 5-9-113, to
be occupied, in whole or in part, by persons of low to moderate income, elderly, or
handicapped persons as may be determined by the board of directors, which
determination shall be conclusive
SECTION 4. Tennessee Code Annotated, Section 7-53-312(f), is amended by adding
the following language at the end of the subsection:
For any economic impact plan approved by the corporation before or after the effective
date of this act, the governing body of the municipality, or any city, town, or county
required to approve an economic impact plan, may approve amendments to the
economic impact plan in connection with approval of the plan, and the amended
economic impact plan becomes effective upon approval by the corporation of such
amendment. The corporation is not required to conduct an additional public hearing
prior to the approval of any amended economic impact plan.
SECTION 5. Tennessee Code Annotated, Section 7-53-312(g), is amended by adding
the following language at the end of the subsection:
Minor amendments to clarify terms or correct errors in the wording of an economic
impact plan that has been previously approved by the governing body of a municipality,
or any city, town, or county required to approve the economic impact plan pursuant to
subsection (f), become effective upon approval by the corporation. The corporation is
not required to conduct an additional public hearing prior to the approval of a minor
amendment to the economic impact plan. If the governing body of the municipality, or
any city, town, or county required to approve an economic impact plan approves the

- 3 - 001279

economic impact plan prior to the approval by the corporation, then additional approval
of the economic impact plan by the governing body of a municipality, or any city, town, or
county is not required.
SECTION 6. Tennessee Code Annotated, Section 7-53-314(f), is amended by adding
the following language at the end of the subsection:
For any economic impact plan approved by the corporation before or after the effective
date of this act, the governing body of the municipality, or any city, town, or county
required to approve an economic impact plan, may approve amendments to the
economic impact plan, and the amended economic impact plan becomes effective upon
approval by the corporation. The corporation is not required to conduct an additional
public hearing prior to the approval of any amended economic impact plan.
SECTION 7. Tennessee Code Annotated, Section 7-53-314(g), is amended by inserting
the following language at the end of the subsection:
Minor amendments to clarify terms or correct errors in the wording of an economic
impact plan that has been previously approved by the governing body of the
municipality, or any city, town, or county required to approve the economic impact plan
pursuant to subsection (f), becomes effective upon approval by the corporation. The
corporation is not required to conduct an additional public hearing prior to the approval of
an amendment to the economic impact plan. If the governing body of the municipality,
or any city, town, or county required to approve an economic impact plan approves the
economic impact plan prior to the approval by the corporation, then additional approval
of the economic impact plan by the governing body of the municipality, or any city, town,
or county is not required.
SECTION 8. Tennessee Code Annotated, Section 7-53-316(a), is amended by deleting
the subsection and substituting instead the following:

- 4 - 001279

(a) It is the intent of the general assembly to encourage the redevelopment of
brownfield sites in this state. In addition to the authorization provided in § 7-53-312, a
corporation located in a municipality in which a brownfield redevelopment project is
located may prepare and submit to the municipality for approval an economic impact
plan with respect to an area that includes, but it is not limited to, the brownfield
redevelopment project in the manner provided in this section. Except to the extent
modified under this section, § 7-53-312 applies to an economic impact plan for an area
that includes a brownfield redevelopment project.
SECTION 9. Tennessee Code Annotated, Section 7-53-316(b), is amended by deleting
the subsection and substituting instead the following:
(b) An economic impact plan submitted for approval under this section must
provide that the property taxes imposed on the property, including either real property or
personal property or both 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 subsection (c) and § 7-53-312(c), as applicable,
and used for the purposes permitted by subsection (e).
SECTION 10. Tennessee Code Annotated, Section 9-21-133(a)(1)(B), is amended by
adding the following as a new subdivision:
( ) Is secured or payable only from tax increment revenues, as defined in § 9-
23-102, except for guaranties or security provided by private parties;
SECTION 11. Tennessee Code Annotated, Section 9-23-103, is amended by the
adding the following as new subsections:

- 5 - 001279

( ) Notwithstanding subsection (a) or the tax increment statutes to the contrary,
for any multifamily, single family, condominium, or townhome housing development,
including, but not limited to, affordable and workforce housing, as those terms are
defined in § 5-9-113, to be occupied, in whole or in part, by persons of low to moderate
income, elderly, or handicapped persons as may be determined by the board of
directors, which determination shall be conclusive, a plan may provide that all taxes
levied by a participating tax agency must be allocated and paid to the tax increment
agency.
( ) A plan may provide that the amount of the dedicated taxes may be fixed for
the term of the plan as of the date of the plan approval by the tax increment agency or
the date of the first allocation of taxes to the tax increment agency.
SECTION 12. This act takes effect upon becoming a law, the public welfare requiring it.