Is Elizabethton Ready for a TIF?

The Progress Edition of the Elizabethton Star talked a lot about development. Specifically, the concept of a TIF (Tax Increment Financing) District was discussed. I’ve had a lot of questions about what a TIF is, what it will cost, and how it can help Elizabethton. Just to be clear with our geography here, city officials, economic development officials, and some property owners have been in discussions about making the area along Elk Avenue from Sycamore Shoals State Park to Krystal’s and north to the Watauga River a TIF District.

First, let’s look at how a TIF works. TIFs are an incentive tool that the State of Tennessee allows local governments to utilize in order to help encourage and incentivize new development. Often times this tool is utilized in cases where the cost to develop are prohibitive because of contamination concerns, lack of roads, water, or sewer, or the cost to redevelop existing buildings is not profitable. Places like these are obvious problems for cities because they lower surrounding property values, encourage crime, and create an aesthetic eye sore on the community.

When a TIF is created, local governments continue to receive the same amount in property taxes that they collected before the TIF is created. Because the new district has been formed developers become interested in constructing new developments within the district. As the property value increases, the amount that the property owner would pay in property taxes will increase as well. What is unique to a TIF district is that the difference between the taxes paid before the TIF was created to what they what they would be during the TIF is set aside to help pay for improvements within the district.

Many TIFs in Tennessee last for 25 years and after the 25 year period all of the taxes (what the city and county were collecting before the TIF and the taxes being set aside during the TIF) are now turned back over to the city to use for general operations.

The benefit this could provide to Elizabethton is new development and re-development of the old North American land. An incentive program like this can be very attractive to developers both local and nationwide. TIFs can also be used in a variety of ways with liability falling to a developer or to a city or county.

Locally, the successes of TIFs have been proven. The new Bass Pro development is a TIF development. The Cabela's site in Bristol, Virgina is a TIF. Downtown Johnson City is redeveloping their downtown using a TIF program. It is a tool that has been proven in case study after case study. Is it time for Elizabethton to use it? Let’s talk about it!