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An ordinance requiring an annual review and an annual presentation to the Budget and Finance Committee of the Metropolitan Council from all boards, commissions, departments, and authorities offering tax abatement incentives.
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WHEREAS, for many years, tax incentives such as Tax Increment Financing (“TIF”) and Payments in Lieu of Taxes have been used to promote economic development, job creation, construction of affordable housing, and other public goods pursuant to Tennessee Code Annotated Title 7, Chapter 53 and Title 9, Chapter 23; and
WHEREAS, Nashville’s explosive growth has brought many benefits, but has also created barriers for the private sector, government, and non-profits in providing needed community assets like affordable housing, small business locations, grocery stores, and childcare facilities; and
WHEREAS, in 2019 the TIF Study and Formulating Committee Report confirmed the economic benefit of properly vetted and designed TIF incentives, and in 2024, the Tax Abatement Study and Formulating (“TASF”) Committee studied tax incentives more broadly and concluded that tax incentives can be an effective way to enable private entities to provide public goods such as jobs, infrastructure, and housing, and that priorities, goals, and outcomes should be regularly reviewed for relevance and effectiveness; and
WHEREAS, the TASF Committee reviewed Government Finance Officers Association (“GFOA”) recommendations and considered best practices from other cities to investigate whether to place some type of cap on aggregate abatements. The committee concluded that too many subjective factors exist to establish an absolute or a percentage cap, including the financial health of the city, the direct and indirect benefits of different programs, and future growth potential; and
WHEREAS, as multiple programs utilize future property tax dollars to incentivize public goods, it is prudent to regularly review priorities and to examine what amounts or what proportion of Metro’s potential property tax should be allocated for these public good purposes and to evaluate if specific projects are still meeting their intended goals. The periodic review process should provide the Director of Finance, the Mayor’s Office, and the Metropolitan Council with relevant information and parameters to evaluate potential programs and projects; and
WHEREAS, in the interests of transparency and maintaining the public trust and confidence, this review process should be formally established and implemented.
NOW, THEREFORE, BE IT ENACTED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:
Section 1. That representatives from the following departments, boards, and commissions shall provide an annual joint presentation to the Budget and Finance Committee of the Metropolitan Council relative to tax abatement programs in Nashville and Davidson County: the Department of Finance, the Department of Law, the Metropolitan Planning Commission, the Office of the Metropolitan Trustee and each department, board, or commission administering tax abatements including: Metropolitan Development and Housing Agency (“MDHA”), Industrial Development Board (“IDB”), Health Educational Facilities Board (“HEFB”), Metropolitan Historic Commission (“Metro Historic”), and such agencies who have proposed to administer tax abatements.
Section 2. The relevant departments, board, and commissions shall present addressing the respective tax abatement program’s efficacy in achieving its goals, the program’s annual financial data, and a list of program priorities that should be considered relative to Metro’s evolving needs, including but not limited to, economic development, job creation, affordable housing, small business support, grocery stores in food deserts, and child care facilities.
Section 3. The Department of Finance shall coordinate the presentation and further report the aggregate amount of tax abatements for the previous year, the appropriateness of that aggregate amount relative to the operating budget of the Metropolitan Government and the community’s priorities addressed by the incentives.
Section 4. This Ordinance shall take effect from and after its adoption, the welfare of the Metropolitan Government of Nashville and Davidson County requiring it.