Pranaav Jadhav

pjadhav@theleafchronicle.com

On Thursday the city council passed a resolution that will allow the Montgomery County Industrial Development Board with a city tax-increment financing (TIF) agreement for the next 30 years to develop a 39-acre area in downtown.

The plan itself is complicated in language, but supporters say the end result is simple: incentives to kick start development and improvement of the downtown area since the 1999 tornado ravaged the area.

To help citizens better understand the plan, here's a few questions answered.

What does TIF mean?

The tax increment financing agreement will give the Montgomery County appointed Industrial Development Board (IDB) the power to use county and city tax dollars generated from the proposed civic plaza to build more projects in downtown Clarksville.

Officials say the plan will not increase taxes for the average tax payer. Instead, the current property tax rates of the properties in the downtown area are essentially frozen, and the increased property tax revenue from improved or redeveloped properties are used to pay bank notes developers take out to make the improvements.

The TIF itself is a form of a subsidy by the city and county given to the IDB which will re-direct the money to private developers to invest in downtown.

Supporters say the TIF will attract private developers to downtown Clarksville since the government will be paying a portion of the cost.

Where was the disagreement?

City mayor Kim McMillan and some others in the city council were scared that the county appointed IDB will give award funding to projects that the city residents might not be interested in.

She also said that because the IDB is a county-appointed board, the city had little or no control over the decisions the board made, and no recourse if they did not provide funding to projects the city council supported. McMillan and county Mayor Jim Durrett are ex-officio members of the IDB, which means they sit on the board but have no vote.

As an alternative, McMillan suggested that there should be an elected member of the city council on the IDB for city representation, greater transparency and control by the city residents on future projects.

Is TIF good or bad?

That's for each citizen to decide. In this proposal, supporters say it will be beneficial to the city as it might attract private developers to downtown Clarksville to revitalize and renovate a section of the city that could have been neglected. Opponents say it's government overreach and involving itself in private business matters.

Some residents now feel the people of Clarksville must be vigilant and even more aware of the projects the county appointed IDB approves.

Contrarily, many, like Ward 8 councilman David Allen, believe that the Montgomery County IDB has done great work in the past and will in the future.

Will taxes go up?

Not immediately. The only taxes that increase as a result of the TIF are the property taxes on individual properties paid by the landowner.

Can the TIF resolution be revoked?

The TIF agreement is a 30-year plan voted in favor for by the city council on Thursday. If in the future the city decides to walk out of the deal, the city council must pass another resolution to that effect.

But that wouldn’t solve the entire problem.

There will still remain discrepancies on what will happen to the on-going projects that have been financed by the TIF agreement at that moment.

How is the civic plaza involved?

The TIF developed by the county was formulated in part to pay for the ongoing civic plaza project. The project is expected to increase property value (and property tax revenue) in the area. The excess tax revenue will be used to pay for the plaza.

What else do I need to know?

Many cities have used TIF money to attract private developers to an area that was previously less frequented. Each are similar in function, but not all are structured the same way.

Some are applied over large geographic areas, while others are individual land parcels for specific purposes.

TIFs are also used when the city feels an urgent need for a certain kind of business in an area. For example, the city of Nashville after building its convention center thought it was necessary to attach a luxury hotel to the newly constructed convention center for better public consumption. Therefore, in 2010, the metro city council voted in favor for a $34M TIF financing to Omni Hotels, Inc.

Reach Government Reporter Pranaav Jadhav at pjadhav@theleafchronicle.com. Follow him on Twitter @pranaavj.