SENATE BILL 220
By Taylor
HOUSE BILL 544
By Vaughan
HB0544
000647
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AN ACT to amend Tennessee Code Annotated, Title 4;
Title 5; Title 6; Title 7; Title 9; Title 13; Title 48 and
Title 67, relative to property tax incentives to
encourage economic and community
development.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 4-29-248(a), is amended by adding
the following as a new subdivision:
( ) Commercial development board, created by § 67-5-2902;
SECTION 2. Tennessee Code Annotated, Title 67, Chapter 5, is amended by adding
the following as a new part:
67-5-2901.
(a) The general assembly finds that authorizing payment in lieu of ad valorem
tax agreements and leases with private commercial developers who lease publicly
owned property for a specified period of time will encourage economic growth and
community development, including:
(1) Revenue gains from expanded economic activity attributable to the
tax incentives;
(2) Increases in property tax collections after expiration of the incentives;
(3) Enhancements in fiscal health and urban revitalization in local
communities; and
(4) Positive changes in community character.
(b) As used in this section:
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(1) "Board" means the commercial development board created by § 67-5-
2902;
(2) "Developer-lessee" means one (1) or more private persons or entities
identified as the developer in a PILOT and lease agreement entered into
pursuant to this section that leases a new commercial property and develops,
and places in service, the new commercial property on or after the effective date
of this act, and prior to the expiration of the PILOT agreement;
(3) "New commercial property" means a real property that:
(A) Is located within a county in which the combined property tax
rate imposed by all affected taxing jurisdictions within that county exceeds
five dollars and fifty cents ($5.50) per one hundred dollars ($100) of
assessed value;
(B) Is solely developed for commercial use by a developer-
lessee; and
(C) Is owned by the commercial development board; and
(4) "PILOT" means payments in lieu of ad valorem taxes that are equal to
the taxes that would have been paid to the affected taxing jurisdictions if, for the
tax year prior to the year the property becomes a new commercial property, the
property was assessed at ten percent (10%) of its appraised value.
(c) Notwithstanding this chapter or other law to the contrary, upon written
requests submitted by developer-lessees to the commercial development board to enter
into agreements with respect to PILOTs and leases, and upon submission of a
reasonable fee in an amount determined by the board to offset the costs of administering
this part, the board shall approve the requests and receive from the developer-lessees
PILOTs with respect to new commercial property.
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(d) The board shall remit the PILOTs to each affected taxing jurisdiction. The
commercial development board shall attach to the PILOT agreements an analysis of the
costs and benefits of entering into such agreements. The analysis must contain a
finding by the board that the PILOTs are in furtherance of the board's public purposes. A
PILOT agreement entered into by the board must contain the following terms and
conditions:
(1) The PILOTs are payable to all affected taxing jurisdictions in which
the new commercial property is located; and
(2) The chair of the board has executed a letter supporting the lease of
new commercial property to developer-lessees.
(e) The board is serving a public purpose by negotiating and receiving from
developer-lessees PILOTs with respect to new commercial property.
(f) The board may acquire and lease a new commercial property in furtherance
of the public purpose of promoting economic and community development in the state.
(g) An agreement providing for the acceptance of PILOTs, including any renewal
or extension of such agreement, entered into by the board must not result in a
developer-lessee making PILOTs for a period that is greater than ten (10) years.
(h) PILOTs and any lease payments payable to the board are and remain a first
lien upon the fee interest in the leased property from January 1 of the year in which such
PILOTs or lease payments are due. The board may enforce such lien, and also obtain
interest at ten percent (10%) per annum from the date due and reasonable attorneys'
fees, by suit filed in the circuit or chancery court.
(i) On or before October 1, 2026, and on or before October 1 of each
subsequent year, the board shall submit to the comptroller of the treasury an annual
report containing:
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(1) A list of all new commercial property owned by the board;
(2) The value of each listed new commercial property as estimated by
the board;
(3) The date and term of the lease for each listed new commercial
property;
(4) The amount of PILOTs for each listed new commercial property;
(5) The date each listed new commercial property is scheduled to return
to the regular tax rolls;
(6) The property address and parcel identification number of the new
commercial property assigned by the assessor of property;
(7) The amount of rents paid;
(8) The amount of any property taxes paid on any leasehold assessment
under § 67-5-502; and
(9) How the PILOTs are allocated between each affected city and county.
(j) A copy of the filing made pursuant to subsection (i) must be filed with the
assessor of property in the county where the property is located on or before October 15
of the year in which the filing is made with the comptroller of the treasury. The assessor
of property may audit or review, or both, the data report on all PILOT agreements and
conduct comparative analysis to ensure that all agreements are reported to the assessor
of property. The board shall timely complete and file the report.
(k) The board shall prepare biannual reports detailing all developer-lessees'
compliance with the terms and conditions of the PILOT agreement or any other
agreement whereby ad valorem taxes are substituted in favor of a PILOT. Such report
must detail the developer-lessees' compliance and noncompliance where applicable,
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and its fiscal impact on revenues generated from ad valorem taxes in each city and
county affected by such PILOT.
(l) All PILOT agreements must be reduced to writing and submitted to the chief
executive officer of each jurisdiction in which the property is located and to the
comptroller of the treasury, for review, but not approval. An agreement may be
submitted in advance of its execution but must be submitted within ten (10) days after its
execution. The name of individuals that are parties to the agreement may be obscured
on copies of agreements submitted in advance of their execution.
67-5-2902.
(a) There is created the commercial development board. The board consists of
eight (8) members as follows:
(1) Two (2) members to be appointed by the governor;
(2) Two (2) members to be appointed by the speaker of the house of
representatives;
(3) Two (2) members to be appointed by the speaker of the senate;
(4) The commissioner of economic and community development, or the
commissioner's designee, as an ex officio member; and
(5) The comptroller of the treasury, or the comptroller's designee, as an
ex officio, nonvoting member.
(b) The members appointed pursuant to subdivisions (a)(1)-(4) are voting
members.
(c) The terms for the initial board members who do not serve ex officio begin on
October 1, 2025, and must be staggered as follows:
(1) The members appointed pursuant to subdivision (a)(1) shall serve an
initial term of six (6) years;
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(2) The members appointed pursuant to subdivision (a)(2) shall serve an
initial term of five (5) years; and
(3) The members appointed pursuant to subdivision (a)(3) shall serve an
initial term of four (4) years.
(d) Following the terms for initial board members as provided in subsection (b),
the term for a board member who does not serve ex officio is four (4) years. A board
member who does not serve ex officio is eligible for reappointment and may serve a
maximum of two (2) full terms; provided, however, that an appointment to fill an
unexpired term as a result of a vacancy does not count toward the term limit. At the
expiration of a board member's term, the member may continue to serve until a
successor is appointed or until the member is reappointed.
(e) Five (5) board members constitute a quorum for the transaction of business.
If a quorum is present, a vacancy on the board does not prevent the board from
transacting business or otherwise taking an action authorized pursuant to this part. Any
form of board action must be passed by a majority of the voting members present.
(f) The commissioner of economic and community development serves as chair.
The board shall meet at the call of the chair. The board may elect other officers as the
board deems appropriate.
(g) The members appointed pursuant to subdivisions (a)(1)-(3) serve without
compensation, but may receive reimbursement for travel expenses in accordance with
the comprehensive travel regulations as promulgated by the department of finance and
administration and approved by the attorney general and reporter.
(h) The department of economic and community development shall provide
administrative support to the board.
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(i) The board may exercise the powers and duties necessary to implement this
part.
SECTION 3. This act takes effect upon becoming a law, the public welfare requiring it.