ATLANTA -- The Memphis city council is considering a plan to set up tax increment financing districts as part of a push to revitalize the city's downtown area.
The council's housing committee recently passed a resolution urging creation of the districts, Edward J. Cross, special projects coordinator with the Memphis department of economic development, said yesterday. Cross said he expects the committee's resolution to be approved at the next regularly scheduled meeting of the city council, set for Sept. 13.
"In other cities, the districts are usually set up to help get a particular revitalization project off the ground," Cross said. "In Memphis, we are moving forward with a number of different projects and hope that TIFs can help us bring them to fruition at about the same time."
Creation of the districts is part of a strategic downtown renewal plan that Memphis Mayor W.W. Herenton wishes to have in place by the beginning of 1995, Cross said. He described the plan as part of an effort to make Tennessee's largest city "more residential and more of a tourist destination."
Under tax increment financing, a widely used method first developed in the 1950s in California, a tax-exempt borrowing is secured by anticipated increases in tax revenues from business growth within a defined development district. The increment is typically defined as the difference between property taxes generated by the district in the base year and that collected each year after redevelopment.
Tennessee has permitted such borrowings since the 1970s, but so far Nashville is its only city to develop this funding method extensively.
Memphis City Councilman Shep Wilbun said he expects the full city council to endorse the committee's resolution.
"TIFs would give us an opportunity to have an excellent funding vehicle to encourage private development and jobs creation," Wilbun said. "What I particularly like about them is that they do not put a drain on the city's finances and they avoid general obligation debt."
The committee resolution was passed unanimously on Aug. 24. It asks that the division of housing and community development, a unit within the city's economic development department, be authorized "to initiate necessary research, studies, partnerships, and plans necessary; for and incidental to the implementation of this very important public incentive for downtown and central city renewal and development."
The resolution was up for consideration at this week's Tuesday council meeting, said Cross, but was tabled because of lack of time. Assuming that the resolution is passed next week, he said, the next step would be for the department of economic development to propose redevelopment districts.
Tennessee's state law requires a finding of "blight" to justify the designation, Cross said. The finding includes dilapidation, overcrowding, or obsolete land use.
In addition, he said, a redevelopment plan must specify the district's land use objectives, its relationship to public facilities, and obligations imposed on private redevelopers purchasing project land.
The proposed districts would then have to be approved by both the city and surrounding Shelby County before any financing plans can go into effect.
Cross said three or four development districts would initially be sought "in the central business district of the city and around its periphery."
Wilbun listed at least three large projects that could be aided by the establishment of the districts and issuance of increment bonds. The largest is a casino hotel whose costs could exceed $150 million on Mud Island on the Mississippi River.
Another project is renovation of the historic Beale Street area downtown, for which hotel renovation and new development could cost about $100 million. A third project might involve a large office and housing complex near the downtown Madison Avenue Corridor.
Cross said city officials are eager to set up the districts as quickly as possible before the push to redevelop designated downtown areas begins in earnest. "We may want to push for some fine-tuning of the state law at some point down the road," he said, "but we want to get on board as soon as possible with the districts so we can establish the most favorable initial valuation of property."