Is Nashville breaking the law with corporate welfare payouts?


May 6, 2015 1:01PM

That’s the question asked by a recent NewsChannel 5 investigation. Nearly 40 years ago, Metro government declared downtown Nashville blighted—a stain on the community chock full of strip clubs, adult bookstores, and boarded up buildings. As a result of its classification, the city government was able to use a practice called tax-increment financing (TIF), essentially giving tax breaks to private developers who are willing to spruce up the city.

Yet, almost four decades later, those same TIF opportunities await developers, long after the city has undergone a nationally acclaimed renaissance. In fact, officials with the state Comptroller’s Office question whether city officials are breaking the law with these corporate welfare handouts.

TIF is designed to target blighted, or downtrodden, areas. Lined with honky tonks, shops, restaurants, music venues, sports arenas, and office space, downtown Nashville today is far from blighted. But that didn’t stop the city from not only extending, but expanding, the “blighted” redevelopment district in an attempt to offer even more tax breaks to developers.

Even worse, one of the biggest arguments proponents use to justify TIF practices is that encouraging development of blighted property increases the property’s value, thereby increasing tax revenue therefrom. That extra tax revenue can then be reinvested in other services like education and safety.

Yet, as NewsChannel 5 discovered, none of the new revenue generated is going toward education or safety, or any government services for that matter. It’s all being doled right back out to other developers. The $1.7 million in TIF revenue generated annually by the “Batman Building”? Redirected to fund the new Omni Hotel. The $1.6 million raked in from the Icon in the Gulch condo high-rise? That will go to build a new pedestrian bridge.

The Metro Nashville School Board recently contemplated suing the state for more money, saying it’s not receiving its fair share of education tax dollars. The school board should first turn to its own city officials, who are handing out TIF revenue to developers rather than investing it in children—possibly in violation of state law.