AN ACT to amend Tennessee Code Annotated, Title 48 and Title 67, relative to real property taxes.
Summary
HB0890 amends Tennessee law governing payments in lieu of ad valorem taxes (PILOTs) for industrial or other development projects. The bill authorizes a municipality to delegate to a corporation the power to negotiate and enter into PILOT agreements with the corporation’s lessees, but only if the municipality determines the arrangement furthers the corporation’s public purposes. A municipality may also require the agreement to be submitted to the legislative body for approval.
The bill adds a notice-and-review process when a proposed PILOT agreement would reduce payments below the taxes otherwise owed. In that situation, the corporation must give written notice to the chief executive officer of each affected taxing jurisdiction. The chief executive officer may either object and require submission to that jurisdiction’s legislative body, or decline to object; if no response is given within 10 days, the corporation may proceed. If review is required, the agreement cannot be executed unless approved by the taxing jurisdiction’s legislative body. For projects inside municipal limits, PILOT payments must be apportioned between the municipality and county in the same manner as ad valorem taxes on the date the agreement is signed.
Impact
The bill changes Title 48 and Title 67 by tightening procedural requirements for PILOT agreements and clarifying who must approve them when they affect multiple taxing jurisdictions. It gives municipalities more explicit authority to delegate PILOT negotiation powers, but also protects counties and other taxing jurisdictions by requiring notice and, in some cases, local legislative approval before a reduced-tax agreement can take effect. Any agreement entered into on or after July 1, 2026, without following the new subdivision is void and unenforceable.
Sentiment
The bill appears to have been generally favorable in committee, with unanimous support in the House Cities & Counties Subcommittee and strong support in the House State & Local Government Committee, where it advanced 20-1. The available record suggests the measure was viewed as a technical or procedural update to local tax-incentive authority rather than a major policy shift. No committee transcript is available, so the discussion record does not show detailed debate.
Contention
The main point of contention is local control over tax-incentive agreements versus the interests of other affected taxing jurisdictions. Supporters appear to favor giving municipalities and development corporations flexibility to negotiate PILOTs, while the added notice and approval provisions protect counties and other jurisdictions from reduced revenue without their awareness or consent. The lone dissenting vote in committee suggests at least one member had reservations, likely about the balance between economic development authority and local tax oversight, though the record does not specify the objection.