HB2147 amends Virginia’s tax increment financing (TIF) statutes to expressly allow local governments to use not only incremental real estate tax revenue, but also incremental revenue from specified “other local taxes” to finance development project costs. The bill defines “other local taxes” broadly to include sales and use taxes, merchants’ capital taxes, license taxes, admissions taxes, transient occupancy taxes, food and beverage taxes, meals and room rental taxes, and other taxes, fees, or charges imposed under Title 15.2. Under the bill, a county, city, or town could adopt an ordinance designating a development project area and, if it chooses, dedicate the growth in these local tax receipts above a base year amount to a special Tax Increment Financing Fund.
The bill also updates the procedural framework for TIF ordinances. Local governing bodies would still need to hold a public hearing before adopting a TIF ordinance, publish notice in local newspapers, and provide the assessing officer and finance officer with the ordinance, maps, and tax allocation details. The bill retains the existing structure for using the fund to pay debt service on obligations or development project cost commitments, and it preserves the ability of a locality to dissolve the fund once all obligations and commitments are satisfied, at which point any remaining money would revert to the general fund.
In practical terms, the bill would expand the financing tools available to localities undertaking redevelopment, blight remediation, infrastructure, or similar development projects. It would not create a new tax, but would allow local governments to capture and redirect incremental growth in certain existing local tax streams within a designated project area to support project financing. This could make TIF projects more financially viable, especially in areas where real property appreciation alone may not generate enough revenue to support redevelopment costs.
The overall sentiment reflected by the bill text is supportive of local economic development and redevelopment authority. The legislation frames blighted areas as a public danger and emphasizes the public purpose of using tax increments to encourage private investment and eliminate blight. No committee transcripts or recorded votes were provided, so there is no documented opposition or support from hearings in the materials supplied.
The main point of potential contention is the expansion from real estate tax increments to a broader set of local tax revenues. Supporters are likely to view this as a flexible redevelopment financing tool, while critics may be concerned that diverting sales, meals, lodging, admissions, or other local tax growth to a TIF fund could reduce general fund revenue available for ordinary local services. The bill also gives local governing bodies discretion over which of the listed local taxes to include, which may raise concerns about fiscal transparency and the scope of revenue diversion.
HB2147 would amend Title 58.1’s tax increment financing provisions to authorize counties, cities, and towns to capture incremental revenue from specified local taxes in addition to real property tax increments. It would affect local governing bodies, treasurers or finance directors, and assessing officers by expanding the revenues that may be deposited into a Tax Increment Financing Fund and used to pay obligations or development project cost commitments. The bill would not alter state tax rates, but it would change how certain local tax growth may be allocated within designated development project areas.
The bill’s tone is pro-development and pro-local-government flexibility, presenting TIF as a tool to address blight and encourage private investment. Because no committee discussion or vote history was provided, there is no recorded legislative debate in the supplied materials. Based on the text alone, the measure appears designed to be facilitative rather than controversial, though it implicates local revenue allocation choices.
The likely contention is whether localities should be allowed to divert growth in broader local tax streams—such as sales, meals, lodging, admissions, and business taxes—into a TIF fund instead of the general fund. Supporters would likely argue this expands redevelopment financing capacity and helps fund infrastructure and blight remediation. Opponents may worry about reduced discretionary revenue for schools and core services, the breadth of taxes covered, and the discretion given to local governing bodies to select which taxes to capture.