Bass, Berry & Sims attorneys Michael Bradshaw and Justin Starling authored an article for the Memphis Business Journal highlighting new laws in Tennessee that are making funding sources available for more types of real estate developments.
“With the level of growth currently happening across Tennessee, these new resources can be valuable tools that developers and municipalities may utilize for funding upcoming projects,” Michael and Justin wrote.
While tax increment financing (TIF) has been a common financing incentive to encourage certain types of development in Tennessee for a long time, amendments to the TIF statute have expanded its eligible uses. Tennessee statutes previously allowed TIF to be used only for commercial, industrial or mixed-use projects, but the 2025 change now allows TIF to be used solely to finance public infrastructure regardless of type of development that infrastructure will serve.
Additionally, new statutes were passed to make special assessment financing, which has historically been fairly limited in Tennessee, available for basically any real estate project. The General Assembly enacted the Residential Infrastructure Development Act (RIDA) in 2024 and the Real Estate Infrastructure Development Act (REIDA) in 2025 to bring Tennessee up to date by enabling the use of special assessment financing to finance public infrastructure improvements in specified development districts.
“Special assessment financing provides significant advantages for real estate developers,” Michael and Justin explained. “As with TIF, while lenders will likely require a developer to guarantee a construction loan, long-term special assessment financing is non-recourse to the developer, so a portion of the developer’s total construction budget that would otherwise be financed with equity or recourse construction debt can be covered with long-term, non-recourse debt. Additionally, if all the infrastructure is to be publicly owned, the developer can also benefit from tax-exempt bond financing with lower interest rates.”
The full article, “New Funding Options for Economic Development Projects in Tennessee,” was published in the Memphis Business Journal on August 8 and is available online (subscription required).