Staff outlines new Tennessee residential assessment districts; Franklin to weigh policy before any use

City staff briefed the Board of Mayor and Aldermen on Tennessee’s new Residential Assessment District Act (RITA) and two early local implementations, and the board directed staff to draft policy guidance and bring the topic back for a focused discussion.

Assistant staff explained that the RITA statute, which became effective May 1, 2024, allows municipalities and counties to create special assessment districts to fund public infrastructure tied to a development, subject to statutory minimums and local policy choices. Key elements staff identified from the statute and early examples include a statutory minimum district size of five acres and minimum capital costs of $5 million; assessments may be levied for up to 30 years under state law; bonds can be issued by a local government or an industrial development board; and the statute allows an administrative fee of up to 5% of assessments to cover program costs.

Staff described the first Tennessee examples. Bristol’s first district capped the annual special assessment at $1,000 per parcel and limited the assessment term to 12 years; the Bristol district funded sanitary sewer work tied to a new residential subdivision and the city intends to administer billing and collection directly and expects to use its Industrial Development Board for debt issuance. Knox County’s district (a converted former industrial site) set a $1,000 annual cap with CPI adjustments, structured the term at 25 years for that project, and allowed off‑site road, water and sewer work in the eligible capital costs; Knox County’s documents named the Industrial Development Board as issuer and provided for the county trustee to collect assessments and enforce delinquencies.

Staff emphasized differences from existing local tools: RITA is “speculative” or non‑investment‑grade debt in many uses, carries higher interest costs than a city general‑obligation bond, and does not automatically rely on growth of assessed value the way a tax‑increment financing (TIF) district does. Instead, RITA bonds are secured by the special assessments themselves; staff stressed the importance of policy limits (minimum project size, allowable capital costs, maximum assessment per parcel, maximum term) and administrative responsibilities including billing/collection and oversight.

A number of aldermen said the tool should be used only when it meets a clear public benefit, such as workforce housing or remediation of a blighted industrial site. Alderman Burger and others suggested applying the tool to targeted areas — as an example Alderman Burger pointed to the Mack Hatcher/Northwest quadrant where a development partnership and a possible commercial change in state law (discussion in the legislature about adding commercial parcels to the statute) might create a local pilot case. Several members asked staff to return with a draft city policy on minimum acreage, eligible capital costs, maximum per‑parcel assessment and administrative cost recovery before the city considers any district.

Staff noted practical differences for Franklin: the city currently does not bill and collect its own property taxes (those services are provided by the Williamson County Trustee), its Industrial Development Board does not have full‑time administrative staff, and the 5% statutory maximum admin fee may not cover the city’s actual administrative costs unless additional funding or staffing is provided. Staff recommended monitoring the two Tennessee examples and drafting policy guidance for board review.

Discussion vs. decision: the work session recorded an extensive policy discussion and a staff request for guidance; the board did not adopt a policy or approve any district at the meeting. Members requested a follow‑up, focused work session and asked staff to draft a policy for review.