Industrial development corporations were authorized by the General Assembly to maintain and increase employment, increase agricultural and industrial production, and reduce pollution. These corporations can figure prominently in a county's economic development activities. They are considered to be public instrumentalities of their creating municipalities (which can be a county, city or a combination of both), and thus, any property owned by an industrial development corporation is tax exempt. T.C.A. § 7-53-305. Counties and municipalities are authorized to appropriate funds to make contributions or loans with reasonable interest, to industrial development corporations in the county. County legislative bodies are also authorized to borrow funds for the purpose of making contributions or loans to industrial development corporations. T.C.A. § 6-54-118.
The powers and duties of industrial development corporations are set forth in T.C.A. § 7-53-101 et seq. These statutes are to be broadly construed to further the health, welfare, and safety of citizens. T.C.A. § 7-53-102. Industrial development corporations are authorized to acquire projects, improve and/or maintain projects, lease projects, sell projects and enter into loan agreements relating to projects to facilitate their economic development goals. T.C.A. § 7-53-302. What constitutes a "project" is defined in T.C.A. § 7-53-101 and includes examples such as manufacturing facilities, office buildings, public buildings, healthcare facilities, amusement parks, and multifamily low-income housing. Industrial development corporations are authorized to sell, exchange, convey or donate any or all of their property. T.C.A. § 7-53-302. Industrial development corporations can also issue bonds or otherwise borrow money, mortgage or pledge projects as collateral for their bonds or notes, and pledge revenue or receipts from projects. T.C.A. § 7-53-302. It is important to note that industrial development corporations cannot pledge the general taxing power of the creating municipality without the municipality first obtaining a certificate of public purpose and necessity and then holding an election in which 75% of the voters approve pledging the municipality's credit. T.C.A. § 7-53-306 and T.C.A. § 7-53-307.
Industrial development corporations have two additional powers which are important economic development tools--the power to enter into payment in lieu of tax (PILOT) agreements and the power to enter into tax increment financing (TIF) agreements.