NASHVILLE, Tenn. -- Many of Nashville's most prominent buildings are essentially off the property tax rolls, a NewsChannel 5 investigation discovered.
Millions of dollars generated by those buildings in property taxes do not go toward city services and schools. Instead, their property taxes help pay for more development.
It's because of Nashville's use of tax incentives called tax-increment financing, also known as TIF.
That revelation came as a surprise to Diane Jarrell, who has watched Nashville grow from the balcony of her condo. She's a retired teacher who loves living downtown.
"Everybody's like you live in the ritzy part of town," Jarrell said.
She's reminded of the cost every time she pays property taxes. Her last bill was more than $2,600 for her one-bedroom condo.
"I know it's a high price, but it's the lifestyle I wanted," Jarrell said.
She doesn't complain about the taxes because her itemized bill shows much of it going to schools and public safety.
But she was shocked when we told her almost all of her property taxes actually go to the Metropolitan Development and Housing Agency (MDHA).
Last year, only $115 of her property taxes went to city services.
"I'm surprised. I didn't even know about it," Jarrell said.
Metro sent so much to MDHA because Nashville gave the developer of the Veridian $6 million in tax tax-increment financing to pay for the construction loan on the high-rise.
MDHA uses Jarrell's money and all the other residents of her building to repay that loan.
"So MDHA got my teacher raise for the last seven years that I worked?" Jarrell asked.
In all, residents of the Viridian paid nearly $890,000 in property taxes last year.
The vast majority of that went to MDHA.
Only $43,000 went to Metro to pay for city services.
"I can't believe I had to work in all the crappy schools that were just falling down, falling apart all those years and the money wasn't going to schools," Jarrell said.
And it's not just the Veridian.
Residents in the upscale Icon in the Gulch condo paid $1.6 million in property taxes last year, but nearly all of it went to MDHA for loan payments.
Metro got just $17,000.
And the Velocity generated more than $750,000 last year, but Metro received less than $12,000.
In addition, NewsChannel 5 Investigates discovered that long after TIF loans were paid off, Metro routinely sent the money to MDHA to pay for more buildings, instead of keeping the revenue for services like schools.
Take Nashville's iconic AT&T building.
Its TIF loan was paid off back in 2002. While it generated $1.7 million in property taxes last year. Metro received only $49,000.
The Renaissance Hotel generated one than $1.2 million last year, but the entire amount went to MDHA -- leaving Metro with nothing.
As a result, The Ryman, the SunTrust Building and dozens of downtown buildings are essentially off the property tax rolls.
"They're not adding anything to the tax base, but they're adding to the demand for services," said Metro council member Emily Evans.
Evans said the people inside those TIF buildings rely on our fire and police departments, drive on our roads and use our schools.
She believes incentives like TIF are no longer necessary in Nashville's core.
"We really don't have to do that anymore -- not downtown," Evans said.
She claims developers expect the incentives because Metro has been so generous with them.
"If you talk to people in the development community it's like, why not? It's like the two-for-one special," Evans said.
Metro Finance Director Rich Riebeling defended TIF. He insisted that it has fueled Nashville's building boom.
"It's a hot town for redevelopment. You have an opportunity. You need to take advantage of it," Riebeling said.
But he admitted it's time to examine TIF's future.
"Going forward there will need to be a discussion as whether it is having a detrimental impact on the city's operating budget," Riebeling said.
Diane Jarrell just wishes her tax bill showed where her money was really going.
But she said just learning about TIF was a revelation.
"Now I know where they're getting the money to build all these nice things, but it's certainly not going to the schools," Jarrell said.
TIF cost Metro more than $17 million dollars last year.
That number will jump dramatically in the next few years as new buildings are completed.
Nashville's use of TIF will likely be a major issue for the next mayor.
