Developers and local governments now have increased flexibility to finance development projects in Mississippi. Effective July 1, 2026, Senate Bill 2846 amended the Mississippi Tax Increment Financing Act (“Act”) to authorize taxpayer agreements between developers and municipalities or counties to fund authorized projects.
The legislation, found in Sections 21-45-1 et seq. of the Mississippi Code, creates new opportunities for developers to structure agreements with municipalities and counties within the established Tax Increment Financing (TIF) framework.
The traditional TIF concept is straightforward. A municipality or county wishes to encourage development of an undeveloped, or under-developed, tract of property. The tax value of the property is based on its current state. Once developed, the property’s tax value, and the taxes it generates, should be significantly higher. To incentivize the development, the local government pledges the projected increase in tax revenues to pay for improvements that support the project, often by issuing bonds secured by that increment. The proceeds from the sale of the bonds are used to pay for the construction, and the bonds are paid off over the course of several years as the incremental taxes are collected.
Mississippi’s Act follows that basic concept but limits the arrangement to “redevelopment projects” for designated “project areas.” Those “project areas” are defined generally as follows:
- Dilapidated or obsolete areas (among other characteristics) that are detrimental to the public health, safety, morals, or welfare;
- Historical preservation sites;
- Areas in which inadequate lot or street layout (among other things) substantially impair growth within the community;
- Any area in which construction or renovation for residential, commercial, or other uses is in the public interest; or
- Any area that has received a certificate of public convenience and necessity pursuant to the Regional Economic Development Act.
For developers and local governments alike, the fourth category (public-interest construction or renovation) allows broad leeway to invoke the benefits of using a TIF to finance a portion of the project.
The new legislation’s additions and amendments allow even broader leeway. SB 2846 created Section 21-45-23 of the Code, which allows municipalities and counties to enter into “taxpayer agreements” with developers in connection with redevelopment projects. Those agreements may be used to:
- Secure repayment of bonds, notes, or other obligations used to finance projects;
- Provide for payments in lieu of, or in addition to, tax increment revenues; or
- Provide for any other payment obligation from any source, public or private, to support the financing or refinancing of a redevelopment project.
SB 2846 also amended the definition of “redevelopment project” to include the costs of acquisition, construction, installation, and equipping of “public or private improvements” for projects undertaken pursuant to a taxpayer agreement under Section 21-45-23 of the Code. As reflected by these amendments, the characteristics of the taxpayer agreements are broad in scope (at least for now), promoting financing arrangements for both public and private improvements that were previously unavailable.
There are other aspects of the legislation worth noting for municipalities, counties, developers, and lenders contemplating a TIF arrangement under Section 21-45-23.
- The taxpayer agreements “[s]hall not constitute a pledge of the faith, credit or taxing power of the State of Mississippi or any municipality,” nor shall they constitute indebtedness “for purposes of any constitutional or statutory debt limitation.”
- If the agreement is secured by a lien on real property, the lien arises automatically upon execution and recordation of the agreement, it takes priority over any subsequent encumbrance, and it “shall exist only for the duration and to the extent provided in the taxpayer agreement.” Because priority extends only to subsequent encumbrances, parties should consider how the lien will interact with existing mortgages and future financing.
- Municipalities and counties may assign their rights under the taxpayer agreement to certain assignees, including any lien rights.
- Municipalities and counties may issue bonds or other obligations as a conduit issuer, and such obligations may be secured by payments and liens under the taxpayer agreement, tax increment revenues, a combination of those, or “other private security.”
These new provisions, like the others noted above, are broad and similarly promote flexible and creative financing arrangements.
In sum, TIF arrangements can be a “win/win” for all involved. The local government gets all the benefits (tangible and intangible) stemming from the new project. Developers gain access to financing supported by a revenue stream that would not exist but for the project. The new legislation expands and adds flexibility to the TIF landscape in Mississippi, making that “win/win” scenario even more achievable.
Developers and local governments should consider whether the new taxpayer agreements may be appropriate for qualifying projects. Of course, insurance, the risks of default, and lien rights should be carefully considered by all parties, including lenders, when structuring such arrangements.
Brunini attorneys advise municipalities, counties, developers, and lenders on tax increment financing and related matters. For questions about taxpayer agreements or the new legislation, please contact a member of Brunini’s Economic and Project Development, Tax Incentives and Public Finance practice group.