Infrastructure Development Districts (IDDs) are a pivotal tool for managing growth and development in Tennessee. As Tennessee’s population grows, the need for efficient infrastructure becomes paramount. IDDs offer a structured approach to funding and financing the necessary infrastructure without overburdening local governments and taxpayers. These districts provide a timely and effective method to deliver essential capital infrastructure, facilitating growth while maintaining fiscal responsibility. In essence, IDDs allows developers to have access to upfront capital to work with local governments to build necessary infrastructure.

Tennessee now has two IDD laws: the Residential Infrastructure Development Act of 2024, and the Real Estate Infrastructure Development Act of 2025. While they are very similar, there are key differences. In later blog posts, those differences will be discussed.

The legislative intent behind IDDs is to establish a uniform procedure for their creation and operation. This involves the levy and collection of special assessments, which are crucial for funding infrastructure projects. The bill emphasizes that IDDs serve as an alternative method, complementing existing municipal powers to create special improvement districts and issue bonds.

Importantly, IDDs do not infringe upon the jurisdiction of municipalities over their properties. Instead, they offer an additional layer of authority, allowing municipalities to manage infrastructure development more effectively. This dual approach ensures that while municipalities retain control, they also have access to a robust framework for addressing infrastructure needs.

In summary, IDDs represent a strategic approach to infrastructure development in Tennessee, balancing the need for growth with fiscal prudence. They empower municipalities with the tools necessary to manage development efficiently, ensuring that infrastructure keeps pace with urban expansion.