Metro Nashville leaders have agreed to place a moratorium on issuing new development incentives known as tax-increment financing over the next year as part of a compromise with the Metro Council, where the development tool is under scrutiny. 

At-large Councilman Bob Mendes, who has led a legislative attempt to overhaul Nashville’s TIF system, announced the moratorium during the council’s Budget and Finance Committee meeting Monday night.

Under the compromise, Mendes said he’s agreed to defer an ordinance — one strongly opposed by developers — that would dramatically overhaul how the city issues TIF loans by setting aside a large portion of redevelopment tax dollars to be used exclusively by Metro Nashville Public Schools.

The Census Bureau released data saying Nashville is growing at a pace of 100 people a day Michael Schwab/USA TODAY NEWTWORK – TENNESSEE

Mayor David Briley’s administration and Metro Development and Housing Agency Executive Director Jim Harbison have agreed to not sign off on any new TIF loans through June 30, 2019, unless the Metro Council and MDHA board authorize the loan.

Mendes said the plan during this period will be for a new seven-member TIF Study and Formulating Committee, recently created via a separate ordinance by Mendes, to analyze and create recommendations for “a more transparent, equitable, effective and understandable” TIF system. The panel’s work is expected to conclude in April.

“This agreement lets everybody’s pencils be down,” Mendes said. “No new loans. No new redevelopment districts. No new legislation. Let the study group do its work.”

Mendes’ ordinance will be formally deferred at Tuesday’s full council meeting. The moratorium will not limit the city from turning to other types of incentives such as property tax abatement or payment in lieu of taxes (PILOT).

TIF, used on several high-profile Nashville development projects, works this way: The council first designates an area for redevelopment. Then MDHA awards funds to a developer to help with land acquisition, parking, infrastructure or some other limited uses. Future property tax revenue generated at that site is then diverted to pay down the balance of the loan.

The freeze comes as the use of TIF — the subject of a USA TODAY NETWORK – Tennessee investigative series last year — has drawn increasing criticism in Nashville amid the city’s red-hot development boom.