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.
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CONTACTS:
Ross Martin I 214.745.5353 I rmartin@winstead.com
Ross Martin focuses his practice on public finance, special districts and public law. He serves as general counsel and bond counsel to special districts, including municipal utility districts, fresh water supply districts, special utility districts, municipal management districts, water control and improvement districts, and other improvement districts providing water, sewer, drainage, roadway and transportation infrastructure for master-planned developments, commercial developments and mixed-use developments.
Elizabeth Holland I 615.949.2354 I eholland@winstead.com
Elizabeth Holland is a member of Winstead’s Real Estate Development & Investments Practice Group where she represents developers, investors, and corporate clients in a broad range of commercial real estate transactions. Her practice focuses on real estate acquisitions, dispositions, financing, development and leasing.
Elizabeth has extensive experience handling multi-million-dollar transactions involving office buildings, retail and lifestyle centers, industrial properties, medical facilities, and single-family rental portfolios. She is committed to providing strategic and practical counsel to help clients navigate complex real estate matters efficiently and effectively.
