Industrial revenue bonds in Tennessee
Volume cap, active issuers, the local buyer base and the steps to finance a manufacturing, recycling, water or housing project in Tennessee with tax-exempt bonds.
State facts verified October 2026Key takeaways
- $987.5M of volume cap in 2026 — the federal $135 per resident applied to 7.32 million residents; rank 15 of 51 by size.
- 15 Tennessee issuer entries appear in SEC-registered fund holdings, $75.9M in total, −$12.6M over the latest quarter (filers report some issuers under more than one name).
- 93 FDIC-insured banks headquartered in the state hold $6.1B of municipal securities — the natural direct purchasers for small issues.
- 1 single-state municipal funds buy Tennessee bonds specifically, which supports in-state demand and pricing.
Issuers whose bonds funds already hold
Registered funds’ holdings show which Tennessee issuers buyers already know. The tables cover all conduit and private activity issuers in fund holdings — including transportation, housing, nonprofit and pollution-control issuers — so they are context for demand, not a list of issuers that do manufacturing bonds.
| Series | Held | Change |
|---|---|---|
| Memphis/Shelby County Economic Development Growth Engine Industrial Development Board, Tennessee, Tax Increment Revenue Bonds, Graceland Project, Seni | $19.5M | +$148K |
| Kingsport Industrial Development Board, Tennessee, Exempt Facility Revenue Bonds, Domtar Project, Series 2024 | $15.9M | +$10.9M |
| Bristol Industrial Development Board, Tennessee, State Sales Tax Revenue Bonds, Pinnacle Project, Capital Appreciation Series 2016B | $14.0M | −$3.0M |
| Bristol Industrial Development Board, Tennessee, State Sales Tax Revenue Bonds, Pinnacle Project, Series 2016A | $11.8M | −$4.3M |
The local buyer base
Banks
93 FDIC-insured banks are headquartered in Tennessee, together holding $6.1B of municipal securities in the latest call reports. Banks often buy small industrial issues outright (direct purchase) or provide letters of credit that let money market funds buy variable-rate bonds.
Funds
National high-yield municipal funds are the core buyers of unrated industrial bonds. 1 single-state funds focus on Tennessee:
- Dupree Mutual Funds
How Tennessee allocates volume cap
Allocating agency: Tennessee Department of Economic and Community Development (Commissioner of Economic and Community Development), under the Tennessee Allocation Plan for Private Activity Bonds (T.C.A. 9-20-101 to 9-20-106; Tenn. Comp. R. & Regs. 0500-02-03). The Commissioner of Economic and Community Development announces, before January 1 of each year, the system by which the coming year's volume cap will be allocated. By rule the system must weigh job creation, state and local tax revenue and affordable housing, give fair access to all areas of the state, and include reporting of use and a schedule for recapture and reallocation of unused authority for carryforward elections. Industrial development bonds issued by local industrial development corporations must stay within the allocation set by the Department.
| Milestone | Date |
|---|---|
| Commissioner announces the allocation system for the next calendar year (Rule 0500-02-03-.03) | Before January 1 each year |
| Annual PILOT lease report by companies leasing property from industrial development boards, filed with the Comptroller (copy to county assessor); $50 late fee | October 1 each year |
Issuers that do manufacturing bonds
| Issuer | Type |
|---|---|
| County and city industrial development corporations (industrial development boards), created by resolution of the county or city legislative body under T.C.A. 7-53 | county/city industrial development board |
State approvals
The industrial development corporation's board (at least seven directors appointed by the county legislative body for a county board) authorizes the bonds. A PILOT requires a formal delegation of authority from the creating city or county, which may also require final approval of each PILOT agreement; a public meeting on at least 5 days' notice; and a cost-benefit analysis attached to the agreement. A PILOT that keeps payments below full taxes for more than 20 years (plus up to 3 years of construction) needs a written best-interest determination by both the Commissioner of Economic and Community Development and the Comptroller (T.C.A. 7-53-305). Final economic development agreements must be filed with the Comptroller (T.C.A. 4-17-103).
Incentives that commonly stack with the bonds
5 state programmes verified on official pages. Eligibility and amounts are set by each programme; the bonds do not confer them.
- Property taxProperty tax abatement through an industrial development corporation lease with a negotiated payment in lieu of taxes (PILOT) under T.C.A. 7-53-305.
- Sales taxSales and use tax exemption for industrial machinery, repair parts and industrial supplies used in manufacturing, plus a reduced 1.5% rate on energy and water, for registered qualified manufacturers.
- Tax creditIndustrial Machinery Tax Credit of 1% of qualified machinery purchases (enhanced 3% to 10% for $100 million+ investments with prior approval), offsetting up to 50% of franchise and excise tax.
- Tax creditJob Tax Credit of $4,500 per net new full-time position (25 jobs and $500,000 investment), with enhanced credits in Tier 2-4 counties.
- Property taxFastTrack job training, economic development and infrastructure grants (infrastructure grants require a local PILOT on real property for at least five years).
Who to call
- Tennessee Department of Economic and Community Development (TNECD)
- Comptroller of the Treasury, State Board of Equalization - PILOT and TIF reporting
Sources: law.cornell.edu (1) · law.cornell.edu (2) · ctas.tennessee.edu (1) · ctas.tennessee.edu (2) · comptroller.tn.gov · tnecd.com · checked October 2026. Procedures and fees change; confirm with the agency and bond counsel.
Not found on an official page yet: state allocation fees; a published figure for cap remaining. We leave these out rather than estimate; ask the allocating agency.
How to finance a project in Tennessee
- Confirm eligibility. Manufacturing projects up to $10 million under the small-issue capital expenditure election, or an exempt facility such as solid waste, water or qualified housing. See the guide.
- Choose an issuer. A county or city industrial development authority, a port authority or a statewide finance authority. The state’s economic development agency and the volume cap allocating agency keep the current list of issuers that do manufacturing bonds; the fund-holdings tables above are context, not a directory. How to choose an issuer.
- Obtain a declaration of official intent (inducement resolution). Costs paid up to 60 days before it, and any time after, can be reimbursed from bond proceeds (Treas. Reg. §1.150-2).
- Apply for volume cap to the state’s allocating agency, Tennessee Department of Economic and Community Development. Tennessee’s 2026 ceiling is $987.5M; allocation is at the state’s discretion, by round, lottery or first-come, and the ceiling is not the amount still available.
- Hold the TEFRA hearing after at least seven days’ public notice (the issuer’s website may be used) and obtain the elected official’s approval. If the issuer sits outside the project’s jurisdiction, an elected official of the host jurisdiction must also approve; approval lapses if bonds are not issued within a year.
- State approvals, documents and closing. Some states add their own steps — attorney general review, court validation or a state commission’s approval. Bond counsel drafts the documents; a bank buys the bonds directly or a placement agent places them with investors.
The order of these steps varies by state: some require the public hearing and local approval before they allocate volume cap.
Questions borrowers ask
Do industrial revenue bonds in Tennessee need volume cap?
Most do. Federal law (IRC §146) requires small-issue manufacturing bonds and most exempt-facility bonds to receive an allocation of the state’s annual cap, which for Tennessee is $987.5M this year. Governmentally owned airports, docks and solid waste facilities, and qualified 501(c)(3) bonds, do not.
Who issues industrial revenue bonds in Tennessee?
County and city industrial development authorities, port authorities and statewide finance authorities, depending on the state. National conduits can also issue with the host jurisdiction’s approval. The Tennessee economic development agency and the volume cap allocating agency can name the issuers active in manufacturing bonds.
Who buys Tennessee industrial revenue bonds?
National high-yield municipal funds, banks — including the 93 headquartered in the state — insurers and separately managed accounts, plus 1 funds dedicated to Tennessee bonds.
How long does it take?
Typically three to six months from engagement to closing; volume cap rounds and issuer board calendars can add time.
Check whether your project qualifies Read the complete guide
Methodology
Volume cap is the 2026 federal formula — $135 per resident with a $397,625,000 small-state minimum (Rev. Proc. 2025-32) — applied to Census Vintage 2025 population estimates; where a state publishes its own figure, the state’s figure governs. It is the annual ceiling, not the amount still available. Issuer and bond figures are holdings reported by SEC-registered funds on Form N-PORT, classified by Securitief; bank figures are municipal securities in FDIC call reports for banks headquartered in the state.
Important information. Securitief Research is published by Securitief, operated by Applied America. Securitief is not a placement agent or underwriter and does not seek or receive compensation from any financing, including financings of issuers and borrowers discussed here. It is not acting as a municipal advisor and owes no fiduciary duty to any issuer or obligated person unless separately engaged in writing.
This material is general information. It is not tax, legal, investment or municipal advice, a recommendation, or an offer to sell or a solicitation of an offer to buy any security. Offers are made only by offering documents and only where permitted by state securities laws. State allocation procedures change; confirm current rules with the allocating agency and bond counsel.
Sources: SEC Form N-PORT and FDIC call reports (holdings), IRS and Census (volume cap and population), state agency publications. Issuer classification and aggregation are Securitief’s own and may contain matching errors; figures may be revised. No licensed index levels (MMD, BVAL, ICE) or EMMA trade data are used. Past holdings do not indicate future demand, pricing or the availability of financing. Interest on private activity bonds may be subject to the alternative minimum tax; tax treatment depends on the facts and the opinion of bond counsel.