Tax Increment Financing (TIF) Guarantee Program
Promotes and stimulates the general economic welfare of various regions and communities in the Commonwealth and assists in the development, redevelopment and revitalization of Brownfield and Greenfield sites in accordance with the TIF Act. The program provides credit enhancement for TIF projects to improve market access and lower capital costs through the use of guarantees to issuers of bonds or other indebtedness.
Infrastructure and environmental projects for industrial enterprises and retail establishments; Infrastructure, environmental and building projects for manufacturers, hospitals, convention centers and associated hotels; Utilization of abandoned or underutilized industrial, commercial, military, previously mined institutional sites or buildings; or undeveloped sites planned and zoned for development in accordance with any existing comprehensive municipal plan.
Maximum guarantee amount per project is $5 million
All municipalities and their authorities, including boroughs, townships, towns, counties and home rules that issue TIF bonds to fund local economic development projects.
Project must be located in a blighted area (containing the characteristics of blight as described in the Urban Redevelopment Law); Project must be located within a TIF district; Project must be located on previously utilized property or on undeveloped property that is planned and zoned for development; Project must demonstrate its ability to comply with the TIF law prior to the issuance of bonds or other indebtedness; Applicants must show that the revenue to be realized as a result of the project will be sufficient to offset the amount of the debt service; Business or private developers must agree to create a certain number of permanent full-time jobs within the TIF district.
How to Apply
What communities will benefit?
The $100 million Commonwealth Tax Increment Financing Guarantee Program (TIF) will be available statewide to all municipalities with emphasis given to Pennsylvania's smaller communities.
What can the funds be used for?
The local issuer of TIF bonds or the Commonwealth Financing Authority (CFA) may obtain a loan guarantee from the program to serve as a credit enhancement for a TIF bond issue, thereby allowing the bonds to be sold on more favorable terms.
Which agency approves a TIF project?
Usually a city or county takes the lead role in approving a TIF project. Each local government that levies a property tax (1) city/municipal; (2) county; and (3) school district, must agree to apply a portion of future tax dollars to repay the TIF bond.
What if my smaller community needs technical assistance?
The Department of Community and Economic Development (DCED) will take a proactive and comprehensive role in the promotion of TIF financing for business or private development projects. This will include the designation of TIF Specialists to both advise municipalities and local organizations on how to establish a TIF district and appropriate uses of TIF financing.
How do I know if my community should submit an application for the TIF Guarantee Program?
Eligible projects should generate economic growth and redevelop brownfields, revitalize downtowns and otherwise strengthen existing communities. A project is eligible for the loan guarantee if it utilizes an abandoned or underutilized industrial, commercial, military or institutional site or building or another site planned and zoned for development. In addition, businesses or private developers must agree to create a certain number of permanent full-time jobs within the TIF district.
An eligible project will receive priority consideration if it is located in an area with a particular need for economic development, or if it is identified for priority investment in a local or regional economic development plan or strategy, which is consistent with a county comprehensive plan.
Who will administer the program?
The technical assistance component will be provided by the Governor's Center for Local Government Services (GLGS), TIF will be administered by the CFA.
Is it difficult to get approval from all tax entities?
Sometimes. School districts are particularly strapped for cash and are reluctant to remove tax dollars from the funding stream. However, as the new development would not occur absent the TIF funding mechanism, the school district is not really "losing" tax funds because it would not receive the new development tax revenues absent the project occurring in the first place. The school district can also agree that a portion of TIF funds (less than 100 percent) will be used to repay the TIF bond, thereby creating some immediate new revenue for the school district. TIF districts are designed to generate other new development and increase property values outside of a TIF district, which also results in new and immediately accessible tax revenue for a school district. When school districts become educated regarding these aspects of a TIF project, they understand that the project will create a net tax gain and create an immediate positive financial impact for the district.
What are the terms of the financing and what will the repayment requirements be?
The TIF Guarantee Program will guarantee all or part of a TIF bond issue, up to a maximum amount of $5 million per project. If there is a call on the guarantee, the primary collateral for the TIF bonds will be assigned to the CFA, which will move into the place of the bondholders.
How will the TIF Guarantee Program coordinate with other financing programs?
While each project will be different, TIF projects will be able to access complementary financing programs administered by DCED and other agencies, in order to control costs and make effective use of public dollars.
Why is the state creating this program?
Because of the significant impact this financing mechanism can have, the state wants to promote increased use of tax increment financing by local governments statewide as a tool for economic development, with the assistance of intensive technical assistance efforts.
How will the program work?
The TIF Guarantee Program will be a $100 million fund to provide loan guarantees for TIF projects, up to $5 million per TIF project. All interest earned on fund investments and any other funds derived from any other source would be deposited into the fund and would be made available for future guarantees as well as administrative costs associated with the program.
Purpose of Funding
- Environmental Projects
- Site Development - Business
- Site Development - Local Government