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PIDC Tax Increment Financing Program
BACKGROUND
The Pennsylvania Tax Increment Financing (TIF) Act
authorizes the City and School District of Philadelphia to create districts
(TIF Districts) in which increases in certain tax revenue may be used
to finance improvements within the TIF District. The Borrower must
identify a lender to fund the TIF loan which is passed through the
Philadelphia Authority for Industrial
Development (PAID) to the Borrower
and is repaid with the incremental taxes. Eligible taxes include Philadelphia’s
Real Estate, Use and Occupancy, Business Privilege and Sales taxes.
USES
- Acquisition • Site Preparation
- New
Construction or Substantial Renovation
- Machinery and Equipment
Acquisition
- Related Project Fees and Costs
FINANCING
- Loan Amount: The loan amount is a function
of the incremental taxes generated in the TIF Districts and will be
determined by the lender according to its underwriting criteria. Borrowers
must demonstrate that the loan amount is no greater than necessary
for the project to proceed.
- Term: Less than or equal to life
of the TIF District (20-year maximum).
- Interest Rates and Collateral:
Other terms and conditions of the loan will be determined by the lender.
PROCESS AND TIMING
The transaction cycle will take 90-120 days
depending on City Council’s
legislative agenda and includes the following steps:
- The client submits a completed Application to PIDC
staff which evaluates the loan request and prepares an Ordinance
of City Council and a Resolution of the School Board including a
TIF Project Plan with detailed tax projections for their respective
review and consideration.
- Following approval by the City, School District
and PAID Board of Directors, PAID issues a Commitment Letter to the
applicant.
- Settlement may occur when terms of the Commitment
Letter have been met.
FEES
- Application: $5,000 nonrefundable fee,
payable at time of Application submission.
- Settlement: 1.5% of the loan amount,
due upon settlement.
- Processing: 1% of each repayment due
upon each such repayment.
For more information, contact Susan Lowry, 215-496-8161,
slowry@pidc-pa.org .
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