Tax Increment Financing (TIF) Guarantee Program

The Tax Increment Financing (TIF) Guarantee Program is administered by the Pennsylvania Department of Community and Economic Development (DCED) and the Commonwealth Financing Authority (CFA) as part of a broader effort to stimulate economic revitalization across the Commonwealth. Designed to enhance credit access and reduce borrowing costs for local redevelopment initiatives, the program provides financial guarantees to support the issuance of Tax Increment Financing debt obligations. These guarantees serve as a form of credit enhancement, helping to secure financing for projects that aim to develop or revitalize brownfield and greenfield sites within designated TIF districts, as outlined in Pennsylvania’s TIF Act (53 P.S. §6930.1 et seq.). The program targets public infrastructure and environmental projects that contribute to the economic growth and stability of Pennsylvania communities. Eligible uses of funds include infrastructure improvements for industrial and retail enterprises, environmental remediation, and site development for manufacturing facilities, hospitals, convention centers, and hotels. Projects must be situated within designated TIF districts and either on previously developed land (e.g., mined or abandoned sites) or on undeveloped sites zoned for future development. A key requirement is that the incremental tax revenues generated by the completed project must be sufficient to offset the debt service on the TIF bonds. Only issuers of TIF debt obligations located within municipalities other than first- and second-class cities are eligible to apply. These issuers may include municipal authorities, redevelopment authorities, and industrial or commercial development authorities. Private developers may be involved in the projects, but municipalities or authorized issuing bodies must formally apply for the guarantee. The maximum guarantee amount offered by the CFA per project is $5 million, inclusive of both principal and interest. However, the guarantee does not ensure project completion. The CFA will only guarantee bonds when the project has enforceable timelines and financial protections, such as completion bonds or adequate collateral. Applicants must submit a detailed project plan that includes cost estimates, economic feasibility studies, proposed sources of financing, zoning information, and developer credentials. Financial due diligence is central to the evaluation process, with the CFA requiring that developers demonstrate both prior experience and sufficient liquidity. The TIF Debt Obligations must include a debt service reserve fund and may require capitalized interest for the early stages of project development. Projects are subject to annual reporting on debt service and tax increment generation, and all parties must comply with nondiscrimination policies as outlined by Pennsylvania law. Applications can be submitted online through DCED’s Enterprise Single Application system or by mail, accompanied by all required supplemental materials. These include detailed project descriptions, financial statements, letters of compliance with zoning ordinances, and resolutions from the issuer’s board. The CFA evaluates applications in the order received, and gives priority to those located in economically distressed areas or designated for priority investment in local or regional development plans. Projects demonstrating strong local support and job creation potential—particularly permanent full-time employment—are also given favorable consideration. For technical assistance, applicants may contact the Center for Private Financing or the Governor’s Center for Local Government Services within DCED. Decisions are typically issued within 30 days of receiving a complete application. If approved, a commitment letter outlining the guarantee terms is sent to the applicant, who must return it with a commitment fee. The program operates on a rolling basis and is available to municipalities across Pennsylvania, with a particular emphasis on smaller communities. While there is no fixed deadline, interested parties are encouraged to apply in accordance with planning cycles and readiness of their development projects.