3.1.19 Tax Increment Financing

A. Tax Increment Financing (TIF) is a public financing method that is used as a subsidy for redevelopment, infrastructure, and other community-improvement projects. States create districts to administer the program for communities to benefit from the TIF. TIF structures vary by municipality, state, or local authority. They may use future increases in taxes to subsidize current improvements. Some states sell bonds backed by a project development's future taxes, while the bond money helps pay the Developer's construction costs.

B. TIF may or may not be recognized as a source of funds, equity, additional income, or a loan in FHAinsured underwriting. The MAP Lender must:

1. Disclose a proposed or existing TIF Commitment at the Concept Meeting;

2. Determine the amount and terms of the TIF and whether or not the specific work in the TIF Commitment is included in the improvements for FHA-insured mortgage; and

3. Document that none of the TIF proceeds are used to support FHA-insured mortgage proceeds, or provide complete analysis and documentation demonstrating that the TIF funds and any tax benefits are irrevocably committed.