PIDC Programs That Can Assist Real Estate Developers, Investors in Philadelphia

Written by: Alan Nochumson

As interest rates are rising, real estate developers and investors must become more resourceful with regards to obtaining funding for their real estate acquisitions as well as their real estate development projects.

In this article, we will discuss some of the programs offered by the Philadelphia Industrial Development Corp. (PIDC), a nonprofit organization founded by the city of Philadelphia and the Chamber of Commerce for Greater Philadelphia in 1958, which can greatly assist these real estate developers and investors.

PIDC offers two grant programs for property owners in Philadelphia—the redevelopment assistance capital program and stormwater grants program.

Redevelopment Assistance Capital Program (RACP)

A grant under RACP provides reimbursement to property owners related to physical maintenance and operation of a property, administrative costs, legal fees and costs, financing and accounting costs, and architectural and engineering fees.

Awards are made twice a year, in April and October.

Past projects awarded grants under RACP include new construction and renovations of hotels, nursing homes, and universities, multipurpose centers and shopping centers.

In order for a project to be eligible for a grant under RACP, it must first be listed in an enacted Capital Budget Act, which itemizes projects that are available for state funding. When the project is “shovel ready,” the project sponsor may submit a business plan to the commonwealth of Pennsylvania’s Office of Budget.

The business plan must detail the “scope of work, project costs, documentation of other financing sufficient to complete the project, anticipated construction schedule and other relevant project and organizational information.”

To qualify, the project must cost at least $1 million and the property owner must match the funding equal to the grant amount.

Under RACP, the project must significantly impact the region’s economy, create, or maintain jobs, impact the community, be financially sustainable, and be shovel ready.

The grant offered under RACP requires financial sustainability because it operates on a reimbursement basis as expenses are incurred.

Furthermore, the project may not receive a majority of funding through any other state programs like PENNDOT or PENNVEST.

Finally, the project may not be located in a city revitalization and improvement zone (CRIZ) nor have eligibility for benefits under CRIZ.

You can learn more about RACP on the Pennsylvania Office of the Budget’s program page.

Stormwater Grants Program

The stormwater grants program, which operates through the Philadelphia Water Department (PWD), offers grant funding for the development of stormwater retrofit projects on commercial, industrial, multi-residential properties with more than 4 units and places of worship, amongst others.

The purpose of this program is to reduce pollution entering the city’s rivers and creeks and assists the PWD meet regulatory obligations and enhance the region’s water quality.

This grant is only eligible for property owners that are planning to add a stormwater retrofit to finished properties situated in the city. Funding under this program can be used for the design and construction of a stormwater retrofit projects on one or multiple eligible properties.

The application under this program must include the goals for the project, the broader mission of the property owner, additional work proposed with the stormwater retrofit, and the environmental, social, and economic impact on the local community.

The application must also include findings from environmental due diligence, a concept plan, any contracts related to the project, the proposed schedule, and additional financial documents which can be found in this document from the city of Philadelphia.

PIDC also offers further financing assistance to property owners in Philadelphia through the neighborhood development loan, subordinate term loan and a bridge loan.

Neighborhood Development Loan

The neighborhood development loan provides financing for property owners of mixed-use, commercial, and industrial projects located throughout Philadelphia.

Applicable uses for this loan include tenant improvements, property acquisition as part of a construction or rehabilitation project, building renovation or construction, machinery and equipment, as well as costs associated with fees, permits and appraisals.

The term of the loan is typically five to seven years and the amount of the loan ranges from $50,000 to $500,000. Under this program, the property owner is required to provide equity of 10%-20% into the loan.

Furthermore, there is no prepayment penalty under the loan program.

There is a fee to apply for the loan as well as a fee of 1.5% of the loan amount due upon the issuance and acceptable of the commitment letter.

To learn more about this loan program, you should visit PIDC’s Neighborhood Development Loan product page.

Subordinate Term Loan

A subordinate term loans, or flexible real estate debt, provides financing to property owners for commercial and industrial projects.

This loan typically funds projects that will create and maintain jobs for low-and-moderate-income residents, increase investment in underserved areas, or improve energy efficiency.

Under this program, one full-time equivalent job must be created for every $35,000 lent.

Eligible uses include property acquisition, construction or renovation, machinery and equipment, and soft costs, such as fees and costs associated with legal, accounting, engineering, permitting, appraisals and other related expenditures.

Typically, the term for this loan program typically ranges between 15 and 20 years and the loan amounts range from $500,000 to $5 million.

PIDC can fund between 10% to 40% of total project costs with a 10% minimum equity contribution by the property owner.

There is a fee to apply for the loan as well as a fee of 1.5% of the loan amount due upon the issuance and acceptable of the commitment letter.

You can visit PIDC’s product page to learn more about this loan program.

Bridge Loan

A bridge loan is available for projects that have been awarded public grants which are in need of short-term financing.

The only eligible use for this program is for interim financing to bridge timing gaps between contracts receivables.

This program offers up to $3 million in such short-term financing, depending upon contract-related cash flow and loan terms typically last one year.

There is a fee to apply for the loan as well as a fee of 1% of the loan amount due upon the issuance and acceptable of the commitment letter.

To learn more about this loan program, you should visit PIDC’s Bridge Loan product page.

PIDC also offers three tax incentive programs for property owners in Philadelphia—tax-exempt bond program, new markets tax credits and tax increment financing.

Tax-Exempt Bond Program

The tax-exempt bond program offers tax-exempt bond financing certain manufacturing facilities and nonprofit 501(c)(3) facilities.

The fee to apply for this program is $2,000 and the origination fee ranges from .0625 to .375%, depending upon the amount so bonded.

You can learn more about this program on PIDC’s Tax Exempt Bond Program page.

New Markets Tax Credits (NMTC)

NMTC is designed to generate private-sector improvements in low-income areas for projects that create jobs and stimulate economic growth.

Individuals and corporate entities can receive credit against their federal income taxes for making qualified investments in projects that finance community development.

Eligible uses include property acquisition associated with substantial renovation or new construction, new building construction, machinery or equipment and working capital.

Financing under this program consists of an equity investment from an investor and a loan from a third-party lender on a non-recourse basis funded into an investment fund. The investment fund is used to make qualified low-income community investment, in the form of a loan, to a qualified active low-income community business.

When applying, the applicant must submit a plan detailing how the project will benefit low- income communities.

The fee for applying for this program of $2,500 for a nonprofit entity and $5,000 for a for-profit entity.

To learn more about this program, you should visit PIDC’s page on New Markets Tax Credits.

Tax Increment Financing (TIF)

TIF is an alternative financing tool which authorizes the taxing bodies of the city of Philadelphia (the city and the School District of Philadelphia) to establish geographic areas (TIF districts) where tax revenue may be used to finance improvements in blighted areas of the city.

PIDC can propose any area of the city to Philadelphia City Council and the school district of Philadelphia for approval to establish such an area as a TIF district.

The eligible uses allowed for financing under this program include new construction, building rehabilitation, site improvements, machinery and equipment acquisition, and limited settlement and processing fees.

The amount of financing under this program is determined by the present value of the incremental tax revenue discounted according to the lender’s underwriting criteria.

The term of the TIF District and, therefore, the financing cannot exceed 20 years.

The interest rate of the loan under this program will depend upon the lender’s criteria.

—Kelsey Keane, a third-year law student at the Benjamin N. Cardozo School of Law, who is interning at the firm, assisted in the writing of this article.

Alan Nochumson is the sole shareholder of Nochumson P.C., a legal services firm with a focus on real estate, land use & zoning, litigation, and business counseling for the people of Pennsylvania and New Jersey. Nochumson is a frequent author and lecturer on issues commonly confronting businesses, individuals and professionals. You can reach him at 215-399-1346 or

Alex Goldberg is an associate attorney at the firm. You can reach him at 215-399-1346 or

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