TIF funds can be used to pay up to 30% of a Project’s annual interest expense. The annual payment is made directly from the TIF fund and can not be rolled into a TIF note. Even if the TIF payments are being made on a pay-as-you-go basis, the interest expense payment is calculated on a separate basis annually. All interest expense payments are limited to amounts on deposit in the TIF fund for that year and can’t exceed 30% of the interest expense incurred for that year. If the municipality can’t make the full payment in any one year because there aren’t enough TIF funds on deposit, the unpaid portion accrues. The total interest expense reimbursement can’t exceed 30% of the total project interest expense, construction or permanent loans.
If TIF funds are being used to construct or rehabilitate low or very low income housing units, the amount of reimburseable interest expense increases to 75%.