Nebraska legislator gets people to vote on weighty TIF requests

LINCOLN. On Tuesday, a Nebraska legislator took aim at the practice of funding the city of Omaha with higher taxes and called for a vote by the people before the tool could be used on projects the size of, say, a modern streetcar or a redesign of the Crossroads.

“It’s not about the merits of the project, it’s about the process,” said Senator Machaela Cavanaugh of Omaha. “Do we respect the intention of TIF and do we respect the people? These are people’s taxes.”

“Wonderful” and “offended”

Under Cavanaugh’s Legislative Bill 746, voters would have to approve a tax increase request in excess of $20 million, although she said she would consider other thresholds. She called the TIF a “wonderful and misused tool” and said she hopes her efforts, along with several other senators’ recent attempts to change the TIF law, will lead to better practices.

TIF, a popular and sometimes controversial tool, is designed to revive “degraded” areas. As part of the incentive program, the developer of a city-approved project takes out a loan to help cover eligible redevelopment costs. The loan is repaid, usually within 15 or 20 years, through the increase in property tax received from the new development.

Typically, property tax payments go to support schools and other local tax authorities. During the TIF period, the property owner continues to pay a portion of the property tax to the local government based on the assessment that existed prior to any improvements.

Once the TIF loan is repaid, the property taxes levied on what should have been a higher value, improved property begin to flow to these local governments.

tiff flurry

Cavanaugh presented her proposal to the Legislative Assembly Committee on Urban Affairs, saying it was prompted by a recent flurry of TIF-backed projects, including a modern streetcar project and a planned downtown Mutual of Omaha office tower to rise on the site of the former W Building. Dale Library Clark.

She was critical of the approval processes, which she felt neglected public opinion.

“None of this can be fixed, but in my opinion, this is evidence of poor management,” Kavanaugh said.

Officials from the city of Omaha and the Greater Omaha Chamber of Commerce were among opponents who testified against the bill, saying the city provides an opportunity for public opinion at various stages of the TIF process.

Jacqueline Morrison, Mayor Jean Stothert’s assistant for economic development, said several projects over the past few years fall within the parameters of the bill. Among them, she said, are the refurbishment of the Crossroads Mall at 72nd and Dodge Streets, as well as the new Mutual of Omaha tower in downtown Omaha.

The City has approved a nearly $80 million TIF request in 2021 to redevelop the Crossroads at a cost of more than $550 million.

For the Mutual tower, now valued at $600 million, the city has approved a TIF request of over $60 million.

Other examples: Omaha in 2016 approved a $15 million TIF request for an HDR headquarters project in the village of Aksarben, and a year later approved a $19 million TIF request for an Atlas downtown apartment.

room to grow

Morrison, in response to questions from Omaha lawmakers including Senators Terrell McKinney and John Cavanaugh, said the city’s website explains TIF and its procedures.

She said meetings related to the promotion are being recorded and that the city is working to better explain and inform the public about the various elements of the streetcar project.

“There is always room for growth,” Morrison said.

Do we respect the intention of TIF and do we respect the people?

— State Senator Machaela Cavanaugh of Omaha.

Christy Abraham of the League of Nebraska Municipalities opposed the bill. Among her concerns were the cost of the election and project delays.

She said smaller communities would be hit even harder.

In response to McKinney’s suggestion that cities hold evening meetings to include more working people in TIF projects, Abraham said that many other municipalities are already meeting at night.

‘In the dark’

Omaha City Council and Planning Board meetings are currently held in the afternoon. McKinney said many of his constituents felt “in the dark” or unheard when it came to streetcar and Mutual projects.

Veta Jeffery, president and CEO of the Greater Omaha House, said she also spoke on behalf of the Lincoln and Nebraska chambers in opposing LB 746.

Jeffrey said TIF encourages development and is key to the goals the Omaha ward has set for downtown redevelopment.

According to Jeffrey, when communities keep adding restrictions, it “sends a message to developers that you’re not needed here.”

Large-scale TIF projects can take so long to conduct elections, Geoffrey says, that developers can target different cities.

The City Affairs Committee has taken no action since Tuesday’s public hearing on whether the bill should be put forward for debate in the full Legislature.

The bill received one letter of support and four written objections.

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