Omaha’s streetcar plan is under threat due to proposed legislation, Omaha Mayor’s aide says
This story was originally published in the Nebraska Examiner.
LINCOLN. A bill submitted to the Nebraska Legislature could kill Omaha’s modern streetcar by limiting future tax revenues the city is counting on to pay off the project.
That’s according to Steve Jensen, an economic development assistant for the city of Omaha, who spoke Tuesday at a legislative committee hearing on a TIF-related bill introduced by State Senator Lou Ann Linehan of Elkhorn.
While Legislative Bill 389 does not specifically mention the planned over $300 million streetcar system, Linehan had it in mind when designing the language. The bill prohibits the use of TIF on a package twice within a 50-year period.
State Senator Lou Ann Linehan of Elkhorn (Courtesy of the Unicameral Information Bureau)
Linehan told the Legislature’s Urban Affairs Committee that she’s not necessarily opposed to the streetcar — she said she loves downtown Omaha — but she thinks TIF has become overused and helps fund some development projects that would have been done even without government subsidies.
“I want to raise a red flag and ask a few questions,” said the senator who chairs the Legislative Assembly’s revenue committee.
Although TIF is used statewide, testimony and concerns about Omaha dominated Tuesday’s public hearing.
Typically, for TIF projects that require city approval, property tax revenues generated from new development are used for up to 20 years to cover eligible redevelopment costs, instead of going to traditional recipients such as school districts.
After the TIF loan schedule, tax revenues from this more valuable property begin to flow to traditional beneficiaries.
Bill clashes with urban, chamber vision
Jensen, who was one of the few who spoke out against LB 389, told lawmakers that he believed Omaha officials were using the TIF as an economic development tool, as the state law intended.
You favor large developments and corporations over the common people in the city.
– State Senator Terrell McKinney, Chairman of the City Affairs Committee.
If the LB 389 is passed, he said, at stake is $5 billion in new construction that Omaha officials and market research expect in the next few decades in the area along and adjacent to the tram route.
In one of the interviews, he explained it this way:
The tram project involves several different TIF revenue streams to redeem the bonds that will be used to fund the system. One called for the creation of a special TIF district that stretches for three blocks on either side of a corridor that runs from downtown to downtown.
Companies in the area should see their property value rise because of the tram. This increased income from the property tax should be used to pay off the debt on the bonds.
Another stream of TIF involves billions of dollars in completely new developments that will sprout in the TIF area. But Jensen said the bill’s proposed 50-year cap would effectively prevent TIF from helping to incentivize these projects.
“This will stop the city and the Chamber of Commerce’s plans to revive Omaha’s urban core,” he said of LB 389.
Jensen, assistant to Omaha Mayor Jean Stothert, continued that the TIF-supported streetcar project will promote more affordable housing and save individual Omaha residents transportation costs. However, these comments raised a number of objections from several members of the City Affairs Committee.
State Senator Terrell McKinney of North Omaha reviewed statistics that showed the low proportion of affordable housing built in recent years in Omaha.
“What worries me is that we are reducing affordable housing under the illusion that we are increasing affordable housing,” he said.
State Senator Megan Hunt of Omaha said apartments and many developments approved for TIF are not available to employees like herself.
Jensen said the tram is expected to boost jobs downtown.
To this, Hunt asked, “Work for whom?”
She continued, “If we get the tram, it will look so beautiful. It would be nice if Mutual of Omaha workers would go get their salad or whatever, but the idea that this will raise the wages of low-wage workers, that it will provide affordable housing, is probably unrealistic, and I think we probably you shouldn’t say that.”
“Great Development Priority”
McKinney followed up Jensen’s remark that the use of the streetcar was expected to reduce the need for and cost of the car. “Why don’t we send a streetcar through the poorest parts of Omaha if that’s our mission?”
“Of course, this is the future,” Jensen said. He said that once the “basic system” is in place, the city will be in a better position to allocate federal funds to expand the streetcar route to North and South Omaha.
McKinney said, “The reality is that you favor big development and corporations over the common people in the city.”
State Senator Carol Blood of Bellevue said she, who previously served on the city council, is likely more positive about TIF than other committee members.
“I’m kind of on the fence on this particular bill,” she said.
Also opposed by Omaha By Design’s Scott Dobbe, who said the bill would create “unnecessary obstacles” to development.
Christie Abraham of the League of Nebraska Municipalities has supported local control over individual cities on how to use TIF as a tool to stimulate development.
On Tuesday, the City Affairs Committee took no action regarding LB 389.