Installment loan authority for cities proposed

Municipalities in Nebraska could borrow money from a bank or other financial institutions under a bill heard by the Urban Affairs Committee Jan. 21.

LB791, introduced by Lincoln Sen. Amanda McGill would authorize cities of the first and second class and villages to borrow money from financial institutions to purchase property. The loans could be repaid in installments.

McGill said the measure would provide cities with greater flexibility. Cities currently may issue bonds and tax notes, she said, and enter into lease/purchase agreements.

“[This method] might be quicker and less costly than the other alternatives,” McGill said.

Lynn Rex of the League of Nebraska Municipalities testified in support of the bill, saying it would clarify existing law.

“There are a few cities that have city attorneys who think they have the authority to do it now,” she said.

Rex said cities might need a loan for the same reason that an individual might need a short-term loan from a financial institution. The bill would provide an additional tool for cities to address cash flow issues, she said.

No opposition testimony was offered and the committee took no immediate action on the bill.