Session Review 2022Urban Affairs

Session Review: Urban Affairs

Funding for pandemic recovery projects across Nebraska, municipal law updates and expedited review changes for tax increment financing were among the topics taken up by lawmakers this session.

Pandemic recovery

A bill originally introduced to focus on COVID-19 recovery efforts in North Omaha was broadened to become a statewide measure and passed this session.

LB1024, sponsored by Omaha Sen. Justin Wayne, allocates $250 million of the federal American Rescue Plan Act funds provided to Nebraska to the new Economic Recovery and Incentive Division within the state Department of Economic Development, which the bill established to administer grant funding for recovery efforts from the coronavirus pandemic.

Priority for grant funding will be given to projects located within qualified census tracts in metropolitan class cities. Omaha is the state’s only metropolitan class city. A federally qualified census tract is one in which 50 percent or more of households have an income less than 60 percent of the area median gross income or a poverty rate of at least 25 percent.

LB1024 also transfers $55 million from the state’s Cash Reserve Fund and places it, along with $80 million of the ARPA funds, into the newly created Economic Recovery Contingency Fund.

The bill creates the Economic Recovery Special Committee of the Legislature to review proposals for distribution of those funds. Contingency fund dollars will not be distributed until DED has submitted a coordinated plan to the legislative committee.

The remaining funds will be distributed in fiscal year 2022-23. A newly created Qualified Census Tract Recovery Grant Program will provide funding to public and private entities located within qualified census tracts.

No less than $90 million in grants under the Qualified Census Tract Recovery Grant Program will go to qualified census tracts in North and South Omaha. Up to $10 million may be distributed to qualified census tracts in Lincoln and up to $10 million in qualified census tracts outside Lincoln and Omaha.

In addition to the census tract grants, the bill directs up to $60 million for development of an airport business park in Omaha, up to $30 million to innovation hubs located within two miles of the same airport and up to $20 million to prepare land parcels for affordable housing in Omaha.

Among other provisions, the bill also distributes funds from the Coronavirus Capital Projects Fund to qualified projects in each of the state’s congressional districts, with no more than $35 million for projects in CD2, at least $40 million in CD1 and at least $40 million to second class cities and villages in CD3.

The bill includes provisions of Wayne’s LB915, which stipulate that any nonprofit that has received middle-income workforce housing grants is not eligible for additional funding until they have spent at least 50 percent of previous grant funds.

Senators passed LB1024 on a 45-1 vote and it took effect immediately.

Gov. Pete Ricketts vetoed a bill that would have required the state to apply for a second round of federal emergency rental assistance.

LB1073, as introduced by Wayne, originally would have created a state Department of Housing and Urban Development. The bill was gutted on general file by an amendment offered by the Urban Affairs Committee to make way for an emergency rental assistance proposal from Lincoln Sen. Matt Hansen.

Under the federal program, individuals who were impacted by the pandemic are eligible for up to 12 months of back rent and three months of future rent — up to $20,000 — which is paid directly to their landlords. The federal government has extended the program but the governor has refused to apply for the additional funds.

The bill passed on a 26-15 vote and subsequently was vetoed by the governor. In his veto message, Ricketts said the state has sufficient funds remaining from the first round of assistance. A motion to override the veto, offered by Wayne, fell one vote short. The veto was sustained on a vote of 29-16.

Other measures

LB800, introduced by the Urban Affairs Committee, makes grammatical and technical changes and replaces outdated language in state law regarding metropolitan class cities.

The bill includes provisions of seven other measures:
• LB555, introduced by Lincoln Sen. Matt Hansen, which requires that reports filed under the Municipal Density and Missing Middle Housing Act include the percentage of residential areas a city has declared substandard and blighted or extremely blighted;
• LB724, also introduced by Hansen, which authorizes funds generated under the Local Option Municipal Economic Development Act to be used to develop and implement affordable housing action plans and authorizes first and second class cities and villages to include grants, loans and construction funds as part of an affordable housing action plan;
• LB727, introduced by Hansen, which eliminates unnecessary language in state law regarding sanitary and improvement district elections;
• LB799, introduced by the committee, which updates and clarifies reporting requirements under the Municipal Density and Missing Middle Housing Act;
• LB842, introduced by Gordon Sen. Tom Brewer, which authorizes tribal governments to apply for grants under the Civic and Community Center Financing Act;
• LB1176, introduced by Lincoln Sen. Eliot Bostar, which amends the Affordable Housing Tax Credit Act to clarify that only individuals who became partners or members of a partnership, limited liability corporation or subchapter S corporation, or who acquired shares of stock prior to Feb. 15 of the year in which a tax return is filed for the credit, are eligible to claim it; and
• LB1189, introduced by Norfolk Sen. Michael Flood, which transfers all funds, property, property rights, legal obligations, taxes or assessments owned by or owed to a sanitary drainage district that lies solely within the zoning jurisdiction of a city to that city, or a riverfront development authority created by the city, if the sanitary drainage district is discontinued.

LB800 passed on a 48-0 vote and took effect immediately.

Lawmakers also approved a bill this session that changes the expedited review of “micro” tax increment financing projects.

Under a segment of the state’s community development law, Nebraska municipalities are able to designate areas as substandard and blighted, allowing them to be redeveloped. The increased property taxes generated by the improvements are used to pay for the financing of TIF projects.

A bill passed by the Legislature in 2020 created an expedited review process for certain TIF projects located in counties with populations under 100,000. The decision to allow an expedited review process rests with the governing body of a municipality.

LB1065, which was originally introduced by former North Platte Sen. Mike Groene, was taken up by Wayne following Groene’s resignation. The bill makes the following changes to the existing expedited review process:
• increases the maximum TIF project period from 10 years to 15;
• requires existing structures to have been within the corporate limits of a municipality for at least 60 years; and
• allows the redevelopment of vacant lots that have been platted and within the corporate limits of a city for at least 60 years.

The bill also increases the maximum assessed value of property within a redevelopment project that receives an expedited review from $250,000 to $350,000 for a single-family residential structure and from $1 million to $1.5 million for a multi-family or commercial structure.

Senators passed LB1065 on a 46-1 vote.

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