Good life district fixes amended, advanced

A bill that would update a state initiative intended to spur large retail developments advanced to the final round of debate May 27 after lawmakers amended it to address concerns related to projects in Bellevue and Grand Island.

The Good Life Transformational Projects Act, passed by the Legislature in 2023, authorizes the state Department of Economic Development to create “good life districts” in which transactions are subject to a state sales tax rate of 2.75%, half the statewide rate of 5.5%.

Elkhorn Sen. R. Brad von Gillern, sponsor of LB707, said the measure is intended to fix “cracks” in the original program that could lead to a “devastating” loss of state revenue if left unaddressed.

“Prior to [LB]707,” he said, “there were serious concerns from multiple parties that the good life district program was simply handing a blank check to development groups with little to no assurance that the state would reap a fair return on its investment.”

On select file, von Gillern introduced an amendment that replaced the proposal with a modified version that he said would balance the interests of developers, cities and the state.

The amendment, adopted 37-0, would repeal the 2.75% state sales tax rate on transactions occurring in a good life district. Beginning July 1, it instead would impose a state sales tax rate that is 50% of the current rate on transactions that physically occur in a district. Von Gillern said sales taxes generated by online purchases and motor vehicle sales would be excluded.

The state tax commissioner would allocate 50% of the sales taxes from qualifying transactions to the city in which the district is located once the city has established an economic development program. The allocated taxes would be considered a local source of revenue for the program.

Von Gillern said the amendment also includes safeguards that would:
• limit the amount of allocated state sales taxes that could be generated by existing retailers;
• account for the relocation of existing businesses to a good life district; and
• define new-to-market retailers as those that did not exist within 40 miles of a district prior to its creation.

Von Gillern added that the amendment is designed to ensure that the program does not use taxpayer funds to support residential development, which he said was not the intent of the original legislation because such development does not generate sales tax revenue.

Under the proposal, a city would have to receive voter approval before establishing an economic development program and receiving state sales tax revenue to help fund a good life district project.

Sen. Rick Holdcroft of Bellevue introduced an amendment, adopted 40-0, that he said would exempt Bellevue from that requirement. He said the city established a good life district under current law and already has invested $40 million in its project.

“Requiring the city to hold a public election to access state funds introduces unnecessary costs, uncertainty and risks of project delay or cancellation,” Holdcroft said.

Grand Island Sen. Dan Quick said current law cuts the state sales tax rate in half on transactions within a good life district and allows cities to establish a general occupation tax on businesses within the district to make up the difference and help fund development.

Quick offered an amendment, adopted 40-0, that he said would delay to Oct. 1 the repeal of the reduced state sales tax rate for transactions occurring within Grand Island’s good life district. He said this would give the city, which already has imposed an occupation tax, and retailers time to adjust to the proposed change.

Von Gillern’s select file amendment allows a city or village in which all or a portion of a good life district is located to request that the state Department of Economic Development approve an adjustment to the district’s boundaries.

Under an amendment introduced by Lincoln Sen. Eliot Bostar, adopted 36-1, a city or village could request only that a district’s boundaries be reduced. He said the change would protect taxpayers by ensuring that a district could grow only with legislative approval.

After the adoption of two further technical amendments offered by von Gillern, senators advanced LB707 to final reading by voice vote.