Session Review: Urban Affairs

Measures aimed at increasing access to affordable housing and requiring the Omaha Housing Authority to address bed bug infestations were among those advanced by the Urban Affairs Committee this session.

Housing

The construction of rent-to-own housing units in urban areas will qualify for state assistance under a bill approved by lawmakers.

Under LB288, introduced by the committee and passed on a vote of 43-6, the construction of rent-to-own housing and the development of upper-story housing for occupation by a rent-to-own tenant are eligible for grants under the Middle Income Workforce Housing Investment Act.

A rent-to-own housing unit must be a tenant’s primary residence, and the tenant may not own a home or other residential real estate. A rent-to-own housing lease must provide that at least $50 of the tenant’s monthly rent be set aside in an account maintained by the property owner.

When the lease ends, the owner is required to distribute money in the account to the tenant to use for a down payment and closing costs on the purchase of a home. The tenant will have the option to purchase the rent-to-own unit at fair market value one year after the lease begins.

As amended, LB288 includes provisions of four other measures considered by the committee this session.

The provisions of LB450, sponsored by Sen. John Fredrickson of Omaha, update the Property Assessed Clean Energy Act, under which municipalities may agree to provide financing for the installation of certain energy efficiency improvements in exchange for a property owner’s agreement to pay an annual assessment.

Under the measure, grid resiliency improvements — including backup power generators, solar panels with battery storage and smart grid technology — also will qualify for the agreements.

The amended provisions of LB626, introduced by Norfolk Sen. Robert Dover, update the Community Development Law.

The provisions allow a municipality to approve redevelopment projects that use tax-increment financing in areas where less than 20% of the housing is affordable housing — which the bill defines as workforce housing, low-income housing or housing intended for households earning less than 150% of the applicable county’s median income.

The provisions of LB622, also introduced by Dover, change how the state Department of Economic Development disburses grants under the Nebraska Affordable Housing Act.

Beginning July 1, 2026, the department will disburse grant funds equal to 80% of housing development costs to the grant recipient upon approval and 20% upon the project’s completion.

The amended provisions of LB531, sponsored by Sen. Kathleen Kauth of Omaha, prohibit the state Department of Economic Development from requiring any new construction project or rental conversion project that receives funding from the Affordable Housing Trust Fund to comply with the 2018 International Energy Conservation Code.

Under Kauth’s measure, the department is not required to review building plans and specifications for compliance with the code if they already have been reviewed by a county, city or village enforcing a local building code that includes the international code’s requirements.

The governor vetoed a bill requiring the Omaha Housing Authority to address bed bug infestations.

LB287, introduced by the committee, would require a housing agency in a metropolitan class city to address beg bug infestations within a certain time frame, among other requirements. Omaha is the state’s only metropolitan class city.

Included in the bill are the amended provisions of LB514, also sponsored by the committee. They would allow a metropolitan class city to require a housing authority to comply with any city rental inspection and registration ordinance, code enforcement and inspection of residential rental properties.

Also included are the amended provisions of LB321, introduced by Sen. Rita Sanders of Bellevue. They would allow sanitary and improvement districts to pay for improvements by collecting special assessments on property located outside the boundaries of the district to the extent the improvements benefit that property.

LB287 passed on a 34-15 vote.

In his veto letter, Gov. Jim Pillen said local governments already have the authority to enforce “basic sanitation and anti-infestation standards” within their communities and that OHA is subject to “rigorous” federal oversight.

Allowing an SID to impose taxes on property owners outside its jurisdiction would constitute taxation without representation, he added.

An attempt to override the veto failed on a vote of 24-24. Thirty votes were needed.

Other measures

Another bill advanced by the committee allows first class cities to use general funds to pay for street improvements rather than levy a special assessment on adjacent properties.

First class cities, which have a population of 5,001 to 100,000, may create improvement districts for the purpose of paving, repaving or making certain other improvements to streets and alleys. Qualified cities had been required to levy a special assessment on adjacent properties to fund improvements in the district.

Under LB90, sponsored by Kearney Sen. Stan Clouse and passed 48-0, a city may levy a special assessment or fund the improvements at public cost.

The measure requires the mayor and city council to create an improvement district by ordinance. Additionally, it expands the law to allow first class cities to construct sidewalks, public ways and other public spaces — in addition to streets and alleys — in the districts.

A bill intended to provide greater flexibility in the siting of a proposed North Omaha business park passed on a vote of 31-18.

The Economic Recovery Act, passed by the Legislature in 2022 and updated in 2023, provided funding for pandemic recovery projects in North and South Omaha and other communities that were disproportionately impacted by the COVID-19 pandemic.

Under the act, the state Department of Economic Development has granted $90 million to a nonprofit economic development organization for the development of a business park located within the boundaries of a metropolitan class city and within two miles of a major airport.

LB290, introduced by the committee, instead requires the project to be located within the boundaries of an inland port district in Omaha. Grant funds may not be used in the downtown or northern downtown areas of Omaha.

A bill intended to increase the number of skilled tradespeople in Nebraska did not advance from committee.

LB447, introduced by Sen. John Cavanaugh of Omaha, would add contract requirements for redevelopment plans or projects that use tax-increment financing in counties with a population of 60,000 or more.