Proposal would change redevelopment program terms

The Urban Affairs Committee heard testimony Feb. 12 on a measure intended to facilitate the use of tax increment financing (TIF) in Nebraska cities and villages.

LR29CA, introduced by York Sen. Greg Adams, would place a proposed constitutional amendment on the November 2014 general election ballot. If approved by voters, the amendment would make two changes to how cities and villages are able to use TIF to rehabilitate substandard properties.

The amendment would replace a current requirement that property be designated “substandard and blighted” with a requirement that it be “in need of rehabilitation and redevelopment.” It also would extend from 15 to 20 years the maximum length of time to repay a TIF bond.

Adams said TIF projects sometimes are hindered when owners of neighboring properties balk at the designation of the property to be redeveloped as substandard and blighted. Often they believe that the designation will reflect poorly on their own property, Adams said, adding that replacing the language may help.

“It’s just a label,” he said. “I think that if we remove that label, we remove some of the mystery and the angst that goes along with TIF.”

Lynn Rex of the League of Nebraska Municipalities testified in favor of the proposal, saying most states already authorize longer bond terms than are allowed under Nebraska’s current TIF program.

“Only three states still have 15 years as a payback period,” she said.

Omaha planning director Ricky Cunningham also supported the measure, saying the city has “run into the buzz saw of community outcry” when attempting to designate areas as substandard and blighted in order to qualify for TIF.

Owners of neighboring property often falsely believe that the designation will negatively impact their own property values, Cunningham said.

Coby Mach of the Lincoln Independent Business Association testified in opposition. TIF is an effective redevelopment tool, he said, but lawmakers should keep in mind that funds are diverted from schools during the time it takes to pay back a bond.

“TIF also requires a balance,” he said, “a balance between development and the needs of the entire community.”

The committee took no immediate action on the measure.