The Urban Affairs Committee heard testimony Jan. 30 on a bill that would update the state\u2019s tax-increment financing rules.<\/p>\n
Introduced by the Urban Affairs Committee, LB874 is the result of an interim study to answer questions about the use of TIF that were raised in a 2016 report by the state auditor of public accounts.<\/p>\n
Under a segment of the state\u2019s community development law, Nebraska municipalities are able to designate areas as substandard and blighted, allowing them to be redeveloped. When a redevelopment plan is approved, TIF bonds may be issued for the acquisition and improvement of the property. The increased property taxes generated by the improvements are used to pay for the financing of TIF projects.<\/p>\n
Among other provisions, LB874 would authorize the state auditor to audit a community redevelopment authority whenever the auditor believes it necessary, or when requested to do so by the governing body.<\/p>\n
The bill also would:
\n\u2022 require a planning commission hearing on a redevelopment plan;
\n\u2022 require that an annual TIF report on projects be provided to a municipality\u2019s governing body;
\n\u2022 require that cost-benefit analyses on TIF projects be made available to the public;
\n\u2022 clarify that the annual report on TIF projects provided by municipalities to the state Department of Revenue is required;
\n\u2022 limit reimbursement of costs incurred prior to the approval of a redevelopment project;
\n\u2022 require that a cost-benefit analysis consider the impact of a TIF project on school districts;
\n\u2022 require that if a redevelopment project divides the tax on only a portion of the real property included in the project, the property must be clearly related to the redevelopment project;
\n\u2022 require that each municipality that utilizes TIF retain copies of all redevelopment plans, substandard and blighted studies and analyses, cost-benefit analyses and supporting documents associated with the redevelopment plan or any related substandard and blighted declaration;
\n\u2022 require that TIF redevelopment contracts include a provision requiring developers to retain copies of all supporting documents associated with the project and provide them to the municipality;
\n\u2022 redefine the term redevelopment project to include enhancements to structures in the redevelopment project area that exceed minimum building and design standards in the community and prevent recurrence of substandard and blighted conditions;
\n\u2022 require that municipalities conduct a substandard and blighted analysis on whether a redevelopment project meets the requirements and include that analysis in the public hearing notice;
\n\u2022 allow redevelopment projects to include a provision that requires all property taxes levied on a redevelopment project to be paid before such taxes become delinquent to be eligible to receive TIF funds;
\n\u2022 require that municipalities give counties or school districts the opportunity to appoint a nonvoting member to a community redevelopment authority; and
\n\u2022 require that proceeds from the repayment of loans made for TIF projects be deposited in the municipality\u2019s general fund and prohibit those proceeds from being used to establish a revolving loan fund.<\/p>\n
Russ Karpisek, legislative liaison for the state auditor of public accounts, testified in support of the bill. The auditor\u2019s office report did not necessarily find violations of state law in examining the implementation of TIF, he said, but rather a great deal of \u201cgray area\u201d in regard to legislative intent.<\/p>\n
Larger cities like Lincoln and Omaha have experts on staff and keep good records regarding TIF projects, he said, but many smaller communities are unsure of the law\u2019s specifications and the consequential lack of recordkeeping makes it difficult to evaluate those projects.<\/p>\n
\u201cAlmost everything that the auditor\u2019s office does is we look at statute and make sure that it\u2019s being followed,\u201d Karpisek said. \u201cWe just want to make sure that the Legislature knows how [TIF] works, that the people who are doing it understand how it works and that the people who are helping people do it understand how it works.\u201d<\/p>\n
Dave Landis, director of urban development for the city of Lincoln, testified in opposition to the bill, though he acknowledged that it had the potential to be a \u201cpeace treaty\u201d on TIF. Not all cities should be required to add a nonvoting member of a county board or commission and school board member to a redevelopment authority, he said.<\/p>\n
For example, he said, it\u2019s not uncommon for Lincoln to meet with developers on an hour\u2019s notice and it would be difficult to integrate someone into that process who doesn\u2019t work at city hall.<\/p>\n
Landis also raised concerns regarding the apparent prohibition in the bill on using TIF money as a revolving fund for smaller-scale development projects. Lincoln created such a fund for small projects\u2014for which the issuance of formal bonds wouldn\u2019t be feasible\u2014and when those loans are repaid, he said, that money returns to the fund for additional loans.<\/p>\n
\u201cWe can\u2019t tell whether that\u2019s a revolving fund outlawed by this statute or not,\u201d Landis said. \u201cBut if it is, it does kill our chance to help small businesses\u2014many of whom are first-generation immigrants\u2014in doing small business projects that we\u2019d like to see.\u201d<\/p>\n
Jamie Berglund, executive director of Omaha by Design, also opposed the bill. TIF creates redevelopment in urban areas that revitalizes communities in ways that would not happen otherwise, she said, in part because of significant challenges such as aging infrastructure. Having a streamlined and predictable process for TIF projects would avoid creation of additional hurdles, she said.<\/p>\n
\u201cComplicated and burdensome processes are surefire ways to ensure that projects don\u2019t move forward,\u201d Berglund said.<\/p>\n
The committee took no immediate action on LB874.<\/p>\n","protected":false},"excerpt":{"rendered":"
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