Expanding TIF Property Tax Breaks Debated
By Fred Knapp , Reporter/Producer Nebraska Public Media
March 25, 2019, 3:52 p.m. ·
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An attempt to expand a property tax break to focus on extremely blighted areas ran into opponents who claimed the tax breaks are being abused. And a state senator went to Washington, DC to try and head off final approval of a controversial transmission line through the Sandhills.
The property tax break in question is called tax increment financing, or TIF. If property is improved under TIF, the increase in property taxes the owner would have paid to local governments can instead be used to pay back the costs of the project, for up to 15 years.
Senator Justin Wayne of Omaha wants to expand that for up to 20 years, but only in areas deemed “extremely blighted,” with unemployment at least twice the state average, and more than 20 percent of residents having incomes below the federal poverty line.
Wayne, whose district includes some impoverished neighborhoods in North Omaha, said he’s trying to create a greater incentive for development in poorer neighborhoods. “Right now in Omaha we treat Crossroads, which is TIF, on 72nd and Dodge, the exact same as you would treat my community. So from a developer’s standpoint, the risk obviously is higher in my community for multiple reasons, so they decide not to develop but will develop in 72nd and Dodge,” Wayne said.
The proposal was opposed by Sen. Steve Erdman of Bayard, who said TIF is not being used for its originally intended purpose. “TIF is used quite often for economic development. It was never intended to be economic development. It was redevelopment. It was for that blighted area in your city or your community that had buildings that were bad and that needed to be tore down and rebuilt. That’s not what we use it for. We use TIF for everything you can think of,” Erdman said.
Sen. Mike Groene of North Platte also opposed the proposal, saying cities are using TIF for new development instead of improving existing neighborhoods. “It’s being abused – a good program that Sen. Wayne and I agree on. It’s an insult to his area. There is an extremely blighted area in his district and TIF has been around since 1978. Why? That’s what it was supposed to fix,” Groene said.
Wayne insisted that restricting the extended TIF program to areas of high unemployment and poverty would prevent abuse. “So there’s no way that a municipality could quote unquote ‘abuse’ this scenario as they currently do,” he said.
Sen. Tom Briese acknowledge those requirements for extremely blighted areas are in existing law. However, he added “I see nothing that really prevents future legislative bodies from expanding that definition, or watering it down, to essentially allow a 20 year payback on most any TIF project.”
Briese said Wayne’s proposal, which itself would go into the state’s constitution, might need to be amended so those definitions could not be changed by a future legislature. Wayne said he was willing to consider that.
Senators adjourned for the day without reaching a first-round vote, with debate expected to resume Tuesday.
And Sen. Tom Brewer of Gordon was in Washington, DC Monday, trying to get the Interior Department to hold off on approving the controversial R-Project transmission line through the Sandhills.
Supporters say the Nebraska Public Power District project is needed to increase reliability and help with possible future alternative energy projects, like wind and solar projects. Opponents say it threatens to destroy scenic vistas and tear up the fragile soil.
Brewer said he argued the Fish and Wildlife Service, part of the Interior Department, should write a supplemental environmental impact statement, using new data to study the R-project’s effect on whooping cranes. Supporters say those effects have already been studied, and show there’s no need to get a permit for possible whooping crane deaths.
Brewer disagreed. “How fair is it to have NPPD say ‘Well, Fish and Wildlife didn’t say we had to do it. And Fish and Wildlife says ‘Well, NPPD didn’t say they needed to do it.’ So no one does it,” he said.
Rep. Adrian Smith, who also attended the meeting, later issued a statement saying “It is in everyone’s best interests to ensure the potential impact of this project is reviewed thoroughly before any decision is made.” Smith added that “The U.S. Fish and Wildlife Service is tasked with balancing environmental protection with the needs of Nebraskans, and I hope that will continue in an equitable fashion.”
Brewer said officials gave no timeline for their decision about whether to require further environmental studies.
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