Design concept of the new downtown tower planned by Mutual of Omaha. (Courtesy of Pickard Chilton)
Editor’s note: This story has been updated.
OMAHA — A long-discussed streetcar, free to ride and running three miles from 10th Street to midtown, was the key to Mutual of Omaha’s decision to build a skyscraper on the property that houses the city’s main library.
The Nebraska Examiner broke the news of both new projects Tuesday night. At Mayor Jean Stothert’s press conference on Wednesday, she and Mutual CEO James Blackledge fleshed out the details. Mutual’s plan will change the city’s skyline with a glass high-rise that could rival the tallest in Nebraska, the 45-story First National Tower (including its mechanical floors).
“It is very clear to all of us, and every developer, that parking has choked development downtown,” the mayor said. “This (the streetcar) is the solution.”
The city and developers expect the streetcar to reduce traffic along the route. The city plans to raise $306 million for the project. The streetcar is projected to cost $225 million, with another $81 million to be raised for a federally required contingency fund.
“It is very clear to all of us, and every developer, that parking has choked development downtown. This (the streetcar) is the solution.”
– Mayor Jean Stothert
Blackledge said Stothert’s willingness to invest in a streetcar that runs through midtown — where Mutual has had its headquarters since 1939 — drove Mutual’s decision to leave for the downtown library site. Mutual has developed a $365 million Midtown Crossing residential and retail campus near its current headquarters. It also has been acquiring more property to the east.
The streetcar would ensure that midtown continues to grow and be redeveloped, Blackledge said, even after Mutual moves downtown with its 4,000 local employees. Mutual already has sold some of its Midtown Crossing properties, including a hotel and some apartments, and he expects to start selling other pieces soon.
The Mutual headquarters deal calls for the city to swap its library property at 14th and Farnam Streets with Lanoha Development for the land Lanoha owns northwest of 14th and Dodge Streets. That’s the former headquarters site of Union Pacific. Each property covers a full city block.
Mutual had considered the Lanoha land before turning to the library property. City officials said extending the streetcar line to the Lanoha property would have added too much cost. Lanoha Development will be the redeveloper of the Mutual headquarters project. Mutual said it will own, not lease, its new headquarters.
Stothert and other city officials declined to discuss any future plans for the Lanoha property. Assuming the City Council approves the plan to move the library, the current library building would be demolished this year. The city expects to relocate the library to 1401 Jones St.
2,000 parking stalls
Mutual’s CEO said he hopes to start construction in 2023 and open the new headquarters in 2026. He said its design and cost are still being hammered out. The structure will hold more than 2,000 parking stalls on its lower floors. Stothert said the city will pay for the parking levels.
Stothert said the streetcar would cost $6.4 million annually to operate, funded by the city’s parking garages and parking meters.
The initial route would stretch from 10th to 42nd Streets along Farnam Street, and from 10th to 31st Streets along Harney Street. There will also be a stop at CHI Health Center Omaha.
Once the route is complete, the city would “look at plans immediately to expand it north and south,” she said.
Stothert said the city sales tax rate and the residential property rate would not increase as a result of the project.
Creation of new TIF district
The city would cover the upfront costs for streetcar construction with development bonds and private funds. It would use tax-increment financing, or TIF, to pay off the bonds.
Under TIF, the property tax revenue generated by new development goes to pay off eligible development costs, rather than being distributed among public taxing entities, such as local governments and school districts. TIF can be used for up to 20 years.
The city expects to generate $354 million in TIF funding for the streetcar project. City officials said TIF revenue for this project would be generated in three different ways:
Existing TIF-approved projects within three blocks of either side of the streetcar line would see their loan payoff timetable stretched from 15 years to 20 years. That extra time would generate about $50 million.
Future TIF-approved projects in that area would see 25% of the TIF revenue directed to the streetcar project, generating about $218 million.
For the first time in Omaha, a special TIF district would be established for the project area. Increased property valuations of commercial structures in the zone would generate an anticipated $86 million.
Any TIF funds generated beyond the project costs would be directed to projects that could include affordable housing and street conversions that would help develop nearby properties. It also might help fund additional connections for the streetcar.
The TIF funding proposals would require City Council approval.
Stothert said city and business leaders have been discussing a streetcar since at least 2009.
“Why now?” she asked. She cited bookend development projects: the $400 million tri-park and science museum development near the Missouri riverfront, and midtown Omaha development anchored by the University of Nebraska Medical Center and Midtown Crossing campuses.
“You can see how the streetcar is going to connect everything together.”
SUPPORT NEWS YOU TRUST.
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site.