Omaha streetcar plan in jeopardy under proposed legislation, Omaha mayoral aide says

A tax-increment financing bill spurs lively discussion

By: - February 1, 2023 5:45 am
Nebraska State Capitol Building

The Nebraska State Capitol Building in Lincoln. (Rebecca S. Gratz for Nebraska Examiner)

LINCOLN — A bill before the Nebraska Legislature could kill Omaha’s modern-day streetcar, as it would curb future tax-increment financing revenue that city leaders are counting on to pay off the project.

That’s according to Steve Jensen, a City of Omaha economic development aide, who spoke Tuesday at a legislative committee hearing on the TIF-related bill introduced by State Sen. Lou Ann Linehan of Elkhorn.

‘Red flag’

While Legislative Bill 389 does not specifically mention the planned $300 million-plus streetcar system, Linehan had it in mind when crafting the language. The bill would prohibit TIF from being used on a parcel twice within a 50-year period.

Lou Ann Linehan
State Sen. Lou Ann Linehan of Elkhorn (Courtesy of the Unicameral Information Office)

Linehan told the Legislature’s Urban Affairs Committee that she isn’t necessarily opposed to the streetcar — she said she loves Omaha’s urban core — but believes TIF has become overused and helps finance some development ventures that would have happened even without the public subsidy.

“I want to wave a red flag and ask some questions,” said the senator, who chairs the Legislature’s Revenue Committee.

Though TIF is used statewide, Tuesday’s public hearing was dominated by testimony and concerns about Omaha.

Generally with TIF projects, which require city approval, property tax revenue generated on new development is used for up to 20 years to cover eligible redevelopment costs instead of going to traditional recipients such as school districts.

After the TIF loan schedule, the tax revenues on that more valuable property start flowing to the traditional recipients. 

Bill conflicts with city, chamber vision

Jensen, who was among a few who spoke in opposition to LB 389, told lawmakers that he believed Omaha officials have used TIF as the economic development tool that state statute intended it to be.

You’re prioritizing big development and corporations over common people in the city.

– State Sen. Terrell McKinney, chairman, Urban Affairs Committee

At stake if LB 389 were to pass, he said, is a projected $5 billion of new development that Omaha leadership and market studies anticipate in the next few decades in an area along and near the streetcar route.

In an interview, he explained it this way: 

The streetcar project anticipates a few different streams of TIF revenue to pay off bonds to be used to finance the system. One called for creation of a special TIF district that extends three blocks on either side of the corridor, which runs from downtown to midtown.

Businesses within that district should see a bump in the value of their property because of the streetcar. That increased property tax revenue is to go toward paying down the bond debt.

Another TIF stream anticipates billions of dollars in brand-new development to sprout within that TIF district. But Jensen said the proposed 50-year restriction in the bill effectively would not allow TIF to help spur those projects.

“It would stop the implementation of the City and Chamber of Commerce’s plans for the revitalization of Omaha’s urban core,” he said of LB 389.

Challenged

Jensen, an aide to Omaha Mayor Jean Stothert, went on to say that the TIF-supported streetcar project will promote more affordable housing and save individual Omahans in transportation expenses. Those comments, however, set off a string of challenges by a few members of the Urban Affairs Committee.

State Sen. Terrell McKinney of North Omaha ran through statistics that showed a low ratio of affordable dwellings built during recent years in Omaha.

“My concern is that we’re decreasing affordable housing in the illusion that we’re increasing affordable housing,” he said.

State Sen. Megan Hunt of Omaha said condos and many housing developments that were approved for a TIF subsidy are out of the reach of wage-earners such as herself.

Jensen said the streetcar is expected to boost the number of jobs in the urban core.

To that, Hunt asked, “Jobs for who?”

She continued: “If we get the streetcar, it’s going to look so pretty. It’ll be nice for the workers at Mutual of Omaha to go get their salad or something, but the idea that this is going to lift up low-wage workers, that’s it’s going to provide affordable housing, is probably not realistic, and I think we should probably just not say that.”

‘Prioritizing big development’

McKinney followed up Jensen’s remark about streetcar use being expected to reduce the need and expense of a car. “Why don’t we send the streetcar through the poorest areas of Omaha, if that’s the mission?”

“Certainly that is the future,” said Jensen. He said once the “core system” is in place, the city would be in a better position to match federal funds to extend the streetcar route into North and South Omaha. 

Said McKinney: “The reality is you’re prioritizing big development and corporations over common people in the city.”

State Sen. Carol Blood of Bellevue said that she, having served previously on a city council, probably has a more positive view of TIF than others on the committee.

“I’m kind of on the fence on this particular bill,” she said.

Also testifying in opposition was Scott Dobbe of Omaha By Design, who said the bill would create “unnecessary roadblocks” to development.

Christy Abraham of the League of Nebraska Municipalities supported local control to individual cities over how to use TIF as a tool to spur development.

The Urban Affairs Committee took no action Tuesday on LB 389.

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Cindy Gonzalez
Cindy Gonzalez

Senior Reporter Cindy Gonzalez, an Omaha native, has more than 35 years of experience, largely at the Omaha World-Herald. Her coverage areas have included business and real estate development; regional reporting; immigration, demographics and diverse communities; and City Hall and local politics.

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