Omaha officials last year gave green light to 23 projects that represent $129M in TIF loans

The Crossroads shopping center's familiar sign shown here at the corner of 72nd and Dodge Streets, a high-profile intersection in Omaha that is undergoing huge changes. This view is looking south, toward the central library facility under construction. The Crossroads redevelopment team is requesting revisions that include an increase in the public tax incentive called tax-increment financing. (Cindy Gonzalez/Nebraska Examiner)

OMAHA — Twenty-three Omaha redevelopment projects boosted by $129 million in tax-increment financing were approved last year by the governing body of Nebraska’s largest city.

It wasn’t a record year for the often controversial economic revival tool, known as TIF. In the previous year, the City Council approved about $160 million in tax-increment financing for the same number of projects.

The proposed Nook housing development on the former Grace University campus south of downtown Omaha is assisted by TIF. (Courtesy of Bluestone Development)

For the five years before that, 2017-2021, the average annual tally of Omaha TIF loan approvals was about $36 million.

On Tuesday, the City Council heard highlights of Omaha’s latest TIF report, which covers 2023. Each request to use the financing mechanism goes through an evaluation by a committee and public hearings before both the Planning Board and the City Council.

TIF critics

Authorized decades ago by the Nebraska Legislature, TIF was designed to spur economic development and jobs in blighted areas. In essence, city approval allows increased property tax generated by improvements to help pay down a developer’s qualified expenses on a project for up to 20 years, instead of going to traditional recipients such as school districts.

The incentive has faced criticism, including by some state lawmakers who questioned whether Omaha uses the tool too generously. Debate was stoked as Omaha’s mayor and city officials pushed tax-increment financing as a way to cover the $300 million-plus construction of the streetcar system planned to run from downtown Omaha to midtown.

In presenting the report, Omaha economic development manager Bridget Hadley noted community benefits such as an overall $1 billion in planned total investment associated with the 23 projects approved for $129 million in tax-increment financing.

This is the latest rendering of the Crossroads redevelopment site, which is assisted by TIF. (Courtesy of Woodbury Corp. and HBA)

She also reported that 16 TIF loans were paid off last year and that the combined assessed property value of those sites increased over the past 15 years by more than 1,057%.

If not for the incentive, Hadley said, that leap would not have occurred, or it would have been a much smaller hop.

According to the report: “The approval of TIF projects presents a tradeoff between ‘settling’ for minimal increases in the property tax revenue stream and between partnering on redevelopment projects that offer much larger returns in the future.” 

Highlights of 2023

Of the 23 projects approved in 2023 for a TIF boost: 

• The largest TIF loan approval was nearly $80 million, aimed at helping to transform the dying Crossroads mall into a mixed-use campus of retail, housing and entertainment. (Developers have since upped the TIF request for that project another $25 million, but the higher amount was not reflected in 2023 data. The Crossroads makeover also has been updated and is now estimated to cost $861 million.)

• The second largest TIF loan approval was $8.5 million for the Forever North mixed-use development in North Omaha (a $72 million project overall). That was followed by $7 million in TIF for the Bluestem Prairie housing project in northwest Omaha (estimated total cost, $49 million); $6.24 million for an Aksarben area housing project (estimated total cost nearly $50 million); and $6.1 for the Nook market-rate housing development south of downtown (total cost about $45 million).

• Thirteen represented housing projects; five were mixed-use ventures; four were commercial structures; and one was industrial in nature.

City Council members did not delve much into public discussion about the report during Tuesday’s meeting. 

President Pete Festersen did point out that of the 2,642 residences to be created with the help of the TIF public incentive, only 413 were considered “affordable housing.”

Bluestem Prairie neighborhood near 52nd Street and Sorensen Parkway is assisted by TIF. (Courtesy of Straightline Design)

“We have a lot of work to do,” he said, noting the push in the city and state for housing that is accessible to workers earning low to moderate incomes.

22%of city ‘blighted’

The 18-page report completed this month offered a bit of history on the program, including that since formal record-keeping  began in 2015, 232 Omaha TIF applications were received and 196 were approved.

Those approved amounted to about $584 million in TIF loans.

The Nebraska Legislature requires cities including Omaha to provide an annual report on TIF activities. Among other highlights of the report:

• Nearly 22% of Omaha has been designated as blighted — a designation needed to tap the TIF incentive. 

• Omaha has 261 active redevelopment projects at least partially financed by tax-increment financing. Those ventures represent an estimated total of $3.7 billion in investment.

• Another 213 TIF loans have been paid off or have matured since 1987.

TIF process

A typical Omaha project approved for tax-increment financing is first approved by a city committee, the Omaha Planning Board and Omaha City Council. It must be in a designated blighted area.

The developer or property owner generally obtains a loan from a financial lender that helps cover eligible redevelopment expenses. TIF becomes a way that allows developers to borrow against the future property value of a project to offset some of the project costs.

The loan is paid back, generally over a 15 or 20 year period, with increased property tax generated by the improvements.

Property tax on the original site, prior to improvements, is still paid by the owner but is frozen at that amount. Those payments continue to go to the usual destination: schools and local governments.

When the TIF loan is paid off, the entire property tax generated at the site is to flow to the usual taxing jurisdictions.

Critics object in part because local taxing jurisdictions forgo that increased property tax while the developer’s loan is being paid off. Some question whether the City Council is too lenient with the blighted designation and whether the project would have been done without the TIF incentive.

Proponents say the increased value would not exist but for the tax incentive. 

TIF was shaped and approved by the Nebraska Legislature in the 1980s to spur private development and jobs in blighted areas. Omaha officials point to the Midtown Crossing area, Blackstone District and Little Italy as examples where TIF-involved projects have resulted in spin-off development of homes and businesses.

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