Extending the tax-increment financing repayment period from 15 to 20 years for areas designated as extremely blighted would draw more development into needed areas, Omaha Sen. Justin Wayne said Monday.
Wayne's proposed constitutional amendment (LR14CA) would allow state lawmakers to extend TIF projects in census tracts where unemployment is twice the state average and 20 percent of residents are living in poverty.
"If we add an extra five years, it makes the financing easier for a developer when he or she is weighing their risk," Wayne said of the proposal, which was narrowly tailored to "areas that would not otherwise be developed."
Nebraska voters would be asked to amend the program in November 2020 if LR14CA passes in the Legislature.
To encourage redevelopment of "substandard and blighted" areas, cities can divert property taxes assessed to TIF projects into infrastructure improvements such as streets, water and sewer lines for up to 15 years.
At the end of that period — most TIF projects end in 12 years, senators said during debate Monday — those properties return to the tax rolls at their new valuation.
Rural senators said the proposed amendment was too broad and afforded too much latitude to city councils to determine what properties met the "extremely blighted" designation.
Sen. Tom Briese of Albion said he was supportive of Wayne's proposal, but suggested amending it to include the definition of extremely blighted in an effort to establish more parameters for local governments.
"I see nothing that prevents future legislative bodies from expanding that definition or watering it down to essentially allow a 20-year payback on most any TIF project," he said.
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The taxpayers "win" more often on a 20-year project than on typical projects, Briese said, but only if lawmakers can prevent "slippage" on the definition of extremely blighted.
Sen. Curt Friesen of Henderson said without more controls, municipalities will broaden the definition on their own, diverting property taxes from schools and other governments and putting further strain on farmers.
"I think it needs to be very well defined so that it cannot exceed what we intend here today," he said. "Without those controls in place and a good definition in place of what that is, I cannot support this."
TIF projects are not all negative, Sen. Mark Kolterman said, as the infrastructure projects can often lead to new businesses and good-paying jobs in places where they weren't before.
Kolterman, of Seward, said the benefits of TIF projects boil down to six words: "Growth, growth, growth, jobs, jobs, jobs."
But Sen. Mike Groene of North Platte, who led opposition to Wayne's proposal Monday, said TIF worked well after Nebraska voters approved it in 1978, but it has become an incentive to lure developers for new projects rather than improve run-down areas.
Just before debate ended Monday, he introduced an amendment that would require 100 percent of the properties of an area to be designated as extremely blighted in order to qualify for the extended TIF guidelines.
Debate will resume Tuesday.