On April 18, the Nebraska State Senate approved a constitutional amendment to increase the repayment period for tax-increment financing (TIF) from 15 years to 20 years for areas where more than one-half of properties are designed as extremely blighted. The vote in the Senate was 43-2. Voters will decide whether to adopt or reject the amendment at the general election in 2020.
TIF is designed to finance economic development in an area. In Nebraska, cities and villages have the power to declare an area as substandard, blighted, and in need of redevelopment and to create a TIF district. The local government can then issue bonds to finance improvements associated with a redevelopment project. The local government can use increased tax revenue, resulting from increased property values due to development, to pay off the bonds over a 15-year period.
The ballot measure would increase the period to pay off the bonds and indebtedness from 15 years to 20 years for TIF districts designed as extremely blighted. In Nebraska, an extremely blighted area is defined as a census tract with an average unemployment rate that is 200 percent or more of the average state unemployment rate and the poverty rate is more than 20 percent.
Sen. Justin T. Wayne (D-13) was the lead sponsor of the constitutional amendment in the state Senate. Sen. Wayne said, “If we add an extra five years, it makes the financing easier for a developer when he or she is weighing their risk.” He also said the amendment was written for “areas that would not otherwise be developed.” Sen. Mike Groene (R-42) was one of two Republicans to vote against the amendment. He referred to the law defining extremely blighted, saying, “This hasn’t even been enacted more than 6 months. We’re going from enacting a law that hasn’t happened, where any city has even defined a highly-blighted area, to putting it in the constitution! Government shouldn’t work that fast. It needs to slow down a little bit. Let’s see if it actually is used.”
The constitutional amendment is the second referred to the ballot in Nebraska for 2020. The other amendment would remove language from the Nebraska Constitution that allows the use of slavery and involuntary servitude as criminal punishments.