The Omaha City Council on Tuesday signed off on more than $14 million in property tax incentives for six projects, including those to restore condos near M’s Pub and to bring the Blackstone Hotel to new life.
Supporters said tax-increment financing, or TIF, is needed to bring the projects, all in eastern Omaha, to fruition.
Detractors say TIF takes money away from the city, county, schools and other recipients of property tax revenue for a period of time.
When a property is developed, its value increases, leading to increased property taxes. TIF allows a property owner to take the difference in taxes from the pre-developed and post-developed property and put that money toward paying down debt incurred for certain things, like getting the site ready for construction or buying the site.
Eventually, the owner pays the full amount of property taxes on the newly assessed value, but not for as long as 15 years.
Without it, supporters of TIF said Tuesday, lots of properties wouldn’t get redeveloped.
“People still think that we’re taking money out of our general fund to pay for these projects” but that’s not so, City Councilwoman Aimee Melton said. “There would never be an increase in property value, I think, unless you got some assistance.”
TIF is the city’s primary incentive for urban redevelopment. But it’s been scrutinized by some state lawmakers in Lincoln. A 2016 state audit said tax-increment financing lacked oversight.
Among the projects approved Tuesday:
- $7.8 million in TIF to restore the Blackstone Hotel into a 204-room upscale boutique hotel. The project includes an addition with a swimming pool and fitness club. The building was vacated by Kiewit last year after a water main break.
- $2.79 million for a project that will convert a former Grace University building into 167 one-bedroom and studio market-rate apartments. Grace put the building up for sale after announcing its plans to leave the campus.
- $1.8 million for the Dahlman Row Houses, a project to build 36 market-rate row house units. (Sixteen will be two-bedroom units, while 20 will be three-bedroom units.)
- $1.08 million to a project at the Drummond Motor Co. and Firestone Tire Buildings in midtown. The Drummond will be converted into 20 market-rate apartments, plus ground floor and basement commercial space. The Firestone Tire Building will be converted into a commercial retail and office space.
- $685,682 to help reconstruct 12 condos damaged in the M’s Pub fire. An attorney for the condo owners said insurance money didn’t cover the cost of rehabilitation, though the owners “weren’t underinsured.”
- $133,554 to Cuming Plaza, a project in midtown across from the OPS Teacher Administrative Center, to rehabilitate an unused warehouse building into a three-bay retail center.
The six projects are altogether expected to cost well over $100 million, an investment that supporters commended. In two cases, the Blackstone and Drummond/Firestone projects, some of the TIF money has to go toward future public infrastructure improvements along Farnam Street.
In other business:
- The city’s property tax rate of 47.922 cents per $100 of valuation is staying the same. But the council agreed to shift how money is distributed.
Currently, 26.557 cents go to the general fund for city operations, with 19.421 cents to debt service, 0.6 cents to the judgment fund and 1.344 cents to the redevelopment fund.
The adopted change means that 25.979 cents will go to the general fund, with 18.743 cents to debt service, 0.6 cents to the judgment fund and 2.6 cents to the redevelopment fund.
Finance Director Steve Curtiss said the decrease to debt service is due to annexation. He noted that the 2.6 cents to the redevelopment fund is the most allowed. The redevelopment fund is used to help the city pay off redevelopment bonds, for work such as the demolition of the Civic Auditorium. The increase in that fund is needed for payments coming up in the next year or so, Curtiss said.
Councilman Pete Festersen said that shifting from the general fund to the redevelopment fund could mean fewer dollars for city operations in the future. But Curtiss said the distribution of funds could be revisited and readjusted.
- The council agreed to a $2.5 million settlement with a company that leases city land near the Missouri River.
USS Hazard Inc., which leased the property that included the now-shuttered Anchor Inn, had wanted $64 million from the city for not allowing the company to rebuild and reopen following the historic 2011 flood. The settlement ends a lawsuit the company filed against the city. Under the agreement, the company can still lease the land.
- The council voted to allow the Fire Department to charge nursing homes and assisted living facilities $400 to lift people who’ve fallen in non-emergency situations. The fee wouldn’t apply to people who fall at home or in an independent living facility. It also wouldn’t apply if medical problems are involved.