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Tax Increment Financing : The extortion stone around our necks

2 weeks ago

586 words

Lincoln is growing, and Lincoln is facing an increasingly dire housing affordability crisis. According to the Feds, Lincoln needs an additional 5,000 affordable rental units. So when you see new housing proposals in the center of town, the initial feeling might be elation. Unfortunately, the apartment complex proposed at Cotner and P will not only do nothing to solve the city’s housing affordability crisis, it will actually likely make it worse. I don’t have figures, but with a sky lounge and a in-house yoga studio, we can go ahead and assume the units will be well above, not below, market rate.

To make matters worse, the developers of this luxury building are seeking Tax Increment Funding, known as TIF. TIF is a government program that incentivizes improvements to” blighted” parts of the city to benefit everyone. TIF funding can be used when a certain area of town is declared “blighted,” the definition of which has become increasingly broad. The city government can then authorize TIF funds, by committing all normal yearly future real estate tax increases from every parcel in the TIF district (for 20–25 years, or more), along with the anticipated new tax revenue eventually coming from the project. That means your tax dollars are being used to subsidize new developments.

In Lincoln, this feel good program has been subverted. The proposed luxury apartment complex at Cotner and P provides an example of how the richest and most connected people in Lincoln use TIF as economic extortion.

For the Cotner and P project, the developers, Commercial Investment Properties (CIP), are demanding over $3.9 million in TIF funds for a new apartment building in a “blighted” neighborhood. Brent West testified on behalf of CIP, that the building will have a private outdoor pool, a yoga room, a clubhouse, a sky lounge for residents, and a stone facade. The stone facade will cost tax payers $2.3 million dollars. I mean, I guess at least the public can look at it. Jokes aside, that is $2.3 million dollars on property tax income that will never be available to schools or any other public services.

Since I have faith that schools will continue to be funded despite this shortfall, this massive tax break to one largest and richest stakeholders in the city will also be factor in why citywide tax relief cannot be achieved. I testified before council raising these concerns.

During rebuttal, the developer did not deny the assertions. The city employee which presented this project, Dan Marvin, made the statement that future earning would offset the city investment. This common defense of TIF projects in general, but it concedes the central point that city has gotten itself in position that all interior projects in any part of the city will receive massive tax breaks. And developers are not asking for these tax breaks as helpful tool to improve our city, but instead are demanding these tax breaks or they will not build. They are so confident that city will give in to their extortion that they feel comfortable beginning construction and advertising projects before they get the money approved through the legal review.

That stone facade that will soon be paid for out of public funds is the stone around our necks that ensure that we will have fewer resources to provide public services in the years to come. If you think that is misuse of public funds, please express your concerns to city council by emailing council packet at councilpacket@lincoln.ne.gov

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