City staff gives TIF 101 briefing; councilers ask about feasibility tests, timelines and protections

Randy, a city staff member, delivered a step-by-step presentation on tax-increment financing (TIF), describing how TIF captures the increase in property taxes generated by a redevelopment project to pay for eligible public costs tied to that project.

Randy summarized Nebraska’s TIF framework, tracing constitutional amendments in 1980 and 1984 and noting that implementation is governed by Nebraska Community Development Law. He described core program features: TIF-eligible expenses such as site acquisition, demolition, utilities, public improvements and certain building rehabilitation; a plan-modification and public-hearing process; and a statutory maximum division period of up to 15 years for captured increment revenues.

Randy walked council through the typical sequence: (1) designation of a redevelopment area and a public hearing; (2) preparation of a general redevelopment plan (often by consultants); (3) application to the community redevelopment authority (CRA) with a developer pro forma showing project financing and demonstrating the project is not economically feasible without TIF; (4) CRA review and, if approved, a plan modification and cost-benefit analysis; (5) planning-commission and city-council public hearings and approvals; (6) negotiation of a redevelopment contract; (7) construction and final assessment; and (8) the division of taxes and semiannual distributions to the TIF note holder until the debt is retired or 15 years elapse.

He emphasized the statutory requirements and common data points CRA requests from developers: detailed project description, total project cost, sources and uses of financing, lender commitment letters when available, a demonstration of the financing gap without TIF (sometimes a bank letter), preliminary site plans, an itemized list of TIF-eligible costs, and a project timeline. Randy said typical application and administrative fees the city charges include a $300 application fee, a $400 plan-modification fee, $400 for zoning changes and a $1,500 administrative fee.

Randy also explained how captured increment is calculated with a local example. He cited a downtown rehabilitation where the assessed value rose from about $300,000 to about $1,200,000 and annual property taxes rose from roughly $6,000 to about $24,500 — producing an increment that can be pledged to repay financing for eligible public improvements. “TIF is a true public–private tool,” Randy said, adding that the base taxes continue to flow to taxing jurisdictions and only the incremental tax revenue is applied to pay the TIF borrowing.

Council members asked how staff verifies developers’ claims that a project would not proceed without TIF. Randy said the CRA vets pro formas closely and often requires lender letters or other documentary proof; he told the council, “If the project was feasible without TIF, you’re not going to see it.” Several councilors pressed for clarity on who bears risk if valuations or tax collections are lower than projected; Randy explained banks and developers typically structure the capital stack to account for this risk and that developers often provide guarantees or the bank obtains collateral. He reiterated that the CRA no longer carries direct debt on most modern projects; rather, developers or their lenders carry the borrowing and are repaid from captured increment.

Randy reviewed oversight and timing constraints. He said the public-notice schedule and required hearings typically make the TIF approval and plan-modification process take at least 90 to 120 days once an application has been filed; the earliest projects sometimes require several months of pre-application work. He also walked through the cost-benefit analysis elements the law requires: tax shifts, infrastructure and service needs, local-tax impacts, employer and employee impacts, and potential school-district effects for larger housing projects.

Councilors raised implementation and transparency concerns. One councilor asked what happens if a developer later sells a TIF-backed property; Randy said redevelopment agreements include a non-contest clause for assessed-value calculations during the TIF term, the memorandum of agreement appears in title searches, and banks or buyers must account for existing TIF obligations. On bankruptcy, Randy said the bank holding the loan is typically the party to take the property and clear tax obligations; the CRA’s obligation is limited to forwarding captured increment, not to guaranteeing developer loans.

Randy closed with local context: he noted completed TIF projects in Hastings have produced increased tax base over time, cited the Kensington project as a long-term success (original valuation and later increases discussed in presentation), and said Hastings’ current captured increment represents a conservative share of the city’s taxable value compared with some peer cities. He offered to provide council members with additional written materials and answered follow-up questions about fees, timelines and how CRA staff vets pro-forma assumptions.

No formal TIF approvals were sought at the meeting; the presentation was for education and transparency and council members asked staff to continue sharing information and to provide materials that the public can review.