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The 2015 Legislature enacted legislation that allowed the State Auditor’s Office to audit Community Redevelopment Authorities (CRA). Prior to that taking place there was absolutely no regulatory oversight of municipalities’ use of Tax Increment Financing (TIF).
This week, State Auditor Charlie Janssen released an audit of a sampling of 22 TIF projects across the state. The link to the entire audit can be reached by visiting the State Auditor’s website, www.auditors.nebraska.gov or by clicking HERE. The results should be concerning to all tax payers. The audit disclosed shoddy record keeping and TIF being used in areas that a reasonable person might doubt as being blighted and substandard. Their findings also pointed out that the laws created by the Legislature putting into practice the voter approved 1978 constitutional amendment that enabled TIF are ambiguous to the point that they are useless.
The Auditor looked at three projects in North Platte. The CRA of North Platte could not show documentation of invoices that the TIF proceeds actually were used to pay proper costs related to the projects. The Auditor also questioned the CRA’s creation of a Community Redevelopment Authority Redevelopment Fund (CRARF) and funding it with 25% of the proceeds from TIF bond sales for the purpose of funding smaller non-TIF projects, stating “…Gives rise to the question of whether the intent of the Community Development Law is to allow cities to use TIF revenues to operate loan programs for non-TIF use.”
The Auditor recommended that language in present TIF law be cleared up. For example, in section 18-2103(12) the auditor states “the law is so broad and generic in nature that it undermines significantly any attempt to place parameters around the use of TIF.” After first precisely describing the “work or undertaking” costs that TIF monies may be expended on, the statute then negates itself by ending with “or other improvements in accordance with the redevelopment plan”. They recommended that the Legislature make clear definitions of the terms, blighted and substandard. Their comment on the present law’s definition: “Such ambiguity contributes to uncertainty at best and the potential for the willful abuse of TIF at worst.”
Finally, the Auditor ends with the recommendation that “Overall, TIF is subject to remarkably little monitoring and oversight.… The Legislature may wish to consider whether the Community Development Law is being utilized effectively, and municipalities are interpreting and implementing its provisions in an appropriate fashion”. Going on to recommend that the Legislature may wish to create a state oversight committee or authority “… thereby protecting the interests of both the taxpayers and their communities as a whole.”
This Senator agrees wholeheartedly with the Auditor’s findings and plans to be a part of the fix needed to put a good urban renewal program, TIF, back on the right path. MY reasons:
1) Citizens and their local elected officials need to be assured TIF is being used correctly for urban renewal of blighted and substandard areas of a community. Local elected officials and taxpayers need to have a source to go to at the state government level to verify the claims made by those wishing to profit from the use of TIF. Presently, your mayor and city council members have no state authority to address their questions or concerns.
2) TIF allows cities to unilaterally confiscate the tax dollars of your local schools, county, Natural Resources District, community college, etc, without input from those government entities. Those elected officials should also be able to check for the accuracy of TIF use. They are the ones who have to raise your tax rates in order to offset the revenue lost by TIF.
3) There’s reason we all pay property taxes, we want good schools and public services. If we arbitrarily allow some property owners to not contribute tax dollars to those purposes for 15 years, the rest of us must pay more to pick up the slack.
I believe you sent me to Lincoln to champion GOOD government; protect the rule of law, the glue that holds our freedoms together; and to make sure all taxpayers and citizens are treated equally. The present abuse of TIF in our state offends all of those principles and it must be corrected.
Please do not hesitate to contact my office firstname.lastname@example.org or 402-471-2729 with any comments, questions, or concerns.