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Legislation introduced to limit use of tax increment financing and to require additional audit processes

on Monday, 23 February 2015 in Dirt Alert: David C. Levy, Editor

The Nebraska Legislature is considering three bills that, if adopted, would significantly weaken tax increment financing (“TIF”) as a development tool in Nebraska. The Legislature’s Urban Affairs Committee will consider all three bills at a hearing on February 24 at 1:30 p.m. The three bills are LB 238, LB 445, LB 596. Senator Groene of North Platte introduced both LB 238 and LB 445 and Senator Davis of Hyannis introduced LB 596. Though there is some overlap between the bills, all three propose significant limits on the use of TIF and would impose various audit or other state level oversight functions.

LB 596 proposes to create a new division of the Public Auditor to review TIF projects and expenditures annually. It also proposes to allow cities to recapture TIF expenditures that the city deems to have failed to meet the redevelopment plan’s goals. It also proposes to require third party approval of certain members of a Community Redevelopment Authority’s board.

LB 238 proposes to limit the use of TIF proceeds to certain types of infrastructure like roads and sewers, as well as land acquisition and site preparation. It also proposes to require the public sale of all TIF bonds.

LB 445 proposes to require additional disclosure by cities to the Nebraska Department of Revenue regarding TIF projects. It then proposes that the Department of Revenue will audit every redevelopment plan that uses TIF at least once every two years. If the Department of Revenue determines that TIF expenditures or the underlying redevelopment plan does not comply with law, the Department of Revenue can prohibit the offending city from approving additional redevelopment plans until it brings its existing plans into compliance.


David C. Levy
Amy L. Lawrenson

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