Nebraska Legislature Passes Act to Allow Use Of New “Community Improvement Districts”

Nebraska has adopted a new statutory framework for a unique financing tool for infrastructure and other development projects. On April 16, 2026, the Governor approved Legislative Bill 1114, which enacted the Community Improvement District Act (the “Act”). The Act permits private landowners to propose and form “Community Improvement Districts” (each a “CID”) within cities and villages in Nebraska, subject to local approval. 

A CID is a political subdivision under Nebraska law. CIDs resemble Sanitary and Improvement Districts (each an “SID”). Both are governmental instrumentalities through which developers can finance, construct, and maintain infrastructure through public powers such as taxation, special assessments, contracts, eminent domain and bond issuances.

A CID must lie wholly within a city or village. The city council or village board approves the district by ordinance after notice and a public hearing. By contrast, parties organize SIDs through district court proceedings and they cannot be within the corporate limits of a city or village. 

A CID’s trustees may be residents of the district, owners of real estate in the district, or designated representatives of landowners. A SID’s initial trustees must be owners or designated representatives of landowners. These structural differences affect the district’s location, formation process, and governance.

In forming a CID, private landowners subject their property to public financing mechanisms, like future tax obligations or special assessments, in exchange for the construction of infrastructure benefiting the property. The Act does not impose a general size limitation when forming a CID. However, any CID exceeding ten acres must devote such land to a statutorily defined public purpose within three years of acquisition. The CID must divest those acres not used for an authorized public purpose within three years.

To form a CID, the owners of a majority of the property comprising the CID must execute articles of association that contain all the information the Act requires. The articles will, among other things, appoint five or more trustees that live within the CID to operate the same and set the CID’s maximum levy rate.

Upon filing the articles of association, the clerk of the city or village where the CID is located shall schedule a hearing to consider formation. Landowners may file a written objection to the CID for consideration at this hearing. After the hearing, the city council or board of trustees may approve formation of the CID. 

Once formed, the CID may, among other things:

• Acquire real property and certain other assets by purchase or condemnation, as applicable;
• Levy a tax on the taxable value of the property within the CID;
• Construct, install, improve, maintain, and repair public infrastructure within or relating to the CID;
• Levy special assessments on property within the CID in an amount equal to the benefit certain public infrastructure and improvements provide the CID;
• Contract with other political subdivisions and municipalities;
• Issue “Community Improvement District Bonds” that shall mature or become redeemable within five years of issuance;
• Petition to annex further real property within the boundaries of the CID; and
• Resolve to detach certain real property from the boundaries of the CID.

For purposes of the Act, “public infrastructure” includes:

• Publicly-owned electric service lines;
• Gas service lines;
• Sanitary sewer lines and system improvements;
• Storm sewer lines and system improvements;
• Floor control improvements;
• Water lines and system improvements;
• Emergency warning system improvements;
• Sidewalks, roads, streets, highways, pedestrian walkways and skywalks;
• Public spaces, facilities, playgrounds, parks, and recreational facilities;
• Motor vehicle parking facilities; and
• All other facilities and appurtenances relating to the foregoing.

CIDs are yet another innovative tool for developers, municipalities, and landowners to use to manage and finance growth and development. We will continue to monitor the expanded use of CIDs and the Act. 

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Attorneys at Baird Holm specialize in various subject matter areas including land use, development financing, and real estate development law. Please do not hesitate to contact us if you have questions about these new regulations or any related matter.

Spencer A. Hosch
Samantha C. Harres, Summer Associate