Nebraska State Auditor Reports on the Use of Tax Increment Financing
The Auditor of Public Accounts (“Auditor”) recently audited a number of Tax Increment Financing (“TIF”) projects and issued this report. The Auditor concluded a number of municipalities violated the Community Development Law (the “Act”) that authorizes TIF. TIF allows municipalities to use property taxes from the improvement of blighted and substandard property to offset some of the costs of public improvements associated with community redevelopment projects.
The Auditor recommended the Nebraska Legislature consider several issues to increase compliance with the Act in the 2017 legislative session, including state-level oversight of TIF. The Auditor also recommended municipalities develop controls to ensure sufficient documentation of project expenses, accurate distribution and collection of funds, and compliance with the Act’s notice requirements.
The Auditor further recommended the Nebraska Legislature evaluate how municipalities use TIF funds, what costs are eligible for TIF reimbursement, and how the Act defines substandard and blighted property. The Auditor concluded state oversight may be necessary to prevent violations of the Act.
In the 2017 legislative session, legislators will introduce a number of TIF-related bills. Policymakers at the state and local levels may continue to scrutinize the use of TIF and compliance with the Act.
For additional information regarding the Act, TIF funds, or the Auditor’s report, contact David Levy or Garner Girthoffer.