City orders incentive plan for workforce housing

NEBRASKA CITY-  At their meeting Monday, city commissioners ordered city staff and Andrew Willis of Cline Williams to pursue a program intended to incentivize construction of workforce housing by using tax increment financing.

Nebraska City's current, city-led housing development received financial support from an increase on the franchise fee placed on Nebraska City Utilities. A 1.5 percent increase is expected to cost utility customers $181,000 a year, but city officials said it would mean the school system would receive immediate tax support from new construction.

The use of TIF would mean that increases in tax assessment caused by improvements would not immediately go to the schools, but would go to pay for the construction.

Under a workforce housing program, all costs of construction would be eligible for TIF, not just development infrastructure like streets. The eligibility of construction costs is suitable for infill housing and upper-story housing, because the infrastructure is typically already in place. Willis said substantial rehabilitation would also qualify.

The difference between workforce housing and a typical housing project is the city will need to find that the developer is not unjustly enriched.

Willis: “The idea is, if you’re building housing, there’s a little more financial return on investment findings they need to present in the application. ‘Hey, if we’re going to sell our home for this, but we’re getting TIF off of this, here’s our return. We’re not going to be unjustly enriched.”

Construction and Facilities Manager Marty Stovall said TIF could be a tool for developers, but the city’s CDA would still have to approve or deny each application.

Willis outlined a four step process.

Willis: “In order to utilize workforce housing incentives, workforce house TIF, you do have to have an incentive plan and that plan, sort of like our redevelopment plan, but we’re following that plan, the incentive plan, when applicants come forward.”

Stovall said staff has reviewed incentive plans provide by Willis and will tailor it to Nebraska City and its housing plan.

 

Parks Commissioner Patrick Wehling asked if the main intention of workforce housing TIF is for the city-led housing development near Grundman Boulevard.

Stovall said it could be a tool for multi-family housing there, but construction on empty lots throughout the city is also in view.

Stovall: “I feel this … infill is kind of the lowest hanging fruit to utilize this. Get the infill done. The model works great for that.”

He said if someone wanted to use TIF for multi-family housing at Kreifels Hills, the council could consider that in the future.

Wehling asked Willis for the pros and cons of workforce housing TIF.

Willis: “I guess I don’t necessarily see any cons to it because … if you approve the housing incentive plan, there’s still going to be a TIF application or something to be approved case by case.”

He said a bare lot is taxed based on an assessment, but that assessment goes up with the improvement. The property owner still pays taxes at the pre-improvement level, but the new taxes generated can be used to help pay for the project.

Wehling said it will incentivize a housing program that is fairly young, but would  also delay tax dollars from the schools and county for up to 15 years. Willis said the length of the TIF may vary.

Nebraska City expects an updated housing study in March.

https://rivercountry.newschannelnebraska.com/story/48727093/citizens-would-pay-franchise-fee-to-pay-for-housing