It started with a new apartment. Intricate, worn octagons of black and white tile covered the bathroom floor. The inset medicine cabinet still had a razor blade slot. Sophia Smith could feel every year of the 96-year-old apartment whenever she walked across the squeaky wood floors.
While the triplex was old enough to be a historic landmark when she moved there in 2019, it was otherwise an unremarkable piece of turn-of-the-century architecture in Omaha.
To her, though, it was home.
Less than a year later, Smith had to accept she’d lost the fight to keep it.
“I almost felt a little bit embarrassed afterwards,” Smith said recently. “Just because [saving it] clearly didn’t matter to anybody.”

On Jan. 12, 2021, the Omaha City Council voted to tear down two buildings on 33rd and Jones streets, one of which held Smith’s apartment, to make way for a 55-unit apartment complex financed partially through a city subsidy called tax increment finance. The story isn’t exceptional. TIF is the city’s most powerful tool to spur development. Since 2006, the city’s subsidized more than half-a-billion dollars in development, according to an analysis by The Reader. The new businesses in Blackstone, shining structures of glass and metal in Aksarben, most of downtown: TIF made them happen.
Though some TIF allotments receive scrutiny like the proposed $80 million for The Crossroads or tearing down three historic homes in the Gold Coast neighborhood, it’s not the norm. Often TIF projects are approved with little fanfare. But when it came to her triplex at 33rd and Jones streets, Smith rallied neighbors and protested the market-rate apartments. By that point, Smith’s landlord had already told her she was being kicked out. Smith hoped she could sway councilmembers, but they unanimously approved the project. She logged off her Zoom call with a middle finger facing the camera.
“Rage,” Smith said of how she felt. “Rage.”
Opposition like Smith’s as well as mounting calls to address housing inequity in Omaha have put TIF in the spotlight. The program is designed to address “blighted” and “substandard” areas, known in Omaha as community redevelopment areas, and through a new amendment to the law “extremely blighted” areas, through redevelopment. Nearly every state utilizes it. The stakes are low as a city doesn’t have to spend any real money.
The Douglas County Acessor’s Office freezes the current property tax valuations and reimburses developers the difference as the values begin to rise. By the time the TIF project is complete, typically a timeline of 15 years, the tax revenue is many multitudes higher than when it started.
The problem is a friction between realism and idealism.
Opponents say TIF hasn’t benefited the most “blighted” areas. Omaha, for example, has subsidized hundreds of millions in downtown, Midtown, Blackstone and Aksarben whereas more impoverished and historically disinvested neighborhoods like North and South Omaha get a fraction.
Advocates also say too much money is going to projects that would have happened otherwise. In cities like Chicago, teachers have striked in part over the overuse of TIF cutting off public schools’ primary revenue source.


Advocates like Erin Feichtinger of Together, a local nonprofit committed to ending hunger and homelessness, say TIF has become a revolving door of projects that never get denied to boost already burgeoning commercial districts. She sees similarities between maps of TIF funding today and those drawn up in the 1930s to keep poor and diverse people locked in their neighborhoods. And when she adds on the fact that Omaha is nearly 80,000 units short of meeting affordable housing demand, according to a new report from the Sherwood Foundation, it makes the inequity even more alarming.
“We cannot just think that the market is going to do what it’s going to do, because what it’s done is create an enormous housing crisis,” Feichtinger said. “You can’t rely on the goodwill of people to do this. It needs to be, ‘We made the mess, and we need to get ourselves out of it.’”
But others would say that’s a simplistic way to look at the argument. Property taxes are low in areas like North and South Omaha and the difference between current and projected tax revenues is so negligible as to not be enticing to investors and developers without more incentives added. In 2018, State Senator Justin Wayne introduced an amendment to the TIF law that would allow developers in “extremely blighted” areas to get tax breaks for 20 years to make the projects more attractive.
But at the end of the day, Bridget Hadley, the city planning department’s economic development manager said TIF projects don’t just happen. The city can’t force developers to redevelop areas. They have to use the tools they have to get the best deal for Omaha.
“We do live in a capitalistic society… People want to maximize profits,” Hadley said. “So maximizing profits becomes the key with the private sector, and particularly in this country. So keeping that in mind, we've got to be able to incentivize them with a tool that they will receive, and then [further the city’s master plan].”
But the city’s also heard the call for equity, and Hadley said they’re trying to figure how to make TIF a better solution. Though TIF has been used to build some affordable housing, a product typically of partnering with other state and federal programs, currently there’s no requirement that TIF projects include affordable housing, Hadley said. That’s already a standard in cities like Chicago. Omaha also doesn’t have a definition of affordable housing — the U.S. Department of Housing and Urban Development defines it as housing that costs no more than 30% of your income, but Hadley said a universal definition has not been accepted.
Omaha City Council President Pete Festersen said TIF is a small part of the solution. Festersen said he’s trying to leverage $20 million in federal COVID-19 relief funds against more private and public dollars to address affordable housing.
“While I think [re-evaluating TIF] is part of the picture we should pursue,” Festersen said, “this bigger picture I'm describing in terms of engaging the nonprofit and for-profit developers throughout the city with the funds we're requesting can make a much bigger difference.”


But people like Smith have a hard time believing the city is serious.
In the middle of one of 2021’s worst snowstorms, she moved out of her apartment. While she found another place to live — ironically next to another apartment complex that received TIF funds called “The Duke” — it’s more than she can afford. She’d always wanted to buy a house in Omaha, but now she feels abandoned.
“‘The way I’m thinking is antiquated, and our city is moving forward,’” Smith interpreted the city saying after it moved forward on the TIF project that demolished her home. “‘And we just don't have a need for people like you. We don't have need for spaces like this.’”
What is Tax Increment Financing


In 1975, a newspaper writer pined over the future of Omaha’s downtown.
“The lunch hour is finished and so is your project at the new W. Dale Clark downtown library,” James Ivey wrote in the Omaha World-Herald. “You saunter down the steps and pop into a boat to return to work … At Eighth Street you alight and take a curving walk, along the Missouri River, to a high-rise office overlooking the river, a marina, a series of townhouses and tourist-oriented gift shops.”
What would help make that happen? Tax increment financing.
It was the paper’s first mention of the incentive program, and while the riverfront never materialized, by 1978 Nebraskans voted to add tax increment financing to the state constitution.
The program, which started popping up in states in the mid-1900s, provided cities autonomy in choosing how to reshape their skylines. Today every state except Arizona uses TIF.
In Nebraska, TIF works by freezing property taxes for 15 years so developers can pad their return on investment and mitigate the risk of building in a substandard area.


By state law, these “blighted” areas must be deteriorating, unsanitary and unsafe. They also must meet one of these conditions:
- unemployment equal to 120% of the state or national average;
- structures with an average age of at least 40 years;
- more than half of the land is unimproved;
- lower per-capita income than the surrounding city or village;
- stable or decreasing population.
While TIF’s been responsible for the revitalization of cities nationwide, many say the tool is mismanaged.
The Chicago Reader has written about TIF for more than a decade. In a 2010 article, it pointed out an area with staggering unemployment, foreclosures, crumbling sidewalks and pothole-ridden roads received .002% of the $1.5 billion in TIF funds between 2004 and 2008.
California, the first state to use TIF, had to amend its law in the early ‘70s when many argued freezing property taxes was suffocating schools. In 2014, the program was effectively discontinued when it became clear most projects were not able to become self-sufficient.
TIF in Omaha has come under the same scrutiny.
“State guidelines for TIF plans seem to be followed haphazardly at best,” Jack Dunn wrote for the politically left-leaning Progressive Research Institute of Nebraska in 2011. “TIF projects have done little to benefit the most poverty-stricken districts. As profit-making entities have become aware of the availability of Tax Increment Financing, more of them have crowded onto the City agenda and used it to build in high-growth areas. Oversight of the TIF plan approval process, especially as to the need for public subsidy, seems to be lacking.”
A central component of most TIF is the “but-for” test — meaning, does this project need the subsidy to be financially feasible. Many, like Dunn, argue that many high-profile projects would have happened without the incentive leading to unnecessary losses in tax revenue. Even as far back as 1999, experts warned about overuse of TIF.
"This is not free money," Richard F. Dye, a professor of economics at Lake Forest College, told the Washington Post. "There are opportunity costs. You're diverting money from some other place. You're giving subsidies where development would have occurred otherwise."
A report from the politically right-leaning Platte Institute for Economic Research also called out TIF for its lack of oversight and evidence-based decision making.
“The impression left on the researcher,” Kriz wrote, “by the interviews is that the projects … once proposed, were destined for approval and the process steps were just pro forma.”
In 2016 the Nebraska Legislature conducted a study of TIF, and in 2018 amended the law, but Jim Vokal, the CEO of the Platte Institute said little has changed.
“There was never more teeth added to it … With that said, I think it's a pretty important project,” he said. “I think Omaha would look a lot different if we didn't have it.”




In city reports, side-by-side images show how vacant industrial buildings downtown have been turned into low-income housing and corporate campuses. A 2012 study commissioned by the developer behind Midtown Crossing found that the project had an economic impact of $729 million and created more than 800 jobs per year from 2006 to 2011. In a 2020 report, the city looked at paid-off projects and asked, “What would tax revenue and property value have looked like without TIF?” Had no development taken place, they estimated a property tax revenue increase of $39,455. By the time the TIF projects were paid off, the annual revenue was $1,626,529 — 41 times more money.


Vokal sat on the Omaha City Council from 2001 to 2009, and served as its president from 2003 to 2005, during a prolific period for TIF projects, including more than $37 million for Midtown Crossing, the most expensive TIF project to date. If the crossroads project passes its final approval, it would become the highest earning TIF project at $80 million.
Vokal said he can’t remember denying a project while he was on the council. Current Omaha City Council President Pete Festersen remembered denying one, a 2019 request from former Omaha landlord Dave Paladino.
After Vokal left city council and joined the Platte Institute, he learned more about the program than he’d known as an elected official.
“It opened my eyes,” he said. “As an elected official, you really aren't told going into that job, ‘Hey, when you're approving TIF stuff there should be this cost-benefit analysis done in the beginning. And then the city of Omaha in this example, is supposed to do post-TIF approval analysis of it as well. That never gets back to the council.”
TIF projects start when a developer brings a proposal to the city, Bridget Hadley said. The economic development staff receives and evaluates TIF applications to determine whether the project complies with the TIF Program. TIF applications are then reviewed by the TIF committee. Those meetings are not open to the public or part of the public record, Hadley said. Once it gets the “OK” from the TIF committee, it’s reviewed by the planning board. Residents in the surrounding area are required to be notified by the developer through a neighborhood association, Hadley said. Finally the city council gives the project two readings and a vote as a resolution to approve the TIF redevelopment project plan and then three readings and a vote as an ordinance to finalize the redevelopment agreement.
“I get the optics that it looks like it's rubber stamped,” Hadley said. “But there's so much work that we are putting the developers through, way before it gets to the public or at the planning board and city council. So I think I would say that's what I would want people to understand, that there's a lot of questioning going on.”
The Problem with TIF
For many it’s not the rigor of the questions, but the type of questions the city is asking. Erin Feichtinger wonders why we can’t ask whether Blackstone is really still blighted. When the first TIF projects were being approved on the stretch of Farnam Street between 38th and 40th streets, the block wasn’t lined with businesses. But after investing millions and attracting brunch spots, salons and fancy cocktail lounges, should it still be receiving money for projects like the Blackstone Hotel ($7,206,000), Blackstone Plaza ($5,994,326) and Blackstone Townhomes ($765,000) when it’s already one of Omaha’s most promising commercial centers?


Hadley said the term “blighted” often causes misunderstanding. The designation leads some to think subsidies should only be given to the poorest areas, or that an area can’t be redeveloped unless it’s in total decay. Hadley said the city uses the term “community redevelopment area” and prioritizes projects that advance the city’s master plan. The reason for continued development along Dodge Street is in part to support the new ORBT bus line as well as goals of density along a major transit corridor and potentially a new streetcar.
“That is one of the reasons why that area will likely remain in a CRA,” Hadley said, “because we've got bigger designs for that Blackstone/Midtown area all into downtown.”
Erin Feichtinger knows TIF isn’t the fix-all solution to inequity, but changing the types of projects the city prioritizes can show intention.
“When I look at the program, I view it more as a policy failure,” she said. “And any policy failure can be reversed by just changing the policy.”
Sophia Smith isn’t seeing any intention of creating more equity. She lived in the Gifford Park neighborhood for six years and has seen drastic change nearby. The storefronts look different. The people look different. They’re changes she, and others like her, don’t feel they’ve had a choice in making.
“Our tax dollars [are] going towards developers to basically foot the bill for whatever weird, rich kid stuff they wanted to put into the neighborhood,” Smith said.
Until she had an experience with TIF, Smith didn’t even know how the process worked. While Hadley said neighborhood associations inform citizens of potential TIF projects, Smith learned about her apartment’s proposed demolition from her landlord. Her neighborhood association hadn’t told her nor any of her neighbors, she said. Still, Smith thought she could stop, or at least delay the project, if she made her voice heard to the city council.
She tried calling and emailing her representative and got no response, she said. She gathered neighbors’ responses to a questionnaire about the proposed developer with strong opinions not to build the new project.
But it didn’t change the outcome.
“The people in any sort of power right now, no matter how small, are not doing a single thing to help the actual people here,” Smith said. “And if they're not doing it, there's only so much that we can do if they're not listening to us.”
Some, like in nearby Sioux Falls, South Dakota, blame the lack of transparency on favoritism between politicians and developers. The Argus Leader reported that its mayor was discouraging some from applying for TIF funds, leading to potential missed opportunities on big public projects.
A Reader review of campaign finance filings found developers spent at least $130,000 among city council candidates in the 2021 spring elections, a Reader analysis found. City Council President Festersen said the $10,000 he accepted from developers, the second-lowest among winning council members, doesn’t affect his judgement.
“That's not at all a factor in my view,” Festersen said.
Festersen later said in an email that he’s not seen similar campaign donations affect the judgement of other councilmembers.


Feichtinger said experiences like Smith’s raises a point about who these projects are for. If the presence of poor people enables TIF, what happens to them when they can’t afford the apartments or restaurants? Where do they go?
“It's not the developer’s job to think about this, it's not the investor’s job to think about this, they don't [need to care],” Feichtinger said. “Their goal is to make profit. But our elected officials’ goal is not to make profit. Our elected officials goal is to protect us, our neighbors and their constituents, and the best way to do that is to make sure that everyone has a safe place to live.”
Feichtinger’s criticism of the social side effects of TIF is common across the country. But in analyzing U.S. Census data for Omaha from 1990 to 2020, it’s hard to say how much of an effect TIF spending, or lack thereof, had on poverty, unemployment or racial diversity.
The reason goes back to the fact that TIF is a small part of the development equation.
From 2007 to 2017, the City of Omaha subsidized more than $370 million for TIF projects. In the same time, banks issued more than $12 billion in local private home loans alone, most of those gravitating westward to majority white and wealthy census tracts, according to a Reader analysis.
Still, TIF, could do more to promote equity, some say. Since 2006, market-rate TIF housing projects have outnumbered affordable ones 51 to 12. Festersen has expressed interest in requiring all TIF housing projects build a certain number of affordable units, but even that wouldn’t be enough.
“No one thinks it's going to solve the problem like no one is under the illusion that if we put, you know, affordability requirements in every residential rental TIF project, that we don't need to do anything else,” Feichtinger said. “But it's a proactive first step.”
The people’s tool, by design


The problem with addressing inequity in Omaha is that the first step often starts a long journey few are willing to take. That’s what Matthew Cavanaugh is learning as the new executive director of Holy Name Housing, an organization that along with a few others has spent decades trying to build homes in economically depressed areas like North Omaha.
“New homes in North Omaha do not appraise for what it costs to build a new home,” former executive director Mike Gawley told The Reader in 2020. “There’s about a $100,000 per house gap.”
When Cavanaugh applies for TIF projects, he requests pennies compared to projects a few miles away. That reason is simple: property taxes are lower so low-income builders are often limited and have to combine a slew of tax credits and subsidies to make projects happen.
That’s the reality of TIF. But that doesn’t mean Omaha can’t change it.
“[Policy makers] need to think outside the box, or stop thinking about all of these nuances and start thinking about solutions,” Cavanaugh said. “Because it's there. It's a tool that exists that can be designed however we want it to.”
contact the writer at chris@thereader.com. Additional reporting by Anton Johnson.