A resolution passed by the Omaha City Council on Tuesday aims to address the city’s affordable housing shortage.
The approved resolution calls for the Mayor’s Affordable Housing Task Force to work with the city Planning Department and the Tax Increment Financing Committee on a policy that would incentivize or require affordable housing in development projects that receive TIF.
Councilman Pete Festersen was the main architect of the resolution. He said the city has taken a number of positive steps toward housing affordability in recent years, but more can be done.
“What this resolution does is that it requests the department to work with experts like we have here today and other developers and technical advisors to come up with a policy for us to consider in the next six months to adopt,” Festersen said.
The resolution puts a timeline on ideas and proposals that have been discussed for years among city leaders and affordable housing advocates. The City Council requested the Planning Department present a proposed policy on or before Sept. 1.
A number of studies have found that Omaha needs to develop as many as 30,000 additional affordable-housing units in the next five years.
Under TIF, the developer of a city-approved project takes out a loan to help cover eligible redevelopment expenses tied to a project. The loan is paid back, generally over a 15- or 20-year period, by using the increased property taxes that are generated on the new development.
Normally, all property tax payments go to support schools, city and county government and other local tax-reliant bodies. But during the TIF period, the proceeds from tax payments are divided: Some tax money goes to local governments based on the valuation that existed before the improvements. The rest of the taxes, based on the added valuation from those improvements, are used to repay the TIF loan.
City Planning recently estimated that about 10% of the housing units TIF has helped bring online over the last five years are affordable.
Councilman Don Rowe voted in favor of the resolution, but called for a measured approach. He said the wording of the resolution was important because it gives the options to implement incentives rather than requirements.
“I want us to see what creative things that we can do to move the dial, because we really do need to move the dial,” Rowe said, “but I want to be sure, to let people know that there are things that we need to discuss, and my biggest fear on changing some of these items is that will have unintended consequences.”
Other Nebraska cities have passed similar stipulations around TIF and affordable housing. In Lincoln, housing projects that receive TIF and are within the urban core are expected to include at least 10% affordable housing. If the project proposes the elimination of existing affordable housing, there is an expectation that displaced units will be replaced on a one-to-one basis.
“There are many factors to consider here,” Festersen said, “and we want to make sure we do get it right. This is not a simple equation, and we want to make sure we do it in a way that does not inhibit additional units from coming online.”