Yep, you read the title correctly. The two words almost never go together. In fact, you might be thinking that I have no clue what synonymous means because I used the word completely wrong. Well I didn’t, not in the way I’m going to talk about blight.
The City of Neligh recently completed and adopted its first Blight and Substandard Study. What the heck is a Blight and Substandard Study you might ask? The study lays the ground work for city officials to declare an area Blighted and Substandard as per the requirements in state statutes. Why in the world would city officials want to do this? Declaring an area Blighted and Substandard gives the city access to Tax Increment Financing (TIF). TIF is to economic development what a hammer and nails is to construction. You can get by without it but your economy might not look spectacular.
What is TIF and why do we need to embrace it? When used correctly TIF will help grow the tax base and economy of a community. Tax Increment Financing is based in Nebraska state statutes. Most states allow the use of TIF, some aspects might be different but they generally support its use. The idea behind TIF is to take a blighted and substandard property and clean it up using property tax money. It’s a lot more complicated than that but that’s the general concept.
A developer will take a property declared blighted by the city, and as the re-developer invests money into the property, the taxable value of the property will increase. The increase in the tax value is used to help pay off the debt incurred to spruce up the area, but is only captured for the next 15 years. For example, if a blighted property was bringing $100/year in taxes, and someone re-developed the property, it may now bring in $1,000/year in taxes. The developer (if he went through the proper steps) will capture the increase, $900/year for the next 15 years to pay off his expenses. TIF, as per state statute, can only be used for certain expenses (eg. demolition, infrastructure, and public benefit).
The re-developer must contact the city first and apply to use Tax Increment Financing to re-develop a property in the Redevelopment Area. The municipality is the organization who handles the use of TIF, but in the long run, all tax entities benefit from the re-development of the blighted property. If not for Tax Increment Financing, the project would have never happened.
The Willows Assisted Living is a perfect example of TIF! If you remember a decade and a half ago, picture what the area looked like. It was a rundown trailer park which brought little money to the taxing entities. It is now back on the tax rolls and, according the assessor’s website, added nearly $1.5 million to the tax base. The Willows would never have happened without the assistance of TIF. The City of Neligh is committed to using TIF, where appropriate, to enhance Neligh!
For more information please call me at 402-887-4447.
By Greg Ptacek
Director of Neligh Economic Development Office