Auburn returns $658,003 after TIF practices questioned •

LINCOLN — Nebraska Auditor Mike Foley said the city of Auburn has returned $658,003 to the state treasury after a state audit team raised questions about some practices of a tax increment financing project announced on Monday.

State Auditor Mike Foley (Courtesy of the Nebraska State Auditor’s Office)

The questions are listed in a 13-page paper letter in may From Foley’s office to Auburn’s mayor, the city’s Community Redevelopment Agency and the Nemaha County Commission Chairman.

Foley reiterated his key points of concern on Monday in press release and in an interview with the Nebraska Examiner.

He claims the Auburn Community Redevelopment Agency collects more tax-increment financing (TIF) revenue than it should from certain redevelopment projects and then retains those funds to cover the costs of different projects, some of which have yet to be conceived.

“The purpose of a TIF is to defray the cost of a specific redevelopment project through increased property taxes resulting from improvements to specific land,” Foley said. “This is not intended to allow developers to collect excess property taxes as a slush fund to fund some other endeavor.”

Not an admission of guilt

Auburn City Administrator and economic developer Crystal Dunekacke said Monday that the returned funds should not be viewed as an admission of wrongdoing.

She said the redevelopment authority maintains it complies with the Community Development Act that governs tax increment financing. TIF (TIF) is a decades-old financing mechanism used by local governments to incentivize economic development in disaster-stricken areas.

Dunekak said the returned funds were a “self-imposed action or compromise to resolve a legal gray area.”

She said the core issue in the gray area is whether remaining TIF revenue from the redevelopment project can be “rolled over” into the account and used for other projects.

Foley said Auburn officials can have their say. “The reality is they put the money back where it came from.”

The parties agreed that the $658,003 would be allocated to local government units that traditionally collect property taxes.

Statewide concerns loom

Foley said there are still broader concerns across the state and in separate but separate cases. Related correspondence from earlier this month Inform state senators on TIF developments.

Foley said some communities in Nebraska have been “very creative” in the ways they have used TIFs, asserting that some practices could put further upward pressure on local property taxes.

However, Foley pointed out that state regulations provide that TIF laws should be “liberally interpreted.”

NE auditor warns of rapid growth in TIF use across state, says it poses risk to property tax burden

“As some would say, it’s an open invitation to creativity. Others would say it’s a prank,” he said.

Foley pointed out again Monday that the city of Omaha is using TIF to pay for the $389 million cost of a modern streetcar project that will be up and running by 2027.

He called the streetcar “the largest property tax diversion for an economic development project in Nebraska history.”

Omaha Mayor Jean Stothert said Omaha complied with the law on TIF-approved projects, including the streetcar.

“While the state auditor may have objections to the TIF, the city has complied with the laws established by the Legislature,” Stothert said earlier.

in the courts of the legislature

Foley said his team could report back on the findings. It cannot enforce penalties, he said. Foley said it will be up to the state Legislature to decide whether the law should be changed.

“Cities are eager to clean up damaged areas and stimulate economic development. That’s all good,” Foley said. “We may have reached a point where things are getting a little out of control.”

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