Lawmaker claims ‘good life' changes could avert taxpayer ‘devastation'
A rendering of a water park under construction in Bellevue that will anchor its good life district near the intersection of Highways 75 and 34. The Legislature on Tuesday advanced a bill to further clarify and add guardrails to the existing good life laws. (Courtesy of City of Bellevue)
LINCOLN — If the third time's a charm, Nebraska lawmakers might finally have clear guidelines to pull off a handful of 'good life districts' envisioned as a way to bring 'transformational' change and unique tourism to the state.
On Tuesday, the Nebraska Legislature voted 37-0 to advance an amended Legislative Bill 707, intended to update, clarify and add guardrails to a pair of previously adopted laws: the Good Life Transformational Projects Act of 2023 and the related cleanup bill enacted the following year.
State Sen. Brad von Gillern, chair of the Legislature's Revenue Committee, said the latest attempt to fix 'cracks' in the laws governing up to five statewide good life districts was complicated and time-consuming but now projects a $3.6 million savings for the state over the next two years at a time when lawmakers grapple with a budget shortfall.
Lawmakers have heard concerns about potential changes to the laws from developers of approved good life districts. But more recent objections came, they said Tuesday, from west Omaha's Avenue One district. Developer Curt Hofer, who is leading that estimated $1.4 billion project site, did not return a reporter's phone call Tuesday.
Nebraska Attorney General Mike Hilgers signed off on proposed changes, von Gillern told colleagues who pressed him about legal ramifications to clarifications made after agreements were approved. Von Gillern said that if developers had problems with changes, they'd have to take those matters up with the attorney general or the Nebraska Department of Revenue.
'I think we came up with a good landing point,' von Gillern told the Nebraska Examiner. 'Most parties were satisfied with the outcome today.'
He said the intent was to ensure that the districts achieve their intended purpose: to foster transformational economic developments that in the long run will be a boon to the state in the form of increased sales tax revenue.
'There were serious concerns from multiple parties that the good life district program was simply handing a blank check to development groups with little to no assurance that the state would reap a fair return on its investment,' von Gillern said.
He said LB 707 would steer the state away from 'possibly devastating' financial impact.
LB 707 now moves forward to a third and final reading, with several amendments approved Tuesday. Among those were changes submitted on behalf of the Cities of Grand Island and Bellevue, which represent two of the four good life districts approved so far by the Nebraska Department of Economic Development.
Bellevue, for example, objected to language that would require it to go back and hold a special election. State Sen. Rick Holdcroft of Bellevue said the district is underway, and that would introduce 'unnecessary costs, uncertainty and risk' of delay or cancellation.
In addition to Omaha's Avenue One, the other approved district includes and surrounds Gretna's Nebraska Crossing shopping center. Kearney and Papillion are vying to be designated as the final of five districts allowed under the law.
Problems with the current good life legislation were spotlighted in, but not limited to, the Gretna area district, which is the largest and most high-profile of the four approved.
Among the controversy was how more than $2.2 million in state sales tax revenue was lost as progress on the Gretna district was stymied.
The host city and Nebraska Crossing owner Rod Yates, whose application established that district's boundaries, deadlocked over terms for his multibillion dollar mega sports-themed vision. Yates demanded concessions that Gretna officials said put taxpayers at financial risk.
As designed, the good life law created a major incentive: State sales taxes imposed within good life districts were to be cut in half, from 5.5% to 2.75%. The idea was to recapture the difference to help finance unique entertainment and shopping districts that over time would draw more tourism for the state.
Gov. Jim Pillen earlier this year proposed clawing back an annual $5 million in state incentives budgeted to help development in good life districts. Even the law's primary champion and architect, former State Sen. Lou Ann Linehan of the Elkhorn area, criticized how the legislation was being carried out.
Von Gillern said the amended LB 707 proposes a dozen key fixes to address what had been identified as flaws.
He said, for example, his team caught on to a 'scheme' that would have allowed sales tax revenue from retailers nearly a mile away from the current Omaha good life district boundaries to go to a developer. 'It's not right …we fixed that,' von Gillern said.
'It's not right that a developer could have relocated a substantial ongoing business to their new development and then capture half of the sales tax revenue,' von Gillern said. 'We fixed that.'
Changes include:
Prohibited use of eminent domain. That became a conflict in Gretna, when Yates suggested that the city force acquisition of other property so that he could control the entire district.
Language allowing multiple developers, essentially sub-good life districts or project areas, within a district.
A $5 million cap on annual sales tax income that a developer can capture from retailers already in a good life district. That applies to Grand Island and Gretna, von Gillern said, which have pre-existing stores within approved boundaries.
Defining a 'new to market' retailer as one not existing within 40 miles of the district. (New business and tourism is required to qualify for the tax incentive.)
Requiring that tax-exempt owners within a district still pay sales tax on construction materials.
Von Gillern denied what he said were accusations that the effort seemed aimed to kill an existing or future project.
He said he has spent a career in real estate development and that the Legislature's recommended changes represent an attempt to 'check aspects of projects that threaten to take advantage of Nebraska taxpayers for no other purpose than to satisfy private interests.'
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