Mayor Stothert lashes back at State Sen. Mike McDonnell over Omaha streetcar, TIF use
OMAHA — Mayor Jean Stothert on Thursday lashed back at State Sen. Mike McDonnell, who questioned the city’s “aggressive” use of the public incentive known as tax-increment financing, particularly related to the Omaha streetcar.
McDonnell, in a letter earlier this week, urged the mayor and City Council to “pause” any new TIF projects until a series of concerns he posed were addressed.
He said he feared that the city’s approach to TIF may result in future legislation that “severely restricts or possibly eliminates what can be an effective development tool.”
Stothert, replying in writing as well, responded to the Omaha lawmaker’s questions and said she had no intention of pausing TIF. But she did not stop there.
NE Sen. Mike McDonnell urges ‘pause’ on new Omaha TIF projects, questions streetcar use
“You want to slow down Omaha’s progress for political gain,” Stothert wrote. “You apparently want Omaha to fall behind.”
Political undertones
While the topic at hand was TIF — itself a controversial economic development tool — the volley between Stothert and McDonnell had political undertones.
McDonnell, who is term-limited and serving his final year as a state senator, has indicated he will run for Omaha mayor in next year’s election. Stothert has announced she is seeking a fourth term as mayor of Nebraska’s largest city.
Stothert started off her letter to McDonnell by saying that after an earlier exchange between the two this summer, she had hoped to engage in a “more productive and public debate” on the streetcar and its financing.
Apparently that is not the case, she wrote, and told McDonnell that her Thursday missive would be the last written response to him on the matter. The streetcar is to be operational in 2027.
Stothert went on to call out McDonnell for, as she said, not attending public hearings on the streetcar project. “I can only assume that this recent revelation and concern … has a different motivation.”
Concerns McDonnell outlined to Stothert and other city officials, including City Council President Pete Festersen, were based on a recent probe of TIF use statewide by State Auditor Mike Foley.
Stothert said Foley “clearly” has “an issue” with TIF and with Omaha’s streetcar. She said his “opinions are beyond the scope of his responsibilities.”
She repeated her earlier stance that Omaha has acted in accordance with state statutes and noted that McDonnell’s vote helped pass them.
Response to concerns
Among the responses she offered to McDonnell:
- The so-called “Redevelopment Plan Area Alliance.”
Foley’s audit team said its reading of documents showed that neither the City of Omaha nor the Streetcar Authority would be managing the finances of the streetcar project. Instead, revenues were to be transferred to the Redevelopment Plan Area Alliance, a nonprofit corporation for overall financing and management. Foley said the team was unaware of any provision in the Community Development Law, which governs TIF, that allowed such a nonprofit entity to act as custodian of TIF funds.
Stothert said the alliance was never formed. She said the Streetcar Authority in fact is overseeing the project. She also said the city is not prohibited from using a nonprofit to implement a redevelopment project and said the city “routinely” partners with such entities to construct housing through the use of TIF.
- “Extensive” TIF boundaries created for the streetcar project.
Foley’s team noted that planned use of TIF revenue impacts a “sprawling two-tiered swath” of about 50 city blocks around the streetcar route. The auditor team said the plan requires developers within that zone to direct a portion of TIF proceeds for those separate projects toward the streetcar.
McDonnell wanted Omaha officials to explain how they determined such an area of the downtown-midtown urban core to be extremely blighted.
Stothert said that before a designation is made, the Planning Department prepares a study of conditions in the area to determine if they meet requirements of TIF statutes. She said public hearings are held.
Omaha’s designations of blighted or extremely blighted areas have “never been identified as legally deficient, out of compliance or improper by the auditor or the Legislature,” Stothert noted.
Stothert accused McDonnell of misstating law and fabricating statements.
“You clearly are not interested in Omaha’s future growth and prosperity,” she wrote to the Omaha lawmaker. “You clearly are not interested in revitalizing the urban core…”
After reading Stothert’s letter to him, McDonnell Thursday called the response “extremely disappointing” and said the concerns voiced on behalf of taxpayers should be addressed in a “mature manner.”
“My questions remain unanswered and that is a disservice to every taxpayer in this city,” he said.