Omaha Real Estate Deals Rob OPS

At Omaha City Council meetings, tax increment financing [TIF] is regularly on the agenda. It’s a way for real estate speculators to increase their profitability and personal wealth while taking money from children, specifically by avoiding property taxes that fund Omaha Public Schools. Your councilmember and mine have accepted campaign donations from these builders and financiers, so it’s no surprise that they approve requests to skip out on tax payments.

TIF works like this: a real estate speculator plans a development and tells the City that the project can’t possibly make money without a tax break. No money, no project. The City provides a convenient solution: TIF. The City will effectively “freeze” the real estate taxes at the current value of the property, not what it’s worth after the project is completed. If the value is now $100,000 but will be worth $850,000, the real estate speculator will only pay taxes on $100,000 for the term of the agreement, normally 15 years.

Since developers get away without paying their fair taxes, they starve our public institutions of funding. Here’s how our property taxes are allocated.

Omaha Public Schools — 55%
City of Omaha — 21%
Douglas County — 13%
Metro CC — 4%
Metro Transit — 2%

In the example I gave above, our community loses $16,885 every year in property tax revenue on that missing $750,000. Over 15 years, that totals $253,284.

At 55% of the tax levy, OPS loses $140,247 in funding so a real estate speculator can avoid taxes.

Maybe that doesn’t sound like much, but here’s the real math. In 2019, the City of Omaha’s TIF program refunded $42,964,332 of property tax money. [link] OPS’ share was $24,451,278. In the same year, City Council approved 20 new projects and adjusted three more to the tune of $38,909,549. [link] For the curious, City Council added $38,780,772 in 2018 and $44,668,238 in 2017.

In just three years, City Council agreed to strip over $122M in property tax revenue over the next 15 years, with over $67.75M coming from OPS’ budget.

Every TIF approval by City Council removes funding for an entire generation of students, largely the poorest in the city.

For the 2019–2020 school year, 74.9% of OPS students were eligible for free or reduced lunch. [link] “Although not the most precise indicator of poverty, student participation in the FRPL program is the only indicator of socio-economic status universally available to public schools across the nation,” according to OPS. [link] To qualify, a family of five must earn less than $1,092 per week, the equivalent of 40 hours of work at $27.30/hr.

These tax avoidance schemes have real impact. In 2018, OPS made $29M in budget cuts, eliminating 180 jobs and freezing wages. [link] In 2019, $10M in cuts and 20 more jobs. [link] We cannot look at OPS’ annual loss of $24.5M in property tax revenue created by TIF and ignore the fact that Omaha’s business community is taking money from students and teachers.

But ignore, we do. Since the City of Omaha has never performed an impact assessment, the government doesn’t acknowledge the consequences of TIF. The City Council has never asked, “If we remove $38M from property tax revenue over the next 15 years, what will happen?” It’s been happening for over 20 years, and our community acts like it’s normal.

TIF is a tool to strip public wealth for private gain. Whatever happened to the “fiscal responsibility” touted by our civic and business leaders? Through their involvement with the Business Ethics Alliance [disclosure: I was on the Board of Trustees for several years], they claim the dual importance of Community Responsibility and Financial Vitality. When it comes to the normal course of business, these values are ignored in the name of profit.

I’m invoking another of the Alliance’s values: Accountability. Part of accountability is “to implement corrective action.” Since Omaha Public Schools has had to cut their budget — and TIF’s 15-year program continues to threaten future funding — it’s time for Omaha’s takers to return our tax money and make good on their promise of community responsibility.

Look here for a list of approved projects: http://ne.tif.report/DOUGLAS/OMAHA/index.html It includes our wealthiest and most influential corporations: Omaha World-Herald, First National Bank, Mutual of Omaha, Blue Cross Blue Shield, Gallup, TD Ameritrade. It includes the biggest real estate developers like Noddle, NuStyle, Paladino, Shamrock, Lockwood. [See all TIF applications to date]

Why are the wealthiest residents of Omaha — these so-called philanthropists — taking money from our schoolchildren? Is it true that they wouldn’t build their buildings without public money? I’d like to see their balance sheets. Certainly, they are making more than the $1,092 per week that qualifies for a free lunch.