Chairman Gloor and members of the Revenue Committee:
I appear today on behalf of the Lincoln Independent Business Association, or LIBA, and it’s more than 1,300 Lincoln business members in a neutral position on LB 884. I testify neutrally because we have reservations about one particular aspect of the bill.
Specifically, we have minor concerns about the added provision that would allow the City of Lincoln to utilize 10% of the sales tax turned back under the program to be used to fund low income housing development. While LIBA understands and is sympathetic to the need for low income housing development and the difficulty related to financing such projects, we do not believe that using money derived from this program is the right way to do it.
The Convention Center Facility Financing Assistance Act is a unique and important statutory mechanism that provides cities assistance in ensuring the success of development projects that can truly energize a community. The rationale for allowing sales tax to be returned to communities to assist in paying for these types of projects is that the development itself works to increase the amount of sales tax dollars generated from the center and its surrounding hotels. Returning sales tax dollars to help offset the community’s cost of the initial development, then, helps the taxpayers of the community who bore the risk in developing the project by allowing them additional assistance in paying of community debt related to the project. Redirecting the sales tax dollars intended to help pay for the initial development subverts this intent. Because the Act is meant to help pay off outstanding bonds from the convention center construction, the sales tax dollars returned should focus on doing just that.
While funding for low income housing development is inarguably a worthy cause, this pool of funding was not intended for such projects. Instead, this funding mechanism was provided to assist local taxpayers in paying off indebtedness for the creation of a public improvement that will provide tax and economic benefits to both the state and local community for years to come. Allowing these funds to be diverted to other projects will likely result in bond debts being paid off at a slower pace than they otherwise might have been, and the entire community will suffer for that.
We ask that the Committee consider an amendment to LB 884 that would remove the provision in the bill allowing the use of the funds to be diverted from paying off bond debt on the construction of the venue.