LINCOLN — State Sen. Rob Dover knows real estate.

The Norfolk lawmaker, appointed to the Legislature in 2022 and now elected to serve four more years, is a Realtor, a builder and a developer of private residential and commercial properties. He has previously served on the Nebraska Real Estate Commission.

Still, Dover said, he’s had a tough time determining whether state funds and public incentives directed at affordable housing are used as effectively as possible.

He led an interim study aimed at finding out what works and what doesn’t. A lineup of housing and economic development experts discussed their thoughts and experiences during a hearing Wednesday before the Legislature’s Appropriations Committee.

Dover said the expert input, along with other research gathered for the Legislative Resolution 416 he sponsored, will be the basis for housing-related legislation he expects to propose during the upcoming legislative session to improve the state’s “return on investment.”

The study looked at, for example, possible change in Nebraska’s Affordable Housing Trust Fund, the Rural Workforce Housing Fund, and documentary tax and tax-increment financing statutes.

“By and large, there is agreement that these funds are making housing more affordable to those in need and that we are seeing new housing spring up in all parts of Nebraska,” Dover told fellow committee members. “This does not mean programs are perfect.”

‘Housing Critical’ To NE Growth

Ultimately, Dover said, Nebraska’s challenges can be resolved by increasing the number of people paying income, sales and property taxes that lower individual tax burdens.

“Economic development requires workers. Workers require housing,” he said. “In short housing is critical for Nebraska’s economic growth.”

Testimony during the hearing at the Capitol came from seven invited Nebraskans who work in the housing industry, including private developers, nonprofits and city governments.

A common theme among the advocates was to invest further in efforts that create housing affordable to Nebraskans. They laid out examples of how various state-funded programs have benefited families and communities.

Candice Alder, economic development director in Norfolk, said 218 new dwellings were possible with help from the state rural workforce fund, which became law in 2017. The state contributed $1.6 million and the city match was about $750,000.

Alder said the economic development tool TIF also “moved the needle” in providing more housing, playing a role in the development of 936 housing units since 2016.

Generally under TIF, a developer, with approval by the respective city, is allowed to use  increased property taxes generated by the improvement on a blighted property (the so-called increment) to help finance a redevelopment project.

Sen. Steve Erdman of Bayard, however, raised doubts during the hearing about whether TIF is being used appropriately in all cases. He pointed to a review by State Auditor Mike Foley, who suggested lawmakers clarify boundaries of the program.

“We need to have it tightened up,” Erdman said. “We have a lot of slack.”

Alder and Jake Hoppe of Hoppe Development, another fan of TIF, suggested changing language in the statute so that the incentive, when used for low- and moderate-income housing, is not limited to “blighted” areas.

Under state law, an area must be deemed blighted and substandard by a respective city council before a redevelopment project area within that zone can qualify for TIF to defray costs of eligible expenses.

“Nobody wants to be called blighted,” said Alder.

Low-Income Tax Credit Key

Hoppe and others praised the state and federal low-income housing tax credit programs administered by the Nebraska Investment Finance Authority as key for producing residential dwellings for people of low and moderate incomes.

According to NIFA data, the tool accounts for the state’s biggest chunk of affordable rental housing, or about 5,000 new dwellings added over the last decade and another 2,000 or so in various stages of development.

In essence, the credit allows investors to offset their tax liability in exchange for providing upfront funds to develop affordable housing. That money reduces a project’s overall debt, which allows rents to be more affordable at below market rates.

A NIFA-led study identified a goal for Nebraska to create, by 2028, at least 35,000 affordable and attainable homes across the state for low- to middle-income earners, which authors said would reduce the number of needed housing units by about a third.

Hoppe suggested broadening the scope of the Middle Income Workforce Housing Investment Fund to provide grants not only for creation of owner-occupied housing, but also for rental. He said requirements in certain state housing funds are cumbersome and should be streamlined.

Roger Nadrchal, CEO of NeighborWorks Northeast Nebraska, urged lawmakers to keep the documentary stamp tax, collected on the transfer of real estate, for housing-related programs and not redirect it to other purposes.

Charlie Wesche, CEO of NeighborWorks Lincoln, talked up the Community Land Trust model. Under that program, a family buys a home but leases the land underneath from the CLT.

Participating land trust residents agree to certain requirements. For example, in the case of a resale, the equity is capped to keep the property affordable for another buyer in a similar economic situation.

Wednesday’s gathering was the last interim study hearing of this year prior to the start of the next legislative session.

Dover said his goal is to promote state programs in which funds can be reinvested to help more homebuyers “instead of being forgiven, resulting in a single use or forfeited tax dollars.”

“It is my intention to bring legislation in the coming session that will lower the burdens discussed, streamline the process, and move affordable housing forward across the state,” he said.

This story was published by Nebraska Examiner, an editorially independent newsroom providing a hard-hitting, daily flow of news. Read the original article: https://nebraskaexaminer.com/2024/12/18/lawmakers-look-at-what-works-wha...