OMAHA — Private developers seeking the sometimes controversial public subsidy called tax-increment financing soon could be required to replace each affordable housing unit destroyed while building their new project.

They also might see a new mandate that TIF residential projects include a certain percentage of affordable housing units.

Those TIF-related changes are among numerous policy and housing code recommendations in the city’s proposed Plan that’s been months in the making.

The goal of the 38-page action document (not including supporting planning materials) is to identify ways Omaha’s roughly half-million residents can achieve more affordable housing options. It also fulfills the Nebraska Legislature-approved Municipal Density and Missing Middle Housing Act.

Strategies were based on an extensive public input process and analysis of demographic and market trends.

Long-range city planning manager Derek Miller calls the study a “starting point” for addressing affordability needs and not a “silver bullet” that is going to solve needs on Day 1.

In defining affordable, the city notes the federal Housing and Urban Development description: housing for which the occupant pays no more than 30% of gross income for housing costs, including utilities. Nebraska’s recent Missing Middle Housing Act explains affordable as dwellings that target households earning no more than 80% of the local adjusted median income as set forth by HUD.

Public comment on the draft report is to be accepted through Oct. 14. Then a final plan will go to the Omaha Planning Board, City Council and mayor for approval. Many individual recommendations and regulation changes still would require additional and separate approval beyond the report.

“Omaha’s housing needs are broad and complex and for this reason this plan should work in unison with other city planning efforts with regular updates to ensure strategies remain relevant,” said Amy Haase of RDG Planning & Design, which paired with the Omaha Planning Department to develop the plan.

Consider these data points outlined in the report:

• Omaha has not been producing enough housing to meet demand. Between 2010 and 2020, the city added 26,908 households and constructed 26,732 units. To avoid shortages, the plan said, slightly more than one unit should be created for every new household.
• The number of households making more than $75,000 annually accounted for 95% of household growth between 2010 and 2020. Those households can afford market rate new construction but, the report said, a shortage of new construction houses has many of them living in more affordable options. That, combined with the loss of nearly 7,000 affordable units in the last decade, has resulted in fewer options for lower income households.
• At 1.1% annual growth, Douglas County will need to produce nearly 30,000 units by 2030. Of those, some 11,000 units should be priced below $250,000 for households making less than $100,000. At current building costs, that number won’t come without changing the type and size of owner-occupied units being constructed.
• About 7,000 rental units are needed with monthly rents below $1,000 for households making less than $50,000.
• In 2021, supply in the for-sale housing market dropped to less than a month, well below the six-month supply traditionally needed to avoid price inflation.
• An Omaha rental survey that included more than 19,000 units found rents increasing for more than half the units in the previous year. The vast majority of new units built charge elevated price points. While households making less than $50,000 has declined, the number of units affordable to those households has declined by about 7,000.

During the public input sessions, many Omahans expressed frustration that there was no affordability requirement linked to city-approved TIF awards. The frustration was exacerbated when the TIF project called for removing existing affordable housing that was in its path.

Thus emerged the recommendation to look at forcing developers to replace, one-for-one, both subsidized and unsubsidized affordable units that are lost. TIF awards also could come with the new caveat requiring a certain ratio of affordable units, or a fee, if that’s what the developer preferred.

Another recommendation was to expedite TIF projects that meet certain criteria promoting affordable housing.

TIF is a Legislature-approved tool intended to spur economic redevelopment in blighted areas. Upon city approval, the developer takes out a loan to cover eligible project expenses that include public improvements. The debt is paid by using increased property tax revenue generated on the new development during the loan period, generally 15 or 20 years.

Once the loan is paid, the tax revenue on what will have become a property of higher value is redirected to traditional government coffers such as public schools and city and county governments.

Other strategies in the affordability plan include creating, within five years, a “development fund” that can expand affordable housing of all types.

That fund could be capitalized through a bond issue requiring a community vote or a fee applied to certain new housing developments.

The report also suggests changing housing code revisions to dramatically increase the amount of residential ground that allows middle density housing. Middle density income housing are building types with multiple units that range in style from duplexes and triplexes to cottage clusters and townhouses.

Among other strategies to be explored:

• Expanding repair and weatherization programs.
• Evaluate and modify minimum parking requirements across all districts allowing residential uses.
• Create a property tax reimbursement for low-income households that do not qualify for the Homestead Exemption Program.
• Expand rent and utility programs through a development fund or city housing bond.

Recommendations are to be built upon and evolved, authors of the report said. Each idea to be considered has a suggested timeline for implementation, some less than three years and others five years or beyond.

The City of Omaha has hired a housing manager to oversee the plan and other recent housing initiatives.

This story was originally published by Nebraska Examiner, an editorially independent newsroom providing a hard-hitting, daily flow of news. It is part of the national nonprofit States Newsroom. Find more at nebraskaexaminer.com.

Author Profile: Cindy Gonzalez