Nuances of Developer Backed TIF Deployment in Nebraska

Nebraska has one of the most established TIF frameworks in the Midwest, authorized by the Community Development Law. Cities across the state have used TIF for decades to remediate blight, fund public infrastructure, and catalyze redevelopment. Now, with the passage of LB 1135, signed into law in April 2026, Nebraska has introduced conduit revenue bonds and taxpayer agreements — tools that shift the financial risk of TIF-supported projects from the Community Redevelopment Authority to the developer, giving municipal leaders a stronger, more insulated approach to incentivizing development.

What the New Legislation Changes

Under prior Nebraska law, TIF bonds issued by a CRA were general obligations of the CRA — payable from its revenue, income, receipts, and proceeds, including the tax increment. While these bonds were not a debt of the city, they did expose the CRA’s broader asset base to bondholder claims. LB 1135 creates conduit revenue bonds payable solely from specifically pledged revenues, insulating the CRA’s other activities. It also authorizes taxpayer agreements where the developer guarantees any shortfall, with liens carrying parity with property tax liens and priority over existing and subsequent mortgages.

How Nebraska TIF Compares to Other Incentives

Nebraska municipalities have access to the ImagiNE Nebraska Act (income tax credits and wage credits for qualifying businesses), Community Development Block Grants, historic tax credits, and traditional TIF. Each tool has a niche, but TIF offers unique advantages: it captures revenue that would not exist without the project, generates long-term tax base growth rather than reducing existing revenue, and under the new LB 1135 framework carries zero CRA general obligation exposure. Unlike state tax credit programs, TIF does not depend on competitive applications or appropriation cycles.

Nebraska’s Unique TIF Characteristics

Nebraska TIF applies only to ad valorem real property taxes — no sales tax, franchise fees, or other revenue streams are captured. The tax division period runs 15 years for standard projects or 20 years for areas declared extremely blighted. The CRA (or the city acting as authority) is the entity that prepares redevelopment plans, issues bonds, and enters into redevelopment contracts. A substandard and blighted declaration is a threshold requirement before any redevelopment plan can be adopted, and a cost-benefit analysis demonstrating the but-for test is mandatory.

Evaluating Project Feasibility

Before committing to TIF, the cost-benefit analysis must consider tax shifts, public infrastructure impacts, employment effects both inside and outside the project area, and other relevant factors. The governing body must find the project is in the community’s long-term best interest and would not be economically feasible without TIF. The Notice to Divide Tax must be filed with the county assessor by July 1 — a critical deadline that, if missed, delays the entire project by a year.

Working With Developers on Terms

The redevelopment contract is the central agreement. Key provisions include the developer’s construction obligations, TIF-eligible cost caps, developer guarantees, disbursement conditions, and default remedies. The CRA must provide the governing body with at least 30 days’ written notice before accepting a redevelopment contract proposal. Under LB 1135, the taxpayer agreement formalizes the developer’s shortfall guarantee with enforceable lien security — adding a contractual layer that prior law lacked.

TIF as a Community Growth Engine

Nebraska TIF has a proven track record of turning substandard and blighted areas into productive tax base. Every completed project adds assessed value that, after the TIF period ends, flows permanently to all taxing bodies. Hageman Capital purchases developer-backed TIF Bonds and serves as a free resource for Nebraska municipal leaders navigating this framework. Connect with our team to explore what TIF can do for your community.