TIF Expertise: Common Pitfalls for Nebraska Municipal Finance Advisors to Avoid

Nebraska’s Community Development Law creates a defined TIF framework with unique characteristics that shape your financial analysis. Here are the pitfalls Hageman Capital sees financial advisors encounter most frequently.

Pitfall 1: Not Accounting for the Ad-Valorem-Only Framework

Unlike multi-revenue-stream states, Nebraska TIF captures only real property taxes. Your increment projection depends entirely on assessed value growth — making accurate property valuation estimates and conservative development timeline assumptions critical. There is no sales tax or franchise fee cushion to offset underperformance in property assessments.

Pitfall 2: Underestimating Assessment Risk

Under current law, a property owner within a TIF district can challenge their property assessment. A successful appeal reduces the excess value and the increment available for debt service. This is one of the key risks LB 1168 would address — taxpayer agreements could contractually limit assessment challenges. Until that legislation is enacted, factor assessment appeal risk into your models with conservative assumptions.

Pitfall 3: Confusing CRA Bonds With City Debt

CRA bonds are general obligations of the CRA, not the city. However, they do expose the CRA’s broader revenue base to bondholder claims. If the CRA is involved in multiple projects, assess the cumulative exposure. Under proposed LB 1168, conduit revenue bonds would isolate project-specific risk — but until that legislation passes, current law applies.

Pitfall 4: Missing the July 1 Filing Deadline

The Notice to Divide Tax must be filed by July 1 on the prescribed form. Missing this deadline means the taxes remain undivided for the entire tax year — a costly delay. Verify the filing is complete and timely as part of your closing checklist.

Pitfall 5: Weak Cost-Benefit Analysis

The cost-benefit analysis must evaluate tax shifts, infrastructure impacts, employment effects, and other factors. A superficial analysis that does not genuinely demonstrate the but-for case creates legal risk and undermines your recommendation. Build a thorough analysis that withstands public scrutiny.

Hageman Capital works alongside Nebraska financial advisors at no cost. Request a meeting with Whitney Peterson for a technical consultation.