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Nebraska, your tax dollars at work: Promoting a new outlet mall

By   /   November 15, 2013  /   No Comments

Part 2 of 3 in the series Gretna outlet mall

By Deena Winter | Nebraska Watchdog

LINCOLN, Neb. — A new outlet mall officially opens in Nebraska Friday, and shoppers will be enticed to buy Coach purses and Nike shoes with the help of $16.7 million worth of public subsidies for marketing and communication alone.

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SHOPPING FOR SUBSIDIES: A new outlet mall near Gretna, Neb., is benefitting from big public subsidies, including $16.7 million to help with marketing.

The grand opening festivities for Nebraska Crossing Outlets began Thursday with a fashion show featuring former Nebraska football coach Tom Osborne and continues Friday with live remotes, deejays and giveaways including Husker tickets and a Land Rover Evoque.

It’s not clear which of these grand opening festivities might constitute your tax dollars at work, however, since Gretna city officials refused to divulge much information about how the $16.7 million in subsidies for “marketing and communication” is being spent.

In possible violation of the state open records law, Gretna failed to turn over any documents other than a single memo in response to Nebraska Watchdog’s open records request seeking specifics on how the money is being spent. Apparently, there’s not one document at Gretna City Hall related to how $16.7 million worth of incentives will be doled out.

Instead, the city clerk and city administrator simply responded with a memo written by Lincoln attorney Kent Seacrest, who was hired by the city to work on the financing plan and redevelopment agreement with the mall developers, Rod Yates of OTB Destination and Frank Krejci of Omaha’s Century Development.

The memo largely lifted passages from the redevelopment agreement, which said revenue from a 1.95 percent sales tax on purchases in the mall can be used for public signs, “grand opening promotions,” other promotions, technology infrastructure and capital improvements.

“Public signs” are defined as seven 40-foot-high digital or non-digital pylon signs and 10 digital or non-digital building signs that can be used for city and community public information and general business and product information, public activites and promotions of public events.

Taxpayer dollars can be used to pay for grand opening public activities and promotions, including the management, promotion and advocacy of retail trade activities, according to the redevelopment agreement. Tax revenue can also be used to pay for a public Wi-Fi network.

And that’s just a portion of the public subsidies Gretna approved for the outlet mall: more than half the $112 million price tag for Nebraska Crossing is covered by government subsidies. Taxpayer dollars are expected to cover $58 million of the cost, more than the $54 million the developers are expected to invest, according to the redevelopment plan.

Gretna residents overwhelmingly agreed in a vote-by-mail 2011 election to divert or “turn back” $14 million in local sales tax revenue for a decade in what is called turnback tax revenue. But that’s just one piece of the financing plan. In addition, the mall is getting:

• $26 million in occupation taxes. A 1.95 percent sales tax on purchases in the mall will be levied for 20 years.
• $13 million in tax increment financing, which diverts additional property taxes generated by the redevelopment into the project rather than public coffers.
• $4 million in general obligation bonds issued by Gretna to fund infrastructure, which will be repaid by property taxes.

Leigh McIlvaine, research analyst for Good Jobs First, has said subsidizing retail won’t create economic growth in a region unless it’s in an area underserved by retail, such as a food desert in an inner city. In fact, many cities ban subsidies for retail projects, she said.

When asked for specifics on how that $16.7 million would be spent, City Clerk Tammy Tisdall said via email that the city wasn’t given “particulars” for the budget on communication and marketing, nor was it required. She deferred to the developers. When reached by phone, Yates said he didn’t have time to talk about it.

City Administrator Jeff Kooistra did not respond to calls seeking comment.

Clearly, there should be a few city documents in existence about how the money is spent, since the redevelopment agreement requires that the developer submit requests for reimbursement with “receipts, invoices, proof of payment or other documentation satisfactory to the city” to prove the costs are eligible.

Seacrest’s memo also noted that to ensure the developer’s performance, the two principals (Yates and Krejci) provided limited personal guarantees.

Contact Deena Winter at deena@nebraskawatchdog.org.

Editor’s note: to subscribe to News Updates from Nebraska Watchdog at no cost, click here.

Part of 3 in the series Gretna outlet mall

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Deena Winter has been a journalist for over 20 years, writing stories for the Northwood Gleaner, Bismarck Tribune, Associated Press, Denver Post and Lincoln Journal Star before joining Watchdog.

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