Community Development Financing Tool In Danger, Sources Say

In recent years, the Village of Dorchester has advanced plans to redevelop portions of our community and its infrastructure. Relying on cost-benefit analyses and tax increment financing, also known as TIF, to goal of village leaders has been to make the new development and upgrades financially viable.

TIF is an economic development tool frequently used by cities, counties, and authorities to encourage developers to invest in under-performing, blighted areas. TIF financing is only available in TIF districts, which are designated by city or village council members.

However, now TIF is in danger in Nebraska, according to insiders. Nebraska Examiner reports that as the Nebraska Legislature considers property tax relief, TIF projects are in the crosshairs.

Why does that matter?

As the Examiner explains, TIF allows a developer, with approval from city officials, to use the increased property taxes generated by the improvement on a blighted property (the so-called increment) to help finance a redevelopment project -- often times for the infrastructure that is needed to make a project actually happen.

“Tax-increment financing is, frankly, the dominant tool municipalities have for economic and community growth,” said one municipality expert.

Currently, TIF is widely used across the state, in 67 Nebraska counties and 136 cities. Numerous projects representing billions of dollars in investment have tapped into the financing mechanism.

Village Taking Next Step Towards New Housing Development, Other Improvements

On Monday evening, Nov. 5, Dorchester will take its next major step to attract new development and improve the conditions of current homes and commercial buildings. 

According to public notices, Dorchester's planning commission and village board will both meet to take public comment in consideration of a resolution to declare all lots and lands within Dorchester's village limits as blighted and "in need of redevelopment" as pertaining to Nebraska's Community Development Law.

While no one wants to hear that their town is "blighted," the move is a critical step in the process to allow tax increment financing, also known as TIF, which help make new development and property upgrades financially viable in a small town such as Dorchester.

Here is how the Department of Revenue's website explains TIF:


The TIF process begins with the city declaring an area as substandard, blighted, and in need of redevelopment. The city must hold a public hearing and ... prepare a redevelopment plan, which must show, for example, the boundaries of the redevelopment project area, proposed land uses, population, land and building intensities, changes in zoning, and traffic flow.

After approval of the redevelopment plan and the project, TIF bonds may be issued for the acquisition of property, site preparation, and public improvements. The property is transferred to the developer at its fair market value for development and construction in accordance with the redevelopment plan. The properties in the project will have a base valuation, which is the last certified value prior to the division of tax effective date. The base property valuation remains assessable to all taxing entities. Any increase in value and resulting taxes must be accounted for separately and be used to pay off the debt incurred for the redevelopment project. The project must not exceed a 15-year period. 


According to an expert we spoke with, allowing TIF is vital for Dorchester's efforts to create a new housing development to the north. (See the graphic above.)

This past summer, village board members held three consecutive meetings to consider annexing a large piece of farm ground immediately north of town.  The land that has been annexed is owned by William J. Plouzek.  The area's boundaries are 12th Street to the south; the Hwy 6 spur (or County Road 1400) to the west; County Road D to the north; and County Road 1450 to the east.

Many residents believe that if Dorchester is to expand and attract new housing, it must be away from the grain elevator and railroad tracks and no closer to the feedyard to the west.  So growing to the north and northeast of Dorchester, near Hwy 6, are the most feasible options.

According to our research, this housing development effort comes at a good time.  A new Nebraska law, LB496, allows TIF to support the construction of workforce housing, and this will lower the cost of building a home in a small community, making new construction more feasible.  LB496 authorizes rural communities -- in counties with fewer than 100,000 inhabitants -- to include the construction of single-family or multi-family housing as part of a redevelopment project eligible for TIF.  Workforce housing under the new law is defined as "owner-occupied housing units costing no more than $275,000 to build, or rental housing units that cost no more than $200,000 to build," according to an e-mail we received.

The future appears to be arriving quickly when it comes to Dorchester's aspirations for growth.

Dorchester's Lots For New Homes Could Be Helped By TIF

UPDATE:  We have heard from several reliable sources that Dorchester town leaders and landowners are looking at options to attract new housing, especially on the outskirts of town and in existing available lots.  One particular area is just north of Dorchester's village limits in what is currently a corn/soybean field surrounding the home of the W.J. Plouzek family. And that effort may have just gotten a boost, according to a reader who has inside knowledge of state government.  According to conversations our staff has had with at least four town residents, the Dorchester Village Board is looking at options to use something called "tax increment financing" (TIF) to provide an incentive to build new homes.  Of course, there would have to be sufficient interest in building at least a handful of new homes and a commitment to build at least a handful.  But according to an e-mail we received, that interest may be sparked more easily now that Gov. Ricketts has signed into law LB496 allowing TIF to support the construction of workforce housing. The new law will lower the cost of building new, making new construction more feasible in small towns.  The bill authorizes rural communities -- in counties with fewer than 100,000 inhabitants -- to include the construction of single-family or multi-family housing as part of a redevelopment project eligible for TIF.  Workforce housing under the new law is defined as "owner-occupied housing units costing no more than $275,000 to build, or rental housing units that cost no more than $200,000 to build," according to the e-mail we received.  Below is a 2017 Times story that may tie into this TIF development.  Stay tuned.

A reader recently e-mailed the Times, thanking us for reporting when homes were listed for sale in Dorchester.

But he also took us to task, writing, "Since Dorchester's real estate market is so hot, why don't you tell folks about available places in town that are ready for new homes to be built?"

We challenged the reader to tell us of any available lots in town -- and he responded by giving us three locations.

For those who are considering building in Dorchester, here are the options according to our reader:

• EAST, NORTHEAST DORCHESTER:  We are told that Jack Bruha has housing lots available for new construction east of Fulton Street and Jackson Ave., as well as north of 10th Street.  This is a pretty part of the community and one of most peaceful.

• NORTH DORCHESTER: We were also informed that Ron Zoubek has a handful of lots in north Dorchester just off of 11th Street and north of the football field.  This is a very nice neighborhood and allows for quick access to the school and Highway 6.

• FAR SOUTH DORCHESTER:  If you don't want cars driving past your home often, there are at least four lots available for new construction on Whitmar Street in south Dorchester, south of the museum grounds.  Bob Kasl has them for sale on this dead-end street in a well-kept and quiet neighborhood buffered from the highway by the county museum grounds.

The Times did not investigate any of this information.  We are simply passing it on since it comes from a well-informed and trustworthy resident.  Those interested in these lots should contact the owners directly, not the Times.  Of course, not only would the land need to be purchased, but the village government would need to approve the construction and provide the water, sewer and electricity to the new home.

As we've reported recently, with demand for small town life growing fast, Dorchester cannot keep quality homes on the market for 24 hours.  This comes as no big surprise since Dorchester has a lot going for it -- if you prefer living in a safe, friendly and affordable community that has much potential for the future. 

If you're ready to call Dorchester home, we encourage you to take a look at these lots and consider building in our community.

Dorchester To Consider Revised Redevelopment Plan For Co-Op Properties

On Monday, Jan. 3, at 6:30 p.m., the planning commission for the Village of Dorchester will meet to consider revisions to a previously approved redevelopment project that will utilize tax increment financing (TIF). 

The meeting, which will be held in the Dorchester Community Building, is open to the public. (Unfortunately, the notice has not been published electronically on the village website.)

The area of town under consideration contains property owned by the Farmers' Cooperative, according to the Village's public notice. (See graphic above.) This includes parcels that contain the filling station, co-op parking lot, co-op office building, and grain silos.

For readers who may be unaware, TIF is utilized to help make new development and property upgrades financially viable, beginning with the city government declaring an area as substandard, blighted, and in need of redevelopment. 

Under the state's TIF rules, the city government must hold a public hearing and prepare a redevelopment plan, which must show, for example, the boundaries of the redevelopment project area, proposed land uses, population, land and building intensities, changes in zoning, and traffic flow.

Dorchester has used TIF previously for the housing development area in the northwest section of town.

According to the public notice, all interested parties will be afforded an opportunity to express their views at the Jan. 3 meeting regarding the revised redevelopment plan.

A map of the redevelopment area and a copy of the cost-benefit analysis are available at Village Hall.

Developing...

Note To Dorchester's Village Officials: Follow McCool's Lead

Interesting story in the Lincoln Journal Star this morning.  We hope Dorchester's elected board members, including the two newest, read it.

According to the Lincoln paper, when the Dorchester-headquartered Farmer's Cooperative put up new silos in 2012 in McCool Junction, McCool's city government "used a boost in tax increment financing revenue to give the entire village a facelift -- redoing streets and sewers, refurbishing parks, even acquiring land."

The Journal Star reports that "when a redevelopment project adds value to a 'substandard and blighted' property, TIF allows cities to capture the additional property taxes on that added value to help pay for related improvements that have some public benefit, generally using a bond that is repaid over 15 years."

Nebraska had 766 TIF projects as of last year.  That's a big number of community improvements.  Dorchester should be in that mix.  

Of course, a good attorney will be needed to walk the village board through the process. But just think of the opportunities:

•  Maybe a new apartment or row-house building on the site of an abandoned, neglected home. (The one on 9th Street comes to mind.)

• Perhaps a refurbished commercial building on main street.

• Or what about the next time the Farmers' Cooperative does another major, $1-million-plus project in town, like any one of the silos that have gone up here in the past half dozen years?

You need to give people a financial incentive to spend big dollars in small communities.  And when they do, our village should be capturing those extra property tax dollars (created by increased property values) to benefit our community's quality of life.

Dorchester's elected leaders need to start getting creative.  Examining the use of TIF in Dorchester might be a good start to help improve our community's businesses, street conditions, and housing stock.

Options For Addressing Unsightly, Dangerous Properties In Town

Earlier this week, the Times received a letter from a resident who complained about the condition of some unkempt properties in town.

Old complaint.  Old problem.  The question is: What to do about it?

We asked three friends of this blog what they would do -- if made king/queen of Dorchester for a day -- to address homes and commercial buildings in major disrepair? We received three different answers.  Here they are:

1. Crack down more on negligent and/or messy property owners, using heavier fines and legal means.
2. Create a "cost-share incentive program" to financially assist clean-up and restoration efforts made by low-income property owners.  (When we asked how this fund would be financed, the resident told us through donations, fundraisers, property tax revenues and perhaps a new sales tax.)
3. Declare certain blocks in Dorchester as blighted and substandard, then use tax increment financing to encourage rebuilding and/or renovation.  (The person who gave us this answer said this could bring a new retirement facility to town, or maybe a new apartment building.) 

Readers of this blog might not be too familiar with tax increment financing, but it's a tool being used in many Nebraska communities to encourage the redevelopment of deteriorating, dilapidated properties.  Nebraska law permits its use. 

We aren't experts on tax increment financing, or TIF for short, but it seems to be a pretty straight-forward concept.  It takes property tax revenue that would normally be paid by developers (once a property is improved and valued at a much higher price) and diverts it back into their projects.  That money can even be used for for public infrastructure near the project.

Under Nebraska law, TIF projects may be commercial, residential, industrial, or mixed use.  After a project is approved by the town board, the locality authorizes the issuance of warrants or TIF bonds to undertake public improvements in the designated area.  

We are interested in what our readers would do to encourage clean-up and repair of dilapidated properties in town?

NEWS ROUND-UP: New Housing Development Being Considered For Dorchester?

Here's the latest news taking place in and around Dorchester:

New Housing Development Coming to Dorchester?:  We have heard from several reliable sources that Dorchester town leaders and landowners are looking at options to attract new housing, especially on the outskirts of town.  And that effort may have just gotten a boost, according to a reader who has inside knowledge of state government.  According to conversations our staff has had with at least four town residents, the Dorchester Village Board is looking at options to use something called "tax increment financing" (TIF) to provide an incentive to build new homes.  Options would be the farm ground just north of town, as well as empty lots in the northeast section of the village.  Of course, there would have to be sufficient interest in building at least a handful of new homes.  But according to an e-mail we received, that interest may be sparked more easily now that Gov. Pete Ricketts has signed into law LB496 allowing TIF to support the construction of workforce housing, thereby lowering the cost of building new.  The bill authorizes rural communities -- which the bill defines as any municipality in a county with fewer than 100,000 inhabitants -- to include the construction of single-family or multi-family housing as part of a redevelopment project eligible for TIF.  Workforce housing under the new law is defined as "owner-occupied housing units that cost no more than $275,000 to build or rental housing units that cost no more than $200,000 to build," according to the e-mail we received.  Stay tuned.

Kyra Creamer Honored for Tech:  Dorchester High School continues to solidify its well-earned reputation of providing a superior education in technology and computing.  The latest example is the news that DHS sophomore Kyra Creamer was one of 12 members who received honorable mention from the National Center for Women and Information Technology.  She was recognized earlier this month in Omaha at an awards ceremony attended by her family and DHS teacher Kyleigh Lewis.  Creamer is accustomed to getting statewide honors: She received second place at Nebraska's FBLA State Leadership Conference along with her DHS group in the category of "Public Service Announcement."  She also represented Dorchester at the State Fair with her presentations using Power Point and computer graphics.

Saline County Getting Worse in Obesity, STDs, Physical Inactivity: The 2018 report by the Robert Wood Johnson Foundation shows Saline County is going the wrong way in key measurements of health.  The report shows we are getting fatter, with 34% of Saline County residents categorized as obese. That's up from 25% in 2004 and is higher than the Nebraska average of 31%.  Meanwhile, 32% of Saline County residents are "physically inactive," compared to just 23% of Nebraska statewide.  Saline County had 365 confirmed reports of sexually transmitted diseases in 2015, up from 70 in 2010.

FLASHBACK: Readers Want New Housing In Dorchester (And Now We Know It's Coming)

In May 2014, the Dorchester Times asked readers who lived in Dorchester if they wanted to see new housing built in our community.  More than 60 readers/residents responded to the survey.    

When we asked if they supported new housing in Dorchester, an overwhelming 83% of respondents said "yes."  Around 17% said "no."

Those who said that they wanted new housing in Dorchester were then asked which area of town would they like to see new homes built.  Readers were evenly divided, with 40% saying build north of town and 40% saying south of town.  The rest wanted housing elsewhere.

We bring up this four-year-old survey because now the Times can confirm that action is being taken by village leaders to grow Dorchester -- in geographic size, anyway.  Dorchester officials have annexed a large piece of farm ground immediately north of town for purposes of housing development.

The land being annexed is owned by William J. Plouzek.  The area's boundaries are 12th Street to the south; the Hwy 6 spur (or County Road 1400) to the west; County Road D to the north; and County Road 1450 to the east.

From what we know, following the annexation, the Dorchester Village Board will use an economic development tool known as "tax increment financing" (TIF) to provide an incentive to build new homes.  Authorized by Nebraska voters in 1978, TIF diverts taxes generated by the increase in a redeveloped property's taxable value to reimburse the cost of new infrastructure over as much as 15 years. Of course, there would have to be sufficient interest and a commitment to build new homes. 

According to sources, at least two new homes are going up in Dorchester this fall (on 9th Street and 12th Street).  At least two additional homes are being planned to be constructed in the northeast section of town. (Also, don't forget that these lots in are available for housing.)

Which brings us to another survey (conducted by the Times in March 2014) of 20 DHS alumni ages 18-30 showed that 80% of these young people -- many of whom have already married and/or have children -- would currently consider moving back to Dorchester.  However, nearly all of those alumni said there would need to be adequate housing.  Others told us they would not move back unless there were more streets with paving.  We've heard the same sentiments from Baby Boomers in or near retirement.

OUR OPINION: Dorchester Needs A Housing Plan

Some interesting comments were left on our post regarding the hiring of a new superintendent for Dorchester Public Schools.

An anonymous reader wrote: "It would be great to see our superintendent live in the school district as Galen Johnson and others did. I know housing is a challenge but I think a superintendent living in the district can set the example for other school employees that 'we are all in this together.'"

That drew reaction from another anonymous reader who wrote: "Where exactly are they going to live in our district? Too bad the town doesn't have any (housing) options."

Dorchester's housing problem is not unique. A shortage of quality housing plagues most Nebraska communities that are either growing or sustaining their population.  In fact, housing is a problem throughout much of rural America.

Don't take just our word.  This week, Mark Hansen, president of West Gate Mortgage in Lincoln, wrote a column published by the Journal Star regarding Nebraska's housing shortage.  

Hansen heads a task force to address the housing shortage across the state.  He writes: "In many communities, a large portion of the housing stock is pre-1950. ... Proactive community leadership must become involved to solve this issue."

According to Hansen, the supply of houses available for sale is at historical lows due to "a shortage of builders and qualified trades people available in outstate Nebraska to remodel existing or build new."  Also, "new construction costs often exceed the market value in outstate markets."  (We know this is often the case in Dorchester.)

According to Hansen, there isn’t a one-size-fits-all answer. "Each local community will have to exercise leadership, planning, collaboration, and persistence to achieve success," he writes.  "Nothing will happen without local leadership, but great things can happen with committed local leadership."

Hansen points to communities like North Platte, which has created a local grant program to stimulate new construction, and Scottsbluff, which operates a purchase-rehab-resale program that buys old homes, renovates them with local correctional labor, then puts the improved properties back on the market. 

He also noted that "more than 20 Nebraska communities are utilizing locally driven and locally approved tax increment financing (TIF) strategies to open new lots for construction. Without TIF, costs to install the modern, necessary, public infrastructure would make the lot construction cost prohibitive."

What can Dorchester do to address our housing challenge?  The Times recommends the following steps:

• Get a housing plan in place.  As Hansen wrote, the housing problem calls for local leadership.  That means the village board, the school board, and even local volunteer groups need to collaborate and craft a long-term housing plan.  Government and volunteer groups can't fix the problem by themselves or fund the efforts, but they can build consensus, establish a blueprint and bring together those with resources.

• Work with experts -- like those at the Southeast Nebraska Development District (SENDD) -- to study best practices, success stories, programs, and ideas implemented by regional towns of our size to encourage new housing development.

• Focus on retaining our older residents and young people.  While it's always nice to attract new residents, no one will care about a community as much as those who've already lived there.  What does Dorchester need to keep are older residents here after they've reached an age they can no longer take care of their current homes? How do we convince young Dorchester natives they should consider making Dorchester their home, even if they currently live in a nearby community?

• Attract smaller, more affordable housing projects.  While it may not make financial sense to build that $500,000 home in our community, Dorchester could easily support new apartments or duplexes, according to an informal poll conducted by Dorchester Times staff.  It's unlikely that a single investor would take the risk of such a project, so a collective effort will be needed to bring together investors who want to see Dorchester's housing market grow.  

• Address abandoned houses.  About 10% of houses in Dorchester are currently unoccupied.  Nothing is harder on a small community than vacant homes -- especially run-down, deteriorating vacant homes.  In the past, this blog has conducted an online poll in which nearly two-thirds of Times readers wanted the Dorchester Village Board to consider imposing a blight tax on neglected or abandoned properties in town.  This concept has been implemented in communities across the country.  If a home has been unoccupied for more than 12 months (verified through water and electricity use), and there is no attempt to sell or rent the property, a $100 per month fine would surely get the owner's attention.

OUR OPINION: Time To Move On A Vacant Property Tax

The members of the Dorchester Village Board read this website, so we'll go ahead and ask the question: Is it time for the village to impose a land value tax on vacant properties in town?

Last week, we stumbled across a story that tells of several U.S. cities calling for a “land value tax” as a way to improve downtrodden areas.  

The tax -- which imposes higher levies on vacant property, thereby increasing the owner’s costs of holding on to unused, distressed property -- is being heralded as a way to eliminate blight and drive redevelopment.  

This would be the opposite of tax increment financing (TIF).  Instead of lowering property taxes for improvements, the "land value tax" would hike taxes on neglected vacant properties -- forcing owners to either pay up or do something with rundown properties.

Some of the obvious reasons behind the "land value tax" would be:

• Lower property taxes for responsible home and business owners in town.
• Force negligent owners to sell or renovate their properties.
• Provide the town government more revenue for economic development.
• Make more in-town property owners have some "skin in the game."

As the story points out, these "land value taxes" are controversial, especially in communities where values are stagnant. And they can be difficult to implement because a taxing entity must estimate the value of the land and the value of improvements separately. 

Still, we continue to think this tax or one like it to address vacant properties should be considered by Dorchester's five village representatives and perhaps put to the voters in the form of a ballot question.

Since Dorchester has no sales tax and no LB840 program, few other options exist.  We reported earlier the Legislature is kicking around a possible state solution.

Maybe the best idea comes from Vancouver, British Columbia, where a lack of available housing prompted the city to impose an “empty homes tax” that assesses a 1% surtax on any residence that is not considered the owner or a renter’s “primary residence.”   Oddly enough, Dochester, too, faces the problem of too little available house -- recently demonstrated in the 24-hour sales of two well-kept homes.

To make a difference in Dorchester, it might take a 5% surtax on properties vacant for more than 18 months -- and properties that aren't the owner's primary residence.  For example, the $30,000 vacant home and lot in town -- which currently costs an owner roughly $425 a year in property taxes -- would suddenly see $1,500 added to that yearly property tax bill.

We'd guess that extra taxation would get vacant property owners to either sell or rent their empty homes and buildings that currently only detract from Dorchester.

NEWS ROUND-UP: DHS Girls Basketball Team Improves To 8-4

DHS Girls Surge to 8-4: Dorchester's girls basketball team has won its last three contests -- beating Friend, East Butler, and High Plains (Polk-Hordville-Clarks) -- improving to 8-4 on the season. On Tuesday, Jan. 17, the Lady Longhorns will face a key test, hosting Class C-2 Cross County (12-3). Meanwhile, with about two-thirds of the season completed, the boys team has struggled with a record of 1-10. The boys did, however, pick up their first win earlier this month against Lincoln's College View Academy. See the schedules for both DHS teams here.

Eastside Bar Publishes Polka Dance Dates: Dorchester's Eastside Bar and Grill has published its 2023 schedule for upcoming polka dances, including one to be held from 3 p.m. to 7 p.m. today, Jan. 15. See the full schedule here.

Multiple Lots Still for Sale: According to Realtor.com, more than half a dozen lots are still for sale in the annexed north end of Dorchester. The lots, which are roughly a third of an acre, varying in asking prices between $21,000 and $25,000. Two homes have been built in the annexed area since the development was initiated in 2018. Meanwhile, the Times has been informed that a resident of town who had planned to build on the east edge of Dorchester no longer intends to go forward with the construction, despite taxpayers spending large sums of money to prepare the development. Residents can learn more about Dorchester's housing development plans by attending monthly village board meetings. (The next meeting will be Feb. 7 at 7 p.m. at the Dorchester Community Building.)

Village Board Approves Amended Redevelopment Plan: On Jan. 3, the village board gave its approval to an amended redevelopment plan for Dorchester. In short, the amended plan calls for a cost-benefit analysis, while renaming the development plan to the Village Infrastructure Redevelopment Project. The project will rely on tax increment financing, also known as TIF, to help make new development and upgrades financially viable.

Dorchester Native Doris Eret Richtarik Passes: Rural Dorchester native Ann (Eret) Richtarik, 89, passed away on Wednesday, Jan. 11, 2023 in Lexington with family by her side. Read her obituary here.