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The City of Omaha plans to add eight subdivisions and more than 6,300 residents to its tax rolls this year, in what amounts to a relatively modest annexation proposal.
Officials warn that Omaha's suburbs don't offer many additional prospects for the city's expansion, despite the fact Mayor Jim Suttle's administration says it wants to aggressively annex.
“Cities that cannot annex and grow will decline as they lose population and tax base,” Suttle said in a statement announcing the annexation plan.
The city is running up against barriers to its expansion in the finances of older subdivisions sitting just outside the city limits.
The latest annexation package, which will go before the City Council for a public hearing and vote in July, would add 6,353 residents in neighborhoods including Lakeview Heights, Pepperwood, Colonies and Seven Pines.
The city would gain $407 million in new tax base, including a strip mall at 156th Street and West Dodge Road that features a Baker's supermarket and commercial property near 144th and F Streets.
After paying off the subdivisions' debt and accounting for costs to extend city services, the city figures it will net an additional $2.6 million in tax revenue during the next decade, or only $260,000 a year on average.
According to the city's analysis, homeowners in the annexed areas would benefit financially.
Property tax rates would drop in six of the eight subdivisions, the city says. Property owners would stop paying property taxes to their sanitary and improvement district, and stop paying Douglas County for a special library tax and the Millard fire district. They instead would pay taxes to the city and Metro Area Transit.
Residents would be able to stop their monthly contracted garbage service, saving some $300 a year, as Deffenbaugh takes over trash collection.
But at the Baker's, shoppers would start paying city sales tax on nongrocery items. At Charlie's on the Lake, along 144th Street, patrons would start paying the city's restaurant tax.
Omaha officials have expressed hope that the city can annex older subdivisions that have sat outside the city limits for decades.
But Rick Cunningham, Omaha's planning director, said the city won't do a lot of catching up with this annexation package.
After this annexation, Cunningham said, the city might not be able to take in many more subdivisions because of their high debts and other limitations.
Some subdivisions, for instance, have streets that weren't built to city standards, presenting an additional cost to the city.
“When it comes down to it financially,” Cunningham said, “we've got to be able to break even on the package.”
Although the latest proposal would allow the city to annex some commercial land, few suburban retail areas in Douglas County remain outside the city limits.
“We're kind of running out of those,” Cunningham said.
For years, annexation has served as a financial lifeline for the City of Omaha, allowing it to bring in shopping malls, bustling suburban neighborhoods and the tax revenue that otherwise wouldn't feed city coffers.
Those sanitary and improvement districts, or SIDs, are created when developers build their developments and use the mechanism to fund infrastructure such as streets and sewers.
The intention was that those subdivisions should be annexed once they are completed, City Finance Director Pam Spaccarotella said. But that situation has not always played out. “Today, buildouts are complete,” she said, “but the city is unable to annex due to high debt loads by SIDs and insufficient funds allocated to pay down that debt burden.”
The process to create such districts may need an overhaul to ensure the original purpose is met, Spaccarotella said.
City officials say the targeted effective date for the latest annexation package is Aug. 27.
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