La Vista is tentatively moving forward with plans to acquire the eyesore Brentwood Crossing shopping center, but it won't use a previously planned redevelopment tax to fund it or any other 84th Street revitalization efforts this year.
After proposing the 2.6 cent redevelopment tax earlier this summer, the City Council put the plan on ice Tuesday, voting to table it until 2014-2015 budget discussions start next year.
The redevelopment tax, separate from the city's general fund tax rate, would allow the city to start amassing money to pay for portions of the long-term plan to rebuild and revitalize the struggling 84th Street business corridor.
While the city hopes to find a private developer willing to take on the job of transforming the tired stretch into a true downtown with condos, shops and a new park, city officials said earlier that the city needed to generate some financing of its own to get the project off the ground.
“84th Street is one of the council's top strategic priorities,” City Administrator Brenda Gunn said at a July budget hearing. “We have aggressive plans, and funding is critical to start the project.”
But the tax is now off the table for the 2013-2014 budget year.
Because the city's general fund tax rate is at 49 cents, approaching the state-mandated 50-cent cap, Gunn said the city would have to roll the redevelopment tax money into its debt service fund. There, the revenue is not supposed to accumulate year after year.
Typically, the city spends money by issuing bonds and then uses the debt service funds to pay down its long-term debt. Financial consultants told the city it shouldn't use the fund as a savings account where money would sit for future, hypothetical debt related to 84th Street.
“You're supposed to pay off your debt with that money,” Gunn said. “But because we haven't issued any debt associated with this project yet, it doesn't make sense.”
So the city administration rescinded its recommendation that La Vista levy the redevelopment tax.
“Why increase somebody's property tax if you don't have anything on the books to pay for?” Gunn said.
The tax would have added $37 per year to the average tax bill, generating $325,000 in redevelopment funding during its first year.
Another proposed 84th Street funding mechanism involves increasing the local sales tax from 1.5 cents to 2 cents, which would raise $1.1 million annually. The sales tax increase has to be put on the ballot and approved by voters.
Revenue produced by a redevelopment tax can only be used to fund projects in the city's designated redevelopment zone, such as for property acquisition.
The city does have one potential project in its cross hairs: acquiring the nearly vacant Brentwood Crossing shopping center, whose redevelopment could serve as the linchpin for the 84th Street transformation.
The former home of a Walmart and Hobby Lobby, the center has become a source of blight in the eyes of officials and residents, whose complaints about the plaza's condition typically top the list of 84th Street concerns.
The City Council passed a resolution last month asserting its right to seize the property through eminent domain, a step city officials have called a last resort.
In the meantime, city administrators have taken preliminary steps toward buying the property outright, including sending appraisers to value the property.
Sarpy County records show the Brentwood Crossing strip mall, recently listed for sale or lease, is valued at more than $5 million, which doesn't include pad sites such as the Chili's restaurant and First National Bank.
“I haven't changed our position,” Gunn said. “My position is we need to acquire this property. That's what we're going to try to figure out how to do.”
If the city buys the property, it can always decide to levy the redevelopment tax or, more likely, use the proceeds from the anticipated sales tax increase, Gunn said.
“I don't think the 2.6 cent changes that at all, or our ability to do that,” she said. “If we're successful and the half-cent sales tax passes, depending on how much that generates, maybe you don't have to do the 2.6 cents. I don't think this undermines the project at all.”
Several council members said they would support the redevelopment tax if it came up again next year.
“You really can't do anything unless you have money to do it with,” Councilman Anthony Gowan said. “In the long run, when this comes back before us, I'll be a supporter of this.”
The council adopted the 2013-2014 budget, which keeps the city tax rate flat at 55 cents per $100 assessed value. For a home assessed at $150,000, that translates to a city tax bill of $825.