Financial analysis clears way for vote on Nebraska Crossing mall

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Posted: Tuesday, March 5, 2013 12:00 am

An independent cost-benefit analysis of the Nebraska Crossing outlet mall redevelopment is in the hands of Gretna City Council members, clearing the way for a vote as soon as tonight on the project.

The analysis, a required step before the council vote, says the completed redevelopment would generate $7.45 in benefits for every $1 of lost revenue and costs to the city of Gretna.

Read the cost-benefit analysis (PDF).

“It's a very favorable opinion, and it is required,” City Mayor Jim Timmerman said Monday. “Now that the council has got this they can vote on the plan.”

The 13-page report, which was prepared by economist Kenneth Kriz, a professor at the University of Nebraska at Omaha's school of public administration, was distributed to council members Monday.

The analysis also says that the project would generate an estimated 679 jobs in the area, raise property values within the project area and increase residents' personal income by $6.8 million.


Click on the images below for larger versions of renderings given to The World-Herald.
Megan Hunt

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The report weighs the project's benefits against the city's increased costs related to the redevelopment, such as road construction and other infrastructure improvements, and the impact of tax shifts if certain city incentives are approved.

The mall's developers — Frank Krejci of Omaha's Century Development and Rodney Yates of Arizona-based OTB Destination LLC — have said they had 25 committed tenants for the planned Gretna shopping center and, when completed, the mall at the intersection of Interstate 80 and Nebraska Highways 6 and 31 should have more than 60 tenants.

Also read: 18 more factory outlet stores commit to Gretna mall

The plan authorizes the city to offer developers up to $57 million in incentives — if the $112 million project meets specific financial goals. If developers do not meet those goals, the city would not be financially responsible, and plans are for that to be spelled out in a legal agreement if the project is approved, Timmerman said.

“The citizens will never have to make it up if it fails,” said Jeff Miller, the city's attorney. “Any shortfall falls on the developer.”

The city's direct investment in the project is $4.1 million in general obligation bonds, which would be paid back through property taxes.

The redevelopment plan calls for a package of incentives available under the state's Redevelopment Act. City officials acknowledge that they've piled on the incentives. City administrator Jeff Kooistra said: “We are not aware of any other project that uses all these incentives.” The proposed incentives include:

MONEY TALKS
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in the Money Talks blog.

>> $12.8 million in tax increment financing, which uses part of the future property taxes from a development to help pay for financing.

>> Up to $14.3 million in turn-back sales tax incentives, which would return 1.5 percent in local sales tax transactions for 10 years within the redevelopment area. The turn-back was overwhelmingly approved two years ago by Gretna residents in a special vote-by-mail election. State law allows cities to divert the city's portion of the sales tax, up to 1.5 percent, for qualified redevelopment projects.

>> Up to $26.2 million from an occupational tax on businesses in the development of 1.95 percent on sales in the area for up to 25 years.

The developers' obligations and responsibilities would be written into the Nebraska Crossing Redevelopment Agreement, a legal document that is separate from the redevelopment plan. The agreement would be written and brought back for a council vote if the redevelopment plan is approved.

Overall, the cost-benefit report concludes that “the risk that the project will not generate enough benefits to cover its costs is minimal.”

Redevelopment of the project area would increase property values, “which will be a gain in wealth to the city. The city will realize that value through increased property taxes,” the report says.

City residents should experience increased employment and income. “They will then spend their income in the city of Gretna and in areas where they live ... The increased employment and income also will increase retail sales in the city, boosting sales tax revenues. ...

“Finally, the project itself will create increased sales tax revenues. Again, many of the sales tax revenues are initially captured by the project (if developers' meet their goals) but will eventually flow back to the city,” the report said.

Contact the writer: 402-444-1142, janice.podsada@owh.com

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