LINCOLN — Disagreement among Omaha’s development community contributed to a state senator’s decision not to introduce legislation aimed at providing new incentives for Crossroads Mall and other major projects.
State Sen. Heath Mello of Omaha said he couldn’t build consensus in time among interested parties in the Omaha area for a bill that would have helped cities spur redevelopment projects without using property taxes.
The measure likely would have first helped Omaha’s Crossroads Mall redevelopment, a project that for years has stalled.
“It was about providing a new redevelopment tool for urban centers around the state as they want to continue to grow and redevelop in areas of their city that desperately need it,” Mello said.
But Mello, chairman of the Appropriations Committee, said he stopped hearing from Mayor Jean Stothert after a meeting about his proposal in early November, even though his office asked for her feedback and sent her copies of a bill.
Stothert, on the other hand, said she stopped hearing from Mello — and that a group of developers had hired longtime Lincoln lobbyist Walt Radcliffe to oppose the proposal.
The group, called Citizens for Responsible Development, thought that the proposal had the potential to “cannibalize” existing businesses, Radcliffe said. Public records show the group listed an address for Westroads Mall.
Still, the shift has no impact on the progress at 72nd and Dodge Streets, Crossroads developer Rod Yates said. But he questioned why “a bill proposed to help statewide economic development would receive anything but great support.”
Stothert said Mello met with Omaha officials and the Crossroads developers to discuss the idea late last year.
His proposal would have allowed local sales tax revenue from mixed-use developments — which typically offer a mix of retail, commercial, residential and civic buildings — to be diverted back into the project’s infrastructure improvements. Initial plans called for the incentive to apply to projects that cost about $200 million or more.
The concept had gained the support of the Omaha City Council — and Stothert.
But as discussions continued, Mello said, concern grew that the incentives would simply shift where development occurs in a city and not promote new growth. He also fielded requests to allow smaller projects, such as ones that cost $25 million, to take advantage of the tool.
Without Omaha’s support, he said, he didn’t feel comfortable moving forward.
“I didn’t want to see what I thought was a potential redevelopment tool be created and see Omaha not be able to use it,” Mello said. “I thought it was best not to introduce a proposal, and to study the issue further to see what other options and ideas we could talk through.”
Radcliffe said he registered in early January to lobby for the Citizens for Responsible Development group.
The group was concerned about using public dollars from sales taxes to create incentives for retail without taking it to a vote of the people, he said. Radcliffe declined to name who is part of the group.
Jim Sadler, Westroads’ senior general manager, answered the group’s registered phone number, but referred questions to David Pursel, a Chicago legal counsel for General Growth Properties, which owns Westroads and Oak View Mall. Pursel did not return a call seeking comment.
Said Radcliffe, “Entities that are established, that have spent their own private resources to develop a project, to then have government dollars be used to create a competing project, and potentially cannibalize some of their tenants, is something they opposed.”
Stothert said she was not involved in the Citizens for Responsible Development’s effort, though she had informal conversations with some of its members.
“The main reason that they described to me was that they felt like it would give that development an unfair competitive advantage over what they had been offered for their different developments,” Stothert said.
Stothert said last year that she supported Mello’s concept, but she noted Friday that she didn’t take a firm position because the details hadn’t been worked out.
Members of the Greater Omaha Chamber of Commerce were split on Mello’s proposal, though the group didn’t take a formal position, said Randy Thelen, the chamber’s senior vice president of economic development.
The measure spurred a “bigger, broader discussion” on changes to Nebraska’s incentives, he said.
“The current mix of incentives we have are 10 to 15 years old,” he said. “We see our competing states reform and revise their tool kit, and we need to sharpen ours as well.”
Omaha Sen. Burke Harr said he applauded Mello for meeting with a number of developers and community leaders on how to draft a better bill and “trying to find new ways of economic development to spur our economy and grow the population.”
Omaha City Councilman Pete Festersen, who represents the Crossroads area, said he met with Mello, the Governor’s Office and the Mayor’s Office about the legislative proposal. He said he’s long supported the concept of a sales tax incentive.
“I think the city and everyone involved supported it conceptually because we’re all looking for additional tools for the city to use,” Festersen said.
Festersen said he’s concerned that there is no redevelopment agreement in place for Crossroads, but noted that Yates remains optimistic about the project.
Gov. Pete Ricketts hasn’t had any recent discussions with the City of Omaha on the subject but looks forward to continued conversation about improving Nebraska’s incentive programs, spokesman Taylor Gage said. Ricketts supports tax incentives that work all across the state, Gage said.
Stothert said she’s not concerned about Crossroads’ future, saying she believes “there’s a lot of interest in developing that area.”
Yates said delays are “only helping create and build a better end product.” Though he at one point planned to begin some demolition in March, Yates said he now expects to submit plans to the city in early May and to start demolition shortly thereafter.
Mello said he would continue to work on the issue and try to provide research to the legislative committees that would likely hear a bill.
The term-limited senator said he’s talking with colleagues about what he’s working on in hopes that someone could introduce a measure in the future.
“It was never about one project or another,” he said. “We wanted to create what we thought was good public policy.”
Additional information on the Legislature