HASTINGS, Neb. — People will eventually replace pigeons as residents of the old Hastings Brewery and bottling works.

A Kansas developer just began an $8 million project to transform the 110-year-old brick structures into 35 affordable, loft apartments.

It’s the latest effort by a downtown Hastings group to creatively address a critical shortage of housing that afflicts rural communities across the state.

Officials here, and the developer of the project, say such renovations of historic structures would not be possible without a state tax credit passed by lawmakers in 2014, a tax credit that is providing about $1 million for the brewery project.

But now, facing budget problems and complaints about the complexity of the application process, the state tax credit for renovating historic structures is being targeted for the scrap heap.

Four bills proposed in the Nebraska Legislature this year would either end or suspend the Nebraska Job Creation and Mainstreet Revitalization Act, which provides up to $15 million a year in tax credits for historic renovation projects.

While critics of the program question whether state tax dollars should be used for such projects, proponents say that restoring an iconic, historic structure in the middle of a downtown area can spark a renaissance and millions of dollars in investment in other nearby structures.

“Many of these buildings have good bones,” said Tim Quigley, director of the Hastings Brewery project. “It’s the green thing to do — instead of tearing down a building and putting all that refuse in the landfill, you’re reusing a building that has a lot of sentimental value and is located in the heart of their community.”

“It very much revitalizes a community,” said Quigley, of Cohen-Esrey Development Group of Overland Park, Kansas. “Plus, how cool would it be to live in a loft apartment in a brewery?”

Critics of the tax credit, meanwhile, say that the application process is so complicated that it scares off small-town projects and all but the largest developers.

State Sen. Paul Schumacher of Columbus, a sponsor of legislation to do away with the credits, said that one of his constituents, seeking funds to help create a museum of historic fire engines, gave up after looking at the lengthy application process.

“They said it was such a nightmare that it was just easier to raise the money,” said Schumacher, who is a member of the Revenue Committee, which will decide whether the proposals advance for debate by the full Legislature.

Another member of that committee, North Platte Sen. Mike Groene, said the state is providing too many special tax breaks when, instead, it should be cutting taxes for everyone.

“The reason we’re a high-tax state is that we have too many people in the lifeboat and not enough people rowing,” Groene said.

The Revenue Committee is holding a public hearing March 3 on two of the historic tax credit proposals, Legislative Bills 272 and 475. A hearing was held Feb. 9 on LB 126, which would end the credit program in 2020, two years earlier than intended. A hearing date for a fourth bill, LB 467, which would suspend the historic tax credits for two years, has not yet been set.

The issue comes up as state lawmakers are trying to close a $760 million gap between projected tax revenue and expected state spending, so ending a $15 million-a-year tax break, though small in comparison, could contribute to that. The gap had been $900 million until changes were approved recently for the current fiscal year budget, which ends June 30.

There has also been a push in the Legislature in recent years to review state tax incentives overall, to better determine whether the forgiven tax revenue really translates into job creation and long-term economic benefits for the state.

Such historic tax credit programs exist in 38 states, including neighboring Iowa, Missouri, Kansas and Oklahoma. And advocates say they pay dividends.

On Wednesday, the Nebraska State Historical Society released an updated report of the economic impact of the tax credits done by the University of Nebraska-Lincoln Bureau of Business Research.

The updated report estimated that more than 1,600 jobs, $53 million in wages and $121 million in economic impact was created by the projects authorized under the historic tax credit program in 2015. It also generated $5.1 million in state and local taxes, the report said.

“This program has proven to work,” said David Levy, an Omaha lobbyist who represents developers.

The credits have helped some high-visibility projects, including the renovation of Omaha’s Burlington Station into the new home of television station KETV and restoration of the once-dilapidated Travers Row Houses on the southwest edge of downtown Omaha.

Norfolk’s McMill Building was put back in use with the help of the tax credits, and credits also funded the restoration of an ornate plaster ceiling in the Hall County Courthouse in Grand Island.

The historic tax credit law authorizes up to $15 million a year in tax credits, with a maximum of $1 million per project. It was passed with the understanding that it would end in 2022, a “sunset” provision designed to force a review before a program is extended.

The bills being considered by the Legislature would either end the program immediately or a few years earlier than planned, or suspend it for two years.

While applications for credits flooded in during the first year of the program, demand was lighter in 2016, when only $8.9 million in credits was allocated.

Ryan Reed, coordinator of the state historic tax credit program, said Wednesday that he fields an inquiry every day about the program and believes that interest is still strong.

While most of the first-year projects were in Omaha, Reed said that subsequent projects have spread the benefits across the state and include smaller communities such as Chadron, Red Cloud and Pender.

Schumacher said his major beef with the tax credit program is that the Historical Society took a simple bill and then adopted 21 pages of rules so complicated that smaller projects, which lack professional developers, gave up trying to qualify.

“Are you the guy who cooked up that 21-page barrier?” asked Schumacher recently when the new director of the Nebraska State Historical Society, Trevor Jones, came to the Legislature to testify in support of keeping the tax credit program.

Jones agreed that the application process could be simplified.

Another supporter of the tax credit program, Deborah Ebke of Fairbury (whose husband is related to the husband of Crete Sen. Laura Ebke), testified that the application process was “intense” but not intimidating.

Deborah Ebke said that without such programs, the renovation of Fairbury’s historic Bonham Theater would not have been possible.

In Hastings, renovation of the old brewery would not only clean up a run-down corner of the downtown area, but also would chip away at the shortage of housing in the college town of 25,000, according to Randy Chick, head of Downtown Hastings, a group dedicated to improving the city’s central business district.

In recent years, that group has spurred renovation of 50 loft apartments in the upper stories of businesses in the downtown area. With its brick streets, downtown Hastings is similar to Omaha’s Old Market or Lincoln’s Haymarket area. There’s a mix of restaurants, a wine bar, a brew pub, coffee shops, boutiques and bakeries.

When the Hastings Brewery was built in 1907, it was the state’s second-largest.

Brews like Prairie Pride catered to the tastes of this German community. Another beer, Personal Liberty Brew, might have been named in honor of efforts to fend off the drum beat of the temperance movement.

But prohibition eventually won out. In 1916, Nebraskans voted to ban the sale and production of alcohol. The brewery in Hastings was closed in 1917.

After ill-fated attempts to produce pop and ice cream there, the brewery eventually became a food distribution warehouse, and later a cold-storage facility.

Broken windows and frayed chicken wire now provide easy access for pigeons, which scattered when Chick showed the building, with its tall brick smokestack, to a reporter recently.

“It’s such a monster,” he said of the building. “Someone obviously needs to spend a lot of money on it.”

paul.hammel@owh.com, 402-473-9584

Reporter - Regional/state issues

Paul covers state government and affiliated issues. He specializes in tax and transportation issues, following the governor and the state prison system. Follow him on Twitter @PaulHammelOWH. Phone: 402-473-9584.

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