People will soon pay a bit more when frequenting some Blackstone District businesses.
The Omaha City Council on Tuesday approved a portion of Blackstone as an “enhanced employment area,” meaning businesses within the area will charge a number of new taxes, including a new additional tax on food and drinks.
The money — up to $22.6 million — will go into financing the restoration of the historic Blackstone Hotel.
The council voted 6-1 for the new designation and for the hotel’s developers to collect the extra taxes, with Councilwoman Aimee Melton voting no. It goes into effect Jan. 1.
This is the city’s fourth such district, and Melton has voted against all of them. The others are the Capitol District, Topgolf and the downtown Landmark Building, which the council approved last week. Each has different terms. The Blackstone project is the first to gain approval without a deadline for when the taxes will expire.
Officials describe the designation as a self-imposed tax. People can “vote with their feet,” meaning they pay the taxes only if they choose to go those districts. Mayor Jean Stothert signed off on the request, and mostly praise was heard for the project at a public hearing last week.
To qualify, a development must create 30 new jobs and $3 million in new investment. The money can be used for a number of things, like building sidewalks and parking garages.
Melton said she might have changed her mind about Blackstone had the developers asked for the enhanced employment area instead of tax-increment financing. But the developers, Tom McLeay, president of Clarity Development Co., and Matt Dwyer and Jay Lund of GreenSlate Development, asked the city for both incentives.
Together, the incentives represent about 40 percent of the project’s total cost. The hotel project is estimated to be an investment of about $77.5 million.
Under the designation approved Tuesday, people will pay:
- A 3 percent tax on hotel rooms, namely at the Blackstone Hotel.
- A 1.95 percent tax on food and beverages. Diners at restaurants within the district would pay $11.76 in total taxes on a $100 bill. That takes into account the new 1.95 percent tax, the city’s existing 2.5 percent restaurant tax and 7 percent sales tax.
- A 1.95 percent tax on retail sales and services, though that wouldn’t apply to tenants under lease now. They would be excluded until they renew their leases.
- 25 cents per square foot of commercial office space, which would increase 3 percent a year.
- $120 per apartment per year, which would increase 3 percent a year. The hotel’s developer has said tenants would not be responsible for the fee — apartment owners would be.
Councilman Brinker Harding pointed out that the extra taxes will be charged only at properties controlled by Clarity, GreenSlate or those that voluntarily agreed. It affects businesses between 36th and 41st Streets along Farnam, but not all. For example, Brothers Lounge isn’t in the district and won’t charge extra tax.
Harding also noted that the city isn’t at risk — only the developer is.
Under an amendment approved Tuesday, there’s no timeline on how long developers can collect the tax. It will expire when $22.6 million is collected.