Nebraska’s Tax Dollars at Work: Promoting a New Outlet Mall

Nebraska’s Tax Dollars at Work: Promoting a New Outlet Mall
November 18, 2013

A new outlet mall officially opened in Gretna, Nebraska before Christmas, and shoppers were enticed to buy Coach purses and Nike shoes with the help of $16.7 million of public subsidies for marketing and communication alone.

The grand opening festivities for Nebraska Crossing Outlets began one day before the official opening with a fashion show featuring former University of Nebraska football coach Tom Osborne and continued Friday with live remotes, deejays and giveaways including Husker football tickets and a Land Rover Evoque.

It’s not clear which of these grand opening festivities might constitute your tax dollars at work, however, because Gretna city officials refused to divulge much information about how the $16.7 million in subsidies for “marketing and communication” is being spent.

Stonewalling on Information

In possible violation of the state open records law, Gretna failed to turn over any documents other than a single memo in response to Nebraska Watchdog’s open records request seeking specifics on how the money is being spent. Apparently, there’s not one document at Gretna City Hall related to how $16.7 million worth of incentives will be doled out.

Instead, the city clerk and city administrator responded with a memo written by Lincoln attorney Kent Seacrest, who was hired by the city to work on the financing plan and redevelopment agreement with the mall developers, Rod Yates of OTB Destination and Frank Krejci of Omaha’s Century Development.

The memo largely lifted passages from the redevelopment agreement, which said revenue from a 1.95 percent sales tax on purchases in the mall can be used for public signs, “grand opening promotions,” other promotions, technology infrastructure and capital improvements.

“Public signs” are defined as seven 40-foot-high digital or non-digital pylon signs and 10 digital or non-digital building signs that can be used for city and community public information and general business and product information, public activities and promotions of public events.

Taxpayer dollars could be used to pay for grand opening public activities and promotions, including the management, promotion and advocacy of retail trade activities, according to the redevelopment agreement. Tax revenue can also be used to pay for a public Wi-Fi network.

More Than 50% Subsidized

That’s just part of the public subsidies Gretna approved for the outlet mall: More than half the $112 million price tag for Nebraska Crossing is covered by government subsidies. Taxpayer dollars are expected to cover $58 million of the cost, more than the $54 million the developers are expected to invest, according to the redevelopment plan.

Gretna residents overwhelmingly agreed in a vote-by-mail 2011 election to help pay for the renovation of an old, unpopular outlet mall into an upscale outlet mall. But that’s just one piece of the financing plan. In addition to the $14 million in local sales tax revenue Gretna voters agreed to divert to the mall for a decade, the mall is getting:

  • $26 million in occupation taxes. A 1.95 percent sales tax on purchases in the mall will be levied for 20 years.
  • $13 million in tax increment financing, which diverts additional property taxes generated by the redevelopment into the project rather than public coffers.
  • $4 million in general obligation bonds issued by Gretna to fund infrastructure, which will be repaid by property taxes.

Leigh McIlvaine, research analyst for Good Jobs First, said subsidizing retail won’t create economic growth in a region unless it’s in an area underserved by retail, such as a food desert in an inner city. In fact, many cities ban subsidies for retail projects, she said.

No ‘Particulars’ On Spending

When asked for specifics on how that $16.7 million would be spent, City Clerk Tammy Tisdall said via email the city wasn’t given “particulars” for the budget on communication and marketing, nor was it required. She deferred to the developers. When reached by phone, Yates said he didn’t have time to talk about it.

City Administrator Jeff Kooistra did not respond to calls seeking comment.

Ordinarily, there should be a few city documents showing how the money is being spent, because the redevelopment agreement requires that the developer submit requests for reimbursement with “receipts, invoices, proof of payment or other documentation satisfactory to the city” to prove the costs are eligible.

Seacrest’s memo also noted that to ensure the developer’s performance, the two principals (Yates and Krejci) provided limited personal guarantees.

Deena Winter (deena@nebraskawatchdog.org) reports for NebraskaWatchdog.org, where a version of this article first appeared.