LINCOLN —  All of Nebraska’s “good life” districts appear to be in a precarious spot — not just the embattled one in Gretna — as Gov. Jim Pillen’s proposed budget seeks to deny $5 million a year set aside for the new state incentive that had been committed for multiple years to boost the buildout of those destination sites.

Pillen’s recently revealed biennial budget package targets “Good Life Transformational Projects” as one of about 50 programs and incentives the Legislature and governor approved over the past five years but that Pillen now proposes cutting. It’s part of his strategy to address a projected two-year $432 million state budget shortfall.

Specific to the good life districts, the governor wants to reject roughly $5 million annually in incentives budgeted through 2029, for a revenue savings of about $20 million in four years. The plan notes that the benefit was to stretch longer, for up to 30 years — derived from a now-controversial cut in the state sales tax rate within the district boundaries.

Here’s how the incentive works: Under the 2023 Good Life Transformational Projects Act, championed by then-State Sen. Lou Ann Linehan of Omaha, the state sales tax within up to five “good life” districts is to be slashed in half, from 5.5% to 2.75%. The idea was that the difference would be redirected to help develop unique, entertainment and shopping districts that ultimately and over time would rake in more tourists and money for the state.

Controversy swirls

Controversy has swirled around the incentive — mostly as it relates to the largest and highest-profile district — in Gretna. The state approved that district based on an application by Nebraska Crossing owner Rod Yates and last April cut the sales tax within the district’s city limits.

But Gretna officials and Yates deadlocked over terms for his multibillion dollar mega sports-themed vision. Without an actual project or mechanism in place to recapture the vacated portion of the tax, an average of $300,000 a month in sales tax revenue has been lost. As of November, more than $2.2 million was forfeited, according to an update from the Nebraska Department of Revenue.

The governor told reporters at a budget briefing last week that he regrets signing into law certain funding incentives, including the good life districts, and he sees now as the time to “reverse” the course. 

State Sen. Brad von Gillern, who has replaced Linehan as chair of the Legislature’s Revenue Committee, said that he has not seen the bill language reflecting the governor’s request. But he said that, as described in the proposed budget, the entire good life district concept would end.

The Omaha senator prefers less drastic measures. He said he is working with a group of state senators on revised legislation that would “preserve the program in a more workable way.”

Besides Gretna, the Nebraska Department of Economic Development has approved formation of good life districts in Grand Island, Bellevue and Omaha. All are in various early stages, with Gretna the last to hold a local election (on Jan. 14) that was required under a 2024 revision to the good life law. Voter approval was needed to tap into the state incentive to help private development.

There is no denying, von Gillern said, that state officials have not been pleased with certain aspects of the law, including that state tax revenue went uncollected in Gretna without even benefiting a project. 

Yates persists

Linehan, the sponsor of the original legislation, also has publicly denounced how the law has played out — not only in Gretna, she told the Nebraska Examiner, although that is where her fury was focused.

In her recent criticism, Linehan said the 2024 revisions to the legislation also opened the door for cities to use the incentive in a way she believes lawmakers did not intend, for projects less spectacular than one-of-a-kind. She said that the state did not give up revenue for cities to use the public incentive on non-extraordinary ventures.

“Shame on me,” she told the Nebraska Examiner previously. “But something is very wrong here.”

Yates, meanwhile, asked the DED on Jan. 13 to terminate his district application. He said he now is seeking someone to push alternative legislation that would help his vision materialize. He said he has amassed partners ready to build arenas and other components and has not given up.

Yates said he has continued to talk with representatives of the Pillen administration. The governor and K.C. Belitz, DED director, had been involved early on in Yates’ vision, at one point traveling to New York to help the former Husker split end’s effort to woo a pro hockey team to Nebraska and the Gretna good life district.

Von Gillern told the Examiner that said he does not plan to introduce separate legislation to catapult that mega project and did not know of any such bills in the pipeline. 

State officials said Jan. 13 that they would seek information from Gretna officials to determine if the approved Gretna project and district remain viable. The 2,000-acre district’s boundaries include and surround the Nebraska Crossing campus near Interstate 80 and Highway 31, between Nebraska’s two largest cities, Omaha and Lincoln.

Gretna sees district surviving

DED said it has the authority to terminate the good life district if it determines the approved project is no longer viable and if termination is in the best interests of the state economy.

Gretna’s Mayor Mike Evans has said they would present evidence to the state that the district should continue, even without Yates’ participation. He said multiple developers within the district are capable of delivering a transformative project. 

Gretna officials have said they wanted to work with Yates, but he was not willing to budge on what they believed were legal and financial risks for taxpayers. They said his demands involved possible use of  eminent domain, as Yates owned only a slice of the property within the district.