Tax Reform & Effect on Omaha

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asherballa
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Tax Reform & Effect on Omaha

Postby asherballa » Tue Dec 05, 2017 12:56 pm

I haven't seen any discussion of this yet on the forums so I thought I would kick it off (with a disclaimer that I work in real estate finance using tax credits).

Currently Congress is in reconciliation (i.e., the House and Senate GOP (Democrats are basically powerless to make changes at this point but Republicans cannot afford to lose votes), and it is considering elimination or severe reductions in the Historic Tax Credit and New Markets Tax Credit programs. Also potentially on the chopping block are private activity bonds (PABs), which fund any number of public improvement projects but vitally help finance about 50% of all affordable housing projects using Low Income Housing Tax Credits.

I moved to Omaha five years ago and have loved seeing Omaha's development and this forum, and I felt the need to post here to help let everyone (regardless of political persuasion) know about the consequences in the hope that any of you might also let Representative Bacon and Senators Sasse and Fischer know the direct downsides this legislation has for Omaha.

The new Creighton dental clinic? Financed with New Markets Tax Credits. Countless buildings in urban Omaha, including Blackstone -- financed with Historic Tax Credits. It's difficult to envision how a street car project gets done without a New Markets Tax Credit or how urban Omaha revitalizes its vacant buildings without Historic Tax Credits available as a financing tool.

That's my two cents -- hoping for the best for our city.

choke
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Re: Tax Reform & Effect on Omaha

Postby choke » Tue Dec 05, 2017 1:11 pm

It's gonna pass. And corporations will probably choose the Coasts before coming to the Midwest. And then NAFTA also. Seems a lot of initiatives are geared toward the Coasts. The administration even gave in on immigration regarding the west and east cost needing skilled employees. Seems the Midwest is kind of getting the shaft. Although ethanol standards did not get reduced.

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iamjacobm
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Re: Tax Reform & Effect on Omaha

Postby iamjacobm » Tue Dec 05, 2017 1:58 pm

The tax credit changes are going to leave a lot of projects with a sizable gap. If PABs get axed(looking like they will stick around, but still possible) you can kiss a lot of public private deals goodbye as well as some infrastructure spending.

I don't know the exact make up of any of these deals so I could easily be wrong, but the new VA facility I imagine includes PABs. I also imagine the wind farm in development for the Facebook data center is using PABs. Wouldn't be surprised if the new Children's hospital tower included PABs. There are likely dozens of other large scale projects that used them as well.

As you mention as well, tax credit loss will affect investment in older properties and East Omaha.

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iamjacobm
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Re: Tax Reform & Effect on Omaha

Postby iamjacobm » Tue Dec 05, 2017 2:09 pm

National Association of Realtors report suggesting Nebraska home values could drop 10-14%.

https://www.nar.realtor/sites/default/files/tax-reform-by-state/Nebraska.pdf

bigredmed1
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Re: Tax Reform & Effect on Omaha

Postby bigredmed1 » Tue Dec 05, 2017 2:20 pm

These bonds have allowed some developers to get rich at the expense of the workers in society who never really benefit from the development. Either the projects are for poor people and the workers don't qualify because they have more than three digits of net assets. Or, they are for the hipsters who can afford $6 cups of hand pressed imported coffee.

Will you lose, possibly? Guess you have had your run. The worker bees get their turn. Maybe the developers could start projects that are economically sound to start with? Do I want Habitat for Humanity to stop? Of course not. Do I want there to be three of them in Omaha? Nope. Frankly, there are three H4Hs in the metro. Think that is an easy way to keep that program viable. Lets turn the three (H4H Omaha, H4H Sarpy, and H4H Council Bluffs) into just H4H. Lets figure out how to get philanthropists to fund that kind of development.

Does a wind farm that serves one company who is just using it for marketing really need a public partner? Especially one as profitable as facebook? Again, does facebook really need to screw the workers? Do we as Nebraskans not benefit more by looking out for each other than letting a rich multinational screw our people out of money? Is green energy really so non-economical that even mighty facebook can't afford it on its own?

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Stargazer
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Re: Tax Reform & Effect on Omaha

Postby Stargazer » Wed Dec 06, 2017 9:12 am

bigredmed1 wrote:These bonds have allowed some developers to get rich at the expense of the workers in society who never really benefit from the development. Either the projects are for poor people and the workers don't qualify because they have more than three digits of net assets. Or, they are for the hipsters who can afford $6 cups of hand pressed imported coffee.

Will you lose, possibly? Guess you have had your run. The worker bees get their turn. Maybe the developers could start projects that are economically sound to start with? Do I want Habitat for Humanity to stop? Of course not. Do I want there to be three of them in Omaha? Nope. Frankly, there are three H4Hs in the metro. Think that is an easy way to keep that program viable. Lets turn the three (H4H Omaha, H4H Sarpy, and H4H Council Bluffs) into just H4H. Lets figure out how to get philanthropists to fund that kind of development.


I know right, the only beneficiaries of a shiny, new downtown clearly have been that of a tiny handful of developers, looking to get rich, taking advantage of us all. Sans all that government subsidized waste, worker bees can take it all over, through Habitat for Humanity funded projects... just need to get those philanthropists to open their pocket books a bit more. No doubt, with another big income tax cut, that will more than make up for all the sensible cuts being made to shut off this spigot of credits to rich developers. I can't wait for all the great new grass roots driven development to come, I know I've got my hammer ready.

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Garrett
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Re: Tax Reform & Effect on Omaha

Postby Garrett » Wed Dec 06, 2017 10:27 am

bigredmed1 wrote:These bonds have allowed some developers to get rich at the expense of the workers in society who never really benefit from the development. Either the projects are for poor people and the workers don't qualify because they have more than three digits of net assets. Or, they are for the hipsters who can afford $6 cups of hand pressed imported coffee.

Will you lose, possibly? Guess you have had your run. The worker bees get their turn. Maybe the developers could start projects that are economically sound to start with? Do I want Habitat for Humanity to stop? Of course not. Do I want there to be three of them in Omaha? Nope. Frankly, there are three H4Hs in the metro. Think that is an easy way to keep that program viable. Lets turn the three (H4H Omaha, H4H Sarpy, and H4H Council Bluffs) into just H4H. Lets figure out how to get philanthropists to fund that kind of development.

Does a wind farm that serves one company who is just using it for marketing really need a public partner? Especially one as profitable as facebook? Again, does facebook really need to screw the workers? Do we as Nebraskans not benefit more by looking out for each other than letting a rich multinational screw our people out of money? Is green energy really so non-economical that even mighty facebook can't afford it on its own?


Yeah because this tax plan is totally just bending the wealthy and corporations over the barrel and giving YUGE breaks to the workers. :roll:
From Omaha to Chicago
From Axel to Garrett

Still the same guy

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iamjacobm
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Re: Tax Reform & Effect on Omaha

Postby iamjacobm » Wed Dec 06, 2017 2:13 pm

My comment is solely a comment on what immediate affects the bill could have. There are a number of projects that have been doing legwork playing by the rules that have been in place for years or decades that will come to a screeching halt. Right, wrong indifferent that is just a reality.

I actually don't think that the whole thing is the "End of the World" or "Armageddon" as Pelosi said. There are a few nuggets in there that will help people. What I really don't like is the way this is being rushed through, I don't like that they are willing to raise the deficit a trillion or more when that has been a calling card for their campaigns against the Dems for years now. I don't like how these cuts didn't come with any sensible government spending cuts(ahem military spending is becoming outrageous). Also don't like how the personal tax cuts are temporary and the corporate ones are permanent. I also think this is benefiting the mega corps a lot more than small ones which again isn't what any of these people say on the campaign trail.

Taxes will always benefit someone and hurt others, the larger standard deduction will probably hurt the revenue of places like H&R Block, but should make it a lot easier for the normal person punching the clock to file their W-2. The mortgage interest deduction limit dropping shouldn't have a huge impact in Omaha b/c our housing costs are so low, but it will put a strain on already expensive housing markets on the coasts and in large cities. BTW landlords can still deduct all their mortgage interest so developers are still going to building and saving.

I think what frustrates me most of all is that there are probably a few things I said that are wrong b/c no one, including the people voting on this, have been given the time to actually see what the heck is happening. Its a crappy way to do all of this.

Heck, it was just reported that a drafting error in the Senate Bill would add $60 million in taxes to a major coal company in essence taxing them out of business. Coal, which Trump has been championing his entire campaign and presidency. They need to SLOW DOWN and do this right.

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HR Paperstacks
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Re: Tax Reform & Effect on Omaha

Postby HR Paperstacks » Wed Dec 06, 2017 5:15 pm

As an independent who was already turned off by their embrace of a completely unqualified moron as president, this tax bill has only solidified the fact that I will never ever vote for a republican again. This bill and the way it was passed was a massive middle finger to most Americans. In a lot of ways it hurts the middle class at the expense of giving the better off even more.

I think it’s clear where their priorities lay and it’s not with any of us. I really am hoping for the demise of the GOP and for another sane party to take their place that actually acts on what they preach instead of bitching about it when they are not in power only to completely disregard it once they are in.

buildomaha
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Re: Tax Reform & Effect on Omaha

Postby buildomaha » Wed Dec 06, 2017 6:10 pm

I think the issue with politics right now is the extreme polarization of the two parties in America. Most Americans DO lie around the middle of the spectrum and the leaders on both sides are on such extreme sides of the left and right that 1. No one is truly being represented and 2. There are just a bunch of terrible ideas being forced into legislation. For as much that two dominant parties has done for this country, there is zero cooperation and having more parties like in Europe may end up benefitting the middle class. Both sides are funded by the super rich who basically run this country. Everything the republicans have done since the election has been a failure and a disgrace to the middle class, but the dems unanimously voting no to any and everything proposed doesn't help. Then the idiot in the white house has to open his mouth (twitter) and ruin a meeting with dem leaders This country will be nowhere if some common sense middle of the road politicians don't get into office and replace these corporate funded idiots controlling the nation right now. Its a complete embarrassment.


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