Court upholds TIF for apartments

The Nebraska Supreme Court ruled against the City of McCook concerning tax increment financing proceeds garnered from the redevelopment of the former YMCA into Landmark Apartments.

In a ruling issued today, the Nebraska Supreme Court upheld the decision by District Court Judge David Urbom in Red Willow County, who said the TIF proceeds from the redevelopment belong to a company that purchased the project, PRP Holdings.

In 1998, the Community Development Agency of the City of McCook contracted with four redevelopment developers that required the developers to convert the former YMCA building on Norris Avenue into apartments.

As part of the contract, the Agency agreed to implement TIF to help pay the costs of the development. Under the contract's terms, TIF funds were to be paid to the redevelopers who advanced the money for the project.

During the development phase, the building was sold to PRP Holdings.

In 2006, the city filed a declaratory judgement action in District Court and asked the court to decide who should get the TIF revenue, the city or PRP Holdings.

Judge Urbom ruled that PRP Holdings should get the proceeds and based his decision under state law that states the Agency had 30 days after the parties formerly entered into the redevelopment contract in 1998 to contest its validity. The Agency filed the declaratory judgement in 2006.

The city appeal that decision and the Nebraska Supreme Court affirmed Urbom's ruling.

McCook City Manager Kurt Fritsch said he had no comment at this time and referred questions to attorney Michael Bacon of Gothenberg. Fritsch said Bacon took the case pro bono in the interest of protecting TIF rights throughout the state and that the court's ruling does not impact any new TIF projects in McCook.

The complete ruling is available online.