Turnback tax legislation allows Lincoln officials to move forward with convention center plans

“Until you have some level of financing, you don’t have a project, you have an idea,” said Dan Marvin, Lincoln’s director of Urban Development. “I think we’ve moved from an idea to something that’s more than that because you have something that can pay for a portion of the building.”

The bill (LB732), introduced by Lincoln Sen. Eliot Bostar, extends provisions originally included in the state’s convention center facility financing assistance act until 2030, allowing cities to use 70% of the state sales tax revenue collected by retailers within 600 yards of the convention center to pay for it.

Bostar’s bill was ultimately combined into an omnibus package (LB727) that incorporated more than 20 tax-related bills in danger of being left behind in the session marked by an ongoing filibuster.

Known as a turnback tax, it was an important part of the financing of Pinnacle Bank Arena a decade ago.

City leaders have made building a convention center a priority, and it was one of four legislative priorities Lincoln senators championed this year.

Lincoln Sen. Anna Wishart introduced another bill to appropriate $60 million in one-time state funds for the convention center. That didn’t pass, and Bostar said they introduced both bills in hopes that one would gain traction.

“I think the idea was that it’s an important project for the city of Lincoln and we wanted to have at least a couple of avenues available to us to realize the goal of building a convention center,” he said.

The convention center was one of the top priorities identified by the Lincoln Chamber of Commerce, along with securing money for a second water source for the capital city. The Lincoln delegation succeeded there, too, getting nearly $180 million in federal American Rescue Plan Act money for the cause.

Two other priorities — funding for affordable housing and the east beltway — ultimately didn’t succeed. The bill to appropriate $25 million for planning of the east beltway didn’t make it out of committee, and affordable housing appropriations were vetoed by Gov. Jim Pillen.

The convention center has been on the minds of city leaders for some time. The chamber, working with several other organizations, commissioned a study that recommended building a two-story, 129,600-square-foot convention center.

The study estimated the cost at $111 million-$120 million, which the turnback tax wouldn’t cover completely. But it would certainly play a major part.

State law allows an entity to collect up to $150 million from turnback taxes, though a portion of that will go to a fund to help smaller communities with convention centers, so ultimately the city could potentially collect $105 million.

But how much revenue is actually collected depends on where the convention center will be located and what retailers and hotels are in the zone.

One change in the law that will likely increase revenue is being able to collect turnback taxes from all retailers — including restaurants and other retail stores — that are in the 600-yard radius. Turnback taxes used for Pinnacle Bank Arena can only be collected from hotels, Marvin said.

While the turnback tax would be a major financing tool, the city still needs to figure out where the remainder of the money will come from, and the mayor has indicated it’s likely to be a combination of public and private funds.

Mayoral advisor Amanda Barker said discussions are happening now about potential municipal financing options.

City officials will begin pulling together a convention center committee that will look at possible sites — including but limited to those suggested in the feasibility study, and will likely begin a process to select a convention center manager who could be involved in selecting a site, Barker said. It could be a year before the city starts that process.

The feasibility study, conducted by CSL International, identified five potential locations: the former Journal Star production building at Ninth and Q streets; the current Midwest Steel site at Eighth and N streets; a site adjacent to the Cornhusker Marriott Hotel; the downtown Post Office next to PBA; and a location in the Telegraph District east of downtown.

Early attention had focused on the Post Office site, but the U.S. Postal Service has expressed objections that could prevent or delay that option. The location near The Cornhusker Marriott has gotten a lot of attention, but city officials say no decision has been made.

But moving forward is a possibility now.

“I think the Legislation we passed this year is the difference between the city of Lincoln being able to construct a convention center and not being able to,” Bostar said. “It’s what makes this project possible.”