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Local Option Municipal Economic Development (LB840)

LB 840 authorizes cities that meet certain requirements to collect tax dollars for economic development purposes.

The Local Option Municipal Economic Development Act (LB840, 1991) authorizes incorporated cities and villages to collect and appropriate local tax dollars—including sales and/or property tax, if approved by the local voters—for economic development purposes.

The Act involves the formulation of the local economic development program plan. The plan forms the foundation for the collection and expenditure of local tax revenues for economic development and, if the voters approve the plan, the provisions of the local plan becomes the basis under which the municipality’s program operates.

Community currently able to offer loans, grants, and other activities with LB840

Ainsworth Albion Alliance
Arapahoe Arnold Atkinson
Bancroft Bassett Bayard
Beatrice Beaver City Beemer
Bellevue Blair Burwell
Cambridge Central City Chadron
Chappell Clearwater Columbus
Cozad Crete Crofton
Curtis Decatur Doniphan
Ewing Fairbury Falls City
Fremont Fullerton
Geneva Gering Gothenburg
Grand Island Hartington Holdrege
Imperial Kimball La Vista
Lexington Louisville Loup City
McCook Milford Mitchell
Nebraska City Neligh Norfolk
North Platte Ogallala O’Neill
Ord Oshkosh Plainview
Plattsmouth Ravenna
Sargent Scribner Schuyler
Scottsbluff Seward Sidney
South Sioux City St. Paul Stromsburg
Stuart Superior Sutton
Tecumseh Tekamah Valentine
Wakefield Wayne West Point

Eligible Communities
All Nebraska cities and villages, as well as any group of two or more cities acting under the Interlocal Cooperation Act, are eligible to seek local voter approval and participate in this Act.

Eligible Activities
Any project or program that provides direct or indirect financial assistance to a qualifying business is an eligible activity for local funds to be collected for the economic development program, or for any payment of related costs and expenses.

Programs could include, but are not limited to:

  • Direct loans or grants to qualifying businesses for fixed assets and/or working capital.
  • Loan guarantees for qualifying businesses.
  • Grants for public works improvements which are essential for the location or expansion of a qualifying business.
  • Grants or loans for job training.
  • The purchase of real estate, options for such purchases, and renewals or extensions.
  • Grants or loans to businesses to provide relocation incentives for new residents.
  • Payments for salaries and support of city staff or the contracting of an outside entity to implement the economic development program.
  • Grants or loans for the construction or rehabilitation for sale or lease of housing for persons of low or moderate income.
  • Grants or loans for the construction or rehabilitation for sale or lease of housing as part of a Workforce Housing Plan.

Qualifying Businesses

A qualifying business is any corporation, partnership, limited liability company or sole proprietorship that derives its principal source of income from one of the following:

  • Manufacturing
  • Research & Development
  • Processing, storage, transport or sales of goods or commodities in interstate commerce
  • Sale of services in interstate commerce
  • Headquarters facilities relating to eligible activities
  • Telecommunication Activities
  • Tourism-related activities
  • Production of films or television programs.

In Cities with a population less than 100,000 it may also include:

  • Construction or Rehabilitation of Housing (either as LMI or under a Workforce Housing Plan).
  • Retail Trade (limited to 40% of funds generated in a 12-month period and 20% in a 5-year period). Retail trade means a business which primarily sells to consumers for own use or consumption and not for resale.

In cities with a population of 2,500 or less, any activities may qualify. In all cases, business do not have to be located within city limits. For information, please consult the guide for implementation.

Questions about the Local Option Municipal Economic Development Act?

Deb Eggleston

Local Option Advisor