Urban Redevelopment Act

An applicant is one or more persons listed in the application, or in an amendment to the application, who conducts business activities at the qualified location, and is part of the taxpayer.

The base-year is the calendar year immediately preceding the year of application.

Base-year employee means any individual who was employed in Nebraska and subject to the Nebraska income tax on compensation received from the taxpayer or its predecessors during the base year and who is employed at the qualified location.

A census tract is a small statistical subdivision of a county determined by the United States Bureau of the Census and is uniquely numbered with a numeric code.

The cumulative investment is all investment made on or after the date of application and prior to the end of the current year, less retirements of the value of owned property previously claimed and value of leases no longer in effect.  Cumulative investment determines whether the required investment level has been attained or maintained.

An economic redevelopment area is an area within the State of Nebraska in which: (1) The average rate of unemployment in the area during the period covered by the most recent federal decennial census or American Community Survey 5-Year Estimate by the United States Bureau of the Census is at least 150% of the average rate of unemployment in the state during the same period; and  (2) The average poverty rate in the area is 20% or more for the federal census tract in the area.

Equivalent employees mean the number of employees computed by dividing the total hours paid in a year by the product of 40 times the number of weeks in a year.  This number is often referred to as the number of Full-Time Equivalent Employees or “FTEs.” Full-Time Employee.  A full-time employee is defined as described in Section 4980 of the Internal Revenue Code of 1986, as amended, and the regulations for this section.

Investment is the value of qualified property incorporated into or used at the qualified location.  For qualified property owned by the taxpayer, the value is the amount required to be capitalized for depreciation, amortization, or other recovery for federal tax purposes.  For qualified property rented by the taxpayer, the average net annual rent is multiplied by the number of years of the lease for which the taxpayer was originally bound, not to exceed 10 years.  This includes land that is rented in connection with, and incidental to, a building that is leased.  

Nebraska statewide average hourly wage for any year means the most recent statewide average hourly wage paid by all employers in all counties in Nebraska as calculated by the Office of Labor Market Information of the Department of Labor using annual data from the Quarterly Census of Employment and Wages by October 1 of the year prior to application. Hourly wages shall be calculated by dividing the reported average annual weekly wage by forty.

Number of new employees means the number of equivalent employees that are employed at the qualified location during a year that are in excess of the number of base-year employees.

Performance period means the year during which the required increases in employment and investment were met or exceeded and each year thereafter until the end of the third year after the year the required increases were met or exceeded.

Qualified location means any location in a city of the metropolitan class or a city of the primary class that is used or will be used by the taxpayer to conduct business activities and that is located within an economic redevelopment area.  More than one qualified location may be part of the same agreement.

Qualified property is any tangible property of a type subject to depreciation, amortization, or other recovery under the Internal Revenue Code of 1986, as amended, or the components of such property, that will be located and used at the qualified location.  Qualified property does not include (1) aircraft, barges, motor vehicles, railroad rolling stock, or watercraft or (2) property that is rented by the taxpayer qualifying under the URA to another person.

Ramp-up period means two years from the date the complete application was filed with the Director of DED.

Related taxpayers include any corporations that are part of a unitary business under the Nebraska Revenue Act of 1967 but are not part of the same corporate taxpayer, any business entities that are not corporations but which would be a part of the unitary business if they were corporations, and any business entities if at least 50% of such entities are owned by the same persons or related taxpayers and family members as defined in the ownership attribution rules of the Internal Revenue Code of 1986, as amended.

Taxpayer means any person subject to sales and use taxes under the Nebraska Revenue Act of 1967 and subject to withholding under Neb. Rev. Stat. § 77-2753 and any entity that is or would otherwise be a member of the same unitary group, if incorporated, that is subject to such sales and use taxes and such withholding.  Taxpayer does not include a political subdivision or an organization that is exempt from income taxes under section 501(a) of the Internal Revenue Code of 1986, as amended.  Political subdivision includes any public corporation created for the benefit of a political subdivision and any group of political subdivisions forming a joint public agency, organized by interlocal agreement, or utilizing any other method of joint action.

A unitary group is one or more corporations or other business entities with common ownership, and which conduct business as a single economic unit, including all activities in different lines of business which contribute to the single economic unit.  Common ownership means one or more business entity owning 50% or more of another business entity.  

Wages means the wages and other payments subject to the federal medicare tax.

Year means the taxable year of the taxpayer.

Q: What is the base year?

1. The base year is the tax year immediately preceding the year of application.

Q: What is a base-year employee?

1. Base-year employee means any individual who was employed in Nebraska and subject to the Nebraska income tax on compensation received from the taxpayer or its predecessors during the base year and who is employed at the qualified location.

Q: What is an ERA? How do I know if I am in an ERA?

1. “ERA” stands for “economic redevelopment area.” This means an area in the State of Nebraska where unemployment is at least 150% of the statewide average and where the poverty rate is 20% or more, as determined by federal census data. You can see a map of areas that meet the requirements to be qualified locations under the URA here.

Q: Does the entire investment requirement need to be made in the first year?

1. No, the investment does not need to be met entirely in the first year. The investment can be made over the course of the Ramp-up Period.

Q: Does a lease of real property count as qualified investment?

1. If the lease is signed after the date of application, and if the real property is part of a qualified location, then the lease will count as qualified investment. The amount of investment is calculated by taking the average net annual rent and multiplying that amount by the number of years of the lease, not to exceed ten years.

Q: Does the renewal of a lease of real property count as qualified investment?

1. The renewal of a lease that would otherwise expire counts as qualified investment and follows the same rules as a new lease. The renegotiation of an ongoing lease does not count as qualified investment unless some term of the lease other than the expiration date is materially changed.

Q: When should we hire our new employees? How long do the employees have to be employed?

1. ​Your “Ramp-Up Period” starts immediately after your application date and lasts until the end of the second year after your application date. Any FTE added during the year you filed your URA application counts toward your employment requirements. You must reach the employment levels required by your URA Agreement by the end of your ramp-up period. Once your employment and investment levels are met, you enter your performance period. The required level of employment must be maintained for all years of your performance period.

Q: When will investment count towards the agreement requirements?

1. Investment in qualified property at a qualified location counts if it is made after the completed URA application is filed. Although you must meet the required minimum levels identified in your agreement with the Department of Economic Development by the end of the ramp-up period, you may continue to increase your investment and employment to earn more tax credits up to the limit listed in your agreement.

Q: Can employees working remotely qualify as new FTEs?

1. Yes, as long as the teleworker’s residence is located within the same an Economic Redevelopment Area as your qualified location.

Q: What is an equivalent employee?

1. Equivalent employees means the number of employees computed by dividing the total hours paid in a year by the product of forty times the number of weeks in a year. Only the hours paid to employees who are residents of this state shall be included in such computation. A salaried employee who receives a predetermined amount of compensation each pay period on a weekly or less frequent basis is deemed to have been paid for forty hours per week during the pay period. Equivalent employees are sometimes referred to as Full Time Equivalent employees, or “FTEs.”

Q: What industries are URA incentives available to?

1. URA incentives are available to all industries as long as the new investment and employment occur at a qualified location. Qualified location means any location that is:

• • Used or will be used by the taxpayer to conduct business activities, and
  • Located in a city with population over 100,000, as measured by the most recent census; and
  • Located within an economic redevelopment area as defined by law. You can see a map of eligible areas here.

Q: What can I do with the credits?

1. You will be able to claim tax credits from the Department of Revenue (DOR) once you have entered your performance period. These credits can be used:

• • To obtain a refund of sales and use taxes
  • As a refundable income tax credit
  • To reduce income tax withholding employer or payor tax liability
  • To obtain a refund of property taxes on real property at a qualified location
  • To reduce the income tax liability of a partner, LLC member, shareholder, or beneficiary.

Limitations apply to these uses. Consult the law here for details.

Q: How long do benefits last?

1. Once you have met the required levels of investment or investment and employment, your Performance Period begins. You will receive the credits for your new investment and employment during the first year of the performance period, and additional credits can be earned over the three years after that by continuing to increase employment and investment.

Q: What documents do I need for the application?

1. A checklist of items needed for the application can be found under Program Resources here.

Q: Is help available to the online application if I need it?

1. Definitely. You can contact us at ura.ded@nebraska.gov for assistance.

Q: If I have more than one location in an ERA, can both be in the agreement?

1. Yes. The URA allows multiple locations to be part of an agreement as long as all locations are qualified locations.

Q: What happens if I don’t hire before the end of my ramp-up period?

1. Once you file a URA application, you will be asked to sign a written agreement that explains your obligations and what incentives you will receive in return. Your obligations will include meeting a specific level of investment, or investment and employment, by the end of the ramp-up period. If you are unable to fulfill this obligation, you will not be eligible to receive any incentives.

Q: What happens if I cannot maintain my required levels of investment or employment throughout my performance period?

1. If you do not maintain the agreed levels of investment or employment for the entire performance period, Nebraska law requires the state to “recapture” any tax credits you received. The amount to be recaptured depends on how many years out of the performance period you failed to meet your employment and investment obligations.

Q: Are my employees required to be in an ERA?

1. Your employees can live anywhere as long as they work at a qualified location, and a qualified location must be located in an ERA. However, you can earn an additional tax credit of $1,000 for each equivalent employee who lives in an ERA.