Omaha’s Hospital Industry

Pumping Up Property Taxes

The Omaha World-Herald has started a series covering the lack of affordable housing. I doubt they will really get to the nitty-gritty of it.

For years now, the hospital industry has been building new buildings and hiring more people. They have followed the lead of the colleges and universities. All of the lands they occupy are exempt from property taxes forcing property taxes up for everyone else.

The more they build, the more employees they have. For the last decade, apartment buildings have been becoming more popular to house such workers. What the renters never know was just how much their rent went to defray the landlords' ever-increasing property taxes. The apartments created a pressure valve on housing demand while the hospital industry continued to grow and annex more land.

The taxing authorities noticed complaints about property taxes have actually gone down. More constituents are renting apartments and never pay directly for property taxes so they don’t complain about property taxes. So the levies never go down very much while property evaluations increasingly go up.

The mortgage industry has actually added to the problem by offering balloon loans. This amounts to a “rent to buy” option from the bank. Mortgages alone can hide changes in the property but a balloon loan doubles the impact as payments get bigger later. This is what forces many people out of Nebraska. (See https://www.investopedia.com/terms/b/balloonloan.asp and https://www.rocketmortgage.com/learn/property-taxes-and-insurance-can-affect-mortgage-payment)

 Omaha Habitat for Humanity recognizes the property tax problem in making housing unaffordable. They are actually promoting the Nebraska property tax credit (https://habitatomaha.org/ways-to-save/) While the property tax credits help, the continual escalation of property evaluations eviscerates much of the relief.

 The hospital industry benefits greatly from the current property tax scheme.  Their buildings really are some of the largest buildings in the City because of their exemption. They have become a sizeable political entity as well.