July 27, 2026

Nebraska Legislature Approves Community Improvement District Legislation

By: Jon Blumenthal and Abby Cota

Nebraska Legislative Bill 1114, passed in April 2026, contains the Community Improvement District Act.¹  This Act allows for the creation of community improvement districts (“CIDs”). CIDs can be formed “for the purpose of construction, installation, improvement, equipping, maintenance, and repair of public infrastructure in or related to such community improvement district, and contracting with the city or village in which the community improvement district is located or other political subdivisions of [Nebraska] for any public purpose.”²  They can be used by communities to make updates, improvements, and repairs in their neighborhoods through the collection of taxes from the property owners within the CID.³

The steps to create a CID, outlined in the statute, are as follows:

1. The majority of the property owners within the proposed CID propose the formation of a CID.⁴
   • These owners must create and file articles of association and request approval for the CID from the city or village within which the proposed CID lies.⁵  The articles outline, among other things, the proposed board of trustees, made up of property owners or residents in the CID.⁶
2. The city or village clerk schedules a hearing and publishes a notice setting forth the hearing date and time as well as information about the proposed CID.⁷
   • Prior to the hearing, property owners within the CID who did not sign the articles of association and object to the formation must file an objection in writing with the city or village clerk.⁸
3. The city council or village board of trustees holds a hearing regarding the application.⁹
4. After the hearing, the city council or village board of trustees decides whether to approve the proposal.¹⁰  If they do, they must pass an ordinance specifying information about the CID and declaring it “a duly formed political subdivision and community improvement district pursuant to the Community Improvement District Act.”¹¹
   • If there is a filed objection to the formation of the CID, the board can only approve the application if the objector’s property is removed from the CID or the board deems its inclusion necessary or appropriate.¹²

After the CID has been declared a public corporation, the board must appoint a chairperson and a clerk.¹³  In order for the CID to order the completion of a project and incur costs, the board of trustees must issue a resolution of necessity that is then set for consideration.¹⁴  If the resolution is approved, the board may order the improvements and enter into contracts for their completion.¹⁵  After a project is completed, a certificate of acceptance must be filed and approved by the city or village and the board of trustees or administrator in order to be officially accepted.¹⁶

A CID generates its own revenue by taxing its property owners.¹⁷  The maximum total tax levy rate is established in the articles of incorporation and approved by the city or village.¹⁸  CIDs can levy an annual property tax, as well as special assessments after the completion of specific work.¹⁹  This tax system is unique as these taxes are only assessed on property owners who are benefitting from the improvements.²⁰  Another benefit of CIDs is that they can issue long-term bonds, allowing for a longer financing period to pay for the costs of the CID.²¹  There is an additional bond tax levy that is used, along with special assessments, to pay the interest and principal on these bonds.²²

According to Nebraska State Senator Mike Jacobson, who introduced the bill, CIDs are beneficial to communities as they allow those in the neighborhood to generate funds for improvements they deem necessary.²³  This could be especially useful in smaller towns and villages that are not as focused on improvements or cities where the specific improvement a neighborhood wants is not high on the city’s overall priority list.²⁴  CIDs can also be used in situations where residents want to make improvements to their community, but the city or village does not want to go into debt further to fund the project.²⁵  CIDs create a mechanism for neighborhoods that “could fall . . . into severe dilapidation” without any investment into infrastructure.²⁶  Further, they give communities the ability to manage and reduce some of the upfront costs of owning a home to help make home ownership more feasible for Nebraska residents.²⁷

Other states, including Virginia, Kentucky, and Kansas, have implemented community improvement district laws.²⁸  These laws, while not identical to the Nebraska law, authorize districts for similar purposes to CIDs in Nebraska.²⁹
Community improvement districts operate similarly to the sanitation and improvement districts (“SIDs”) authorized by Nebraska Revised Statute 31-727.³⁰  The two statutes generally outline a comparable framework.³¹  However, SIDs are created to provide more specific services, some of which are typically provided by a city for property within city limits.³²  One of the main differences between SIDs and CIDs is that SIDs cannot be located “within any municipal corporation,” meaning that they cannot be within city limits.³³  A CID on the other hand can be within city limits.³⁴  Some of the services SIDs can provide include electric service, sewer and water systems, and fire and police protection.³⁵  Similar to a CID, SIDs levy an annual tax to pay the principal and interest on issued bonds, along with an annual tax to create a sinking fund for maintenance and repair.³⁶

Senator Jacobson stated that CIDs fill an issue currently unaddressed by tax increment financing and SIDs.³⁷  Overall, CIDs generally function to expand the benefit of SIDs to property within city limits.³⁸  They allow for property owners to have autonomy over improvements in their communities and keep other residents from bearing the cost of improvements from which they are not seeing a benefit.³⁹

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1. Legis. B. 1114, 109th Leg., 2nd Sess. (Neb. 2026).
2. Id. § 3(1)(a).
3. See id. § 3(1)(a), 21, 32, 36.
4. Id. § 3(1)(a).
5. Id. § 3(1)(c), 3(4), 4.
6. See id. § 3.
7. Id. § 4(1)–(2).
8. Id. § 5.
9. Id. § 6(1).
10. Id.
11. Id.
12. Id. § 6(2).
13. Id. § 9(1).
14. Id. § 25–27.
15. Id. § 27–28.
16. Id. § 30(1).
17. Id. § 21. See also Hearing on LB1130 Before the Urb. Affs. Comm., 109th Leg., 2nd Sess. 2, 4 (Neb. 2026) [hereinafter Urb. Affs. Comm. Hearing]. Legislative Bill 1130 was later amended into Legislative Bill 1114. See generally Legis. B. 1114, 109th Leg., 2nd Sess. (Neb. 2026) (containing the Community Improvement District Act).
18. Neb. Legis. B. 1114 § 3(2)(a).
19. Id. § 21(1), 32.
20. Urb. Affs. Comm. Hearing, at 4, 15. See also id. § 5, 6(2) (stating that property owners who believe their real estate should not be included can file an objection).
21. Urb. Affs. Comm. Hearing, at 13; Neb. Legis. B. 1114 § 36(1).
22. Neb. Legis. B. 1114 § 36(6).
23. Urb. Affs. Comm. Hearing, at 4.
24. See id. at 4.
25. See id. at 6-7.
26. Id. at 8.
27. Id. at 12.
28. VA. CODE ANN. § 15.2-2403.4 (West); KY. REV. STAT. ANN. § 107.320 (West); KAN. STAT. ANN. § 12-6a26, 12-6a28 (West).
29. See VA. CODE ANN. § 15.2-2403.4, 15.2-2403; KY. REV. STAT. ANN. § 107.320; KAN. STAT. ANN. § 12-6a28, 12-6a27(m).
30. NEB. REV. STAT. § 31-727.
31. See generally Legis. B. 1114, 109th Leg., 2nd Sess. (Neb. 2026); NEB. REV. STAT. § 31-727 (both following a similar statutory framework).
32. See NEB. REV. STAT. § 31-727.
33. Id. § 31-730 (“No lands included within any municipal corporation shall be included in any sanitary and improvement district.”).
34. See generally Neb. Legis. B. 1114 (containing no specific restriction on location).
35. See id.
36. Id. § 31-739.
37. See Urb. Affs. Comm. Hearing, at 4.
38. See supra notes 23–27, 32-35 and accompanying text.
39. See supra notes 8, 12, 23-27 and accompanying text.