Olde Towne Bellevue residents upset by blighted designation, say mayor has conflict of interest
- Jessica Wade
- Nov 13, 2022
- 7 min read
Updated: Aug 7, 2024
Published: Nov. 13, 2021
Diane Leiker never thought that her quiet neighborhood of modest, well-kept homes in Bellevue’s Olde Towne would ever be considered blighted. But that is the exact word the City Council, at the request of a developer seeking to build new town houses, has attached to several properties in the area.
Further exacerbating frustrations from Leiker and many neighbors is what they view as a conflict of interest by Bellevue Mayor Rusty Hike, who cast the tiebreaking vote designating the land as blighted. Hike, a longtime advocate of developing the Olde Towne area, denies any conflict and says the future development would benefit all of Bellevue.
The City Council was split at its Oct. 19 meeting on whether to declare several properties in Leiker’s neighborhood blighted and substandard, a designation that was brought to the council for consideration by Mercury Property Management.
Mercury hopes to build 10 town houses on undeveloped land south of West 16th Avenue between Jefferson and Franklin Streets. The company sought a blighted designation for its own property and more than a dozen lots to the south — most of which have existing homes on them — in an effort to receive tax-increment financing, a tax incentive meant to spur redevelopment in areas deemed blighted.
Councilmen Bob Stinson, Don Preister and Thomas Burns voted against the proposal. Council members Kathy Welch, Jerry McCaw and Paul Cook voted for it, and Hike, as mayor, broke the tie by voting in favor of the designation.
The mayor’s decision to vote on the matter troubles some in the neighborhood, who point to Hike’s recent ownership of the property slated to be developed.
In March, Hike and a business partner sold the property to Jeffry Gehring of Mercury for $100,000, a tax document shows.
Hike and his partner bought the lot from Lumax Properties LLC for $800 in 2016, according to the Sarpy County assessor’s website. Lumax was deeded the property from the city in 2013 for free.
“I am so frustrated,” Leiker said. “I think the deciding vote should never have been made by Rusty Hike. He sold that property, and now he’s voting on it. I don’t think that’s right.”
Conflict of interest provisions in the Nebraska Political Accountability and Disclosure Act state that public officials can’t have a financial interest in contracts with their governing body.
But Hike contends that once he sold the land, he no longer had a financial interest in its development.
“I’m always very careful with that,” said Hike, a former Sarpy County Board member who was elected mayor in 2018. “As mayor, I’m not going to capitalize on something to make money for myself. I have my own projects, but if I’m ever in a conflict, I’m always going to conflict out (recuse).”
It’s possible that his company, Hike Real Estate, will have a part in selling the town houses after they’re built, but, Hike said, that’s a possibility for all real estate agents in the area.
“There’s no financial gain on my part at all,” he said. “All my agents in my office are independent contractors. Now, if one of my agents does sell one of the properties someday, I can’t say they wouldn’t get paid for it, but that would go for any real estate company as well.”
When Hike and his partner bought the land in 2016, they also looked to build town houses there. But Hike said their preemptive plan was “nothing near the development Mercury is doing.”
“Blighting and TIF, that’s nothing my partner and I had in mind,” he said. “They’re taking their project a step further. They’re putting probably twice as much value on that lot than what we had planned.”
Hike and his partner did put a bit of time and money into plans for a three-town-house development on the property, he said. They considered building the town houses on the property’s highest point, overlooking the wooded area below.
The decision to drop the project and sell the land was a matter of prioritizing other projects, Hike said, including the renovation of an Olde Towne bar.
Despite the sizable difference between his purchase price and sale price, Hike said the land wasn’t sold for more than it’s worth.
“We got a good buy on it when we bought it,” he said.
Speaking generally and not specifically on Hike’s vote, Frank Daley, executive director of the Nebraska Accountability and Disclosure Commission, said a mayor or city council member has a conflict of interest if they are faced with a decision that could result in a financial benefit or detriment to the official, a member of his or her immediate family or a business with which they are associated.
The financial benefit or detriment must be distinct from that experienced by the general public and must be reasonably foreseeable, Daley said.
Hike said he has made no official or verbal agreements with anyone regarding the property beyond the sale of the land.
“If I had an agreement with Mercury, that would be a conflict of interest,” Hike said. “If I’m making money, or I’m taking city money for something, that would be a conflict on interest for me, and I have conflicted out on those instances.”
Gehring, of Mercury, said he was unaware that Hike co-owned the property when he began the process of buying the land.
“Later, as I got involved in it, I found that out, but this is a completely separate project,” he said. “Mayor Hike had nothing to do with this, but he’s of course very excited about it, and he really wants to see Olde Towne revitalized.”
From a moral, if not legal, standpoint, Hike should be transparent about any connections to the developers and previous ownership of the property, said Jack Gould of the watchdog group Common Cause Nebraska.
“In most cases, the honorable thing is to not vote,” he said.
Hike’s previous ownership of the property was not mentioned when several community members, including Leiker, spoke in opposition to the substandard and blighted designation and the potential town house development at the Oct. 19 council meeting.
They voiced concern about the increase in traffic the development would likely bring, and how clearing trees from the heavily wooded area would affect the neighborhood’s abundant wildlife. Many also lamented the label of their property as blighted and substandard, a designation, they said, that may help the developers but wouldn’t be beneficial for neighborhood residents.
“Blighted” and “substandard” are unfortunate terms for an economic development tool, said Jeff Ray of JEO Consulting, the company hired by Mercury to conduct the substandard and blighted study that was presented to the City Council.
It’s a term neighborhood resident Connie Golden took issue with as well.
“I know they’re just terms, but no one has given me an answer of how long that lasts,” Golden told the City Council. “If they build these (town houses), will these be blighted and substandard forever, or is it a term that can be taken away? Because we don’t want that hanging over our heads.”
Bellevue City Attorney Bree Robbins said that as state law is currently written, the designation blighted and substandard does not go away after redevelopment.
“There is no avenue in the Nebraska statutes that un-blights something,” Robbins said. “That is something that we can certainly have conversations with our state legislator about.”
Ray listed several criteria used to determine whether the area would warrant a blighted and substandard designation.
Poor drainage in the area, an irregular shape and size of lot layouts, extended driveways, a lack of sidewalks, and houses built more than 40 years ago were a few listed.
Hike, whose campaign platform included redeveloping Olde Towne, said he sees the designation as an important tool to bring new activity and economic development to Bellevue.
“It’s just part of the bigger picture for redeveloping,” he said. “The officials and the public have wanted things to happen in Bellevue, and things are happening. What’s taking place right now is all good and all in the interest of Olde Towne Bellevue.”
Hike made the same point while debating with Councilman Burns after the Oct. 19 public hearing.
Burns argued that not one neighborhood resident has advocated for the development.
“I know we’re not talking about (the development) tonight, and it’s later in the process, but all those neighbors also have stated they don’t want the development,” Burns said. “We’re forcing a designation that we can’t change, that all those neighbors have said they don’t want.”
Hike responded that the designation and potential development would be “for the betterment of the entire city.”
“As this body, we’re representing this entire city, so whatever happens across town we have to answer the same way that we answer here,” Hike said at the time. “Bellevue has a lot of floodplains in this city we don’t collect taxes on, a lot of military property we don’t collect taxes on. You ask why your taxes are high; it’s because we don’t have the proper development in this town.”
A few neighbors contacted Burns after the council meeting. One, he said, thanked him for opposing the designation.
“Most are extremely frustrated, and I think that’s sort of an understatement,” Burns said.
Burns has also heard from neighbors who shared their concern that Hike was the one to break the tie.
“I know there are a lot of those neighbors who are worried that there might be a possible financial gain down the road,” Burns said. “I don’t know if that’s true, but I know that the neighbors didn’t want the designation, and it’s my job as their representative to advocate for their neighborhood.”
Residents within 300 feet of the potential development were recently sent a letter notifying them of a rezoning request for the property that will come before the Bellevue Planning Commission. The letter included a site plan that depicts 10 town houses south of 16th Avenue and west of Franklin Street.
Gehring contends that the town houses and potential TIF, which has not yet been formally requested, will be good for the area.
“This is a weed- and tree-infested area that can be changed into very nice condos, and on top of this, we’re going to be doing some area development,” he said. “They’ll get some sidewalks they don’t currently have, some curbs. We’re going to see if we can fix the water pressure issues they have. There may be even more on the table if we get TIF.”
Under TIF, the developer takes out a loan to help cover eligible redevelopment expenses — typically aspects of a project that benefit the public, such as roads. The loan is repaid by the increased property taxes that are generated on the new development.
Mercury aims to sell the town houses for less than $300,000, Gehring said.
The median sale price for homes in Bellevue, according to real estate firm Redfin, is $245,000.
“This is also going to provide housing to people,” Gehring said. “In the homebuilding industry right now, I can’t build you anything for under $400,000.”
Approval of the designation was the first step in moving the development forward. The next step will be a rezoning request, which is scheduled to come before the Planning Commission on Thursday.
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