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JANESVILLE

If a project helps address Janesville’s housing shortage, and if the financial details make sense, city council members said they’re open to using tax increment financing to subsidize residential development.

They stressed the council must unravel those ifs before approving any deal. But using TIF incentives for housing—something the city hasn’t done in nearly two decades—could become the new normal for Janesville if it wants to boost its housing stock.

Last week, the city and Forward Janesville co-sponsored a housing forum where two outside developers suggested tax increment financing was essential if Janesville wanted more residential projects.

Several council members attended the forum. They learned more about a tactic that hasn’t been used here for housing development since the Marshall Apartments in 1999.

“It would be a major policy shift for the city and city council to investigate that,” Council President Doug Marklein said Wednesday. “But based on the realities of the marketplace, what we heard at the meeting from two outside people, that is becoming the norm now. That’s what cities are doing to make the economics work, to fill the gap.”

Marklein is a partner at a family homebuilder business. He sees the issue from both sides: the struggle to make money in a market with relatively low rents and the city’s limited ability to provide assistance.

His business is interested in constructing a 12-unit apartment building, but right now it’s not financially feasible. Marklein fears he wouldn’t see a return on his investment because Janesville rents are too low, he said.

Higher rents would attract developers, but it could make housing unaffordable to some city residents. If rents stay the same, developers might need municipal dollars to cover construction costs. Otherwise, they might not bother building here, he said.

Marklein and other council members who spoke to The Gazette said they were willing to consider TIF incentives for residential purposes. They lean toward reserving those funds for multi-family developments rather than single-family homes.

Tax increment financing has become more common in Wisconsin because it’s one of the few development tools municipalities can use under state law, said David Callender, communications director for Wisconsin Policy Forum.

Successful TIF deals also help generate more property tax revenue. State-imposed levy limits otherwise restrict a community’s ability to enlarge its tax base, Callender said.

Council members were interested in seeing multi-family developments that cater to a variety of income levels. But market forces would have to drive that, not city policy, they said.

Assistant to the City Manager Maggie Darr agreed, saying it was not the city’s job to tell developers where they should set their rental rates.

For Section 8 housing and other projects that receive federal funds, the city could include some sort of requirement for low-income units. But such influence would not extend to all types of housing, she said.

Besides tax increment financing, Janesville could also revive an old program that helped cover such infrastructure costs as curb and gutter installation, Darr and other council members suggested.

But TIF incentives could make a significant dent in a tight housing market where rental vacancies hover around 2 percent.

Council member Tom Wolfe said if the terms of a TIF package are mutually beneficial, they could help stimulate far more development than curb and gutter coverage could.

Though many cities could use more housing, Wolfe said Janesville must also deal with a possible influx of jobs as the former General Motors site undergoes redevelopment.

That makes the housing shortage even more pressing.

“I think we have to have several hundred units before the GM development even starts. We have to be ahead of the curve in terms of the housing market,” he said. “We’re not going to get there under current terms, so something needs to change. What that is, I guess, remains to be seen.”

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