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Property owners in Janesville’s central business district have a new option for generating revenue after the city council approved an ordinance to allow first-floor downtown apartments.

Planning Director Duane Cherek said the ordinance will help ease the city’s housing shortage and demand for market-rate apartments.

The council approved the ordinance 7-0 Monday.

Trends show people want to live and work closer to the city’s core, and first-floor apartments can occupy space in underused buildings downtown, Cherek said.

The central business district has 88 buildings, and 73% are along the pedestrian corridors of Main and Milwaukee streets, he said.

The ordinance makes special provisions for Main and Milwaukee street businesses. On those streets, any building converted to ground-floor residential is required to keep 25% of its street frontage as commercial space.

Property owners will have to secure conditional-use permits from the plan commission and abide by all building and fire codes for mixed use before letting tenants move in.

The city held a public hearing on the ordinance Monday. Ty Bollerud, a regular speaker at council meetings, was the only person to speak, and it was unclear what his stance on the ordinance was.

Deborah Adams emailed city councilors and staff to voice support for the ordinance, saying it “gives downtown another tool to put in our toolbox.”

Michael Gilbertson emailed Cherek with 10 concerns about the ordinance, including a question about how corner businesses, which have two storefronts and less space in the back of their buildings, would be handled.

Council member Sue Conley asked Cherek to have city staff give business owners information on costs associated with converting a commercial space to residential.

Conley said she feared some property owners might start working on first-floor apartments and then get in over their heads.

Cherek said the city is happy to work with property owners to help them with the process and answer questions. He said smaller storefronts likely won’t benefit from the ordinance.

Eight of Janesville’s peer cities allow first-floor apartments in their central business districts, with a variety of conditions or limitations attached.

Requiring property owners to obtain conditional-use permits will allow the plan commission to tailor requirements to businesses as time goes on, Cherek said.