Officials say the city needs to create more “increment” in its downtown tax increment finance district to justify the city’s recent investments into downtown.

To boost that increment—that is, the tax dollars collected in a TIF district to help the city recoup the costs of developing property in the district—city staff has recommended changes to the city’s multifamily development TIF policy to encourage downtown residential development.

Some city council members were not convinced during their meeting Monday night that changes to the policy are necessary. The council asked staff members to take feedback from Monday’s discussion on the subject and develop new recommendations.

In 2018, the council voted to allow multifamily developments to be eligible for TIF incentives as a way to address a citywide shortage in housing, especially rental housing.

Before that vote, developers had indicated to city officials that the average rent in Janesville was too low to justify the cost of building new units. The city approved allowing TIF incentives to ease the cost burden for developers, officials have said.

More than a year later, there are two apartment projects under construction benefiting from TIF incentives. A third, River Flats, already has approval from the plan commission, and a TIF agreement will likely go to city council for approval in the near future, economic development director Gale Price said.

City staff made the following recommendations to the council Monday:

  • Limit multifamily development incentives to a pay-as-you-go model instead of upfront assistance.
  • Allow TIF incentives only for downtown or brownfield projects. Brownfields would be defined as sites that have been previously developed and that subsequently have access to infrastructure.
  • Allow the option to extend TIF districts for another year to accommodate for affordable housing projects.

Council members were hung up on the use of the term brownfield, so member Doug Marklein suggested the city could define eligible projects in other ways, such as how long the land has been within city limits or whether the land has access to infrastructure.

Marklein also said he does not want developers to perceive Janesville as thinking less of projects that are not downtown.

If restrictions were added, the city would still allow multifamily development throughout the city. It just would not offer incentives to projects excluded by any new restrictions, council member Paul Benson said.

Price stressed the importance of the city earning more increment in its downtown TIF district, which would require steering developers downtown. TIF districts are used nationwide to improve blighted or struggling areas within communities.

Council member Tom Wolfe said he does not see a reason to change existing policy because city staff vets projects before proposals reach the council, meaning staff already could limit incentive offers to downtown projects.

Price said given the city’s limited resources, changes to the policy would help staff prioritize projects.

Benson and council member Sue Conley agreed the recommended revisions would help prioritize downtown without limiting developers.

“I think all efforts into downtown will be for naught if we don’t continue to prioritize downtown,” Conley said.