The Janesville City Council on Monday approved and praised a tax increment finance agreement with local developer Jim Grafft to redevelop downtown apartments.
Multiple council members thanked Grafft and his family for their plans to renovate two apartment buildings on West Milwaukee Street into five market-rate apartment units.
The council unanimously approved a $102,500 TIF agreement to assist Grafft in renovating vacant apartments above the storefronts at 401 and 405 W. Milwaukee St.
The agreement is a pay-as-you-go agreement, which Economic Development Director Gale Price said presents little risk for the city.
Pay-as-you-go TIF options allow the city to pay a portion of the total development assistance back to the developer each year.
For the Grafft project, the renovated apartments are anticipated to increase the properties’ value from $185,200 to $500,000. That means the project will generate at least $7,193 in new tax revenue each year, according to a city memo.
The city will pay back 95% of that new tax revenue to Grafft over 15 years. The return will be given after Grafft makes annual property tax payments.
Assistance could be paid out sooner if Grafft makes larger annual payments, but the total assistance is capped at 95%, Price said.
The apartment project will have to be granted a certificate of occupancy by the city by Dec. 31 to make the agreement valid, Price said.
Project costs total $500,000, Price said.
Grafft has expressed interest in updating the buildings’ façades, but that work would not be included in the TIF agreement.
Provisions in the agreement prevent Grafft from challenging future tax bills while the agreement is in effect and require any sale of the property to receive city approval before incentives can continue, Price said.
Rents are so low in Janesville that developers often need assistance to make a profit on residential projects, Price said.
City officials have been vocal about wanting more housing downtown to accommodate national trends for walkable, urban living spaces, Price said.
Council members lauded the project for its ability to clean up a part of downtown that is blighted and largely vacant.
The Gazette reported on crime and drug use at an upstairs apartment at 309 W. Milwaukee St. that drove a small business out of the building’s ground floor storefront.
Price said having more eyes in the area will help prevent similar situations from happening.
Engaging West Milwaukee Street will allow the area to prosper, Price said.
City council member Tom Wolfe said he hopes the apartments will be catalysts for further downtown revitalization. Members Sue Conley, Jim Farrell and Paul Benson echoed that thought.