JANESVILLE—The 4-year-old Janesville Innovation Center is outgrowing its need for a city subsidy, and its success has led to plans to create a second center.
Tax increment financing District 22 has helped fund the Janesville Innovation Center since it was created in January 2013. The city has poured an estimated $1 million into the center, about $200,000 of which has been for operations, said Gale Price, city economic development director and Innovation Center board member.
TIF district money for operational expenses have been diminishing each year. In its first year, the center got $100,000 in local money for operations, but it received only $20,000 this year, Price and city council President Sam Liebert said.
The plan has always been to annually reduce subsidies and eventually end them, they said.
That’s OK because the Innovation Center has been one of the more successful business incubators in Wisconsin, Price said.
“Things are falling into place. That’s the best part,” he said.
It’s expected the Innovation Center will reach capacity next year, which gives it the ability to operate without TIF district funds, Liebert said.
“We’re now generating rental income that covers our operating costs,” said Mike Mathews, center director.
The center is growing enough that the city is considering partnering with a private developer to create a second Janesville Innovation Center, or JIC2, nearby.
The second center would include bigger spaces to accommodate graduates of the existing center who want more room to operate their businesses. The second center would be close to the original center so tenants could still enjoy the services it provides, such as business consultation, Price said.
It could also include space for new businesses that aren’t part of the Innovation Center, Mathews said.
“We think it could be a real benefit to a development because they can operate a building, and we have tenants we can feed into the developer,” Price said.
The last thing the city wants is for Innovation Center businesses to outgrow the area.
“We want to keep them in Janesville,” Price said.
The center will give the city council an update on its status and plans at the council’s Monday meeting.
Though unlikely, it’s possible the council would want to continue funding the Innovation Center.
That would create problems because TIF District 22 is running out of money. Continuing to subsidize the center would likely require pulling money from the city’s general fund. In a year the city is facing a nearly $1 million shortfall, that would not be good, Liebert said.
The center’s success so far is evidence of the economy’s recovery. Innovation Center officials will give the council another update next year to show how it’s doing without local subsidies, Liebert said.
“We’re getting to the kind of … growth we were hoping we’d be able to accomplish through the Innovation Center and its programs,” Mathews said.
http://www.gazettextra.com/20161008/city_to_stop_subsidizing_janesville_innovation_center