Janesville City Council Special Session on Data Center Tax Impacts - Feb 23, 2026
Janesville City Council Special Session on Data Center Tax Impacts - February 23, 2026
On Monday, February 23, 2026, at 5:15 PM, the Janesville City Council held a special workshop session in City Hall Council Chambers to receive a 30-minute presentation from Ehlers, Inc. (Todd Teaves) and City Finance Director Dave Godek on the economic and tax implications of a potential large-scale data center project. The presentation focused on levy limit mechanics, net new construction, TID closure adjustments, and the flexibility the city would have in managing additional revenue. A 15-minute Q&A period followed, with hard stops set at 5:30 PM for the presentation and 5:45 PM for questions. The session adjourned promptly thereafter.
Presentation on Data Center Economic and Tax Impacts
- Todd Teaves (Ehlers, Inc.) explained that under Wisconsin levy limit law, the city's general operating levy can increase annually only by the percentage of net new construction from the prior year. For the 2025 valuation cycle, Janesville added approximately $130 million in new construction, equal to 1.63% of total value. Net new construction occurs both inside and outside TIDs, and the city may carry forward unused levy capacity for up to five years before it is lost.
- Teaves described two scenarios for a data center project located in TID 42:
- If the TID remains open, the city could either claim the net new construction annually (raising the levy but increasing the tax rate because only non-TID properties pay the higher levy) or defer/not use it (neutral on tax rate, no additional revenue). At TID closure, the city would receive a one-time closure adjustment based on the final incremental value.
- If the city closes the TID or removes the development site, the new tax base becomes available immediately. Claiming all net new construction would keep the tax rate stable while increasing revenue; claiming none would push the tax rate down, providing property tax relief.
- Finance Director Dave Godek added concrete projections: a $1 billion assessed value data center would increase the city's total assessed value by about 13%. The share of residential property would drop from ~70% to 61.7% of the tax base, and annual tax revenue would increase by approximately $4.8 million. The mill rate would decline as citywide assessments rise.
Council Questions and Discussion
- Councilmembers asked about flexibility in using additional revenue, including reducing debt (e.g., avoiding borrowing for short-lived assets like police vehicles), creating sinking funds, and funding community development. Teaves and Godek confirmed significant but not unlimited flexibility, noting that the project would build out over six years, not all at once.
- Councilmember Nino requested the historical percentage of taxable value that General Motors represented (last fully valued around 2010). Godek stated he would need to research the figure.
- Councilmembers inquired about valuation methodology: the assessor would likely use cost of construction due to lack of comparable sales or income data for data centers. Construction value would be added incrementally each year as buildings are completed.
- A councilmember asked about the risk of the project failing (data center not built), leaving the city with debt for infrastructure. Godek estimated that $30 million in new debt would cost the median assessed homeowner about $845 per year.
- Councilmember Miller noted that the net new construction percentage would decrease after the large project (because the denominator grows), but the total dollar amount of levy capacity would still be larger. Godek confirmed and said his office's normal budget recommendation would be to take the maximum allowable levy increase, though the council has discretion.
- Multiple councilmembers emphasized that this project is not a single solution; continued growth and diversification of the tax base remain essential. The council thanked the presenters.
Key Outcomes
- No formal votes or decisions were made; the session was informational only.
- Councilmembers gained a clearer understanding of levy limit mechanics, the trade-offs of keeping vs. closing TID 42, and the flexibility available in budgeting additional revenue.
- The city will continue evaluating the proposed data center project, including its build-out timeline and long-term fiscal impacts.
Meeting Transcript
All right. I'm going to call to order the city council workshop for Monday, February 23rd, 2026. Clerk, if you could do roll call for me, please. Council President Ertic. Here. Vice President Squire. Here. Council Member Cass. Here. Councilmember Ertman. Here. Councilmember Miller. Here. Councilmember Nino. Here. Council Member Who am I missing? Williams. Here. Isn't we do have a quorum? Okay, thank you. And because we have a council meeting at six o'clock, lay down some ground rules at a hard stop on the presentation by 5 30, so we have some time for questions and a hard stop at 545. And we're gonna call up Todd Teaves from Ailers for a presentation. Thank you. I'm uh Todd with Ellers, and uh been has been a while since I've been here, but our firm assists you with principally your economic development work, but we also do uh quite a bit of uh work in the space of financial planning, uh levy limits, uh forecasting of tax rates and levies. So what I've been asked to speak about tonight briefly is uh if you had a data center project in the city, what would be the impacts in terms of tax levy and tax rate? And there's a short slide deck if we can have that brought up. You should be able to use the mouse, Todd, right there in front of you and just advance. There we go. So you're I'm all sure I'm sure you're all aware that the city operates under levy limits. So at the most basic level, levy limits means that the city cannot increase its general operating levy over the prior year uh by more than a percentage equal to your net new construction in the prior year. So this system is set up uh to allow you to increase the levy if you have growth. It is not set up nor does it factor in increasing cost to deliver services. Uh so this is a challenge you face every year with your budgets, uh navigating levy limits and being again limited to that net new construction. There are many other adjustments to levy limits. The most notable one is your debt service. Uh so general obligation debt service is always exempt under the levy limit law. So whatever your basic operating levy is, uh you get to add that debt on top of that. So, what do we mean when we say net new construction? Uh, this is determined by the Department of Revenue. Uh, they certify that percentage that is available to the city each August 15th when the values come out. And what's important to understand is that net new construction, it doesn't matter whether it happens in or out of a TID. If it happens anywhere in the city, it contributes to that net new construction percentage. And basically it's whatever is added in terms of new real estate, uh less anything that may have been removed within the prior year. So as an example for uh the most recent valuation cycle, uh January 1st, 2025. So this was the number that impacted your 25 levy for the current budget year. Uh you add about 130 million in new construction, and that was equal to 1.63 percent of your uh total value. So that was the allowable increase uh in the city's levy last year prior to uh debt service and other adjustments. So a couple quick concepts before we sort of talk about uh the scenarios in terms of what a large project does uh to your ability uh to increase levy and the impact on the rate. So the first is a levy carry forward. Generally speaking, when you have net new construction, it's a use it or lose it proposition.
openpublica.com