By james art Madison plans to spend $9.85 million from its affordable housing fund to support the addition of about 275 new rental units, including 167 for lower-income people, in four housing projects.
The city’s support can help developers secure federal tax credits through the Wisconsin Office of Housing and Economic Development. These tax credits are often needed to finance projects that will have mostly low-cost units.
Mayor Satya Rhodes-Conway and five City Council members introduced a resolution this week to use the fund for senior apartments at Merchant Place on the west side, East Washington and 7th avenues on the east side, and Dryden’s CORE and United Residences on the north side .
The council also approved $5.5 million this week for four projects that will not seek federal tax credits. Just over half of that funding will come from the Affordable Housing Fund. The rest will be through Tax Increment District 51, between John Nolen Drive and Fish Hatchery Road on the south side.
Those projects — intended to add or retain 152 more affordable units — include Parker Place Apartments on the South Side, the Scattered Homeless Housing Program and the Red Pine Housing Co-op on the East Side, and The Point on Washington Apartments on the Far East Side.
Madison’s Affordable Housing Fund was created a decade ago to increase the availability of affordable housing for the city’s lowest-income residents.
Under Rhodes-Conway, the city has increased the amount of money committed to the fund. And while the fund was originally intended to boost the chances of projects competing for a specific type of federal tax credit, it has since been expanded to support a wider range of housing initiatives, including those too small to seek federal support.
The scale of these smaller projects often “falls short of the best place for tax credits,” said Community Development Director Jim O’Keefe. “We also tend to see more rehabilitation of existing housing stock under the tax credit proposals.”
All four non-tax credit projects selected this year involve at least some rehabilitation of existing rental housing. In total, they will add, improve or preserve about 275 housing units, just over half of which will be affordable.
The city received nine proposals for projects that would seek federal tax credits — two of which were later removed from consideration for this round of funding — and six proposals for projects that would not seek federal tax credits. Ultimately, the staff recommended four proposals from each group.
“It’s always difficult to decide which development proposals get funded and which don’t,” O’Keefe said.
City staff consider factors such as how the projects will be financed, how long developers are willing to commit to keeping the housing affordable, the extent to which local residents have been involved in shaping the proposals and their proximity to transportation services, schools, grocery stores and parks.
“We’ve got what we’ve got,” O’Keefe said, “and we’re doing the best we can.”
Money from the Affordable Housing Fund comes with some conditions. Developers can only keep their awards from the city if they also secure the rest of the financing they need and the various approvals their projects will require. Funding for projects seeking tax credits is contingent on passage of the 2025 capital budget.
“If these funding commitments are approved, it doesn’t necessarily mean that every one of these proposals will move forward,” O’Keefe said. “They’re certainly in a better position than without them, but they still have a lot of work to do before they’re ready to break ground.”
What city staff recommends
Projects Seeking Federal Tax Credits:
- Horizon Development Group and Kaba-Baal. Dryden’s CORE, 2902 Dryden Drive. Project cost: $18.1 million. City award: $1.85 million. Total Units: 55. Cheap Units: 43.
- Northpointe Development and Selassie Development. Merchant Place Senior Apartments, 6702 Odana Road. Project cost: $19.88 million. City award: $2.5 million. Total Units: 60. Cheap Units: 36.
- Northpointe Development and Dream Lane Real Estate Group. United Residences, 709 Northport Drive. Project cost: $28.3 million. City award: $3 million. Total Units: 80. Cheap Units: 48.
- Volker Development and Cordon Development Group. East Washington & 7th Ave, 2430-2450 E. Washington Ave. and 10-16 N. Seventh St. Project cost: $30.51 million. City award: $2.5 million. Total Units: 76. Cheap Units: 40.
Projects not seeking federal tax credits:
- Catalyst 4 Change. Scattered Homeless Housing Program, 3507 Milwaukee St. Project cost: $600,000. City Award: $622,000. Total Units: 4. Cheap Units: 4.
- Hispanic Housing Development Corp. Parker Place Apartments, 2401 Parker Place. Project cost: $3.86 million. City award: $2.75 million. Total Units: 70. Cheap Units: 54.
- Repvblik Madison Apartments. The Point on Washington Apartments, 3917 Lien Road. Project cost: $2.55 million. City award: $1.5 million. Total Units: 190. Cheap Units: 85.
- Sunny Side Development and Red Pine Coop. The Red Pine Housing Cooperative, 212 Merry St. Project Value: $830,000. City Award: $649,000. Total Units: 7. Affordable Units: 6.