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 those with lower incomes, across four housing projects.
The city’s backing can help developers secure federal tax credits through the Wisconsin Housing and Economic Development Authority. These tax credits are often necessary 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 Merchant Place Senior Apartments on the West Side, East Washington & 7th Ave on the East Side, and CORE on Dryden 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. A little more than 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.
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Those projects — set to add or preserve another 152 low-cost units — include Parker Place Apartments on the South Side, the Scattered Site Homeless Housing Program and the Red Pine Housing Cooperative 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 housing that would be affordable to 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 initially meant to boost the chances of projects competing for a specific type of federal tax credits, it has since been expanded to support a wider range of housing initiatives, including those too small to pursue federal support.
The scale of those smaller projects often “doesn’t hit the sweet spot for tax credits,” Community Development Director Jim O’Keefe said. “We also tend to see more rehabilitation of existing housing stock under the non-tax-credit proposals.”
All four of the non-tax-credit projects selected this year involve at least some rehabilitation of existing rental units. 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 will seek federal tax credits — two of which were later removed from consideration for this round of funding — and six proposals for projects that will not seek federal tax credits. Four proposals from each group were ultimately recommended by staff.
“It’s always a difficult thing to decide which development proposals to fund and which not,” O’Keefe said.
City staff consider factors such as how the projects will be financed, how long the developers are willing to commit to keeping the units affordable, the extent to which local residents have been involved in shaping the proposals, and their proximity to transit services, schools, grocery stores and parks.
“We have what we have,” O’Keefe said, “and we do the best that 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 funding they need and the various approvals their projects will require. Funding for the projects seeking tax credits is contingent on the adoption of the 2025 capital budget.
“If these funding commitments are approved, it does not necessarily mean that each and every one of these proposals will will move forward,” O’Keefe said. “They’re certainly in a better position than without, but they still have a lot of work to do before they’re ready to break ground.”
What city staff recommended
Projects seeking federal tax credits:
- Horizon Development Group and Kaba-Baal. CORE on Dryden, 2902 Dryden Drive. Project cost: $18.1 million. City award: $1.85 million. Total units: 55. Low-cost 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. Low-cost 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. Low-cost 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. Low-cost units: 40.
Projects not seeking federal tax credits:
- Catalyst 4 Change. Scattered Site Homeless Housing Program, 3507 Milwaukee St. Project cost: $600,000. City award: $622,000. Total units: 4. Low-cost 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. Low-cost 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. Low-cost units: 85.
- Sunny Side Development and Red Pine Coop. The Red Pine Housing Cooperative, 212 Merry St. Project cost: $830,000. City award: $649,000. Total units: 7. Low-cost units: 6.
