Madison wants to build 1,000 affordable apartments over five years, and that effort got a big boost Tuesday.
City officials have learned that five out of six affordable development projects received crucial, competitive federal tax credits, including three projects that didn’t make the cut in last year’s funding cycle. Together, the projects will result in 310 units, 281 of which will be affordable. That will bring the number of affordable units built by the city since 2014 to over 700.
At a Tuesday morning press conference at the site of one of the approved projects, Madison Mayor Paul Soglin said that puts Madison "well on track" to hit its 1,000-unit goal. He added that the city has "virtually eliminated” chronic homelessness of veterans.
But Soglin said Madison won't stop when it hits 1,000.
"The one thing you do when you achieve a goal is you raise the bar," he said.
He listed two more goals: ending homelessness for all veterans and ending all chronic homelessness.
Major affordable development in Madison is often impossible without federal low-income housing tax credits. The credits are distributed through the Wisconsin Housing and Economic Development Authority and can account for 75 to 80 percent of the development cost, according to Jim O’Keefe, the city’s community development division director.
The city’s $25 million Affordable Housing Fund was created in 2014 with the goal of creating 1,000 affordable units in five years. It’s contributed $15.8 million to various projects, and those local commitments make project applications more competitive in the WHEDA scoring system.
"(The credits) are popular. They are coveted. They are highly sought after,” said WHEDA chief operating officer Brian Schimming. “Only the best of the best get awards.”
“The city is doing very, very well this round," he said, referring to Madison.
Before 2014, the city didn't make a concerted effort to take advantage of WHEDA tax credits, O’Keefe said, and there were “very few, if any” WHEDA applications for Madison projects. Over the last few years, Madison has turned into one of the “more aggressive or active city governments” in the program.
Thirteen Madison projects have secured almost $95 million in WHEDA credits, contributing to over $257 million in estimated development costs. Those projects create 835 total units, about 745 of which are affordable. Of the affordable units, 163 are set aside for homeless individuals or families.
Speakers at Tuesday's press conference pointed to the benefits of those efforts. Soglin referenced WHEDA-supported Rethke Terrace, which he said houses formerly homeless individuals who “many of us saw in downtown Madison for years.” Michael Goldberg, executive director of Rethke developer Heartland Housing, said supportive services at Rethke have allowed individuals to connect with doctors, dentists and health insurance for the first time. One veteran who had been in pain for years went to the dentist, and now his “general outlook on life has improved dramatically," Goldberg said.
There are still thousands of Madison households paying more than 50 percent of their income on rent, said Matt Wachter, Madison’s manager of the office of real estate services, so there will be a continuing "systemic need" to bring more affordable units online every year. But for some of the city's most vulnerable homeless populations, it only takes a few projects like Rethke "to really make a huge effect," he said.
This is the city’s fourth cycle of WHEDA applications. Last year, three out of six Madison projects received funding. This year, those three rejected proposals reapplied and were granted funds: Park Street Apartments, Tree Lane Senior Housing and Fair Oaks Apartments.
Park Street Apartments by Heartland Housing at 1202 S. Park Street: A permanent supportive housing project, the proposal would build 58 units for homeless single adults. The project is estimated to cost $11.6 million dollars and the city has committed $1.9 million from the Affordable Housing Fund. WHEDA awarded the full requested amount of $8.1 million over 10 years.
Recently, the neighborhood suggested moving affordable housing to another site on South Park Street, seeing a failure to receive WHEDA credits as an opportunity to reevaluate the project. The city said moving the project “was not an option for us at this time.”
Tree Lane Senior Housing by CommonBond Communities at 7941 Tree Lane: The proposal would create 54 units of senior housing and 51 of those units would be affordable. The City has committed up to $1.48 million from the Affordable Housing Fund to the $11 million project. WHEDA awarded the full requested amount of $6.6 million.
Fair Oaks Apartments by Stone House Development at 134 S. Fair Oaks Ave.: The development would create 80 total units and 68 of those would be affordable. The estimated cost of the project is approximately $17 million and the city has committed up to $1.35 million to the project. It was awarded the full requested amount of $9.7 million.
Two Madison projects applied for and received additional credits this year: Normandy Square and GrandFamily Housing.
GrandFamily Housing by Gorman & Company, at 2507 Winnebago St.: The city has committed $950,000 to the approximately $13 million project that will build 60 units, 56 of which will be affordable. This project received the full requested amount of $809,690 in additional credits.
Normandy Square by MSP Real Estate, Inc. at 6509 Normandy Lane: It would create 58 units of housing for seniors, and 48 of those would be affordable. The city committed $850,000 to the project last year and it received $5.6 million in tax credits. The project received the full request amount of $599,700 additional credits.
Mark Hammond, director of development and general counsel for MSP, said with downward pressure on credit pricing and upward pressure on construction costs, the “additional credits were huge.”
The only Madison project that did not receive tax credits was MSP's The Grove Apartments, a 112-unit project slated for 204 Cottage Grove Road, with 95 units of affordable housing. The City has committed up to $3 million to the approximately $20 million project. MSP asked for $13.4 million in credits.
Hammond said MSP would apply for credits in the next ground, as long as the landowner was willing to extend their contract.
“We’ll work hard to try to put together an application that’s more competitive and can get across the finish line,” he said.
Additionally, Main Street Apartments in Sun Prairie received over $8 million in credits and Oak Ridge Middleton apartments received almost $900,000 in additional credits. A project in Mount Horeb by developer JT Klein did not receive credits, bringing the Dane County score to seven approved projects out of nine.