Rethke Ave project

A 60-unit supportive housing project at 707-709 Rethke Ave. near East Washington Avenue is slated to get under way this week.

Heartland Housing Inc.

Construction is slated to begin this week on a permanent supportive housing project near East Washington Avenue, moving forward Madison’s and Dane County’s commitment to housing first initiatives.

Developed by affordable housing manager Heartland Housing Inc., the four-story, 60-unit building at 709 Rethke Ave. will provide studio apartments for formerly homeless single adults and supportive services for those individuals. It was supposed to get started a month ago, but an unexpected budget shortfall pushed the closing date back to this month.

Community Development Division Director Jim O’Keefe said budget issues are not uncommon for a project of this magnitude, in this case stemming from unexpected Davis-Bacon Act requirements, which involve contractor pay and reporting requirements.

Heartland Housing Director of Real Estate Development Nadia Underhill said there was discussion about whether the Davis-Bacon Act requirements would apply and they needed a bit more time than they had hoped to put together those details with the contractor. The requirements left the project with an approximately $450,000 gap.

 “It added some cost to the project and then they needed a little bit of time to close that budget gap,” O’Keefe said.

Underhill said they were able to mostly close the budget gap with increased participation from the investor, deferring a larger portion of the developer’s fee and tightening the design scope slightly. Madison then contributed the remaining $100,000 to close the gap out of its affordable housing fund, allowing the developer to move forward with the project.

That is in addition to the $2 million included in the 2015 budget for the project, consisting of $1,050,000 in general obligation borrowing, plus $950,000 from Dane County. The project also secured federal tax credits from the Wisconsin Housing and Economic Development Authority.

“We had hoped that the project could be completed and for residents to be occupying the property as early as February or March of next year, so this may push that back a little bit,” O’Keefe said.

He said it’s unclear how much time they will be able to make up, but Heartland Housing is still anticipating occupancy in the late first quarter or early second quarter of next year.

“We don’t think it’s going to significantly impact the timeline,” Underhill said. “There’s a lot of opportunities to make up the time that was delayed during construction.”

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 The development will include offices for service providers, a commercial grade teaching kitchen, a community room and other shared spaces. The non-residential areas will be available for use by outside organizations.

For selecting residents, the details are still being determined, but O’Keefe said the process will rely largely on information from a registry that the community, city and service agencies are in the process of developing. The housing will then offer sustained support services for the residents, addressing physical health, mental health, unemployment, transportation and other needs, O’Keefe said.

“It’s the first of what we hope will be at least five projects like it,” O’Keefe said.

Heartland Housing has proposed another “phase two” project on Tree Lane in partnership with the YWCA, but that project did not get tax credits from WHEDA this year. Underhill said they will continue to flesh out the design for that project and work with the city and county on zoning and land use before applying for the next round of tax credits.

“We’re really excited for this partnership and to be part of a solution to Madison’s work to end homelessness,” Underhill said.

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