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As a construction boom of upscale apartments rolls on, a nonprofit developer is proposing the first low-cost housing project in the core Downtown in a decade.

On top of that, nonprofit Madison Development Corp. intends to sell some existing low-cost housing at other sites to another nonprofit, which would keep the existing stock in the affordable market while helping finance the new units.

“Our mission is to provide quality affordable housing,” MDC president Frank Staniszewski said, adding that the proposed housing would let low- and moderate-income Downtown workers live close to their jobs.

MDC is proposing to demolish a single-family home and two duplexes at 433, 435 and 437-439 W. Mifflin St. for a $6 million, four-story, 46-unit apartment building with 28 underground parking spaces. A four-unit Tudor-style building at 427 W. Mifflin St. and a duplex and four-unit building at 441 and 443 W. Mifflin St. would remain.

The new units would be reserved for tenants making up to 40 percent, 60 percent or 80 percent of area median income — $25,880, $38,820 and $51,150 for a two-person household.

Ald. Mike Verveer, 4th District, called the proposal “exciting and important.”

“The Downtown housing boom unfortunately has not included a large segment of our community. Those who live on fixed incomes have not been included,” Verveer said. The proposed project “provides those on fixed incomes with new housing options.”

The buildings to be demolished were built in the late 1880s but are not considered historic structures, a city Planning Division staff report says. The city’s Urban Design Commission is scheduled to consider the project on Wednesday, with Plan Commission and City Council review in January.

If approvals are secured, demolition and construction would start in July after the leases for currently occupied buildings expire, Staniszewski said.

The project has been warmly embraced by the neighborhood, Verveer said, adding, “I don’t see any impediments whatsoever.”

The proposal counters a trend in which low-cost housing Downtown is being razed for upscale apartments buildings targeted to urban professionals.

“There’s less and less affordable housing in the Downtown,” Staniszewski said.

Developers don’t build affordable housing Downtown due to challenges in securing financing and the high cost of land, Verveer said. “It’s a double whammy,” he said.

Verveer added, “The rents Downtown, frankly, are astonishing for the new buildings built in the last few years.”

MDC can make the new units affordable through a combination of means, Staniszewski said.

The nonprofit has owned property on the 400 block of West Mifflin Street for a long time and doesn’t have to assemble land at a high cost, he said.

Also, the project is eligible for tax-exempt bonds — meaning low interest rates for borrowing — and he said it will use funds generated from the sale of other affordable housing: a six-unit house at 103 N. Butler St. and an eight-flat building at 310 E. Mifflin St.

MDC hopes to sell the house and eight-flat to nonprofit Housing Initiatives Inc., which provides permanent housing and support services to homeless people who suffer from mental illness.

“We’re very hopeful this deal is going to go through,” Housing Initiatives executive director Dean Loumos said. “In a city that has a lack of affordable housing, particularly Downtown, we’d hate to lose 14 of these units in the Downtown area.”

Housing Initiatives hopes to secure financing through the Wisconsin Housing and Economic Development Authority and apply city Housing Development Reserve Funds to make the purchase, Loomis said, adding that both properties would be renovated if acquired.

The council on Tuesday approved a resolution from Ald. Ledell Zellers, 2nd District, and others to deliver $600,000 in Housing Development Reserve Funds for the purchase.

If the sale is made, Housing Initiatives would let current tenants stay at the properties and bring in client tenants only as units become vacant, Loomis said, adding that new tenants would likely be veterans.

“The MDC proposal is absolutely win-win,” Verveer said.

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Dean Mosiman covers Madison city government for the Wisconsin State Journal.