To Maleah and Dan LaCloche, the new Monroe Commons development on the city's west side seemed like the perfect place to raise their family. It was located on Monroe Street, next to shops and restaurants, within walking distance of Maleah's parents. A Trader Joe's grocery store was opening on the building's first floor.
And the price was right: Under Madison's new inclusionary zoning (IZ) ordinance, the young couple could get a two-bedroom condo, with a den, for just $168,000. It was big enough for their 2-year-old son, Ben, to run around in.
'This was a dream,' says Maleah. 'This was like winning the lottery. It's just too bad that it was so emotionally draining.'
The LaCloches were among the first families in Madison to purchase an IZ unit. Since the controversial ordinance passed in 2004, only 11 condos or homes have been sold. Of those, half were sold through Common Wealth Development, a nonprofit group that handled the sale of six units on Williamson Street.
But the LaCloches found that the IZ law is far from user-friendly, especially when dealing with a developer who may resent having to offer lower-cost units. In their case, the developer questioned everything from their income eligibility to whether they could buy amenities like parking or storage. It took them nearly a year of wrangling before they finally moved into the unit in October. 'It was intense,' says Dan. 'It shouldn't be that hard.'
And they were not the only ones who had trouble. Jake Goeller had similar experiences buying a one-bedroom unit at Monroe Commons for the IZ price of $121,000.
'I was interested in living there because I work a block away,' he says. 'And I like the neighborhood.'
But Goeller's agent, Gail Clark Musillami of Clark Realty, had to fight Slinde Realty, which was marketing the condos, to receive her 3% commission. (Monroe Commons is a joint project of Slinde Realty, Trio Development and the Keller Real Estate Group.) Goeller also had trouble getting amenities or even having someone answer basic questions about his unit, which he finally moved into in October.
'I'm trying to be excited about it,' he says. 'It's supposed to be a fun process. It was just a huge task, pushing this rock up a hill.'
Under inclusionary zoning, developers in Madison must offer 15% of their units for sale at 'affordable' prices. To qualify, buyers must make less than 80% of Dane County's median income ' or currently $52,700 for a family of three. Dan and Maleah LaCloche were working five part-time jobs between them to support their family. Yet Slinde Realty questioned whether they fit the income guidelines.
'Their lender said they were approved to buy a house up to $200,000,' says Bert Slinde, the owner of Slinde Realty. 'That created suspicion.' Moreover, he says, the LaCloches wanted to buy parking, storage and other amenities for the unit. 'All of a sudden they've got $15,000 for parking and $3,500 for storage? It didn't seem right. There was great suspicion that they were abusing the law.'
But to the LaCloches, it felt more like they were being abused. They had to have a special meeting with city officials and Slinde to establish that their income was low enough to qualify for IZ. They also had to get a letter from the Madison City Attorney's office affirming that they were allowed to buy amenities, if they could find a way to finance them.
'They acted like we were getting away with something,' says Maleah, who notes that after paying for parking, storage and appliances, the unit actually cost $190,000. (That is still less than the unit's $251,000 appraised value.)
But Slinde counters that the city requires developers to verify a buyer's income. And he says the developers were worried about making a mistake. 'This is all brand new,' he attests. 'No one really knew what they were doing.'
The LaCloches say they were also told they couldn't have a buyer's agent to help them through the process of buying their first home. Instead, they hired a lawyer, who offered to work for a flat fee of $400. 'It was the best protection we could have had,' says Maleah, although she notes that the lawyer had to educate himself about IZ.
Musillami, who had been working with Goeller as a buyer's agent, says Slinde refused to pay her 3% commission for the nine months of work she did helping Goeller buy his condo.
'They said they wouldn't pay my agent's fee,' she says. 'I can't work for free. The developers don't want to pay anybody. If they can fight you and get you out of the contract, they'll try to do that.'
According to the Wisconsin Realtors Association, a seller's agent can legally refuse to work with a buyer's agent. But 'it's very unusual,' says Kevin King, the association's legal counsel. 'I'd be hard pressed to understand why they might want to do this.'
Slinde says he never told anyone they couldn't have a buyer's agent, just that they would have to pay the agent themselves. He says the developers decided to nix agent's fees after they didn't get $2.5 million in tax-incremental financing from the city. (The city still gave the developers $2.3 million.)
'The cost to build with parking and to accommodate a grocery store is horrific,' says Slinde. Without more money from the city, 'the first thing that went was the real estate fees.'
Musillami eventually got her commission, but only because she wrote it into the purchase offer and Slinde failed to notice. When he found out, she says, he 'flipped' and called her names, including 'whacko.'
Slinde denies this and says Musillami was the one who went crazy. 'Gail hates my guts, and I'm not very fond of her,' he says. 'She's a walking tornado.'
But Goeller praises Musillami for helping him. 'She's awesome,' he says. 'She fights for people who are the underdog.'
The IZ ordinance only requires developers to include a refrigerator and a stove in a unit. Goeller was unable to afford other appliances, including a dishwasher. During a walkthrough of his new unit, he was stunned to discover that the builders had left a hole in the kitchen where the dishwasher was supposed to go. 'No cabinet, no vinyl on the floor ' just concrete,' he says. Musillami argued with the developers until they agreed to put in a cabinet.
Slinde says the unit was originally designed for a dishwasher and it was not the developer's responsibility to provide anything else. 'Somebody has got to pay for the cabinet,' he says.
Both the LaCloches and Goeller are also upset that even though they paid the $3,500 for storage ' the same price as everyone else ' they were assigned the two smallest spaces. The LaCloches' storage space even has a concrete pillar in the middle.
Slinde says the IZ units weren't supposed to get storage or parking at all. 'We were under the impression that they were not supposed to get upgrades because it boosted the price,' he says. 'I feel bad that they feel I stiffed them.'
But Musillami says Slinde is simply showing his true feelings about inclusionary zoning. 'Jake was treated like a second-class citizen because he was IZ,' she says. 'If he had a million bucks, everyone would have been kissing his butt.'
Monroe Commons was originally supposed to have six of its 50 condos available for IZ prices, but the developers got out of building three of these units by paying $192,514 into a special city housing fund. Two of the three actual IZ units went to the LaCloches and Goeller. Musillami says she had a buyer interested in the third unit, but Slinde wouldn't let her show the condo, saying he already had an offer on the table. The unit was never sold, however, and converted back to 'market' rate in June. A one-bedroom condo at Monroe Commons starts at $286,900.
Under the old IZ law, if developers couldn't sell a unit within 240 days, it could then be sold at market rate. (The ordinance was amended in July to get rid of the marketing period, but the change didn't affect Monroe Commons, which was approved under the old law.)
Musillami and Goeller suspect the developers were trying to run out the clock on the marketing period for Goeller's unit. It took Slinde three weeks to finally accept Goeller's offer to purchase.
Slinde says the delay happened because 'the sellers wanted to be really sure of what the ordinance was all about.' He notes the developers were making counter-offers to Goeller during those three weeks, trying to come to an agreement on whether he could buy storage.
The LaCloches say their experience shows that the city of Madison needs someone dedicated full-time to helping buyers and sellers understand the new law. 'We really felt unprotected,' says Maleah.
One way the city could help, suggests Musillami, is to help pay for buyer's agents. 'They're just throwing people to the wolves with no one to represent them,' she says.
Slinde, for his part, questions whether the city even needs an IZ ordinance.
'I think there's already affordable housing out there,' he says. 'All you have to do is look around.' Still, he says, he's using the LaCloches as a selling point for Monroe Commons, telling future buyers that the building has young families. 'Diversity is a good thing.'