Can ‘social housing’ help address Madison’s affordability crisis?

The city is stepping in to confront the failures of the private market

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About five years ago, Madison officials were scrambling to save the south side’s only full-service grocery store, the Park Street Pick ‘n Save, from being turned into a new health clinic by a private developer. The plans were on private property, so the city had little official say. 

But the city did own a property next door, named after the former Truman Olson U.S. Army Reserve facility. Officials tried to work with the developer, Welton Enterprises, on a plan to replace the Pick ‘n Save with a new grocery store and low-income apartments on the Truman Olson site. 

When members of the Truman Olson Selection Committee saw the developer’s plans for the city property, though, they were still frustrated. Instead of the dense, mixed-use development with a large grocery store they wanted in a major transit corridor, Welton had proposed a smaller grocery store, a surface parking lot, and a smaller apartment complex.

At that point, newly elected Ald. Tag Evers, whose district includes the Pick ‘n Save and Truman Olson sites, says he approached Matt Mikolajewski, director of the city’s Economic Development Division.

“Why don’t we just do it ourselves?” Evers says he asked Mikolajewski. “Why is it necessary that, having owned this land for the better part of a decade, we turn it over to a private developer and hope they do what we want?”

According to Evers, the city wasn’t yet prepared to do the development itself. Evers says Mikolajewski told him, “We don’t have the capacity. We don’t have the skill set.” But because the city owned the land, it could reject Welton’s plans. Ultimately, the city issued a second request for the Truman Olson site, asking for more apartments, and moved forward with plans to sell the land to a different developer.

Four years later, the space proposed to be a surface parking lot is now the mixed-income Park Cedar Apartments, with 150 units. A grocery store will soon open on the first floor of that building — in space the city bought from the developer for $4.7 million and will lease to the grocery store.

Since the Truman Olson experience,  and with Madison growing quickly and already facing a housing crisis, the city has begun to take a more active role in the development of housing to address failures of the private market. This includes using the city’s Community Development Authority, which until recently has focused mostly on managing federal public housing, to add hundreds of new units on city-owned land, and seeking out more land to buy for future projects. 

“It makes more sense for the city to acquire sites, control them, and gather enough space to do meaningfully sized projects,” says Dan Johns, a housing development specialist in the city’s Office of Real Estate Services who collaborates on the CDA’s work. “I think there’s been a lot of people looking to the city to address issues in the private market and come to some kind of solution,” adds Johns. “We can’t build it all — the private market does have to account for most of the new construction — but we can do more when it comes to adding supply.”

Advocates call the type of housing the city is proposing “social housing.” Different from traditional public housing, which is a specific federal program, social housing developments are publicly owned and feature a range of incomes among residents.

“Public housing is 100% low-income, social housing is mixed income,” says Olivia Williams, an advocate for more social housing in Madison and the director of the Madison Area Community Land Trust, which develops affordable owner-occupied housing in conjunction with the city. In these publicly controlled and owned social housing developments, Williams says residents paying market-rate rent can in effect subsidize residents with lower incomes who pay lower rents. 

Mikolajewski says the city is taking steps to tackle these new, larger-scale developments. Since 2019, he says, “we have “made adjustments to the work plans and staffing models of the Community Development Authority and real estate office with an eye towards the city playing a larger role in the management of these types of projects.” 

Public housing in Madison

Madison created the Community Development Authority in 1945 to build and administer public housing, a federal program created in 1937 as part of the New Deal. In the 1960s, the CDA developed the Triangle — bordered by Regent, Washington and Park streets — as public housing after razing hundreds of buildings in the mainly immigrant Greenbush neighborhood and displacing more than 1,000 residents.

In recent decades, the CDA has managed, maintained and redeveloped public housing in Madison, overseeing 742 public housing units and a handful of others around the city. But the agency has not looked to significantly expand its portfolio of non-public housing units until lately.

With Madison’s housing shortage and expected population boom, the CDA plans to add hundreds of new units in coming years by taking the lead on major redevelopments on city-owned property. 

At the Triangle in central Madison, for example, the CDA must now replace the 336 units of public housing it built there in the ‘60s as the buildings reach the end of their useful lives. Rather than replacing that housing with the same number of units, the city is using the 10 acres of land it owns there for a much more dense project, with many more apartments. The project could eventually more than triple the number of apartments on the site, adding nearly 1,000 mixed-income apartments in multiple phases over 10 years.

To avoid displacement, new units for public housing residents will be built first and current Triangle residents will move in before buildings are demolished. After that, the new buildings will feature all new non-public housing units with a range of affordable and market-rate apartments.

The CDA is also taking the lead in the planned redevelopment of Madison’s South Transfer Point, located on two acres of city-owned land. Early concepts for the project call for about 600 units of market rate and affordable housing, above new space for public agencies, Public Health Madison & Dane County and the city’s Fire Station #6.

“That [change in approach] is a result of myself and other so-inclined alders saying yes, let’s do more social housing,” says Evers, who serves on the CDA board. “Let’s retain ownership, and in so doing, we can assert our values. If we can increase our portfolio of social housing, we have a greater likelihood of the outcomes we want to see.”

At an Oct. 12 meeting of the CDA, where the authority was authorized to act as master developer for the South Transfer Point project, some board members took note of the more ambitious scale of recent CDA redevelopments. “Do we have the staffing to support these two very ambitious projects?” Mary Strickland asked director Matt Wachter.

Wachter said a team from across the city is supporting the projects, mentioning Dan Johns as an example. “Dan is not technically CDA staff. Dan sits in the city’s Office of Real Estate Services and he’s part of a larger team of project managers, and we’re in the process of expanding that team,” Wachter said, adding that this team also collaborates with city planning staff and outsources some work to private partners. “It is a much larger city team that will actually do the work. So I think yes, we have the capacity to do it.”

There’s some time to continue staffing up as well. The first new building at the Triangle is not slated to open until 2026, and at the South Transfer Point not until 2027.

Madison becoming a mid-size metro

Between 2010 and 2020, Madison added about 36,000 new residents to its population of a quarter-million, growing at the fastest rate in decades. The city predicts that growth will continue, adding 70,000 more newcomers by 2040, according to its 2018 comprehensive plan, Imagine Madison.

Madison is on the precipice of change, turning from a “smallish city to a mid-size metro that requires more density,” says Johns. That means about 40,000 new units of housing will be needed in the coming decades.

Private-sector developers are adding new apartments, but those new buildings tend to cater to the most expensive section of the market. They also haven’t kept up with rapidly increasing demand, leaving housing in Madison in short supply, especially larger units that cater to families and units for people who need more supportive services. The result adds up to the largest increase in average rent of any major city in the country last year — 14%. Average rent in Madison is now about $1,600.

As newcomers continue to move to the city, south Madison is expected to boom, raising major concerns about gentrification and displacement in the area. Jeff Greger, an urban planner for the city who helped develop the South Madison Plan — a series of recommendations for the area between Wingra Creek and the Beltline based on neighborhood feedback that was adopted last year — says the city heard those concerns loud and clear. “Far and away, preventing gentrification as much as possible is the biggest outcome” from the community feedback he heard, says Greger.

Greger says the city taking public control of more property on the south side to develop housing, which it has been doing through a land-banking policy adopted in 2021, can help combat gentrification. The CDA’s redevelopment of the South Transfer Point, also referred to as Park and Badger after the nearby intersection, is part of that effort. The city took about two years to purchase and assemble the two-acre site it now wants to turn into housing and space for public agencies.

“Instead of letting the market dictate who buys properties and develops what, the city has used land banking to essentially set aside properties to implement some of the housing needs in south Madison,” says Greger. “That’s one thing that the Badger and Park project is trying to address — developing some affordable rental properties.”

Greger says other land the city has recently bought on the south side, including the former All Metals Recycling site at 1802 S. Park St., could see owner-occupied housing. The South Madison Plan recommends increasing homeownership in an area of the city that was historically segregated through redlining, beginning in the 1930s. Since the Great Recession in 2009, the private market has been much less inclined to develop condos and townhomes and banks have made financing those projects more difficult. 

Public control of development gives the neighborhood more say over projects like the Park and Badger redevelopment, says Greger. “If it’s a private development, they are usually required to hold one neighborhood meeting and then they go right into getting their city approvals.

“We know south Madison asked to be heavily involved in this project,” he adds. “We want to respect that and get it right. And we have a little more leeway to get that public input.” 

Efforts to reach Ald. Sheri Carter, who formerly represented this area, and current Ald. Isadore Knox, were unsuccessful. 

The city has bought several other properties along Park Street as it prepares to reconstruct the street and build a bus rapid transit route there, and is still looking to buy more land to set aside for affordable housing development. 

With property values rising quickly, says the land trust’s Williams, it’s a “good time to invest in buying land in these transit corridors. The faster we can put money into creating permanently affordable housing, the more efficient we’re being with our public money.”

A new approach to subsidized housing

Public housing in the United States has a bad reputation. For some, it conjures images of low-quality buildings segregated from the rest of the community and prone to crime. 

Not long after the Triangle was completed, the expansion of the federal public housing program came to a screeching halt in 1973 when President Richard Nixon issued a moratorium on new housing funding from the U.S. Department of Housing and Urban Development.

And the federal public housing program is likely to remain stuck in the 20th century for the foreseeable future: In the 1990s, Congress passed a law known as the Faircloth Amendment that caps the number of HUD-funded public housing units at the number that existed on Oct. 1, 1999.

“We’re maxed out in Madison on public housing units,” says Williams. “So what can we do with our local resources is kind of the question.”

Williams says that a mix of market-rate units in social housing can help a project be financially viable with less subsidy and help those local resources stretch further. And advocates say filling a building with a mix of incomes creates integrated neighborhoods where people of diverse incomes have access to the same amenities. The city has been working with the developers of Bayview, located next to the Triangle and singled out as a model redevelopment, hoping to connect the two projects into a single neighborhood, with plans to extend East Campus Mall through the property to Brittingham Park.

“It’s a misnomer that affordable projects are all gonna end up like Cabrini-Green in Chicago,” says Evers. “Having a mixture [of income levels] provides some of that social cohesion.”

‘A shot across the bow’

Earlier this year, a battle between city alders and developer Core Spaces illustrated the limited powers city officials have to influence the development of affordable housing in private developments. 

Core was proposing to tear down large, older homes in the area of Bassett and Johnson streets downtown to build a new market-rate student housing development. Many alders were unhappy with the developer’s plans, arguing the units the company would tear down were “naturally occurring affordable housing,” and asking for more affordable housing units for students in the new development. The city council voted 13-6 to reject Core’s requested zoning change.

But a state ban on rent control limits what the city can require of private developments on privately owned land. An attempt by Madison in the 2000s to require that developers include affordable units in their developments was struck down by the Wisconsin Court of Appeals under that law. City attorney Michael Haas advised that a lack of affordable housing was not a legal reason to object to the development, and the project was approved at the next city council meeting.

Still, says Evers, it was “a shot across the bow,” showing that alders are serious about producing more affordable housing in Madison. “We don’t often use the word emergency when it comes to housing. But we are in a current state of emergency in Madison and Dane County,” he says. “That’s the reason why it’s important for CDA and city staff to explore different ways to control the things we want and need to control.”

Evers says alders can take a more active role in pushing for more development under the “social housing” umbrella. “We have to build housing at all price levels, but we have to figure out a way to do this social housing — which means Common Council needs to be more than a check.”

Williams agrees the city has hit a turning point, with the Core Spaces battle illustrating that some are willing to take a more assertive approach toward producing affordable housing in the city.

“Something has started clicking, of staff and alders realizing where their power is, even in this restrictive legislative environment,” says Williams. “Any time the city has control of the land or the financing, they have a lot of control over what can happen there.”