Tommy Washbush
University Park Commons
JT Klein is asking for more than $2 million from the city's Affordable Housing Fund to help finance a second phase of development at University Park Commons, above.
While a state rent control ban prevents the city of Madison from requiring affordable units in new housing developments, the city can still broker voluntary agreements with private developers to offer apartments at below-market rent, including through the city’s Affordable Housing Fund.
Five developers with proposals for new affordable housing developments in Madison are vying for this year’s $10 million pot, final financing that could give a difference-making boost to their balance sheet. Projects competing for the money include a redevelopment of the west side’s Neighborhood House and several new developments on the city’s west and southwest sides.
To qualify for the funds, developers must agree to make at least one of every five of their apartments affordable to a family making 30% of the county median income — that’s about $37,000 for a family of four. Developers must also designate some apartments as “supportive housing” for tenants who may have been experiencing homelessness or need case management services; locate the project in an area slated for transit-focused development near community staples like grocery stores and schools; and include space for a community service provider.
Developers presented their requests for funding on Oct. 5 to the Community Block Grant Development Committee, which will make recommendations at its November meeting ahead of a full city council vote in December.
Mayor Satya Rhodes-Conway has emphasized the fund as a key tool for the city to promote affordable housing, proposing in her 2024 capital budget to double the $10 million fund to $20 million next year. The city intends to distribute this year’s money to up to four projects, with the goal of adding 300 new affordable apartments to the city, similar to last year’s totals.
Neighborhood House, which is partnering with The Alexander Company, is asking for just under $2 million dollars for its redevelopment of the community center, which would operate on the first two floors and part of the third floor in its new building. On the third through sixth floors, 36 of 60 apartments would be considered affordable to households making less than 60% of the county median income — for a family of four, that’s a bit more than $70,000.
Developer JT Klein is asking for $2.12 million from the fund to complete the second phase of University Park Commons, which is replacing the former Westgate Mall. The first phase of the project, which received $1.68 million from the affordable housing fund in 2020, opened in June, and Lutheran Social Services is already operating out of office space on the site.
The second set of buildings would add 68 more units, with 53 set aside for low-income residents. JT Klein is also asking for $1.53 million in city TIF money and was recently awarded about $557,000 from Dane County’s affordable housing fund.
Horizon Development Group is asking for $1.9 million to redevelop the property currently housing End Time Ministries International on Madison’s southwest side into 56 low-income senior apartments and nine family townhomes. End Time Ministries — where state Rep. Shelia Stubbs is pastor and co-founder — will have space on the ground floor of the new building.
Northpointe Development is applying for $3.25 million for a four-story west-side development with 124 apartments, 90 of which would be reserved for low-income tenants. The company says WayForward Resources — formerly known as Middleton Outreach Ministry — would operate a partial food pantry and do case management from commercial space on the first floor. Northpointe's project has also received $2.5 million from Dane County’s affordable housing fund.
MSP Real Estate is asking for just more than $2 million to build 60 apartments on South Yellowstone Drive, with 51 being reserved for low-income tenants, and plans to have space for Anesis Therapy, a black-owned therapy clinic, on the ground floor. The development, called Yellowstone Apartments, also received $1.5 million from Dane County.
The city had hoped to subsidize developers between $15,000 and $40,000 for each affordable apartment they build. Developers uniformly asked for the higher end of that, with per-unit subsidies ranging from $35,000 up to the maximum $40,000 allowed. Most of each project’s expenses are for construction costs, which have jumped sharply since the pandemic.
One goal of the Affordable Housing Fund is to bring more state housing money to Madison by helping developers compete for state tax credits from the Wisconsin Housing and Economic Development Association. This year, projects that receive WHEDA housing tax credits are prevented from raising their rents more than 5% per year. Applications for tax credits are due in January, after Madison’s awards are announced.
