Rending of Park Street complex

A permanent supportive housing project for homeless individuals and some couples at 1202 S. Park St. will not get critical federal tax credits through the Wisconsin Housing and Economic Development Authority in 2017. Shown above is a preliminary design of the housing project.

Heartland Housing is pulling out of its planned affordable housing development on South Park Street. Read on to find out what happens next.

What happened?

Heartland Housing was the developer of a proposed permanent supportive housing project at 1202 S. Park St. The project would have included 58 units for homeless adults and 1,200 square feet of commercial space.

Heartland is also the developer of two other such projects in the city: Rethke Terrace Apartments at 715 Rethke Ave. and Tree Lane Family Apartments at 7933 Tree Lane. Both serve the formerly homeless and employ a "housing first" model, which seeks to deliver support services to people once their lives are stabilized by having a place to live.

But both complexes have had ongoing problems and police calls, prompting a spate of corrective actions from the city for Tree Lane, including increased funding for support services, a nuisance abatement action and assigning a deputy mayor to the site.

The land use approval process for the Park Street project was delayed while the city and Heartland attempted to “resolve some of the major issues at those other two properties,” Jim O’Keefe, director of the city's community development division, said in 2018.

Then the Wisconsin State Journal, citing ongoing troubles at the two properties and 1202 S. Park St. project deadlines, reported last week that Heartland decided to pull out of the project. 

What happens to the funding the project received from the city and the state?

The city awarded the project about $2 million from its Affordable Housing Fund, but that money was contingent on the developer receiving land use approvals. Since Heartland has now withdrawn from the land use approval process, that money will be returned to the AHF and used for future projects, minus the $640,000 the city used to purchase the property in 2017.

The project was also awarded $8.1 million in federal tax credits in 2018, which came with a mandatory construction start date of May 31, 2019. If Heartland missed that date, it would incur a 1% penalty of the credit amount, said Sean O’Brien, director of commercial lending for WHEDA. Missing other deadlines would make the project ineligible for credits, he said. WHEDA will redistribute Heartland’s credits to another project.

What does the neighborhood think about this?

Ald. Tag Evers, District 13, said last week that he hadn’t heard much neighborhood reaction to the news yet, but he thinks neighbors who did express concerns were “relieved” when plans fell through.

But neighborhood hesitation was not based in “NIMBY” sentiment or an opposition to housing formerly homeless people in the area, Evers said. Neighbors saw problems with the model used at Rethke and Tree Lane, questioning if there were adequate support services for tenants who need help. They also voiced concern that the 1202 S. Park St. site was too cramped and didn’t provide enough green space.

“(It’s) like a postage stamp in its relative size and shoehorning 50, 60 people with lots of needs into a site like that, while laudable in the overall goal ... is not particularly laudable if it fails,” Evers said.

A neighborhood survey in 2018 found 69 percent of respondents said that it was important to add permanent supportive housing in the neighborhood, but about 76 percent thought that there wasn’t enough parking at 1202 S. Park St. to accommodate the proposed development.

What will happen to the site?

It’s not yet clear. The city could decide to sell or develop the property, likely through an RFP process.

“We have a decision to make as a city and working with that alder and neighborhood about what we want to do with that property,” O’Keefe said.

Could another permanent supportive housing project wind up there?

At this point, it’s a pretty safe bet that it won’t be another large permanent supportive housing complex, according to O’Keefe.

The neighborhood had “legitimate” concerns about the density of the 58-unit project at 1202 S. Park St., O’Keefe said, and time and experience at Rethke and Tree Lane made the city reconsider the scale of its permanent supportive housing projects.

Evers said he doesn’t see a “groundswell of support” for a project similar to Heartland’s, but at this point doesn’t know what neighbors would prefer instead.

Why was the city aiming for  a dense permanent supportive housing project in the first place?

The creation of the Affordable Housing Fund came with the goal to build 1,000 new units of affordable housing in five years, including 250 units for homeless populations. The original idea was to regularly build a 50 or 60-unit permanent supportive housing project, O’Keefe said, which the city did in creating Rethke and Tree Lane. But there have since been “some legitimate questions” about whether this high-unit model can work, O’Keefe said.

Heartland already has similar housing models, but they’re mostly in Illinois, where the states’ Medical Assistance program supports supportive services in a more robust way than Wisconsin’s, O’Keefe said.

“We’ve kind of figured out how to build the properties. Where we continue to struggle is how to pay for the support services that are critical for them being successful,” O’Keefe said.

If a large permanent supportive housing project isn’t going on the property, what will?

Among the “conceivable” options, according to O’Keefe: a smaller permanent supportive housing project, a traditional affordable housing project or a senior housing project.

But in any case, it would likely be a project of “smaller scale” than originally proposed, O’Keefe said.

What’s the timeline for figuring out plans for 1202 S. Park St.?

“There’s no particular need for this to happen quickly,” O’Keefe said.

While O’Keefe said “we obviously don’t want to own and hold a vacant parcel for very long,” the city will likely want to wait and see what happens with the request for proposals at the neighboring Truman Olson property, 1402 S. Park St.

“(We) certainly want something at 1202 S. Park St. that would be complementary to that redevelopment, whatever it might be,” O’Keefe said.

As an example, O’Keefe said that if 1402 S. Park St. ends up hosting significant affordable housing, the city would probably less likely to propose affordable housing at 1202 S. Park St.

So what’s next for the city’s permanent supportive housing efforts?

This isn’t a time to quit on the housing first model, Evers said, but an “opportunity for us to learn from our mistakes.”

City staff are looking to convene a discussion group of permanent supportive housing providers to discuss their experience, and determine how the city and developers can move forward, O’Keefe said.

What’s going on with Tree Lane?

In the next week or so, the city will release an RFP looking for new service providers for Tree Lane, seeking collaborative proposals anchored by a lead case management provider, O’Keefe said. And, as they have for months, the city is working with the Road Home, Heartland, Madison police and others to “try to help that project be successful.”

“Everybody just needs to be vigilant and keep focused on doing the best we can do in terms of managing the property,” O’Keefe said.

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