Two affordable development projects have received crucial, competitive federal tax credits, which will result in 131 more affordable apartments around the city.
Major affordable developments in Madison are often impossible without federal low-income housing tax credits. These Section 42 credits are distributed through the Wisconsin Housing and Economic Development Authority and can account for 75% to 80% of the development cost.
The city’s Affordable Housing Fund was created in 2014 with the goal of creating 1,000 affordable units in five years. Local commitments make project applications more competitive in the WHEDA scoring system. Last year, five out of six city-supported Madison projects received the credits.
In 2018, the city allocated AHF funds to four affordable housing projects. Three — The Ace Apartments, Valor on Washington and Schroeder Road Apartments — applied for the traditional 9% WHEDA credits that many other Madison developments have utilized. The Bayview Foundation Apartments were seeking a different form of low income tax credits, known as 4% credits, thought to be better suited to its development process.
The results were not quite as impressive as other years. Only Schroeder Road and Valor on Washington received credits this year. The Bayview application was designated “ineligible” for the 4% credits.
“We’ve gotten spoiled, haven’t we?” said Jim O’Keefe, the city’s community development division director. “If you look at the list of proposals, you can see how competitive a process it is, and sometimes you come out on top and sometimes you fall short.”
Schroeder Road Apartments by Stone House Development at 5614 Schroeder Road will provide 96 units, 81 of which will be affordable. Twenty units are supportive service units set aside for the formerly homeless families and veterans. The Road Home will provide a case manager on site to provide supportive services, O’Keefe said.
That continues a relationship between Stone House with on-site support services from The Road Home, also present in the existing The Breese apartments and the under-construction Fair Oaks apartments.
“It’s a model that we’ve encouraged,” O’Keefe said.
The $21 million project received $1.85 million from the Affordable Housing Fund, and it received its full requested amount of $13.2 million in WHEDA tax credits over 10 years.
Richard Arnesen, vice president of Stone House, said in an email that construction will begin this fall or early 2020, and will last a year.
Valor on Washington by Gorman & Company at 1314-1326 E. Washington Ave. will create 59-unit project, 50 of which would be affordable. The project is aimed at veterans and their families. Dryhootch, a nonprofit support organization for veterans, will occupy space on the first floor of the building and Lutheran Social Services will provide supportive services for all tenants.
The $15 million project received $950,000 from the city and $10.2 million in WHEDA credits over 10 years.
Ted Matkom, Wisconsin market president with Gorman, said a construction timeline depends on how fast the project completes the city approval process. The project still needs UDC approval and a building permit, he said, and Gorman may begin the approval process in May. He estimated that Gorman would start construction on the project in the fourth quarter of this year, likely meaning that construction could be completed by the end of 2020.
“We’re really excited to build housing for family vets, which I think is a demographic that’s been not serviced extensively over the years. We’re excited to build this community as a family vet community,” Matkom said.
The Ace Apartments by Mirus Partners (which after a merger is known as The Commonwealth Companies) and Movin’ Out at 4602 Cottage Grove Road would provide 70 units of housing for $18.5 million, and 59 units would be affordable. The project received $1.1 million from the AHF and federal funds, but was not given WHEDA credits.
O’Keefe called this “just a matter of their score not being high enough to make the cutoff” in a “very competitive process.”
“It was an extremely competitive round. We are exploring various options for next steps. Reapplying next year is one of the options we're considering. We’ll know more within the next couple of weeks,” said Kathryne Auerback, executive director of Movin’ Out, Inc.
Bayview Townhouses by the Bayview Foundation & Horizon Development Group, Inc., at 601 Bay View would provide 130 units, 120 of which would be affordable, and a community center for an estimated $35 million. The project received $1.9 million from the Affordable Housing Fund and $990,000 in federal funding for the project, but also did not receive needed WHEDA credits.
The development would replace the 102 existing townhomes located in the triangle bordered by South Park Street, Regent Street and West Washington Avenue, most of which are supported by federal Section 8 vouchers. Bayview’s proposal would demolish the existing housing and 5,000 square-foot community center.
But the project didn’t receive 4% WHEDA credits. O’Keefe said that though the project was designated “ineligible,” that’s “probably not the best choice of terms.” The proposal lacked a rent study, so WHEDA was unable to consider it, he said.
“I have every reason to believe that that project will reappear,” O’Keefe said. “I have to believe that the Bayview proposal is a strong one given its location and who it’s serving.”
Alexis London, executive director of Bayview, confirmed that the application was missing final approval on their rent study. She said they are taking care of that documentation and are very confident the application will be successful next year.
“The news came with disappointment … but we also are just gearing up (to) make sure our application is absolutely complete and successful for the next round,” she said.
However, another Madison project, Oak Ridge-Madison did get 4% credits, though that project was not supported by any Madison Affordable Housing Funds. The approximately $30 million project at 502 Genomic Drive will offer 140 units of affordable housing. JT Klein Company, Inc. is the developer of the project.
President Jacob Klein said they hope to start construction in late 2019, with construction expected to last 14 to 16 months.
These WHEDA-funded developments do not charge rent as a certain percentage of income. Instead, they limit their tenants to those who make less than a certain percentage of the area median income.
In Madison, many projects limit tenants to those making up to 30%, 50% or 60% of the area median income. For an individual in 2018, that would be someone making between $19,250 and $38,520 a year. For a family of four, 30% to 60% of area median income would be between $27,500 and $55,020.