60% or 80% of Dane County Median Income is NOT affordable housing by most people’s definition. Take a look!
Request for Proposal Language
This is the language that the council approved:
The project must be for a housing, commercial, or mixed use purpose (excluding hotel use) land use and include a workforce housing component with some units being subject to rent and income restrictions which make them affordable to low and moderate-income households.
What is “Low or moderate-income”?
Good question. Who’s definition are we using?
HUD defines low or moderate income as follows:
According to 24 CFR 1003.4 [Title 24. Housing And Urban Development; Subtitle B. Regulations Relating To Housing And Urban Development; Chapter IX. Office Of Assistant Secretary For Public And Indian Housing, Department Of Housing And Urban Development; Part 1003. Community Development Block Grants For Indian Tribes And Alaska Native Villages; Subpart A. General Provisions], ‘low and moderate income beneficiary’ means a family, household, or individual whose income does not exceed 80 percent of the median income for the area, as determined by HUD, with adjustments for smaller and larger households or families.
The Banking Industry and CRA defines where low or moderate income as follows:
An individual is considered to be LMI based on their annualized family income. Overall, to be classified as LMI, an individual or family’s household income must be 80% of the median income for the county or area where they reside.
These income levels can be further separated by low- or moderate-income. Moderate-income individuals have an annualized family income between 50% and 80% of the HUD area median income. Low-income individuals have an annualized family income of less than 50% of the HUD area median income. Median incomes for every county in the United States can be found on HUD’s website.
Low Income Housing Tax Credits (WHEDA) housing requires:
As a threshold for eligibility, HTC developments must remain affordable for a 30-year period. Developments must also meet one of two thresholds for occupancy. At least 20% of all units in a development must be reserved for households at or below 50% of the area median income, or at least 40% of all units must be reserved for households at or below 60% of the area median income. (WHEDA, Multifamily Tax Credits, “Wisconsin Standard Multifamily Tax Subsidy Project Estimated Maximum Income and Rent Limits” (April 2017))
If you look up HUD Data Sets for Dane County it gives you the following (follow the link for very confusing explanations of their definitions):
Dane County Housing Authority has incomes listed like this on their website
These are the income limits for the City’s Housing Authority or CDA:
80% AMI – No matter what chart you use at 80% AMI – a single person would be making $50,350 or $24.20 per hour. A family of 4 with one income owner would be making $71,900 or $34.56 per hour. In a two-income family each earner would be making $17.28 per hour. I don’t think that is what most people have in mind when they talk about affordable housing for low or moderate income people.
50% AMI – At 50% of AMI would be making $32,100 per year or $15.43 per hour. A family of 4 with one income owner would be making $45,850 or $22.04 per hour. In a two-income family each earner would be making $11.02 per hour. This seems to be a little closer to what one might expect, but none of the affordable housing is in this price range according to the summaries.
Minimum wage in Wisconsin is still $7.25/hour. Or $15,080 annually if you are working 40 hours a week.
If you are on W-2 the state makes you work/volunteer/do job searches etc and you get $653 a month or $7,836 per year no matter what your family size is.
Developer Responses
According to Channel3000.com here are the proposals.
Stone House Development, of Madison:
- Proposes to build a 159-unit apartment development and 7,000 square feet of retail space in the Podium.
- Total project cost estimated at $40 million.
- Thirty-seven units would be income restricted at or below 80% of Dane County medium income.
- Requesting $1.2 million of affordable housing funds from the city of Madison
Proposes to pay $5.0 million to purchase the air rights and the Podium.
Gebhardt Development, of Madison:
- Proposes to build a 196-unit apartment development and 26,000 square feet of creation/office space and amenities above the Podium.
- Total development cost estimated at $52.0 million.
- Seventy-eight units would be income restricted at or below 60% of Dane County median income.
- Requesting $1.75 million of affordable housing funds from the city of Madison.
- Proposes to pay $7.5 million to purchase the air rights and the Podium subject to structural modifications to the Podium.
Mandel Group, of Milwaukee:
- Proposes to build a 144-unit apartment development and 7,000 square feet of retail space in the Podium
- Total project cost estimated at $38.2 million.
- Twenty-nine units would be income restricted at or below 80% of Dane County median income.
- Requesting an unspecified amount of funding to be negotiated at a later date to provide the affordable housing.
- Proposes a lease arrangement for the Podium, and a future purchase of the air rights for $1.0 million within 10 years of occupancy.
Developers Definition of Affordable Housing
With these few facts its hard to tell – but at 80% AMI, landlords have units listed with these income restrictions with the following rents:
Efficiency – ?
1 bedroom – $1265
2 bedroom – ?
3 bedroom – ?
I tried, but I couldn’t find any at some income restriction levels. My guess is that its hard to call something affordable housing and then charge $1265 for a one-bedroom.
At 60% AMI, WHEDA has maximum limits on rent for 2018 set at:
Efficiency – $963
1 bedroom – $1032
2 bedroom – $1239
3 bedroom – $1431
When you heard the words “affordable housing” for “low or moderate income” people, is this what you had in mind?
To be clear, we need housing that is affordable to people at many income levels, whatever label you put on it. But when you say “affordable housing” you have to put some sort of qualifiers not there to know what is actually being provided.
What are we getting for our money?
With the scant details I do have, I can see the following:
Stonehouse Development – We would be paying them $32,432 per unit from the Affordable Housing Fund for 37 of the 159 units. Only 23% of the units in the building would be “affordable” for a single person making $50,350 and paying about $1265 for a one-bedroom.
Mandel Group – They didn’t specify how much money they want us to give them, but only 20% of the units int the building would be “affordable” for a single person making $50,350 and paying about $1265 for a one-bedroom.
Gebhardt – 40% of their units would be affordable and they are targeting their units to people making 60% AMI. For one person they would make $38,520 or $18.52 per hour. They would pay up to $1,032 for their one bedroom. In return, they would be asking the city to pay $22,435 per unit.
Judging based on this limited information and on affordable housing alone, looks like Gebhardt is the winner. Of course, devil is in the details and I look forward to learning more about these projects, but I’m guessing that this is not what people were thinking when they heard “affordable housing.”
