The Wrong Way To Do Affordable Housing

Madison’s Plan Commission has approved 550 units of low-income housing in a redeveloping former industrial area.

That’s good. What’s not so good is that those 550 units are all low-income (no income diversity is allowed) and it’s concentrated in one tightly packed development.

There are also some brown fields issues involved because the site had been used to store coal for the old Oscar Mayer plant. Neighborhood residents and advocates are right to raise concerns about that and the DNR and city officials need to make sure that the area is safe before they allow construction to move forward.

But assuming that the environmental issues can be addressed, this is still a questionable proposal because of the concentration of low-income residents. Certainly the city needs workforce housing and 550 units (about 200 of which would be available for workers, the rest is for seniors) is a great start. My concern is just putting it all in one place.

Essentially, there are three ways to make housing more affordable. You can subsidize the construction, as is being done here, through tax breaks for developers or through direct public investment. Or you can subsidize renters through vouchers or other payments. Finally, you can just build a lot more housing and let supply and demand drive down prices. (There is a fourth way. Allow a city to deteriorate to the point where nobody wants to live there. Let’s not pursue that option.)

Of those options, I like the market solution the best. And, in fact, Madison has done a good job in recent years of reducing barriers and encouraging infill development all over the city. But the market is an imperfect tool and it can take a long time for supply to catch up with demand and to drive down prices. So, I understand the impulse for some kind of government intervention.

I like subsidizing renters better than developers because it gives renters choice on where to live and it increases chances of having mixed income neighborhoods. When you build hundreds of units of affordable housing in one tightly packed space and then restrict the incomes of those who live there (in this case to no more than 60% of county median income) you’re asking for trouble.

Concentrations of low-income housing on Allied Drive created all kinds of problems a decade and a half ago. We made things better in part by tearing down larger apartment buildings and building some market rate housing, including single family homes. Now, the city is experiencing some problems in the high-concentrations of low-income housing in the North Port Drive area.

Redeveloping the area around Oscar Mayer is a great thing. Building a lot more housing is a great thing. Providing workforce housing is a great thing — though I’d say that subsidizing developers to do it is the least attractive available strategy. But if we are going to create restricted low-income housing on the supply side, then it would be much better to do that as part of mixed-income developments.