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Council approves deal with developer to guarantee affordable student housing for 40 years

Image courtesy Vadewalle & Associates.

Affordable housing and raising the limits of how tall buildings can be were on the table at last night’s Common Council meeting.

Chicago-based developer CORE Spaces and the Common Council brokered a deal in the contract for its oLiv development at 405 W. Gorham St. The resolution will allow for building 10 to 12 stories, instead of six, and create affordable rental units for students at 40% below market rate. Madison’s Common Council unanimously voted in favor of the resolution.

“I personally find it important to call it ‘discounted housing’ and not ‘affordable housing,’” said District 8 Alder MGR Govindarajan. “It is going to be a little bit more affordable for sure, but the prices will still range between $750 to $850 for most students.”

The development will feature 465 units and 1624 bedrooms, with 10% of the beds dedicated as “affordable” for a minimum of 40 years. Approximately 160 beds are leasable through recommended financial need for a student by UW’s Office of Financial Aid at the discounted rate.

Additional provisions in the resolution outline failure to perform and compensatory damages if the contract is not followed. The city will have the initial opportunity to sue for lack of performance on CORE Spaces’ end to provide the discounted units at a suitable quality. Should CORE Spaces fail to honor the contract, they’ll have to pay $8 million, most of which will go into the city’s Affordable Housing Fund.

“I would also highlight the 40 years… I spoke about that too. I think that’s very important,” Govindarajan said.

If the property changes hands before the 40-year mark, the next owner of the property will take over the provisions in the contract for providing affordable housing. CORE Spaces has no legal requirement to maintain ownership of the Gorham Street property, but the affordable units will remain available until the contract expires.

The affordable housing fund works to increase the supply of affordable rentals for households at or below 30% of an area’s median income, according to the City of Madison’s website.

All units at the Gorham Street development have already been pre-leased before completion. The development is slated to be completed in 2024, before the beginning of the next academic year.