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Wednesday, January 7, 2009

LAIC Building $99K Spec Houses in Madison TIF District

Speaking of building permits...

The New Year brings new construction, as workers brave the January cold to start the first houses in Madison's tax increment finance district. I found a handful of well-layered guys and a backhoe punching a basement into the frozen ground south of Southeast 4th Street yesterday.

And who are the proud owners leading the way in populating the TIF district? You and me, of course. My sources tell me the Lake Area Improvement Corporation is the holder of not one but two building permits in the TIF. Each permit is for a $98,600 spec house.

I appreciate the LAIC putting its money where its mouth is on building quality affordable housing in Madison (and $99K is about as good as it gets for affordable new housing, short of a yurt). But is this particular economic development investment the best use of the LAIC's quasi-public dollars? If there really is a need in the Madison market for affordable houses, wouldn't buyers and builders be lining up to snap up the 11 TIF lots even without a couple spec houses to stir the pot?

I'm sure the LAIC could make an effective business case based on the data from the housing study. But the LAIC continues to keep the housing study under wraps, demanding payment to read data that if publicized might actually make the LAIC's job easier.

Buying two spec houses in this particular development may spark some cries of favoritism, just as the TIF has, as the LAIC invests in this particular housing development but not others. I don't want to get too bogged down in the personal side, but it seems there is any easy way for the LAIC to avoid even the appearance of picking winners in the housing market. What if, instead of buying spec houses, the LAIC used Habitat for Humanity to pursue its goal of affordable housing? (Full disclosure: I live with a Habitat board member, and I've worked on a Habitat house.) Consider the advantages of directing some LAIC/Forward Madison money toward Habitat:
  1. Non-profit Habitat builds houses the market generally won't, meaning they aren't in competition with Craig Williams, Nick Opdahl, Dennis Miller, or other local developers or contractors.
  2. Habitat can build a house for around $80K. For the amounts on the spec house permits, the LAIC could fully fund two Habitat houses and spring for a really big barbecue afterwards to celebrate.
  3. Habitat is a great volunteer effort. When you give money (or sweat) to Habitat, you aren't just building houses; you're building community. Talk about return on investment!
Now understand that on balance, I think the LAIC is on the right track. I've said before that if the market can't supply affordable housing, then the city and its related agencies can justify stepping in to fill that need. I think I've even written (although I can't find the link this morning) that it might be nice to see some money turned toward attracting residents with good housing, not just more industrial development. I would just like to see the LAIC use its (our?) money as efficiently as possible... and do it in an open fashion that makes the best political impression possible. (Anyone notice the irony of my recommending a more politically palatable way of doing things?)


  1. When a Governor's House comes into Madison, the labor for the $33,000 home is prisoner labor, not local labor. While there is local support for concrete, garage, etc., I'm surprised a Governor's House qualifies as a spec home in a for-profit development.

  2. Hang on, Rufus: is a Governor's House involved?

  3. There's a sweet little two bedroom that just came on the market for $50,900. Includes appliances. Established neighborhood. Is that affordable housing? No, because we don't have affordable housing in Madison. Just look at the housing study.

  4. How can the public see the housing study? Is there a copy of it at the public library or at City Hall that a person can sit down and read? Is there a copy of it online that can be accessed?

  5. This is the good old boy network desperately trying to not look retarded. No one wants the tif property and if it sits on the market (it already sat for too long) the developer has to pay holding costs. LAIC is being duped here.

  6. I like the idea of the return being building community. I think that can be just as valuable as the final product as McKibben argues in his book "Deep Economy."

  7. McKibben knows his stuff!

    Housing Study: A year after receiving the final study from the out-of-state consultants hired to produce it (more outsourcing), the LAIC has not made a single copy available for public review. I obtained this executive summary, but anyone who wants to review the full study must pay the LAIC $250.

    No one wants the TIF property? I'm not convinced. Near the creek, lots of trees, close to the movie store and Lewis... it's not a bad spot, although cul-de-sacs are bad urban design. If the land isn't selling (and I don't know the status of any other lots in the TIF district), it may just be the bad housing market and economic jitters.

  8. I can't be for sure, but if my eyes are right, the trucks in the picture are of Olson-Kearin Concrete. Good to see the LAIC spending dollars locally.

  9. Sounds like LAIC is using the same spec-house program that Colman used to create three identical governor homes on the southeast edge of Colman. All available for purchase if people meet the income guidelines. Will those buyers be able to afford a payment, utilities, taxes and flood insurance?


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