Developer drops housing project for the homeless on South Side

May 5, 2019 GMT

In a setback for city efforts to house the homeless, a developer is abandoning plans for a controversial $11 million, four-story project with 58 units of permanent housing with support services for homeless individual adults and some couples on the South Side.

But the city and developer, nonprofit Heartland Housing of Chicago, say they remain committed to providing permanent housing with support services for the homeless.


“We are firmly committed to the city’s plan to end homelessness, including by developing additional supportive housing,” Mary Bottari, chief of staff for Mayor Satya Rhodes-Conway, said Saturday.

Michael Goldberg, Heartland’s executive director, said, “Heartland Housing remains committed to the city’s plan to end homelessness.”

In recent years, Heartland opened the city’s initial big attempts at Housing First on the East and Far West Sides, but is dropping a third project on a now-vacant lot at 1202 S. Park St. amid high numbers of police calls at the first two projects and a looming deadline to use critical federal tax credits it had secured to finance the latter project.

The city, meanwhile, is pausing its pursuit of Housing First projects, which emphasize getting the chronically homeless into housing and then offering mental health, substance abuse and other services, as it reexamines the best way to provide the units.

“It’s a recognition that there’s more work to be done to be able to proceed with future projects and be successful,” said Jim O’Keefe, city community development director.

Help for homeless

Many have applauded the openings of Heartland’s initial projects, which have helped dozens of chronically homeless individuals and families get off the streets.

But Heartland’s bid to secure city land use approvals for 1202 S. Park St. stalled as the city struggled with a high volume of police calls at the nonprofit’s initial projects — the $8 million Rethke Terrace, with 60 units for chronic homeless single adults and veterans at 715 Rethke Ave., which opened in 2016, and the $11 million Tree Lane Apartments, with 45 units for homeless families at 7933 Tree Lane, opened last year.


The high volume of police calls at Rethke Terrace and Tree Lane has exposed challenges in housing so many of the city’s most vulnerable at the same sites and inadequacies in the funding model to pay for critical support services for tenants, O’Keefe said.

Police calls for service at the properties stabilized in colder months, but have bumped up again with warmer weather, police spokesman Joel DeSpain said.

The primary issue for police centers on the lack of long-term or permanent property managers at each site, DeSpain said, adding that Heartland is working to resolve the situation. Problems, he said, are often related to people being allowed into the buildings when they shouldn’t be there. The hope is these situations, and calls for police service, will be mitigated with more consistent management, he said.

The city’s Affordable Housing Initiative, begun in the 2015 budget, relies heavily on federal Low Income Housing Tax Credits to help developers finance 60 percent to 70 percent or more of such projects. The initiative seeks to create 1,000 lower-cost units — including 250 units for the homeless — over five years.

City officials see the combination of city support and tax credits — secured through the Wisconsin Housing and Economic Development Authority — as the most potent way to create such housing in locations across the city near transportation, schools, groceries and other basic needs.

The city has approved providing up to $2 million for Heartland’s South Park Street project. But Heartland failed to secure WHEDA tax credits in 2017, and the city moved to save the project by buying the site, which would have been placed on the market. The city then demolished a vacant, two-story structure there.

On a second try, Heartland secured $8.1 million in federal tax credits from WHEDA in February 2018. Heartland, however, paused the land use approval process for its South Park Street project as it sought to help manage requests for police service and support services demands at the first two projects.

The neighborhood questioned Heartland’s plans for the tight South Park Street site, contending there were better locations in the area for such a project.

Heartland has needed Plan Commission approval for a conditional use and Urban Design Commission approval for construction in Urban Design District 7. It’s proposal has been repeatedly put off by both commissions at Heartland’s request and had not yet been scheduled for new public hearings.

With the land use approval process stalled, Heartland faced looming deadlines to use federal tax credits, O’Keefe said. Heartland was facing penalties if it didn’t meet deadlines to begin construction and complete the project. Heartland will now return the credits.

An acute need

Despite the opening of Rethke Terrace and Tree Lane, the need for permanent supportive housing for the homeless is acute. As of last week, there were 760 homeless single adults and 122 homeless families on waiting lists for housing, said Torrie Kopp Mueller, continuum of care coordinator for the Dane County Homeless Services Consortium.

The city and Heartland will continue efforts to deliver and maintain housing, Bottari and Goldberg said.

“We share a commitment to providing permanent supportive housing for those experiencing homelessness in Madison and will continue to work together to ensure the success of our joint projects already underway,” Bottari said

The coming weeks and months “will provide all stakeholders, including community members, additional time to reconsider factors such as building size and location, supportive service funding, and the needs of populations to be served,” Goldberg said.

“Maybe it’s not large scale development, maybe it’s finding a different way to fund support services costs,” O’Keefe said.

Meanwhile, city staff will make recommendations for the future of 1202 S. Park St., which could still be used for market rate or low-income housing or another purpose, he said.