A Win for Student Housing

On the evening of Tuesday, June 20th, Madison Common Council made the surprising and impactful decision to say no to lining the pockets of wealthy developers and yes to the needs of current residents and the future vitality of downtown Madison. 

We, (Alder Bennett (D2) and Alder Govindarajan (D8), are making this post in response to Madison resident inquiries on Council’s vote. We can understand how our vote could have caused confusion without the full context of how the development would have displaced hundreds of students from affordable housing and further forced downtown into becoming an elite utopia. We hope this post can provide insight to the student perspective that was centered during the vote on Tuesday. 

Background

Core Spaces, Inc. of Chicago proposed a 12-story development on Johnson and Bassett St that would have demolished 70 units of naturally-occurring affordable housing and displaced hundreds of students that reside therein. Naturally occurring affordable housing are properties that are affordable, but unsubsidized by the government (NOAH). The development company planned for the project to be “competitive” with their previous developments at the James and Hub. It would have featured luxury amenities, including a pool, hot tub, fitness center with a lackluster design such as cheap building materials, maze-like layout, and most importantly out-of-control rents. 

“We do not want this.”

From January to April, we knocked every single door in our districts that we could, reaching thousands of residents. Nearly every resident, especially in luxury high rises, said their rent is too high, they are moving due to rent increases, the building conditions are undesirable, and they do not want more luxury high rise developments. 

For example, a student at the Waterfront Apartments said that she is forced to move in August, because from 2022 to 2023 her rent nearly doubled from $2100 to $3800 per month for a two-bed, two-bath. Similarly, residents in the James and Hub aired frustration with rent raising 30% or more, from $1100 to $2000+ per bed per month. 

Residents further shared “It is not worth it”. Some residents at the James were extremely frustrated that they didn’t have electricity in their apartment for over a month when they moved in August of 2022. Some noted feeling unsafe walking around the maze-like developments, where security does not track who enters and exits the building. The hallways can reek of left-over trash for months at a time. Residents rarely use the amenities when they could go to the Nicholas Recreation Center blocks away and aren’t in town when the outdoor pool is open. 

The Campus Area Neighborhood Association surveyed over a hundred residents in the impacted area. The common thread the neighborhood association heard was “more student housing is fine, but we do not want more luxury high rise developments”. 

A Question of Economics

If residents keep saying that we don’t want more luxury high rise developments then why does Madison allow developers to keep building them? 

Policy and real estate leaders have long forced the idea that all our rental cost problems are related to supply and demand. This idea is only half right. 

Please do not mistake, we respect the laws of supply and demand. When there is high demand and low supply, price increases. This is true on a simple supply and demand curve. Housing is complex, not simple.

If we were to adhere to the simple laws of supply and demand, rent prices for student housing should have decreased in the last decade. From 2010-2020, the UW student population only grew by about 3000 students (Enrollment Reports), meanwhile new luxury high developments have increased around 6000 beds. Surely between student housing developments of the James, Hub, Domain, Waterfront, Roundhouse, etc., rental cost should have decreased. But…it hasn’t. Rent is skyrocketing.

There are many reasons why the cost of “student housing” is increasing. One of the more important factors is the market distortion of student housing supply as the state legislature has disallowed the University to build new housing, which limits competition and provides landlords a direct subsidy. There is also a change in consumer preferences and population demographics. Students prefer living closer to campus and the increased population of young professionals (i.e. Epic employees) prefer living downtown. 

We must accept that trickle down housing theory is not helping us achieve affordable housing (Housing is a Human Right). In our current inelastic demand of the housing market, building high amenity units will result in price increases, even with increased supply. In other words, so long as there is a relatively consistent population of wealthy, young professionals and out-of-state students prices will not decrease. Saturating the market with luxury high rise developments will not magically create affordable housing someday. 

Let’s face it, luxury developments, such as the Johnson & Bassett development are not designed for students. They are designed for wealthy young professionals, and a subset of the top 10% of students that can afford their rents. The complex economic factors of the housing market is why it is so important to preserve and build housing of all types, not just luxury high rises. 

In Terms of Legality

Some questioned whether the vote that took place was legal, given the preemption on inclusionary zoning and rent control from the Wisconsin State Statute. This vote was not about that.

Yes, affordability was a large aspect of the discussion, but that has always been the case. Put simply, we voted to not rezone this area because we believed protecting the existing housing was more important to our constituents. It was a matter of protecting what student residents stated in the CANA survey mattered.

This type of housing is in direct contradiction to the city’s goals and neighborhood plans.

City Goals 

The 2017 Housing Strategy Report on Student Housing identified two strategies for downtown housing: 

1. Provide options for all students who want to live near campus to have access to well maintained housing at a variety of price points; and 
2. For neighborhoods located further from campus where the student rental market is softening, facilitate a transition of the housing to serve a wider variety of household types and incomes. Because of the deteriorated condition of the housing stock and difficult economics of converting rental housing to ownership, greater density, or subsidy are needed to bridge the gap.

Core Spaces clearly stated that they want to be competitive with the James and Hub so they would have price gauged as much as they could out of residents, ie. not provide housing at all income levels. Further it would have taken away existing housing stock that contributes the the diversity in housing type in th

Downtown Plan

The Downtown Plan (p. 55) recommends the Johnson Street Bend to be used as a “primarily higher density student residential area mixed with some new neighborhood serving retail uses. Linkages to adjacent areas, including parks and open spaces should be enhanced.”

Despite the developer’s beliefs, the development was not designed for the average student. The average student does not need, use, nor want a pool, hot tub, spa, yoga studio, study spaces on each floor, fitness center, and other luxury amenities. Including these amenities further demonstrates that the development does not maximize usable space for housing, fails to meet our sustainable development goals, and instead caters to professionals (Building Design). We cannot continue to allow buildings to be designed for professionals, slap “student housing” on the title, and pretend that this is the type of housing students want. 

Demolition Standards

The City of Madison’s demolition standards state “The Plan Commission shall consider the factors and information specified in items 1—6 and find that the proposed demolition or removal is consistent with the statement of purpose of this section and with the health, prosperity, safety, and welfare of the City of Madison.​”  Staff notes in their report that there is nothing particularly wrong with the current housing, except there is not as much density. 
The Johnson & Bassett steering committee noted that the “three P’s” of housing should be considered when evaluating development proposals: 

1. “Production of new housing at all income levels, especially affordable housing;
2. Protection for current resident to avoid displacement;
3. Preservation of existing housing affordable for lower- and middle-income residents”

Each P was not met in this proposal. Beyond the affordability aspect, the displacement that would have ensued from this development would have been harmful to the neighborhood. Unlike the Oliv Madison, which did not take away existing housing stock, this development would have taken away 70 units of naturally-occurring affordable housing (Preserving Naturally Occurring Affordable Housing). This type of housing is particularly important to students who have limited student housing options elsewhere in the city. It is more important to preserve and maintain these units that cater to the targeted student population, rather than replace them with overpriced beds for the elite. 

Do we want the future of downtown Madison to be exclusive to the wealthy or do we want a vibrant, diverse, and inclusive place for everyone? 

The trajectory we are on says the former. Yes, we generally need more supply of housing, but the housing we build should meet the needs of our residents. We cannot continue to demolish housing used by current residents, replace them with luxury high rises, and wonder why the average student and young person are moving further east and west, away from downtown. 

 

We believe that we should protect and preserve quality affordable housing, not force displacement. 
 

We believe that downtown residents deserve to live in complete neighborhoods, not a high rise enclave. 
 

We believe that young people deserve to live in housing that is inclusive to everyone, not exclusive to the elite.