Impact of City Funding on Housing Supply

(Note: This page is part of the 2025 Housing Snapshot report)

Madison needs more housing, and more subsidized, low-cost rental housing to ease cost burdens borne by low- and moderate-income households. The City’s goal to add more housing includes ensuring that at least 25% of all new homes completed by 2030 meet City-imposed affordability standards.

Toward that end, Madison offers financial support to developers of affordable housing through its Affordable Housing Fund (AHF) and through Tax Increment Financing (TIF). The time required to secure financing, obtain permits and construct buildings typically results in a 2–4 year lapse between city funding commitments and the date a building opens for new residents. Over the last decade, the city has provided $46.8 million in development subsidies to support 2,285 new multi-family homes, which is roughly 10% of all homes completed in Madison during that time. Figure 34 shows the annual portion of newly completed homes that came about with city support.

All homes in a mixed-income development, whether intended to serve subsidized or non-subsidized households, reflect the same square foot construction costs. It is only through subsidies, like those offered through the AHF, that some of those homes can be made affordable to lower-income households. Developers that receive City subsidies are required to maintain affordability standards for at least 40 years though, in some cases, they commit to permanent affordability. Developers receiving City funds must also provide supportive services to tenants of homes designated to serve households earning not more than 30% of AMI.