Housing market a challenge for Madison’s Allied Drive (UPDATE)

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By Paul Snyder

New rental units in Madison’s redeveloped Allied Drive neighborhood are leased and have a waiting list, but local officials fear condos and houses in the area would go begging.

“When it comes to the home portion, I think some would be wonderful and I will keep fighting to make it as affordable as possible,” said Alderman Brian Solomon, who represents the district. “But there are still things this community needs, like a community center, and I think we have to keep options open before we move too fast on anything.”

Mark Olinger, the city’s director of planning and development, said city planners will assess the needs in the coming months, but the almost-complete first phase has shown strong returns. Construction costs were just more than $6 million, all of the 49 rental units the city built for the area are leased and there’s a waiting list of nearly 200 interested renters.

The second phase of construction, which will begin next year, will include new streets and utility lines, as well as demolition of the area’s last two older apartment buildings.

Olinger said the city plans to construct a condominium on the site of one of the apartment buildings, but that plan might change if the market does not recover in the next year. The city is not interested in building more rental units, he said, so the project may change to single-family homes or duplexes.

Madison’s Community Development Authority also wants to sell about 29 lots to developers and homebuilders, but Olinger said that number could decrease depending on the level of interest in building.

Kent Disch, government affairs director for the Madison Area Builders Association, said the market is too volatile to predict builders’ interest.

“I think the question will be what type of restrictions the city puts on selling those lots,” he said. “My gut reaction is that the lots might not move quickly. People weren’t knocking down doors to build inclusionary zoning units because of the restrictions.”

Disch said, though, that a waiting list of 200 people for the rental units could be a powerful selling point to builders who want to know if there is interest in the area.

Restrictions on lot sales and home specifications will be worked out in the coming months, Olinger said. The city likely will only sell lots to developers who agree to turn a project around quickly, he said.

The Community Development Authority is also considering building a model home to show residents what the options will look like.

“My take on the single-family homes is that people can’t imagine what it might look like yet,” Olinger said. “We’d like to show that to them, and if it takes a few years to sell out, then that’s OK. We want to do this right, and we want to do it well.”

Residents and city officials who initially thought the redevelopment should be done quickly to revitalize the neighborhood will have to adjust to the change of pace, Solomon said.

“I think Allied’s doing fine right now,” he said. “There were a lot of people that thought the second phase should be quick, but the first phase is standing by itself, and perception’s changing already.”

But Solomon said he doesn’t want the neighborhood locked into housing if the market will not support it.

Owning houses creates more investment in neighborhoods, Disch said, but empty lots can hamper a neighborhood’s efforts to turn itself around.

“Let’s say you build 10 homes,” he said. “That’s great. The value of getting homes into a neighborhood is huge. But if you still have 18 lots behind them sitting vacant and allowed to be used as a hangout or a place for people to cause trouble, that’s going to be a problem.”