Old church finds new purpose as St. John’s Lutheran Church converts to affordable housing

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St. John’s Lutheran Church, one of Madison’s oldest churches, is getting ready to tear down its current space and build a 10-story, 130-unit affordable apartment building. Real estate experts said the church is part of a wider trend of religious groups turning their underused property into housing to help combat a nationwide shortage.

The church is working with Mark Binkwoski, principal of MRB Holdings, LLC, and Janesville-based J.P. Cullen to demolish the church and create a mixed-use structure 310-322 E. Washington Ave. The plan includes 108 units for people making between 30-60% of the Dane County median income. When completed, the building will have 10,000 square feet of space on the first floor for the church congregation.

Construction will cost around $35.8 million, according to developers in an application to the city of Madison’s Affordable Housing Fund. The developer asked the city to give $3.5 million to support the project. St. John’s will get financing help from Dane County and the Wisconsin Housing and Economic Development Authority (WHEDA) as well.

Faith-based groups turning to housing continue social mission, leverage assets

Project plans began in 2019 when church staff and the congregation started talking about the aging building and high maintenance costs, said Don Bernards, a partner at consulting firm Baker Tilly. The firm is supporting the project through the state tax credits process.

“There’s an aging building, there’s maintenance and an aging population of congregants and underutilized space. The thought is, ‘What do we do with this space,’ meet our mission and survive as an organization,” Bernards added.

Bernards noted the St. John’s redevelopment is part of a larger trend of faith-based groups converting their space into housing or other uses. The trend spread to states such as South Carolina, New York, Miami and Minnesota, as churches look to expand their social mission and leverage their assets as congregants dwindle.

“The trend was out there pre-COVID. You look at faith-based buildings of worship and many have been around since the 1920s. Part of the trend is the cost and capital needed to maintain buildings. There are also cultural and societal changes. Around 60% of Baby Boomers identify with a faith-based group and attend with some type of service. Millennials were 36%, so there are less people going to faith-based services,” Bernards added.

The COVID-19 pandemic also exacerbated the low numbers of attendants, as more people opted to worship online. “It’s a combination of all these things,” Bernards remarked.

He also used an example where Mark Elsdon, a minister and director of the nonprofit Pres House, opened a student housing project at the University of Wisconsin – Madison campus.

“This is a church, a faith-based group, but it’s also a great place to make money… There are so many places in the southeast of congregations of 50-100 people are at risk of closing. We’re looking at some places in downtown Charleston, South Carolina where congregants are moving to the suburbs. We think it’s going to be a big area of real estate development and construction in the next five to 10 years, or longer,” Bernards added.

The redevelopment includes 10,000 square feet of congregation space and 5,000 square feet of space for nonprofits, community events and social service providers. Project officials said they’re also seeking an Enterprise Green Certification and are committed to using a small photovoltaic array.

Before the pandemic, St. John’s offered an emergency overflow shelter for the homeless and assisted another church shelter in downtown Madison. The program had to shut down during the pandemic for social distancing purposes.

The church saw the redevelopment to continue its mission “to care for the needs of our neighbors, especially those who are poor and working class,” said Rev. Peter Beeson, the Lead Pastor at St. John’s.

Project possible through county, city and state funding

Because the redevelopment is primarily for people with lower incomes, most units are for between 30-60% of the area median income. Only 22 units will be offered at market rate rent.

St. John’s applied for $2.44 million through the Dane County Affordable Housing Development Fund. A total of 22 units will be affordable for households at 30%, 58 units at 50% and 28 units at 60% of the county median income. Five units will be offered to people on the Dane County Homeless Services Consortium’s community by-name list, officials said.

Project officials were also slated to submit a 4% tax credit application to WHEDA in December of 2022.

St. John’s hopes to break ground in 2024 and wrap up construction around mid-2025.

This will be the first low-income housing project in Madison’s inner ring since 2005, Bernards said. The congregation was first organized in 1865.