Rental Rehabilitation Loan Program helps housing get needed updates

Madison has an urgent need for more housing, with an estimated 291,000+ people currently living here and more than 385,000 residents expected by 2050. With one of the lowest rental vacancy rates in the country, not only does the city need to see more new units built, but existing units also need to be cared for to make sure they are available for years to come.

That’s part of the reason why the City of Madison’s Community Development Division launched a new Rental Rehabilitation Loan Program earlier this year. The program offers landlords who charge no more than Fair Market Rents in buildings of up to 20 units a loan in order to make major repairs to their properties to comply with building codes and regulations or implement energy-efficient upgrades in their units.

For 2024, Fair Market Rent rates in Madison are defined by the U.S. Department of Housing and Urban Development as $1,004/month for a studio or efficiency, $1,182/month for a one-bedroom unit, $1,372/month for a two-bedroom unit, $1,808/month for a three-bedroom unit, and $1,986 for a four-bedroom unit.

Owners of buildings of 1-4 units are eligible for loan amounts up to $75,000, while owners of buildings of 7-12 units are eligible for up to $150,000 and owners of buildings of 13-20 units are eligible for up to $200,000. In order to be eligible, at least 75% of the units in the building must be housing tenants whose incomes are at or below 80% of Dane County’s Area Median Income.

The ultimate goal of the program is to make sure renters have access to affordable, safe, and healthy housing options as part of a broader strategy to foster stable and sustainable communities. The resulting rehabilitation efforts will help prevent the deterioration of rental properties, reduce the risk of safety hazards, and extend the life of aging buildings.

Eligible uses for the loan include:

• Improvements necessary to meet City of Madison minimum housing code
• Improvements deemed necessary to enhance the livability and curb appeal of the property
• Upgrades of major building components, such as roofs, windows, HVAC, plumbing, and electrical systems
• Energy-related repairs, including installation or repair of solar panels
• Weatherization improvements
• Improvements required to facilitate use of the property by persons with disabilities
• Energy Star-rated appliances that will stay within the unit(s)
• Landscaping work to reduce flood risks
• Abatement or reduction of lead-based paint and other environmental hazards, like asbestos or radon
• Installing or repairing fences to enhance security

The loan cannot be used for:

• Refinancing existing loans
• Furniture or other personal items
• Hot tubs, whirlpool baths, or saunas
• Reimbursement or payments for any work completed or materials bought prior to the receipt of a signed funding agreement from the City of Madison
• Sweat equity payments for the owner’s labor, as well as any materials, equipment, or tools bought by the owner to complete improvements
• Improvements to an owner-occupied unit, excluding exterior work where repairs would be necessary for all units

Program funds will be available continuously until all funds are used. Applications will be processed on a first-come, first-served basis, with requests for assistance for emergency repairs being prioritized. Additionally, properties in targeted parts of Madison’s southwest, south, and north sides (specifically, U.S. Census tracts 6, 14.01, and 21) will receive more attractive loan terms and see their application fees waived. 

The application and checklist of required documents are posted on the City’s Community Development Division website.

A full list of program requirements and guidelines can also be found on the Community Development Division’s website.