Common Council approves change to allow more affordable student housing

The City of Madison Common Council approved a change to the city’s zoning code Tuesday night to expand the existing downtown affordable housing incentive so it can be used to create more affordable housing specifically for college students.

The Common Council adopted the original downtown affordable housing height incentive last year. The incentive provided developers the opportunity to exceed the maximum number of stories allowed in the downtown area (while still staying under the maximum height in feet) in exchange for an agreement with the City to guarantee a portion of the extra units would be affordable and rented to those making 60% or less of the Area Median Income. To qualify, developers had to either use at least half of the additional space for affordable units and maintain that affordability for at least 30 years, or, if they were receiving financial assistance from the City, negotiate the affordability terms as part of that agreement.

While some developers have already made use of the new incentive, a further change to the zoning code was needed to expand it for housing designed for students. Students pay for housing through a combination of loans, grants, and assistance from their families, which makes them ineligible for most housing programs. Additionally, because most students rent by the bed rather than renting a whole apartment, the existing height incentive didn't fit with the student housing market.

Without support from college or university staff, the City has no effective way to make sure the right students can access lower rents because staff cannot track income levels of families living across the US and around the world.

The change to the ordinance approved Tuesday night still requires property owners choosing to use the height incentive to enter into a Land Use Restriction Agreement with the City of Madison to guarantee a specified amount of below-market-rate housing for a set period of time.

From there, a local college or university will refer students from low- to moderate-income families to the property owner to rent the affordable units, ensuring that students who need affordable units the most are the ones getting the opportunity. Additionally, the new change allows qualifying students to rent a bed or bedroom at affordable rates alongside non-qualified students who are paying market rate for another bed or bedroom in the same apartment unit.

The change comes as a recent study commissioned by the City of Madison and UW-Madison found that the average rent for rentals near the UW campus average $1,273 per bed per month, but newer or renovated buildings average $1,575 per bed per month, and properties within one mile of campus average $1,746 per unit.

Additionally, rentals near the UW campus have a 98% occupancy rate as enrollment – and competition for housing – increases. Student surveys conducted as part of the study found 27% of students were sharing bedrooms in order to save money on their rent. The authors of the study recommended that the City of Madison continue to implement density bonuses and tax incentives to encourage the development of more affordable units.

With this change to the zoning code now in place, the City of Madison will continue to work with UW-Madison to further support the creation of more affordable units for students choosing to live off-campus.