Madison Nonprofits Team Up on Affordable Housing and Early Childhood Education in a Win-Win for Everybody May 18, 2022

Strong communities require a plentiful supply of quality affordable housing. Strong communities also require an abundance of quality early childhood education (ECE) choices. And while developing dedicated facilities to meet either need individually can create positive social impact in the community, what might be possible in a new facility that brings both of these critical community assets together under one roof? 

In a Nutshell

What: Nonprofits Movin’ Out and Red Caboose are partnering to co-locate quality affordable housing and an ECE center in a new facility that will address shortages of both community assets in Madison, WI, enable Red Caboose to increase enrollment from 53 students to 120, and revitalize a long-vacant lot in a high-traffic, transit-accessible corridor in the city.  
Sectors: Affordable Housing, Early Childhood Education 
Location: Madison, WI 
Size: 70,000 square feet, including a 21,000-square-foot early childhood education center 
Cost: $14.5 million 
Funding & Financing Sources: Low-Income Housing Tax Credits, Wisconsin Housing and Economic Development Authority (WHEDA is allocating the LIHTCs and acting as the lead lender for the project, with Cinnaire serving as the equity investor), City of Madison, Federal Home Loan Bank of Chicago AHP, HOME, United Way, IFF, Red Caboose capital campaign 
IFF Support: Two loans closed in March 2022 totaling $4.18 million for Movin’ Out (construction and permanent financing); A forward commitment of $3.58 million for Red Caboose to finance the purchase and build out of the ground floor ECE center once construction of the facility is completed  
IFF Staff Leads: Darian Luckett, Director of Lending – Wisconsin and Iowa & Stephanie Socall, Managing Director of Lending – Affordable Housing 
Design: Knothe & Bruce Architects 
Construction: McGann Construction 
Impact: 32 affordable housing units created (including nine supportive units for residents with disabilities); 67 ECE slots created; financial and operational synergies for Red Caboose and Movin’ Out  

That’s a question that nonprofits Movin’ Out and Red Caboose are on their way to answering as the organizations partner to develop a 70,000-square-foot, mixed-use facility in Madison, WI, that addresses two pressing local needs with a solution greater than the sum of its parts. The facility, which is currently being built, will include a ground floor ECE center and 38 one-, two-, and three-bedroom apartments on the upper three floors – 32 of which will be affordable for families earning 30-60 percent of the Area Median Income and nine of which will be supportive units for tenants with disabilities. Movin’ Out takes an integrated approach to affordable housing development, setting aside roughly 25 percent of units at the properties it develops for disabled residents to ensure that they are able to fully participate in their communities.    

In partnership with the Wisconsin Housing and Economic Development Authority (WHEDA), the lead lender for this $14.5 million Low-Income Housing Tax Credit (LIHTC) project, IFF is providing $4.18 million in construction and permanent financing to Movin’ Out and has issued a forward commitment of $3.58 million to Red Caboose to purchase and finish the ground floor into a purpose-built ECE center.  

The project is expected to be completed in spring 2023, and it represents a win-win for the City of Madison, where there are shortages of affordable housing units and ECE options, and for the neighborhood in which the facility will be located, where underutilized land will be put to a highly productive use. 

It’s also a win-win for both nonprofits. For Movin’ Out, which has developed more than 1,200 units of affordable rental housing in Wisconsin, the shared facility presents an opportunity to chip away at a shortage of affordable rental housing in Madison – where an estimated 13,000 additional units are needed – while also providing residents with an invaluable amenity: access to quality ECE in the most accessible location possible. Residents will receive enrollment preference from Red Caboose, reducing the chances that families who need child care will struggle to find affordable, accessible options.  

“We know the long-term impact of high-quality, early child care, and what a difference that can make in people’s lives in the long term,” said Movin’ Out Executive Director Kathryne Auerback in a recent interview. “It’s the same level of impact for having a safe, quality, affordable, stable place to live, and so the ripple effect of this project is really almost unlimited.”  

Additional building amenities available to residents will include an underground parking garage, secure bike storage, a community room, shared outdoor deck, fitness center, and on-site management office. Both the housing units and the child care facility will be designed according to the Wisconsin Green Built Home standards – ensuring energy efficiency and reducing operating costs – while a rapid transit stop will soon be placed on the same block as the facility, increasing connectivity with the community for residents and making child care at Red Caboose more accessible to families in Madison without vehicles of their own. 

Unique nonprofits partnering for a unique project

The partnership between Movin’ Out and Red Caboose is unique, but so too are both nonprofits. The 50th anniversary for any organization is reason for celebration, but it’s particularly remarkable for Red Caboose. In 1972, center-based child care provided by nonprofits was a rarity, and Red Caboose was at the forefront of an emerging movement. Not only is it the oldest independent child care center in Madison, but also one of the longest operating independent ECE centers in the United States. By partnering with Movin’ Out to co-locate its facility with affordable housing, the nonprofit continues to break new ground today.

Movin’ Out is similarly innovative, helping to advance disability justice by co-creating safe, affordable, community-integrated homes, including home ownership activities and rental housing development. Through the partnership with Red Caboose, the organization is breaking new ground in integrated housing with on-site child care; a transferable model it hopes to implement elsewhere in the State of Wisconsin. 

“The connectivity to other services in the community is important for all residents, but it’s critical for people with disabilities,” says Megan Schuetz, Movin’ Out’s real estate development program manager. “The location of this development and the rapid transit stop will allow for proximity to health care, employment, supportive services, shopping, and more.”    

For Red Caboose, which is celebrating its 50th anniversary this year, the project is a long sought-after opportunity to move into a new facility better suited to its needs after outgrowing its current space. Red Caboose began assessing its options in 2015, eventually determining that the best path forward was to develop a new single-story facility elsewhere. Like many ECE providers, however, tight margins at Red Caboose made it difficult to construct a new facility independently. Compounding the challenge was Red Caboose’s status as the only ECE provider in Madison that offers sliding-scale tuition based on family income; making child care inclusive and affordable to low-income families but also limiting cash on hand that could be devoted to the development of its own standalone facility.  

Partnering with Movin’ Out for a different type of project than originally imagined, however, provided a pathway to a new ECE center that will provide Red Caboose with the capacity to triple enrollment in the next six years, engage families more deeply through holistic programming, and more fully leverage partnerships that enhance the organization’s ability to care for the whole child.  

“One of the benefits of co-locating with Movin’ Out is that it will allow us to share resources,” says Lisa Fiala, Red Caboose’s Project Administrator. “Whether they have tenants upstairs who can benefit from the resources we provide for children, or we have kids with developmental disabilities who require additional support beyond what we may have been able to provide in the past, this shared facility is going to provide new ways for both of our organizations to support families.”   

And, by co-locating its facility with affordable housing, Red Caboose’s employees will receive preference for upstairs apartments – another unique benefit of the partnership between the nonprofits that is expected to help Red Caboose recruit and retain staff.  

When it opens, Red Caboose’s 21,000-square-foot space will include two flexible community rooms where the nonprofit plans to offer parent education classes and host neighborhood events, a commercial kitchen where meals for children will be prepared from scratch, and six classrooms. Over time, Red Caboose will continue to add classrooms and expand its service offering, with plans to reach 11 total.   

“We’ll be able to add infant classrooms, which we’ve never had, as well as a school-age room where we can serve kids from the neighborhood through after-school programming, all of which will ultimately triple our capacity,” says Red Caboose Executive Director Jason Anderson. “We’re also excited to bring some of the magic from our current location to the new space.” 

For 50 years, our work has been about the people, the relationships, and a deep commitment to love and care for children, and now we’ll have this amazing new space to continue that tradition.

One of the ways Red Caboose will accomplish this is by incorporating building materials from its current facility into its new center, creating a bridge between a beloved space where more than 5,000 children were cared for and the location where Red Caboose will embark on the next chapter in its evolution. Adding to the magic will be a nature-based playground outside the new ECE center unlike anything the organization has been able to offer families before.  

“The only concrete used will be to mimic a dirt path, and the rest of the playground will make use of as many natural materials as possible,” says Fiala. “We’ll have wood gazebos and a large climbing structure, mud kitchens with a hand pump for water, standing sand tables, and plenty of opportunities for play with loose objects like logs and sticks. Kids will be able to play in an open-ended fashion, and the playground will be accessible to kids with a wide range of mobility.” 

“This is going to be a space worthy of our kids and families and staff,” concludes Anderson. “For 50 years, our work has been about the people, the relationships, and a deep commitment to love and care for children, and now we’ll have this amazing new space to continue that tradition.” 


Co-locating affordable housing and ECE: A promising model in need of public policy support

In May 2021, IFF partner and fellow CDFI Low Income Investment Fund published a research paper in collaboration with the National Children’s Facilities Network focused on the co-location of affordable housing and early childhood education. Noting the “severe shortage” nationally of both quality ECE options and affordable housing, the paper underscored the promise of co-location to address both challenges in an efficient and sustainable way. Despite the benefits of co-location, however, the paper also noted that a variety of logistical and financial challenges impede providers’ ability to complete more projects like the one Movin’ Out and Red Caboose are engaged in. Removing these barriers will require policy changes at the local, state, and federal levels. To access the report and learn what changes were recommended, click here.