A proposed condominium development on Madison's East Side would not include affordable housing units, as mandated by the city's inclusionary zoning ordinance.

The project on Atwood Avenue, proposed by developer John Svuem, would instead spawn a cash payout to the city of Madison for low-income housing.

"With average house values [in the area] of $150,000, these units add diversity," Ald. Larry Palm, District 15, said. "It could be the catalyst for redevelopment; it certainly is not similar to the designs or types of buildings that are in the neighborhood."

The provisions of IZ require most developments to sell 15 percent of units below market price, to create more affordable housing in the area, but allows for exceptions to be made through negotiations with the city.

However, city officials have raised concerns of allowing such an exception.

"It's crucially important that every neighborhood comply with IZ," Ald. Austin King, District 8, said. "Looking out 30 years to the future, what will Madison look like with inclusionary zoning and without inclusionary zoning?"

King, a supporter of inclusionary zoning, said the city analyzes the proposed profit margin of the development and determines whether or not to waive IZ restrictions.

"We built in the waiver process because in some projects, inclusionary zoning is not appropriate," he said.

In cases where undervalued units would make building cost-restrictive, a cash payment to the city may be made instead.

"The buyout should be the last option on the table," King noted, emphasizing the need for more low-priced housing throughout the city.

Palm labeled the issue of city mandated low-cost housing a "conundrum" and highlighted a need for a multi-faceted approach to this issue.

"Affordable housing is such a larger beast than what IZ can work with, because there are so many reasons houses are not affordable," he said. "The city of Madison should be working to raise the level of income of the citizens."

King said neighborhoods already having numerous low-cost units are usually composed of older, undesirable buildings.

Given the neighborhood's lower property values, some are concerned with the effect this development will have on property tax assessments.

Palm noted that an increase in property taxes reflects greater land values, which he views as positive for residents.

"Last year, property values in that area went up by eight percent, whereas citywide they went up by about four percent," he added.

According to Palm, this process will have the effect of increasing the value held within real-estate investments.

The neighborhood, which is on the east shore of Lake Monona, is currently populated primarily by middle-class homes, but the condos — which would replace an abandoned parking lot — will be priced between $268,000 and $764,000 per unit.

Furthermore, constituent opinions about the project are mixed, Palm said, but he added Svuem has been cooperative in engaging the neighborhood, and has returned with several revised plans.

When asked about the appropriateness of the project in this neighborhood, resident Bill Wedeward noted other proposals in the past have included a car wash, and said he felt the condominium proposal was an "improvement" over previous land-use suggestions.