Affordable Housing: Ballot question 3 aims to develop Rhode Island’s stock

Housing prices across the state set new records last year under the COVID-19 pandemic. Pundits speculate the reason is high-income professionals fleeing urban areas in record numbers (possibly turning Rhode Island into a bedroom for Boston), but the impact is struggling residents are getting strangled by the increase in rent. Affordable housing, already vanishing prior to 2020 is about to become extinct. 

“Right now in Rhode Island there are no municipalities where if you’re earning the median renter income of $24,000 you can afford to rent,” says Brenda Clement, director of Housing Works RI. According to HousingWorks RI 2020 Factbook, if your household income is $50,000 or less, the only town affordable to purchase a home in is in Central Falls. Household incomes in Rhode Island are not keeping pace with home and renting costs, with the median income around $63,000 a year.

Question Three on the ballot on Tuesday aims to build up the stock of affordable housing. If passed, the bond would provide $65 million to source funding to build and develop affordable housing in Rhode Island. Voters in the state have approved three prior bonds in the last 20 years to fund affordable housing construction in Rhode Island.

Rhode Island had an extremely tight housing market prior to COVID. There was a low vacancy rate in the rental market and an even lower rate in housing stock. Housing prices increasing will add additional challenges to creating new housing stock. 

“The least three bonds have produced 3,200 affordable housing units,” says Clement. “We have used those funds in 34 out of the 39 cities and towns.” Rhode Island’s fair share law requires each town to meet a goal of 10% of their total housing stock be affordable housing, a goal only six out of the 39 cities and towns actually meet. Past bonds have focused primarily on rental developments over home ownership. 

Linda Weisinger is the director of Pawtucket Central Falls Development, a nonprofit community development dedicated to building affordable housing in two of the state’s impoverished communities. “With our own in-house construction crew, we build the houses we sell to our buyers,” Weisinger said in an interview with Motif. They rely on developer fees to operate developing projects. PCF could apply for money from the fund. Previous grants from bond money has helped them build 41 units of affordable housing, and are currently building two-family homes for first time homebuyers on Middle Street, as well as 14 affordably priced condos also in Pawtucket.

“We love the character in existing buildings, so any chance we get to renovate we do that,” says Weisinger. She gives the example of the 14-unit condominiums PCF is building in Pawtucket. The building was bought from the diocese, and came with the kind of high ceilings really only found in old church buildings. PCF has developed more than 300 rental units (which they retain ownership of) and sold more than 100 homes to first-time new home buyers. They boast the lowest foreclosure rates out of all the developers. Their purchasing policies require buyers to sit through classes and counseling, a far more extensive process than typical homebuyers face. PCF also does an extensive income verification process, going through paystubs, tax returns, bank statements, 401ks, all assets they have as a total household.

The competitive RFP process will show what the developers and communities want to build. The exact number of affordable housing units to be produced by the new bond money is hard to estimate, depending on a lot of variables, including community need and what the developer proposals turn out to be. No state housing is state-owned. With all the transition in state government currently, Clement says — if the bond is approved — she hopes the RFP process gets started by the summertime at the latest, so projects can get approval and commence in the autumn.

In order to keep housing affordable, there may be deed restrictions imposed on affordable housing developments, such as rental units having a set time they have to remain affordable, typically 30 years or more. Renters of affordable housing units have to recertify every year that they are income-eligible for the property. 

Affordable housing as bonds remains one of those quirks that only Rhode Island does. While the state has only bonded affordable housing over the last 20 years, most states have a dedicated funding stream to build affordable housing in their annual state budgets. “That’s a big barrier,” says Weisinger. She notes Massachusetts and Connecticut provide funding in their budgets, and only the Ocean State bonds it out. There’s never been a dedicated funding stream for it in state history.

“COVID has highlighted the importance of the basic needs in life,” says Weisinger. “Including shelter, including food. Some of these inequities we’ve seen over the past year, there’s not enough quality, affordable safe housing for families to reside in.”