CHUCK: Rhode Islanders head to the polls in a few short weeks to vote in the presidential election and decide several local races and ballot questions. One of those questions is whether to invest $50 million dollars into affordable housing. The bond is question seven on the November ballot, and Rhode Island Public Radio’s John Bender joins us now with more details. Good morning John.
JOHN: Hey Chuck.
CHUCK: So John, voters approved similar bonds for affordable housing in 2009 and 2012, worth a combined roughly $73 million. What happened to that money?
JOHN: Well, the state says the money helped create about 1,900 affordable housing units across the state. This bond, if it passes, will work in a similar way. The bond is for $50 million. Most of the money — some $40 million — would go to a variety of affordable housing projects. The remaining $10 million would be set aside for urban renewal and to fix up vacant and abandoned properties.
There are some areas of the state with whole blocks of vacant retail or commercial space, and the majority of those projects would probably be in the urban core.
CHUCK: When you talk about affordable housing projects, what specifically does that mean?
JOHN: So tthe funding from this bond would go directly to rental units and units for sale, and that means this funding will essentially subsidize the cost of development and construction for that housing, and that savings can then be passed on to the resident when the units are rented or sold at below market price.
Housing experts in the state estimate that the $50 million dollars from this bond would contribute to the creation of some 800 affordable units.
CHUCK: And this bond money would be distributed and overseen by the state’s Housing Resources Commission. Who are the organizations that would apply to use it?
JOHN: Primarily they are non-profit property developers known as community development corporations. There is a network of these organizations throughout Rhode Island. Some are dedicated to a single city or town, others, like in Providence for example, are devoted to a single neighborhood.
CHUCK: Why do they need this funding?
Housing advocates say this money is crucial because it takes a lot of different funding sources to develop affordable housing. That’s largely because it costs as much to build affordable units as any other kind of housing, but the developer will then turn around and sell or rent the property for a lower price. That means a lower return on investment for the developer. And this state invests a lot less in affordable housing compared to our neighbors. Here’s how Carrie Zaslow, the Acting Chair of the Housing Resources Commission, breaks it down.
“Massachusetts invests about almost 100 dollars per capita in affordable housing and in Connecticut, a little over 76 dollars per capita. And in Rhode Island we’re only investing $8.46 per capita on housing.”
Basically, Zaslow says that translates to less construction and a lower supply of affordable housing, but at the same time there is a high demand for housing, which drives up costs for renters and buyers.
CHUCK: So I hear you that housing advocates say there’s a real need for more state investment in affordable housing. Who is opposing this bond?
JOHN: Well few people say they are opposed to affordable housing in principle. But there are people who oppose specific developments because they don’t want affordable housing near their own properties, out of fear it could bring down property values or have a negative effect on the neighborhood.
And there are also people who question state borrowing, which is what a bond essentially is. So this $50 million isn’t free money. It comes with interest totaling an estimated $30 million, bringing the actual cost of the bond to roughly $80 million. That money would be paid off over about two decades. So any bond does add to the state debt.
That said, Rhode Islanders have historically been supportive of this type of bond issue.
CHUCK: Do residents and other property owners have a point that affordable housing can have a negative impact on property values?
JOHN: Affordable housing advocates certainly would challenge that idea. They say people can get worried when they hear the term affordable housing – in fact, advocates tell me they would prefer to call it something else altogether because that term has such a stigma attached to it.
But advocates say that there are plenty of affordable developments that have not harmed neighborhoods and that are helping the people who live there to have a better quality of life. There are even some developments that are improving blighted neighborhoods. Of course, that may not stop property owners from worrying about the specifics of a particular project.
There is a state law mandating that all municipalities have at least 10 percent of their housing stock be affordable, and we should specify that by affordable, we mean that residents would not have to spend more than 30 percent of their income on housing. So since that law passed in 1991, only five communities have met the 10 percent threshold. Housing advocates are expecting this money to help.
CHUCK: Well, thank you for helping us parse that out John.
JOHN: You’re welcome Chuck.
