Will a new $1 million report on RI's lack of housing lead to change?

Correction: The groups that helped pay for the report has been expanded.

A $1-million report commissioned by the Rhode Island Foundation to synthesize the research about the state's housing and homelessness crises has validated what the people who have been working in the arena have said for years, and some express hope that it will bring more political will to bear on solutions.

The Rhode Island Foundation, the Local Initiatives Support Corporation Rhode Island, Blue Cross Blue Shield Rhode Island and Partnership for RI paid $500,000 toward the cost of the 182-page report, and the firm that wrote it, the Boston Consulting Group, paid for the other half.

In a written statement, Rhode Island Foundation President Neil Steinberg wrote that the report was needed to jump-start action on housing after former RI Commerce Secretary Stefan Pryor was named housing secretary at the head of a new housing department.

In a written statement, Pryor wrote that the report highlights the state's "severe challenges in the area of housing" and that he will consider the ideas and options put forward, especially the best practices from other states.

To make "meaningful progress," everyone in the state, including the 39 cities and towns, will need to "join forces," he wrote.

Household formation key driver of housing shortage

While the state's population has not risen significantly, up 4.3% between 2010 and 2020, and is shrinking again, down 3,251 people in 2022 from 2021, the household formation rate has been increasing.

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For example, four people living together in a single house equates to one household and one housing unit. If that group splits into two households of two people each, the population stays the same but the number of households has doubled.

According to one graphic cited in the report based on U.S. Census Bureau data, the number of households in the state has drastically increased since 2019, at the same time that the rental vacancy rate has fallen.

One Neighborhood Builders Executive Director Jennifer Hawkins said there needs to be more attention drawn to the "overhoused," like empty nesters in large houses, who often can't find smaller apartments, condos or age-restricted buildings to downsize into.

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The report targeted the short-term rental market and recommended that municipalities be allowed to regulate short-term rentals even though municipalities across the state are already allowed to regulate short-term rentals, including in Providence where they must be owner-occupied in areas zoned for single-family homes.

State failure to use $1.3 billion in federal tax credits highlighted

The report highlighted a finding by Sen. Samuel Bell, D-Providence, who put out a report at the end of 2021 about the $1.3 billion in federal funding the state has failed to utilize between 2014 and 2020.

According to Bell's report, the state spent $171.4 million on affordable housing, mostly to maintain existing properties.

The 4% low-income housing tax credits are a big source of money for prospective affordable housing projects, but they are not enough to make projects viable by themselves and require states to chip in.

The state has also been issuing tax-exempt private activity bonds, which can trigger an automatic award of low-income housing tax credits, for things that are not housing, and therefore not triggering the automatic award.

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The solution is to allocate state funding toward affordable housing production, according to the report.

Local Initiatives Support Corporation Executive Director Jeanne Cola said the state hasn't put in enough money to make the 4% tax credit projects feasible, but it's also up to municipalities to pass their own bonds to fund affordable housing that uses the federal subsidies.

In an interview, Bell said the state needs to maximize the number of 4% tax credits it can get, which would require projects to not be over-subsidized, which allows nonprofits to offer other services to people in need of affordable housing.

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"I think the serious problem, the fundamental problem, the problem with volume, is money," he said.

Hawkins said it was important that the report highlighted the housing tax credit issue because it validates what people who work on the issue have already been saying.

"You can say something until the cows come home but when an objective party says it? That's different," she said.

Report skirts single-family zoning rules in many towns

Rhode Island is hostile to new building permits, with the Providence-Warwick metro area ranked as the third-most regulated in the country, according to the report.

"Our single biggest obstacle in RI is dealing with the permitting process," one anonymous affordable housing developer told the consultants.

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Building in the state has drastically declined since 1986, according to data the consultants pulled from HousingWorksRI. At the same town, town planners and mayors bemoaned the lack of knowledgeable staff and the lack of state support.

The report did not mention what HousingWorksRI highlighted in its 2022 Housing Fact Book, that in four of the state's seven regions, cities and towns allow multi-family housing by right on just 5% of their unprotected lands.

Rhode Island's second-largest city, Warwick, and its fifth largest city, East Providence, do not allow multi-family housing by right. The other largest cities, Providence, Cranston, Woonsocket and Pawtucket, do allow multi-family housing by right, with some caveats, like Pawtucket, which requires 3,000 square feet per unit in a multi-family building, and an additional 1,000 square feet for each unit with four or more bedrooms.

HousingWorksRI Director Brenda Clement said the report is nice confirmation for what she has been saying the state needs, for a long time: more housing and higher quality housing.

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"It's a good thing I guess to have all the thoughts together in one document but I really want us to get moving, implementing, experimenting, to build some housing instead of just talking about it," she said.

Sharing the burden of housing goals

Hawkins said she keyed in on one of the six policy levers available to Pryor − setting housing targets for both the state and individual communities.

Putting out a specific goal, and then sharing the burden with the 39 municipalities, would create a very tangible goal to work toward, and help with political will. The state needs a culture shift to begin thinking about how everyone in the state can work toward the housing goals, Hawkins said.

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The report is a perfect launching point for Pryor as the new housing secretary, Cola said.

"Some ideas may work, some may not, but it's really up to the Department of Housing to look at it, move through it, and see what is the low hanging fruit and how they can bite the apply quickly," Cola said.

Ending chromic homelessness

The consulting group's report focused on both housing and homelessness. Crossroads Rhode Island Executive Director Karen Santilli said the report validated what service providers have been saying since the start of the pandemic about the increase in homelessness, but she is "looking forward."

That means figuring out how to build more housing and how to get the state to approve money for supportive housing projects.

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Shelter is more expensive than building housing and Santilli said she has projects that are shovel ready, they just need funding, like the $250 million in federal American Rescue Plan Act, or ARPA, funds.

While she does want funding for her housing projects, the "vast majority" of the households falling into homelessness aren't living anywhere near the poverty line, or the threshold for federal housing subsidies, 30% of the area median income, $20,300 for a single person, or $29,000 for a family of four.

That majority has been pushed out by rising rents which in turn are a function of a lack of housing.

Prior to the pandemic, the state was close to having enough supportive housing to eliminate most chronic homelessness, but the recent changes have put that goal out of reach, for now.

"I think we're going to need more supportive housing," Santilli said.

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Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.

This article originally appeared on The Providence Journal: $1 million housing crisis report looks to other states for solutions