McKee proposes Low-Income Housing Tax Credit

PROVIDENCE — Gov. Dan McKee’s administration announced Friday a package of budget proposals including the introduction of a state Low-Income Housing Tax Credit aimed at increasing the stock of affordable homes.

The proposals are amendments to McKee’s recommended fiscal 2024 budget. They aim to increase housing production rates in the state and expand housing investments with $29 million of State Recovery Fund Money.

“Housing is essential infrastructure for communities throughout Rhode Island,” McKee said. “The increases in rents, evictions, and homelessness in recent years demonstrate the need to provide better and more affordable options to Rhode Islanders.”

Low-income Housing Tax Credits encourage developers to build homes affordable for families. Rhode Island and New Hampshire are the only New England states without such a program.

The proposed new program would award tax benefits to developers through a competitive process and would be capped at $30 million annually, according to a news release.

“Though Rhode Island’s housing challenges are significant, this tough scenario has created meaningful momentum for change,” Housing Secretary Stefan Pryor said. 

“Our state can begin to turn things around with these new investments in housing development – and, through these initiatives, we can start to create new housing opportunities for Rhode Islanders at every income level.” 

According to a recent assessment of the state housing crisis by Boston Consulting Group released by the Rhode Island Foundation, only 800 multi-family housing units have been built in the state since 2008. 

In addition, 80% of the state’s housing structures were built before 1980, leading to negative health outcomes and fewer available homes, said Brenda Clement, executive director of HousingWorks RI.

“Oftentimes what happens is that they’re still in use but in conditions that are unsafe,” she said.

The supply crisis has made the Providence Metro Area (including Fall River and New Bedford) the fifth highest year-over-year rate of rental cost increases in the country at 23.8%, according to the HousingWorks RI 2022 Housing Factbook. 

“We’ve shown for 15 years the cost burden facing Rhode Islanders,” Clement said. “We need to stop talking and start doing stuff.”

The move comes as the General Assembly works its way through a 14-bill legislative package. Among them were bills aimed at zoning reform, increasing access to affordable housing around transit hubs, and a bill allowing the construction of accessory dwelling units in certain single-family zones.

The other investments

The Department of Housing proposes the $29 million in State Fiscal Recovery Funds (SFRF) to increase and maintain Rhode Island’s supply of affordable housing through the following initiatives: 

• $17 million to create grants addressing priority housing developments focused on seniors, veterans, and people with disabilities.
• $4.3 million to expand physical housing-related infrastructure via competitive grants through the Rhode Island Infrastructure Bank. 
• $4.9 million in grants for transit-oriented development hubs The hubs seek to encourage municipalities to zone and approve affordable housing around public transportation access points in an effort to increase access to public transit and reduce carbon emissions. A bill sponsored by Sen. Meghan Kallman, of Pawtucket, to promote the development is awaiting hearing before the Senate Committee on Housing and Municipal Government.
• $1.4 million to support municipalities as they conduct zoning, permitting, and planning actions to address barriers to affordable housing construction.
• $978,755 to conduct outreach to the unhoused, support ambulance response, day programs, and municipal services to bolster emergency shelters.
• $500,000 are proposed to purchase deed-restricted properties entering foreclosure. The purchase will allow the state to keep affordable pricing covenants intact.

Good start but more needs to be done

According to the Rhode Island Foundation report, over 150,000 households in the state are cost burdened, meaning they spend more than 30% of their income on housing.

The report also said that 45% of renter households and 28% of homeowners are cost burdened when it comes to housing. 

Margaux Morisseau, deputy director of the Rhode Island Coalition to End Homelessness, said the announcement is a net positive, but may not bear fruit for years to come.

“The announcement of these funds entering our system is very positive,” she said. “But we need to look holistically to address both immediate needs and long term concerns.”

Morisseau supports a joint resolution introduced in February by Rep. June Speakman, of Warren, that would give $5 million to the Office of Housing and Community Development to create a Housing Problem Solving Fund. The fund aims to use financial and social tools to help those immediately facing homelessness. The bill is currently awaiting hearing before the House Finance Committee.

Morisseau said the investment would save Rhode Island both suffering and dollars.

“It takes about $1,200 to keep a family housed that is immediately about to lose their home,” she said. “It’s a way to stop the bleeding into homelessness.”