WOONSOCKET – A leading advocacy group for affordable housing released a report today criticizing state government for failing to protect its investments in affordable housing with additional funds for maintenance and operations.
The HousingWorks RI report characterizes affordable housing as an essential component of the state’s economic development infrastructure. The report, entitled “The Complete Approach to Affordable Housing,” says the state not only needs more affordable housing but should invest more to make sure what it has is sustainable.
“Unlike our neighboring states, affordable housing in Rhode Island is not yet viewed as a cornerstone of a strong economic infrastructure,” the study says. “And yet research consistently shows how strategic investments in affordable housing can save tax dollars and create vibrant communities that attract businesses.”
HousingWorks RI says a $50 million bond referendum passed several years ago helped develop about 1,300 units of affordable housing, and the state is getting ready to begin releasing the proceeds from a follow-up bond of $25 million approved by voters in 2012.
“The $25 million bond approved by voters last November will provide the capital needed to build affordable housing, but Rhode Island also needs a consistent investment in the operation of these homes to ensure that some will be affordable to Rhode Island’s lowest-income earners,” the study said.
Jessica Cigna, policy researcher for Housing Works RI, says there is still a dearth of affordable housing in the state. Nearly half of all Rhode Islanders are “housing cost burdened,” which means they pay over 30 percent of their income on rent, and more than a quarter of all renter households are paying over half their income on housing costs.
Renters in the Blackstone Valley are among those in the crosshairs. In Pawtucket, for example, the net wage of a household must be the equivalent $21.05 per hour for the average two-bedroom apartment, renting for $1,026 a month, to be affordable. In Woonsocket, the necessary income is $20.94 per hour for the same apartment, renting for $1,021 a month, to be affordable.
These wages exceeds those of the most common types of employees in Rhode Island, including office help, sales personnel and food service workers, whose median hourly wages check in at $17.11, $12.49, and $9.17 per hour, respectively, according to the study.
With the demand for affordable housing far outstripping the supply, Cigna says the state should not only build more affordable housing but protect what it has.
Massachusetts allocated $134 million to operate affordable housing in fiscal 2013, in addition to $80.5 million for construction. Likewise, Connecticut allocated $52.9 million in operating cost in addition to $70 million for development.
States typically budget for upkeep and maintenance of affordable housing because they know investors in such projects cannot simply pass along the costs to tenants because of government-regulated income restrictions on the apartments. Those constraints increase the likelihood that such properties will fall into disrepair and eventually disappear from the affordable housing stock.
“With market rate housing you can pass on those costs but in affordable housing you cannot pass on those costs to tenants,” she said. “In order to make these properties sustainable for affordable housing owners the state must invest in operating costs associate with affordable housing as well as the capital costs.”
A stable supply of affordable housing is “critical” to economic development and job growth, which is why Massachusetts and Connecticut invest in both development and operating costs. Rhode Island makes no similar investments, she said.
As the report says, “High housing cost burdens are bad for business. An inadequate supply of affordable housing puts Rhode Island at a distinct competitive disadvantage in attracting and retaining workers. Employers across the country report that a shortage of affordable housing negatively affects their ability to sustain and grow their businesses.”