PROVIDENCE, RI – The McKee Administration today announced a package of budget proposals aimed at spurring housing development, creating housing opportunities for vulnerable Rhode Islanders, and supporting cities and towns. These new investments will help address the long-lagging housing production rates in Rhode Island, catalyze expanded housing supply, and mitigate upward pressure on rents and home purchase prices. Additionally, these proposals will expand housing investments by an additional $29 million of State Fiscal Recovery Fund (SFRF) investments.
"Housing is essential infrastructure for communities throughout Rhode Island," said Governor Dan McKee. "The increases in rents, evictions, and homelessness in recent years demonstrate the need to provide better and more affordable options to Rhode Islanders. I thank the Speaker, Senate President and the General Assembly for considering this budget amendment which will help spur much needed housing development across our state."
"Decades of underinvestment have left our state dead last in housing production, but this proposal is exactly the kind of bold action we need to reverse that trend. Rhode Island is ready to lead the nation by establishing a state-level public sector housing developer and making major investments in transit-oriented development," said Lt. Governor Sabina Matos. "I'm grateful to Governor McKee for advancing this proposal, and I am excited to work with him and the General Assembly to get it passed."
The most prominent of the Governor's proposals is the creation of a statewide Low Income Housing Tax Credit (LIHTC) program to provide a tax incentive for developers to expand subsidized housing options for low-income households. Currently, six of eight states in the Northeast have a state-level program to match and support investments from the federal LIHTC program. Elsewhere in the Northeast region, state LIHTC investments have proved to leverage additional federal resources and successfully close financing gaps needed to finalize development proposals and get shovels in the ground for new housing production. The proposed new program would award tax benefits to developers through a competitive process and would be capped at $30 million annually.
"Though Rhode Island's housing challenges are significant, this tough scenario has created meaningful momentum for change. 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," said Secretary of Housing Stefan Pryor.
"Dedicating an additional $29 million in federal State Fiscal Recovery Funds toward new housing initiatives is the latest step in supporting this critical need for Rhode Island," said Interim Director of Administration Brian Daniels. "This latest allocation would grow the state's total SFRF investment in housing and homelessness infrastructure to $309 million."
"We appreciate the Governor's continued efforts and focus on the importance of housing production. This latest round of budget proposals provides the state with tools and resources that will help to create much needed housing for Rhode Islanders throughout the state," said Carol Ventura, Executive Director of RIHousing. "RIHousing looks forward to working with the Governor, the General Assembly, the Secretary of Housing, and our partners to put these resources to work."
The proposal also includes the reallocation of funds to create a pilot initiative to support municipal efforts to address homelessness. The proposed $978,755 would support services such as homeless outreach, day programs, ambulance response, and other activities and municipal services to help emergency shelters succeed in local communities while continuing to expand options for Rhode Islanders experiencing homelessness.
The Department of Housing is also proposing a $29 million investment of State Fiscal Recovery Funds (SFRF) for purposes such as the following:
Expanding housing-related infrastructure – $4.3 million to provide resources on a competitive basis to projects through the RI Infrastructure Bank. The program will provide funds for physical improvements needed to support housing development where infrastructure deficiencies are a considerable barrier.
Fund transit-oriented development – $4.9 million in grants for housing developments near transit options and for municipalities to study and implement zoning changes to up zone parts of communities in greatest proximity to transit. This investment reduces transit costs to Rhode Islanders by providing options nearer to bus, rail, and bike infrastructure. Transit-oriented development is a proven approach to city planning that reduces carbon emissions and advances efforts to protect the environment.
Establishing a priority projects fund – $17 million for competitive grants to address priority housing developments. Potential uses of this funding include permanent supportive housing for vulnerable Rhode Islanders or housing for special populations such as seniors, veterans, or people with disabilities.
Investing in housing planning & municipal capacity – $1.4 million to create a housing-related municipal fellows program that will provide staffing capacity to municipalities that are too often understaffed as they conduct zoning, permitting, and planning activities to address barriers to housing opportunity.
Preserving affordable housing – Reallocation of $500,000 to preserve affordable housing units. These funds will allow for the purchase of deed-restricted properties entering foreclosure so that the affordability covenants will remain intact and to mitigate the loss of subsidized housing supply.
To further support housing development, the package includes a proposal to fund a proactive development subsidiary under the RI Housing and Mortgage Finance Corporation. The focus of this will be to identify housing developments that meet Rhode Island's most significant needs and work proactively to support cities and towns, property owners, and developers to bring these expanded housing options to fruition.
Activities of the entity may involve but are not limited to expanding the supply of affordable and special needs housing; advancing housing development generally; establishing a revolving fund to support proactive development endeavors; conducting feasibility analysis of real property; acquiring and assembling real property; predevelopment financing; site readiness activities and municipal technical assistance. $1.4 million in State Fiscal Recovery Funds is allocated to the new subsidiary to enable staffing capacity and initial activity.
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