OP ED: $3m Affordable Housing Fund Investment will Grow Economy

Across the state, Rhode Islanders are talking about a number of important initiatives that could add jobs and grow our local economy. How can we leverage our existing assets to make Rhode Island a center of innovation? How should we invest in education to equip workers with the skills that businesses need? How can we create an environment that will attract the growing advanced manufacturing sector? These questions have been carefully weighed by state leaders during this past legislative session. But there is one more critical question that should be considered moving forward: Where are the employees we’re working to attract going to live?

In order to grow jobs in Rhode Island, we need to have enough housing that is affordable for our workforce. Affordable housing – housing that costs less than 30 percent of a worker’s income – is in short supply in Rhode Island. In 2000, about one third of renters in Rhode Island spent more than 30 percent of their income on housing. In 2011 – the most recent year we have comprehensive housing affordability data for – nearly one half of renters in Rhode Island across all income levels exceeded that threshold.

Our relatively high cost of living is one factor that companies may consider before relocating or setting down roots here. That’s why investing in housing is such an important piece of any comprehensive economic development strategy. Governor Raimondo is deeply committed to addressing the shortage of housing in our state.

In addition to a number of aggressive economic development initiatives included in the budget that was recently passed by the General Assembly, there is a $3 million Affordable Housing Fund proposed by Governor Raimondo. The purpose of this Fund is to finance the development and preservation of 200 to 300 affordable homes. The Fund will leverage existing federal resources to build and preserve homes for the Rhode Island workforce – while creating good paying construction and other real estate-related jobs.

The Affordable Housing Fund will be administered by Rhode Island Housing. It will be used in conjunction with 4% Low Income Housing Tax Credits (LIHTC) to leverage other federal funding and private sector capital. The LIHTC program is the principal federal program used for the construction and rehabilitation of rental apartments. Rhode Island Housing allocates the tax credits to developers who then sell the credits to investors, attracting private capital to invest in affordable homes. Over the past 30 years, Rhode Island Housing has financed nearly 7,000 apartments through the LIHTC program – revitalizing neighborhoods, creating affordable housing options in communities across the state, and leveraging hundreds of millions of dollars in private investment.

While the LIHTC program has played a major role in the development of affordable housing, it is a resource that is currently underutilized. Without sufficient state resources, we have been unable to use all of the federal LIHTC available. These federal tax credits are just sitting there. Meanwhile, there are existing proposals for affordable housing developments that could raise private equity, but are on hold because of financing gaps. With the Affordable Housing Fund, we will be able to close those gaps, put Rhode Islanders to work, and build and preserve homes for Rhode Island’s workforce.

The $3 million investment is expected to leverage $12 million in private equity and other financing. We estimate that the associated development activity would create hundreds of jobs during construction alone, more than $50 million in total income for Rhode Island business owners and workers, and millions in taxes and other revenue for the state and local governments.

Governor Raimondo and the General Assembly have demonstrated a strong commitment to working together to grow our economy in the months and years ahead. If we’re going to grow jobs in Rhode Island, an investment in the Affordable Housing Fund is a smart investment to make now.

Barbara Fields is the Executive Director of Rhode Island Housing, the state’s housing finance agency.