State High Court Disallows Town’s Fees In Lieu Of Affordable Housing

In what may further complicate an already contentious issue, the state Supreme Court last month ruled that East Greenwich could no longer offer developers a way out of providing affordable units through a fee.

The town had offered developers the possibility of paying a fee in lieu of providing affordable housing. The state has mandated that all cities and towns provide at least 10 percent of housing stock as affordable. Right now, East Greenwich has less than half that percentage.

The Supreme Court ruled that North End Realty, which wanted to build five housing units of Tillinghast Road, could not be compelled to pay $200,000 in lieu of making 15 percent of its project “affordable.”

The company filed suit in 2007 and Superior Court ruled in the town’s favor in 2008. North End appealed to the state Supreme Court.

According to the state, an “affordable” housing unit is that for which the price is set so that it would be affordable for someone with an income between 80 and 120 percent of the median for Kent County. It is not public housing. Recent affordable units have sold in the mid-$200,000 range, Planning Director Lisa Bourbonnais said at an April meeting.

“When a developer constructs new non-affordable housing units, it increases the overall number of housing units in a municipality without adding any affordable units,” the ruling (attached here) read. “As a result, there is a decrease in the percentage of affordable housing in that municipality.”

The ruling continued: “It is our view that, before a municipality may impose a fee-in-lieu on developers, it must have specific statutory authorization from the General Assembly - as is the case with respect to development impact fees and open-space fees.”

“We don’t really know what [the ruling] means yet. We just know that we can’t impose the fee,” said Bourbonnais on Monday. In terms of the fees that have already been collected on housing developments that have been built - “we’re out the fee and the unit,” she said.

For now, she said, the town will not impose a fee in lieu of affordable housing. She said she was unclear what will happen to those projects that are now in process, noting that that number was low.

According to Bourbonnais, the ruling basically means that the town has to get legislative backing for the action.

“They didn’t specifically give us that tool, to impose that fee,” said Bourbonnais. “In the next legislative session, we’re going to try to get that tool in our toolbox.”