The path to hell, they say, is paved with good intentions. In Rhode Island, it appears the path to a failed affordable housing strategy is paved with an overabundance of competing interests, all of …
The path to hell, they say, is paved with good intentions. In Rhode Island, it appears the path to a failed affordable housing strategy is paved with an overabundance of competing interests, all of which have valid arguments for why they have been implemented but inherently clash with one another all the same.
There’s a lot to unpack in this premise, but the basic situation looks like this.
The state’s new plan to boost the stock of affordable housing is already precariously balanced on the premise that unshackling private developers from overly strenuous local regulation will result in an increased production of affordable housing.
(As an aside, it should be stated that this approach conveniently omits that the current legal framework only requires private developers to include a small fraction of rental units at rates 80% below the market value, which translates to monthly rent costs that remain wholly unaffordable for all low-income earners in the state.)
Private developers, naturally, seek to make profits from their investments. Charging less for an apartment unit than could feasibly be marketed to someone for a lot more is bad business. So the government chips in publicly-funded financial tax credits with strings attached as a means to incentivize them to do so and help make up for some of the disparity in that cost. It’s not perfect, but it has resulted in at least some moderately affordable housing developments getting off the ground. And to their credit, some private developers have even gone beyond the minimal requirements set by state law and are in the midst of trying to build apartment complexes where a majority of the rental units are priced at 60% of the market value, making them more truly affordable for people on lower incomes.
However, the construction unions then make a point to rightly advocate for their members because Rhode Island had not been enforcing federal wage requirements passed during the Great Depression for projects that utilize these tax incentives. What legislator interested in keeping their seat would oppose a bill advocating to pay skilled tradesmen and women a wage that is federally guaranteed? That measure passed nearly unanimously through the general assembly, and went into effect this year.
And now? It’s private development’s turn to gripe about how paying that prevailing wage would render those tax incentives completely null, or even surpass their value, adding costs to developments that are already skyrocketing due to inflation and the increased price of building materials. The scramble is now to determine which projects got in quick enough to be exempt from those requirements, but what about the future?
It’s hard to imagine a solution where everyone will be happy. Outside of sizable private investment from ultra-wealthy trusts, foundations, or private individuals, the cost of producing affordable housing will seemingly continue to deter private developers from taking the financial risk required to build such projects — and that is bad for everybody, the trade unions included.
So what has to give? Amidst a period of economic uncertainty and downturn, it is understandable that developers don’t want to be saddled with additional expenses up front, and that skilled trades members want to be guaranteed more money for the labor they invest to make those conceived projects a physical reality.
Unfortunately, there doesn’t seem to be an answer at this time where both of those desires can be satisfied.
It’s a never-ending whammy of Catch 22s, and make no mistake — the victims will always be the people who barely make enough money to scrape by, and remain unable to afford a safe and reasonably priced place to call home.
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