A stairwell connecting the ground and second floors of a 25-unit apartment complex being built on Central Street in Central Falls is shown on Nov. 14, 2024. The affordable housing site is being developed by the nonprofit Pawtucket Central Falls Development. (Christopher Shea/Rhode Island Current)
The phrase “public housing” conjures up visions of rundown, barracks-style buildings that increase crime and sink property values in otherwise idyllic neighborhoods.
But creativity comes out of crises, and a crippling housing shortage is forcing lawmakers and residents to reconsider negative stereotypes of publicly funded affordable housing developments. In Rhode Island, changing mindsets are driving what could be the first-in-the-nation state-level public developer of housing, seeded by a $10 million carveout from the $120 million state housing bond just approved by voters in the general election.
“It’s been absolutely amazing to see the consensus taking shape on this,” said Dan Denvir, co-founder of tenant organizing group Reclaim RI, and a leading proponent of a state public housing model. “We have lawmakers, builders, businesses, all buying in. It’s become abundantly clear that neither the for-profit sector nor the nonprofit sector will, on their own, build anything close to what we need.”
Indeed, voters on Nov. 5 backed the historic level housing bond by an overwhelming 67%, the second-highest approval rating of all five state ballot questions. The page-long borrowing description, laid out as part of the fiscal 2025 budget, offers only a few words about public housing — specifically, it states that $10 million “may be used to support a new program for public housing development.”
But the intent by lawmakers is clear: Put the state in charge as overseer, developer, partial financier and part-owner of projects that fill the shortfall in affordable housing.
Still, questions linger. A state-commissioned report published in October offers a range of options, but no firm conclusions for how Rhode Island could prop up its own program.
Meanwhile, the nascent Rhode Island Department of Housing, the most likely administrator of a state public housing arm, is trying to regain stability amid a revolving door of leaders. Gov. Dan McKee on Thursday named Deborah Goddard as the third permanent cabinet head in the agency’s three-year existence, filling the position left open after Stefan Pryor resigned in June. Earlier this month, Deputy Housing Secretary Deb Flannery also submitted her resignation letter; her last day was Friday, Nov. 22.
Convincing skeptics to embrace state-mandated housing laws has not been easy. Even small tweaks to local zoning codes approved by the state legislature in recent years have faced resistance by municipal officials and planners.
House Speaker K. Joseph Shekarchi anticipates another battle over publicly-subsidized housing developments.
“It’s not easy with advocates who want affordable housing, it’s not easy with the public who don’t want any affordable housing, and it’s certainly not easy with the municipalities who also resist affordable housing,” Shekarchi, a Warwick Democrat, said. “We need communities to see that affordable housing is not the housing they have envisioned in their mind.”
Here’s how Shekarchi proposes it would work: A state-administered revolving fund seeded with the $10 million from the housing bond would offer low-interest construction loans to developers that build mixed-income housing on publicly owned land. The construction loans would be repaid when the project reaches the permanent financing stage, while the mortgage and ongoing maintenance costs come from the market-rate rents.
Maryland county sets example
A version of this model has been used successfully in Montgomery County, Maryland, where the county council set up a $100 million revolving fund, administered by its public housing authority, starting in 2021.
Montgomery County is among the 14 cities, counties and countries with public or “social” housing programs examined in a newly published report commissioned by the Rhode Island housing department. State leaders hoped the 71-page report by New York University’s Furman Center for Real Estate and Urban Policy would help inform and advise them how to set up a publicly-funded, state run housing development program.
“I wanted it to tell us how many units we need, where we need them and how much they will cost,” Rep. June Speakman, a Warren Democrat and chair of the state’s 17-member Special Legislative Commission to Study Housing Affordability, said. “People laughed when I asked that, but it’s what we need.”
Instead, the report presented to the legislative panel during its Oct. 17 meeting reads like a research paper, opening with a definition of public housing before delving into the ways in which places like Montgomery County, Hong Kong and Vienna, Austria, have directly involved their governments in housing development and financing.
Existing models offer some lessons for Rhode Island but are by no means a direct prescription to cure the Ocean State’s housing woes, said Melina Lodge, executive director of the Housing Network of Rhode Island, which advocates on behalf of nonprofit developers.
“Housing development and land use as a whole is hyperlocal,” Lodge said. “What works in Montgomery County or what works in Singapore, it works for very specific reasons.”
The report notes that higher market-rate rents in Montgomery County, an affluent suburb of D.C., help ensure the return on investment for public dollars in a way that may not work in Rhode Island.
Which leaves unanswered what Lodge considers the most important question in the debate for a state public housing development program: Do the finances justify the risk? Or as she puts it, “Does the math, math?”
“Housing financing is complicated, and in order for a housing development to be successful, it doesn’t matter who’s building it — a nonprofit, for-profit, government — the cost of development, the units, the revenues coming into that development have to work,” Lodge said.
The report repeatedly describes the need to vet the “risks and rewards” of a public housing model, based largely on these unanswered financing questions.
“Rhode Island must carefully consider whether there is a distinct, unmet need that a new public development entity could address more effectively than the current landscape of for- and nonprofit developers,” the report states. “This analysis should extend beyond merely identifying gaps; it should also assess the potential for a public entity to effectively bridge these gaps given the possible limitations such an entity would be likely to encounter.”
Assessing political will
Dave Caldwell, another commission member, found the entire study rather underwhelming.
“I expected to see an example of what Rhode Island could do,” Caldwell said. “Instead, we got a college report on ‘here’s what other countries could do.’ It was an interesting read but not much else.”
After decades of on-the-ground experience building luxury homes — Caldwell is vice president of North Kingstown-based Caldwell & Johnson Custom Home Builders, and former president of the RI Builders Association — Caldwell is fed up with what he sees as lots of talk and little action on the housing crisis. He’s open to a state revolving fund, or some other form of state-led public housing development, but only if there’s follow-through.
“Money is not the real critical thing stopping housing being built in Rhode Island right now,” Caldwell said. “It’s political will.”
Caldwell would like to see some of the $10 million bond allotment spent on building a “test project,” with the state partnering with a private or nonprofit developer to create mixed-income housing on publicly owned land. He has a few ideas in mind, which he declined to share, but thought the right place, with the right developer, could get shovels in the ground by this summer.
It’s become abundantly clear that neither the for-profit sector nor the nonprofit sector will, on their own, build anything close to what we need.
– Dan Denvir, co-founder of tenant organizing group Reclaim RI
But leaders whose seats in state government depend on success, aren’t quite ready for that.
“If we do this wrong, it will have a detrimental effect, not only in Rhode Island but on the whole country,” Shekarchi said. “I don’t mind being the first, but I want it to be done right. If right means doing it a little slower, I don’t mind.”
Especially because the state housing department just got the name of its next permanent secretary, a position many view as key to shaping the details of a state public housing program. McKee’s pick, Deborah Goddard, is slated to start Dec. 2, but must be confirmed by the Rhode Island Senate when it reconvenes in January.
Dan Connors, who has served as the interim housing secretary since Pryor resigned in June, insisted that the leadership turnover and other unfilled positions had not stopped the department from making progress, including on the public housing idea. Of the 38 full-time positions budgeted for the department, 16 are vacant, according to Emily Marshall, a department spokesperson.
The department has two open positions advertised on the state government jobs website.
“We are a young department, and we still have a long ways to go, but we have a lot of really good people working hard,” Connors said. “Although the team is not fully built out, the folks here are really talented.”
Connors blamed the “ordinary churn” within the nascent department in part on the blurry boundaries between its authority and other agencies and departments that historically have led housing policy and funding decisions in the state.
“This department has not been set up for success, so some realignment or consolidation is really in order,” Connors said.
Recognizing the problems with the original 2022 law that created the housing department, the legislature as part of its 2025 budget called for the housing department to review and recommend ways to streamline housing governance across the state. The report is due by Dec. 31.
Rethinking incentives
Separate from the structural woes, the business-backed Rhode Island Public Expenditure Council has pointed to flaws in the way the state incentivizes housing development, prioritizing projects that achieve multiple purposes, like historic preservation or commercial use, and focus on units for the lowest-income residents without attention on workforce or “middle market” housing. The result is that the state is not getting the return on investment needed to make a dent in the estimated 26,000-unit affordable housing shortage across the state, yielding a mere 1,500 new units from the $245 million spent on affordable housing from 2022 to 2024, per RIPEC’s Oct. 9. report. By those calculations, another $10 million for a state public development program would produce another 50-60 units. Setting up a new financing tool isn’t enough; the rules by which that funding is spent also need to change, said Jeff Hamill, a public policy analyst for RIPEC.
“For us, the public housing developer represents a more innovative approach, but the devil is really in the details,” Hamill said. “There are a lot of ways of doing public development.”
I don’t mind being the first, but I want it to be done right. If right means doing it a little slower, I don’t mind.
– Rhode Island House Speaker K. Joseph Shekarchi
The Furman report also notes that the $120,000 per unit financing gap for new construction in Rhode Island — rising to $400,000 per unit for affordable housing — requires more than just state funding to close. The report stresses the importance of a “capital stack” that combines federal and state financing tools like tax credits and subsidies to combine with direct public investment.
But longstanding funding tools like the U.S. Department of Housing and Community Development’s Low-Income Housing Tax Credit program could be at risk under the incoming presidential administration and Republican-led Congress.
Connors declined to comment on how the Trump administration could impact federal housing programs, and in turn, Rhode Island’s housing plight, except to say that department staff are “doing our best to be prepared.”
To Sen. Meghan Kallman, a Pawtucket Democrat, the prospect of a Trump presidency increased the need and urgency for the state to find its own housing funding. Kallman first introduced the idea of a state-funded public development arm on Smith Hill in 2022, though the legislation in its original form did not pass.
“The need for the state to be creatively aggressive has increased substantially by a Trump presidency and a Republican trifecta,” Kallman said. “Having a state play a leading role in creating and maintaining housing is unusual, but these are not usual times.”
Kallman recognized the structural and cultural hurdles Rhode Island must overcome to achieve its public housing development vision. But she was encouraged by the short turnaround — two years — from her initial, unsuccessful bill to what is now a dedicated carveout of bond money for a state-led housing development program.
It’s no silver bullet, but an important piece of the puzzle, Shekarchi said.
“The housing crisis is a 30-year-old crisis which is very complicated,” Shekarchi said. “The unraveling of that, or the correction of that, or the fixing of that, will be very complicated, too, and we need to look at and explore all the different ways to solve this.”
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