Affordable housing tax hike veto brings relief for now

By Patrick Anderson
PBN Staff Writer

Industry groups of all stripes have come to fear the end of the General Assembly session, when unheralded bills affecting their bottom lines can appear suddenly and become law with little debate. More

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GOVERNMENT

Affordable housing tax hike veto brings relief for now

By Patrick Anderson
PBN Staff Writer

Posted 7/29/13

Industry groups of all stripes have come to fear the end of the General Assembly session, when unheralded bills affecting their bottom lines can appear suddenly and become law with little debate.

This year affordable housing developers felt the sting of a late-night legislative surprise, as lawmakers passed a 25-percent tax hike on their revenue a few hours before the Fourth of July.

To their relief, Gov. Lincoln D. Chafee came to the rescue and vetoed the bill, and House Democratic leaders have indicated they do not expect to return for a special session for an override vote.

But the lingering differences that spawned the bill between affordable housing developers, and the cities and towns that host them remain and are likely to generate new tax fights going forward.

Municipalities have battled with affordable-housing developers for years over how much their properties can be taxed. In response to a series of court cases on the subject, a 1995 law set the amount communities could tax affordable housing developments at 8 percent of gross rental receipts, as opposed to collecting conventional property taxes.

The bill vetoed by Chafee, sponsored by Rep. Lisa Baldelli-Hunt, D-Woonsocket, would have hiked those payments to 10 percent of gross rent.

At the start of this year, Providence already had begun denying new affordable housing projects – such as West Elmwood Housing’s Sankofi development – the existing tax rate on the grounds that state law only guarantees that rate to rehabilitation projects, not new construction.

In Barrington, a stronghold of resistance to affordable housing, town councilors are exploring potential legal challenges to the state law that sets taxes on affordable housing projects, including the Providence policy.

If new construction isn’t covered by the law, then the town may seek to raise taxes on controversial affordable housing projects built from scratch even before this year.

The affordable housing developments affected by the laws include both deed-restricted for-profit projects that accept federal Section 8 housing vouchers and developments built by local nonprofits using any combination of private and government funding, including proceeds from the state’s latest $12.5 million housing bond.

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