PROVIDENCE – Newly proposed legislation by City Council leadership would support low-income housing developers in the period between groundbreaking and a special tax rate that goes into effect upon occupancy.
Under a state provision known as the "8 Law," municipalities assess property taxes for low-income housing developments at 8% of gross scheduled rental income. But this special rate only applies once units are occupied.
The new proposal, the Boosting Urban Investment to Launch Development Act, would offer limited stabilization for developers of affordable housing units starting at the time of construction. The bill uses a tax stabilization agreement structure to provide this support.
This gap places low-income housing developers in a precarious position, the council said in a news release, as these developers often operate on thin margins and can hit unexpected delays during construction.
Co-sponsors Rachel Miller, the council's president, and President Pro Tempore Juan M. Pichardo will formally introduce the legislation at Thursday evening's council meeting.
Miller said that the proposal "paves the way for the speedy development of affordable income-restricted housing."
"At a time when our housing crisis requires a swift response, removing process barriers and ensuring that low-income housing developers have what they need to make the financing case has a big impact in the low-income landscape," she added. "This is another strong step forward as the council works to increase development, protect the housing stock and stabilize the cost of rent.”
Melina Lodge, executive director of Housing Network of Rhode Island, expressed support for the legislation in the council's Wednesday afternoon announcement.
“We appreciate the Providence City Council’s recognition that successful affordable housing development depends on predictability and consistency, as demonstrated by the introduction of this ordinance to provide property tax considerations during the development phase,” Lodge said in a statement. “By reducing uncertainty and allowing developers to focus resources on building homes, this policy meaningfully eases financial pressures while fostering greater efficiency and innovation.”
She continued, "Importantly, the added predictability these tax considerations provide enables more reliable planning and execution, helping to accelerate the delivery of much-needed housing for individuals and families."
Josh Estrella, a spokesperson for Mayor Brett P. Smiley's office, told Providence Business News that the mayor "shares the City Council's goal of lowering the cost of housing for all Providence neighbors and is looking forward to reviewing the proposal that City Council announced today."
Jacquelyn Voghel is a PBN staff writer. You may reach her at Voghel@PBN.com.
