Employee housing proposal sparks thoughts of mill villages

STANLEY LESSING, an employee at VIBCO Inc., a Richmond-based manufacturing company, has lived at home with his parents the past three years, as renting or buying a home is too costly, and remains only a dream. In the photo, Lessing is packing a VIBCO product for shipment./PBN PHOTO/CASSIUS SHUMAN

RICHMOND – Warren Fry’s housing situation became a nightmare when a pesky neighbor caused him to move out of his apartment in Westerly where he had been residing for more than three years.

The 39-year-old manufacturing employee shuffled around, unable to secure an apartment due to his income level and rents as high as $1,500 per month. Seeking refuge, he moved back in with his parents, only to move in with his brother a week later to share in paying the rent.

“It feels like with COVID, everything has gone up in price,” said Fry, who works at VIBCO Inc., a Richmond-based manufacturer. “That doesn’t help me because it doesn’t mean my pay rate is going up. So, it’s become more of a struggle trying to survive.”

Fry’s story has become commonplace, as employees’ housing remains an issue for the state’s employers. It’s the reason why Rhode Island’s legislative leaders have made housing a priority for the 2022 legislative session.

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Gov. Daniel J. McKee has proposed allocating $250 million in American Rescue Plan Act funding over a six-year period to address the state’s affordable housing needs.

Karl Wadensten, CEO and president of VIBCO, has been cooking up a solution for his company, a modern day mill village of sorts.

Wadensten is proposing a company-funded, premises-based employee housing program in which his employees pay into their matching 401(k) account as a form of rent payment.

The program, aimed at retention, would reward participating employees with the dollars yielded from the investment, stipulated by contract, going toward a down payment on a single-family home.

Details are still being developed, but Wadensten said an employee could borrow up to 50% of their 401(k) account balance after five years for a down payment with no tax or early withdrawal penalty as long as the loan is paid back within five years.

Wadensten said his company saw that rising costs associated with housing were going to make it challenging to retain employees.

“This would be affordable rent housing,” he said. “We have excessive land, and parcels here where I have wanted to put up Kingston Cottages – prefab homes for people that worked for me. The good thing is there would be no cost for them to get to work, and I would have those people on-site.”

Wadensten said the rent for an employee would be half the average rent of an apartment with payment being deposited into their 401(k) account.

“At the end of five years, the delta difference would be about $6,000 a year, times five is $30,000, some of which could be used as a down payment on a house,” he said. “And we would rotate these places for different employees. I think it would be a huge benefit.”

VIBCO manager John Goodwin said it could be a viable solution, as there is no public transportation in rural Richmond like there is in urban areas.

“Back in the day with the old mills down here, they had mill villages,” Goodwin said. “The housing was right around the mill. People walked to work.”

“There is something to be said for that,” he added.

Goodwin was employed at the company when Wadensten first proposed the project to the town of Richmond about 15 years ago.

“They shot down the idea. I’m not sure why,” Goodwin said.

“We had the same issues we have now,” Wadensten said. “People had a tough time finding housing, and transportation to get here.”

Wadensten said one challenge with his proposal then was that Richmond town officials did not believe his project fit the property’s zoning use.

Richmond Town Planner Shaun Lacey says VIBCO’s 6-acre property is zoned industrial, which supports manufacturing and other commercial uses. However, residential development of any kind within industrial zones is prohibited.

Lacey said the zoning ordinance would have to be rewritten to allow for housing on the property or go through the comprehensive permit process with the caveat that at least 25% of all units would need to be made affordable.

“The permitting process would allow the Planning Board to review the request and use its discretion to waive or forgo the underlying zoning restrictions in exchange for affordable units,” Lacey said. “This process also requires significant time and investment but could be more streamlined depending on how quickly the applicant chooses to move – six to eight months approximately.”

Wadensten said his proposal calls for 100% of the dwellings to be classified as affordable housing on the property.

At the Jan. 24 meeting of the R.I. Commerce Corp. board, Wadensten broached his housing proposal with the governor.

“Affordable rents and housing go hand in hand,” said Wadensten, who sits on the agency’s board.

McKee said that funds from the American Rescue Plan Act are being used to draft a state housing plan. The governor said Wadensten could submit his proposal to be included as part of the R.I. 2030 Plan.

“Some proposals that have been submitted for the plan are meant to help with homeownership,” McKee said. “Homeownership is a way to create generational wealth and equity. So, we’re on board with that. We don’t have anything really baked in, in terms of how we would do it yet, but that’s the purpose of putting a plan together.”

It’s a story that David M. Chenevert knows about, as his industry was sustained by mill villages in its early days in the state.

“If you go back in history to the other mills, Cumberland, for example, had brick apartments built for their employees,” said Chenevert, executive director of the Rhode Island Manufacturers Association. “They had a store for the employees to purchase products at discounted prices.”

Chenevert said Wadensten’s idea is “thinking outside the box,” which most manufacturers practice to find solutions.

“The concern I have is that we can’t just give employees money for a down payment to buy a home,” he said. “They need education and good-paying jobs to support that home. And the proposal to improve the ability of others to get their first home should include an education for them to understand the cost of supporting that home.”

Brenda Clement, director of HousingWorks RI at Roger Williams University, agrees. She has been at the forefront of the state’s housing crisis.

“I think it is an important piece to address housing needs, but homeownership counseling and education are also critical to help people achieve homeownership,” she said. “Our goals always in housing are to help people attain, maintain and retain healthy and affordable homes. Like most problems, we need multiple tools and programs to be effective.”

For Stanley Lessing, an employee at VIBCO, owning a home would be a dream come true. Unable to afford rent, Lessing has been living with his parents in the Ashaway village of Hopkinton for the past three years. Part of the reason was to care for his ill father.

“I can’t find an affordable apartment – it’s impossible,” Lessing said. “You have to pay about $1,500 a month, plus utilities. You can’t live like that.”

Despite that, Lessing said that he is trying to save money, but the high cost of living is preventing him from getting ahead.

“I think about it every night before I go to sleep,” he said. “Having employee housing at VIBCO would be life-changing. It would be a tremendous help.”

Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com. You may also follow him on Twitter @CassiusShuman.

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