With a record year for home foreclosures in 2008, many low-income tenants in Rhode Island have found themselves without a place to live when their landlords properties were foreclosed, said Housing Action Coalition of Rhode Island Executive Director Brenda J. Clement. Clement took a few minutes this week to tell Providence Business News about the future of affordable housing in Rhode Island and what new federally funded programs are gearing up to help homeowners and tenants.
PBN: Has housing affordability been affected by the high volume of foreclosures in Rhode Island?
CLEMENT: Yes. Rhode Island already had a housing affordability problem, particularly for low-moderate income workers, prior to our real estate boom. Between 2002 and 2007, housing prices grew at a rate six times faster than the average income in the state. For minimum wage workers and lower-income individuals, the gap was even wider. While housing prices have steadily declined since 2007, housing is still unaffordable to many Rhode Islanders. Homes lost to foreclosure (2,777 in 2008 alone) now sit vacant. More than half of the foreclosures in our state have been in multi-family buildings, resulting in the displacement of both the homeowner and tenants. Continued displacement of tenants and increasing rates in unemployment will keep demand for affordable housing, particularly rental units, high.
PBN: Will it get worse or better from here?
CLEMENT: As our state’s economy continues to struggle, we expect foreclosures to rise. A recent study by the Pew Charitable Trust estimates that one in 31 homes in Rhode Island will have faced foreclosure by the end of 2010. When the real estate bubble burst here in Rhode Island, it was like a big wad of bubblegum popped and is now stuck to a lot of things. The Pew study projects that $1.7 billion will be lost from the combined state and local tax base. Homeowners affected by foreclosure are expected to lose $7,008 on average in property values. The Center for Responsible Lending estimates that the decline in housing contribution to the state economy – the gross state product – between 2005 and 2008 is $700 million. It is going to take awhile for us to clean up this mess.
PBN: You have been working with R.I. General Assembly members to put together new legislation that would bring back at least part of the R.I. Historic Preservation Investment Tax Credit. Why is historic preservation important for affordable housing?
CLEMENT: Our colleagues at Grow Smart Rhode Island have led the effort in demonstrating that the state historic tax credit program has been an important resource to rehab historic buildings and restore them back to productive use and to the local property tax rolls. We know that the General Assembly and governor recognize the importance of the program as well. Our largest producers of affordable housing in the state – the nonprofit housing and community development corporations – strongly believe that historic preservation is a critical piece of their neighborhood revitalization efforts. The low-to-moderate income neighborhoods in which they focus their work are rich with historic mills, buildings and grand old homes that need significant rehabilitation to restore them to a new use for local businesses or homes for workers. A tour through these neighborhoods shows that mill owners understood the importance of connecting jobs, housing and transportation. Our local CDCs see the state historic tax credit as one of the “tools” in their tool belt to create affordable housing and encourage revitalization in their neighborhoods.
PBN: Has federal support for affordable housing waned?
CLEMENT: While we are encouraged by some recent initiatives from the Obama administration, federal support for affordable housing, particularly for production, has been stagnant for years. It will take a while for the federal government to get back into the game. This is a particular problem in Rhode Island, where we have decreased our support for affordable housing production over the past few years because of our state budget woes. The Neighborhood Opportunities Program that is our only state production program is a critical resource to develop supportive housing and rental units for very low-income income individuals and families. Affordable housing advocates and supporters are rallying at the Statehouse on April 2 to urge General Assembly members to restore funding in the state budget for NOP.
PBN: What types of programs are supported by federal dollars?
CLEMENT: The Housing and Economic Recovery Act passed by Congress in July 2008 created the Neighborhood Stabilization Fund to address the increased number of vacant buildings created by foreclosures. Our state’s Housing Resources Commission has drafted a plan to implement the $19.6 million in funding that Rhode Island will receive. While that sounds like a lot of money, with the average cost of rehab of each vacant buildings well over $100,000, this will only help us make a dent in rehabbing the hundreds of vacant buildings across the state. HERA also created the national housing trust fund – a long-fought victory for housing advocates across the country. The president’s budget includes startup-capital for the fund. Once in place, this funding will be the first time since the late 1970s that the federal government has provided funding for the production of rental units targeted to very low-income individuals and families.
There is also some funding for several housing programs in the federal stimulus funds. For instance, $19 million will go to local public housing agencies for capital improvements on existing units. While helpful, it is not enough to meet all of the existing capital needs. We are encouraged by the $12 million in the low-income housing tax credit assistance program that will be administered by Rhode Island Housing. There are currently six developments by local CDCs that are stalled and these funds will help fill the funding gap in some of these shovel-ready projects. Some of the other programs will provide assistance to individuals, such as the weatherization funds, the homeowner affordability and stability program, and the emergency housing assistance program. Many of the details for these programs are still being drafted. We know that they are very much needed here in Rhode Island.
Data from the Rhode Island Homeless Management Information System administered by our colleagues at the Rhode Island Coalition for the Homeless shows that shelter use was 43 percent higher in February 2009 than that in February 2008. The reasons given for shelter use clearly reflect the impact of the current economic crisis – higher unemployment and foreclosure rates. The number of shelter residents who cited foreclosure as their reason for becoming homeless has quadrupled in the last eight months as compared to the previous year.
