Certified nursing assistant Virginia Burdick works two jobs so she can afford the rent for her cramped, two-bedroom apartment in South Kingstown. Her daughter, 9, and son, 14, have never had their own rooms.
She makes too much to qualify for state assistance but not so much to live comfortably.
“If I don’t work my other job, I’m just barely cutting it,” said Burdick, 30. “I make too much for [government-provided] health insurance. I make too much for food stamps. I make too much for child care assistance. I make too much for cash assistance.”
She earns about $50,000 annually between her two nursing jobs – putting her among many Rhode Islanders who make a decent income but are being squeezed by skyrocketing rents and home prices.
The small apartment is insufficient for a family of three, but it’s the only thing she could find at a price she could afford: $600 a month. Finding any other living arrangement within her means is nearly impossible and getting more difficult by the day.
The type of housing she’s looking for has been given a discouraging label: the “missing middle.”
Many would say the name has been well-earned. Most new housing in Rhode Island is aimed at those closer to the edges of the market – single-family houses for people who can afford the rising valuations or multiunit developments that often receive federal tax credits to make them feasible for lower-income families.
But the need to construct “missing middle” housing – or “workforce housing” – has drawn more attention from municipal and state officials as house prices even at the low end of the market rise far beyond the reach of those earning modest but stagnant incomes, and rents for apartments are also pushed higher.
The South Kingstown Town Council, for example, recently approved a tax relief program to prod property owners to build “accessory dwellings,” such as small cottages and walk-up apartments. The intent is to add more housing for young professionals and families who are being priced out of the community.
In the Olneyville section of Providence, an out-of-state developer is converting the former Paragon Mill into more than 100 apartments that will be dedicated to low-income and workforce-income tenants.
The same is happening in Woonsocket, where nonprofit NeighborWorks Blackstone River Valley is renovating three dilapidated mills in a downtown area dubbed the Millrace District. The combined projects will offer affordable and workforce units.
There’s no shortage of need.
When construction is complete, NeighborWorks will dip into a list of more than 2,500 families desperately waiting for affordable housing. That list has mushroomed from just 500 families five years ago, according to Joseph Garlick, the nonprofit’s executive director.
Part of the problem is low housing production. In 2019, the state had 1,612 building permits issued for either single-family or multifamily homes, a decrease from the 2,337 issued in 2018. At no point this decade has the state matched its 2005 peak for construction, when 2,836 building permits were issued.
The pandemic and the explosion in housing prices in the past year are also partly to blame, Garlick said.
“People have struggled more than they have [in the past] because of the economic disruption,” he said. “But the bottom line is that Rhode Island hasn’t been producing the housing. We’re definitely behind the eight ball when it comes to production.”
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MISSING THE MARK
State law has set a goal that 10% of a community’s year-round housing stock be low- and moderate-income housing. Only six cities and towns have reached that goal. / SOURCE: R.I. Housing and HousingWorksRI[/caption]
RISING CONCERN
State leaders seem to agree that boosting housing production across all levels of affordability needs to be a priority.
House Speaker K. Joseph Shekarchi, D-Warwick, has made affordable-housing production one of his focus points. Early in the General Assembly session, Shekarchi unveiled a package of eight legislative measures, including one to create a “housing czar.”
His agenda includes several proposals that are part of Gov. Daniel J. McKee’s fiscal 2022 budget plan. The most contentious is a housing production tax on the sale of residential properties over $700,000. Budget officials say it will generate $2.6 million in its first fiscal year, and then $5.7 million annually.
The proposal would double the existing real estate conveyance tax of $2.30 per $500 of value to $4.60 per $500 for all residential sales over $700,000 in value. As of June 9, the plan had not been discussed by lawmakers.
It would be the first time that Rhode Island has a dedicated revenue source for affordable housing. Previously, the state focused on bond issues to provide funds for construction or renovation but only at voter discretion. In March, state voters approved a $65 million bond issue for affordable housing development.
Rhode Island needs to catch up, said Shekarchi, a land use attorney who represented the Warwick Housing Authority for more than 30 years.
On the campaign trail last fall, his constituents voiced concerns about the lack of middle-class housing.
“You’d be surprised how many people raised this issue,” Shekarchi said. “[They said], ‘I want my grandchildren to live near me. They can’t afford to. They have to move somewhere, far away, that has lower housing costs.’ People feel this whether they are new buyers or longtime homeowners.”
And the concern about workforce housing goes beyond mere convenience, according to public officials.
Middle-income workers such as teachers, nurses and managers are essential to a local economy. If housing isn’t available near workplaces, employers can struggle to attract and retain essential workers. Those forced to live farther away from jobs add to traffic congestion. A range of housing also adds to the diversity of neighborhoods and provides opportunities for young families to put down roots, strengthening communities.
Rising housing costs and stagnant incomes have made finding that “missing middle” even more difficult to find.
In 2014, a family with a median income of $63,290 could reasonably afford to buy a median-priced house in six Rhode Island cities and towns, according to data published by HousingWorks RI at Roger Williams University. By 2019, that family could only afford a median-priced home in one place: Central Falls.
Renters are facing a similar situation. A family with the state’s median renter-household income of $34,255 in 2019 could not affordably rent– spending less than 30% of their household income on rent and utilities – a two-bedroom apartment in any town or city in Rhode Island.
Brenda Clement, HousingWorks RI executive director, said that for a generation the state has had a pattern of building too few affordably priced residences.
“Many people who live in affordable housing developments go to work every day, but they go to work at a job that does not pay them a livable wage,” she said. “This whole past year we’ve talked about essential workers. All of those people who were essential workers during this pandemic were the ones who struggled the most keeping a roof over their heads.”
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CREATING OPTIONS: Joseph Garlick, NeighborWorks Blackstone River Valley executive director, stands in front of a renovated duplex in Woonsocket that will be sold to a moderate-income family. About two dozen people are vying to buy it for $169,000. / PBN PHOTO/MICHAEL SALERNO[/caption]
PRICED OUT
While salaries have increased in Rhode Island in the years following the Great Recession, they have not kept pace with housing costs.
The median household income for the state increased by 13% between 2014 and 2019, according to HousingWorks RI. At the same time, the average rent for a two-bedroom apartment increased by 40% to $1,651 a month and the median price for a single-family home climbed 32.5% to $285,000.
And during the COVID-19 pandemic, home prices have escalated unabated, according to Rhode Island Association of Realtors data. In April, the median cost of a single-family home in Rhode Island reached a record $349,000.
Some areas of the state are even more expensive.
In Washington County, not a single town has reached a 10% goal set out by the state years ago for affordable housing levels, said Alicia Johnson, the director of housing and partnerships for South County Habitat for Humanity.
Johnson said she’s worked with residents struggling to stay in their homes. Several have been displaced from their longtime apartments because the owners decided to sell while values are high, she said.
Others bounce among family members or friends in the summer months and then find a place to live in the winter, when tourists have left and rents are lower. “It’s a matter of the yearly rentals not being available or affordable,” Johnson said.
Because of the shortage of homes, people with “workforce” incomes – generally between 80% to 120% of the area median income – move into available apartments that otherwise would go to people who earn less, displacing lower-income residents and driving up rental costs.
This trend was noted in a 10-year plan for housing production prepared for Providence officials in March. The 128-page report found that the city now puts about $2.1 million in federal funds into affordable housing preservation annually and can generate at least $1.1 million more annually from contributions mandated in tax stabilization agreements.
But the report concluded that the city needs about 75 times that amount – $225 million a year – to meet the demand for affordable housing within the next decade. Those funds could be used to provide incentives for developers to build that housing, the report said, including through low-cost financing or through tax credits.
Bonnie Nickerson, the city planning director, said one way the city can leverage its available funds is by issuing bonds that can be repaid using the payments for affordable housing included in developers’ tax stabilization agreements.
This year, the city issued a $24.75 million bond used to create an affordable housing trust fund. It provides gap financing for developers who are building or rehabbing affordable units.
The developer at Paragon Mill was one of the first to benefit. The Alexander Co., of Chicago, will receive $5 million to help close its financing gap, Nickerson said. The mill will create 57 apartments for people at “workforce housing” incomes and another 44 for people who make below 60% of the area median income.
But another issue the city’s housing report identified is the need for apartments that can support families – units with at least three bedrooms, not microlofts or one-bedroom units that have become prevalent in renovated buildings downtown.
“In every single neighborhood we have families with all different housing needs. Different family sizes, different income brackets,” Nickerson said. “We should be looking at that as we are incentivizing units.”
TAKING INITIATIVES
ONE Neighborhood Builders, one of the city’s largest nonprofit community development organizations, has in recent years expanded its approach in creating and preserving affordable housing.
This year, the organization moved beyond its original location in Providence and started buying properties in East Providence. The organization recently purchased a 36-unit apartment building using a loan from the R.I. Housing and Mortgage Finance Corp., also known as Rhode Island Housing. The loan carries with it a deed restriction that rents must be set at affordable rates for 30 years – at roughly 30% of tenant income for housing expenses – and renters must fall within certain income limits.
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AFFORDABLE UNIT: Jennifer Hawkins, executive director of ONE Neighborhood Builders, stands inside one of the completed Manton Townhomes in Providence, which will be sold to someone with a moderate income. / PBN PHOTO/RUPERT WHITELEY[/caption]
ONE Neighborhood Builders also bought two two-family properties in Providence at $175,000 or under, and it is now leasing them to families at affordable rates. These are called “naturally occurring affordable housing” sites, or NOAHs.
“I’ve created six affordable units,” said Jennifer Hawkins, the organization’s executive director. “And we’re leasing it to what we’re calling the ‘missing middle,’ individuals who make too much to live in our deed-restricted apartments but too little to afford market rate.”
Rhode Island Housing created a program to increase workforce housing development in the state, providing no-interest loans to developers who agree to provide rental units in the range of 80% to 120% of area median income.
In the first disbursement, two developers in Providence received funds, including a company that will develop Parcel 6 in the I-195 Redevelopment District in the Fox Point section of Providence. That mixed-use development will include 31 units leased at rates affordable for a workforce income, said Carol Ventura, Rhode Island Housing executive director.
The program, the Workforce Housing Innovation Challenge, is an attempt to create new units at the workforce housing price level, she said, which would free apartments at the lower end of the market for families who earn less and are getting squeezed out.
“That was our goal. To create something at the upper end to free up inventory,” she said. “There is a lack of [inventory] period, across the board. Even for people who are earning $70,000 a year.”
Among housing advocates, labels matter. The term “workforce housing” can be an irritation. People who earn less than 80% of area median income are in the workforce too, housing advocates note.
The shortage of housing at all levels makes it worse for people at the lower income levels, said Michelle Wilcox, chief operating officer at Crossroads Rhode Island, which runs a 100-unit apartment community in North Kingstown, called Kingstown Crossings, occupied by families who were formerly homeless and who have low incomes. It has a wait list of 4,344 families.
“I chafe a little bit at the ‘workforce’ [label] because obviously the people we serve are in the workforce, too,” Wilcox said.
Burdick, who recently was approved by South County Habitat for Humanity for one of its homes, hopes to move into her Exeter home by the end of the year. She plans to go back to school to become a registered nurse.
The scramble to make enough money to pay the bills has been a toil. She works six days a week.
“There are still so many people out there that are struggling and working two jobs,” she said. “There is no need for people to work so hard just to guarantee they have a place to live for one more day.”
Correction: A previous version of this story inaccurately identified the location of six single-family homes purchased by ONE Neighborhood Builders. The homes are located in Providence.
Mary MacDonald is a PBN staff writer. Contact her at Macdonald@PBN.com.
