Rhode Island has added yet another tool in its battle to ease the shortage of housing in the state, creating a "housing land bank" that can accept, hold and repurpose various types of properties for home development.
Affordable housing advocates say the "bank" – created by legislation signed into law by Gov. Daniel J. McKee on June 27 – will have the mission of creating or expanding affordable housing stock by identifying vacant land and easing its transfer to reputable developers.
The legislation is just one piece of the puzzle in solving the housing crisis in Rhode Island, according to Sen. Meghan E. Kallman, D-Pawtucket, and Rep. June S. Speakman, D-Warren, who sponsored the bills.
The concept of a housing land bank isn’t new – Providence established its own version of this initiative in fall 2022. But statewide programs aren’t so common.
About 18 states have enacted laws that give local entities the authority to create land banks with powers such as buying tax-foreclosed properties, clearing titles and reusing land for homes.
Rhode Island's housing land bank, however, will be operating within the R.I. Housing and Mortgage Finance Corp. and will have oversight throughout the state.
The land bank cannot force a municipality or private land owner to give up property, Speakman says, nor does the bank have direct funding for land acquisition and housing development. But with the database of vacant land established, the state is expected to take a more active role in encouraging housing development on otherwise unused property.
Advocates say the land bank will be effective in cases of acquiring properties that have been foreclosed upon, or are tax delinquent, vacant and abandoned. Once barriers such as liens have been cleared, land held by the bank can then be donated or sold for housing development.
“It’s a mechanism for holding property for later use,” Speakman said, and “to ensure that vacant land is being used for its best and highest purpose – that it’s not just sitting.”
The law allows the land bank to accept property and funding, which it can obtain as a gift, exchange, transfer, foreclosure or purchase from any public or private entity. It also directs municipalities to review real estate assets that are unused with no active plans for future use, and to work with state agencies to consider those properties for housing development eligibility.
Nonprofit housing developer ONE Neighborhood Builders is well-acquainted with the burden of acquiring property suitable for development. Just to purchase the privately owned land to build the 144-unit Center City Apartments in East Providence, for instance, cost the organization $4.5 million.
ONE Neighborhood Builders pulled the funding together with a $1 million grant from R.I. Housing and a $3.5 million loan from Local Initiatives Support Corp. Rhode Island, in addition to a $154,000 East Providence Community Development Block Grant to cover additional expenses.
While not all of ONE Neighborhood Builders' active developments came with quite as high of a price for land purchases, all were substantial investments. The developer purchased the Del Toro property in Providence for $1.25 million using a philanthropic donation, for instance, and The Avenue property for $975,000 using an LISC Rhode Island loan and organizational predevelopment capital.
Though the housing land bank legislation won’t directly cover those expenses, the nonprofit is optimistic that it will spur more development opportunities and reduce or eliminate acquisition costs.
“We see this as another tool in the toolbox for affordable housing development,” said Alexandra Steinberg, policy and research manager for ONE Neighborhood Builders. “Land banks can be a great resource to help reduce development costs, especially through acquisition and to incentivize the use of unused, dilapidated or vacant properties for affordable housing.”
Additionally, the land bank “is going to hopefully help developers such as us to be able to consider and approach developing a piece of land in a way that lends itself to the timeline and schedule that nonprofit developers are actually looking at,” said Kyle McKendall, vice president of resource development and communications at ONE Neighborhood Builders.
