This Election Must Be About Housing

Rhode Island is a small state, both in size and in population. Its population is so small, that fears of losing a seat in Congress have routinely entered headlines. In an effort to stave off the loss of political influence, one Rhode Island politician even offered a $10,000 bounty.

A Problem of a Housing Shortage

But before resorting to such desperate measures, Rhode Island’s policymakers need to acknowledge what the real problem is. The problem is housing. According to the 2013 Annual Social and Economic Supplement to the U.S. Census Bureau’ Current Population Survey, the top reason people give for moving is housing, followed by family, followed by employment. If Rhode Island wants to attract and retain people it must start supplying housing. While there’s much to criticize about the way the State rolled over for the Amazon HQ2 proposal, it can’t be denied that the company’s assessment that Rhode Island would be unable to handle 50,000 new jobs was exactly right. We need to start producing far more units.

In 2016, HousingWorks RI predicted Rhode Island would need to add roughly 3,500 units a year to match demand; the upper estimate suggested over 40,000 units of housing in the decade following 2016. It’s important to note here that Census Bureau figures show Rhode Island hasn’t even issued permits close to that number of units since 1999. And that year was an outlier. You have to go back to the decade before 1989 to find a stretch where we reached a 3,500 average production of units.

It’s at this point that many people begin talking up the relaxation of zoning laws. And it’s fair to say that zoning causes some of the issues, and that zoning reform should be part of a host of tools for addressing the crisis. But as objections to the Fane Tower proposal so aptly demonstrate, ignoring zoning to just build housing targeting the upper class isn’t going to work. Indeed, while rents in expensive cities have decreased at the upper end of the market, the poor are facing increasing rents.

The same dynamic is taking place in Rhode Island. In a recent WPRI story the CEO of the Rhode Island Builders Association said “we build high-end housing and we build subsidized housing,” but it should be pointed out only the high end housing is meeting the demand.

A Crisis of Affordability

A National Low-Income Housing Coalition (NLIHC) report on rental housing in Rhode Island found that for every 100 renter households in the state that earned between 81 percent and 100 percent of area median income there were 103 units that were affordable and available (“affordable housing” is defined as costing a household less than 30 percent of its income on rent a utilities, “available” means the unit is either vacant or not occupied by a wealthier household); this is enough to meet demand, if not a lot of choice. Only 5 percent of such households were cost burdened or severely cost burdened (meaning they spent more than 30 percent of their household income on rent and utilities; “severely cost burdened” households spend over half of their household incomes).

But for Rhode Island households who earn less than 80 percent of area median income, there aren’t enough rental units to meet demand, dropping precipitiously as income declines. This shows in the cost burdens as well. For the lowest-income Rhode Islanders, there are only 48 affordable and available units, and over 3/4s of such households are cost burdened. Nearly 80 percent of those cost burdened households are severely cost burdened.

The homeowner side of things is better, but not too much better. A recent NPR story, relying on Census Bureau data analyzed by the Harvard Joint Center for Housing Studies suggests that only 56 percent of households in Rhode Island could afford monthly payments on homes sold in 2015.

Simply put, the rent is too damn high.

In 2016, Pew Research found that housing was taking up a larger portion of American household spending than it had 20 years before. More recently, Pew found that wages (when adjusted to 2018 dollars) have remained essentially stagnant since 1964! When the analyzing the cost of a 2-bedroom rental, in 2017 NLIHC found that for such a unit to be affordable for a full-time worker, they would have to be paid $19.49 an hour. According to NHLIC, the average renter earned $13.27 an hour.

Even with the recent increase to $10.10, and even if calls for a $15 minimum wage were to be successful, housing will remain a severe cost of our poorest neighbors.

This is having an effect in Rhode Island. Cranston overtaking Warwick to become the second largest city in Rhode Island (according to US Census estimates) was heralded by many as evidence of its success. But looking more closely at the data shows that Cranston largely earned that place thanks to the declining population in Warwick.

The reaction to such a change should not have been self-satisfied smiles from Cranston, it should’ve been horror from Warwick and other municipalities that lost population. HousingWorks found that the loss of households with children from 2000-2013 reduced Rhode Island’s GDP by $646 million and cost the equivalent of over 7,000 full-time jobs. Meanwhile, for the first time since 2010, homelessness has increased.

The same study puts to lie the typical complaint from the outlying towns in Rhode Island: that families with children will cost them too much in school costs. Except for Lincoln and Barrington, all municipalities in Rhode Island saw large decreases in children enrolled in schools from 2003-2011. Over the same period, spending per student increased. According to the study, schools in Rhode Island are economically inefficient with their spending, and could be much more efficient by enrolling more students.

Beyond which, who will live in these towns if they have no children? As a simple matter of policy, Rhode Island should want to be an attractive place to raise a family. The hostility displayed towards new families in the letters-to-the-editor section of some of our local newspapers is short-sighted. At worst, it is sometimes thinly-veiled racism.

What is to be Done?

The solution to a housing shortage is simply to build housing. Wage increases would help the poorest Rhode Islanders, but without new housing stock targeted at them, the crisis will worsen. Normally, we would rely on the market to create housing, but while zoning issues and local hostility to new housing do present barriers, the market has never really prioritized housing for the poor. And where a market fails, this is where government must step in.

To be sure, Rhode Island spends some money on affordable housing construction, but largely ignores the operating costs (maintaining affordable housing so it’s inhabitable). This makes it an outlier compared to neighboring states, which spend far more on both construction and operation of affordable housing. For a state often treated as the little brother to Massachusetts, Rhode Island usually fails to follow its older sibling’s example. In housing this is no different.

Under the current approach, Rhode Island has been going much too slowly. The crisis, already bound to get worse, will continue to squeeze out existing residents. More radical solutions are called for.

Rent control is an obvious one, and such a movement already exists in Providence. Construction costs could be lowered by relying more on manufactured housing, as long as it’s quality; although that could take a while to get going.

Perhaps most promising is a large investment in social housing. Under this plan, Rhode Island (or any municipality) would build quality housing that would be affordable to anyone who wished to move in, regardless of income. A report released by the People’s Policy Project offers various models to produce social housing that is either profitable or cost-neutral for governments – meaning no costly subsidies. Combined with rent control, and Rhode Island can keep its people in their homes while also having plenty of space for new residents. Such an approach already works in a place like Vienna.

There are likely those who see such a plan as too ambitious, bound to be unpopular. That would be a mistake to assume, a case of our policymakers’ grasp exceeding their reach. Recent polling and modeling by Data for Progress suggests that 58 percent of Rhode Islanders would support public (not social) housing funded by a 3 percent increase in taxes on those making over $200,000 a year; even when the question was couched in explicitly partisan terms. Social housing, which is housing for all Rhode Islanders, could be much more popular.

This Election Matters

It’s been too easy for Rhode Island’s leaders to ignore this crisis, even as it’s worsened around them. Much of Rhode Island’s elite policymakers, media, and business class are insulated from the effects of housing policy. Research suggests renters simply don’t vote as often as homeowners do, which means concerns about housing are only now becoming a problem. A few years ago, a housing advocate and I were talking about a prominent political journalist who refused to cover housing issues. “He just doesn’t see it as a ‘political’ issue,” the advocate said.

Such a view is wrong. Housing is (and long has been) political. Housing is also economic development. Think of the millions of dollars that are tied up by thousands of cost burdened households. Those are dollars that could be spent on other items, in local businesses, leading to more hiring and better wages. Rhode Island is too quick by half to spend money on outside businesses who might already be looking to move here anyway, while ignoring the plight of its own residents who need housing relief now.

Voters should take note. As candidates and their canvassers come to your door or call your phone, be sure to tell them they need to address the housing crisis in the state. Rhode Island needs to be a home for everyone, not just those with cash to burn.

About Samuel G. Howard 1 Article
A native-born Rhode Islander, educated in Providence Public Schools, went to college in North Carolina and a political junkie and pessimistic optimist.

2 Comments

  1. I totally agree that housing is way too expensive and RI needs to build a lot of affordable housing. But the idea that we need to increase the population is a bit wrong headed. The idea that population needs to increase is tied into the idea that the economy has to grow, but if both happen, the planet cooks and resources crash along with the economy. We need a much more ecological approach to our economy and our housing crisis. I like the idea of manufactured housing. it can be super energy efficiient, and we have room for factories to build it. But if we keep plopping housing into forests and other open space, other disasters follow.

  2. Interestingly enough, Providence mayor, Jorge Elorza has had a lot to say about the pros and cons of rent control.

    As for your quote re: “for such a unit to be affordable for a full-time worker, they would have to be paid $19.49 an hour. According to NHLIC, the average renter earned $13.27 an hour.”

    Elorza carefully sets up the premises of his arguments by eliding such things , as he wrote in his 2007 paper, ” . . . I purposefully exclude a discussion of the changes in the urban economy. Although this has contributed to urban poverty in substantial ways, the proposed plan is not intended to directly address this problem.17″

    https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1120&context=cjlpp

    He also carefully avoids mention of the War on Drugs, the prison industrial complex, and the effect such institutions have had on families. In Mr. Robinson’s neighborhood the only ones with targets affixed to their backs are owners of 2 and 3 family buildings, not big real estate investors, not Big Finance, whose red lining programs created urban decay, not the Rockefeller and Ford Foundations who displaced so many in the 50s and 60s with their urban renewal policies:

    “. . . I propose that rent control be enacted only in neighbor- hoods with a high percentage of two-, three-, and four-family homes. Virtually every state in the Northeast and Midwest, along with numerous others across the country, has blighted neighborhoods that contain a suf- ficient percentage of two-, three-, and four-family homes. 122″

    Who is to be excluded?:

    ” . . . all large housing developments, including pub- lic and federally subsidized housing units, should be excluded.1 79 Exclu- sion prevents the owners of these buildings from suffering a disproportionate impact, given their large number of units, and quells the chilling effect rent control may have on the construction of new, large housing developments.”

    Healthy Gentrification?, you may ask. Here’s how it works if you just think magically enough:

    “An interesting filtering dynamic arises when incoming landlords re- place outgoing tenants. Incoming homeowners will likely move from various parts of the town, city and state. However, all outgoing tenants will move from the same neighborhood. These outgoing tenants will not necessarily fill the vacancies left by the incoming homeowners in their former neighborhoods. Since the new homeowners will be slightly wealthier and have higher or more stable incomes, they will bear higher housing-specific preferences 45 that the poorer tenants cannot afford. This will trigger the filtering process as the vacancies created by the new homeowners will be filled by a class of tenants with lower housing-specific preferences. 146 In turn, each vacancy in higher quality housing will be filled by tenants from a lower income class who will filter up and upgrade their housing conditions. 147 Through this upward filtering pro- cess, the vacancies left by the new homeowners in their former neighbor- hoods will trickle down and eventually result in an upgrade in housing quality for poorer tenants.”

    That’s correct. It’s a trickle down plan. You may think Reagan but think Clinton. What’s the difference, after all?

    and this is a very interesting part of it all:

    “For the existing tenants who are displaced, so long as locali- ties can prevent them from re-segregating in other blighted neighbor- hoods, their living conditions will improve. The result will be neighborhoods that are more stable and communities whose members will be better positioned to participate in mainstream society.”

    So we all know from past experience that there is little chance of existing tenants “re-segregating” the way the former East Side residents did to the South Side in the 1960s after eminent domain took hold on South Main, Randall Square, and the area where University Heights is now.

    and:

    “if community concern is great, the rent control scheme could in- clude a provision for a modest subsidy to the dislocated poor. For in- stance, the ordinance could require a one-time payment to those tenants replaced by the incoming homeowners. The cost of this one-time pay- ment can be capitalized into the cost of the house and paid directly to the tenant by the new homeowner. 44”

    thereby lowering the sale value of the property . . .

    lest we forget, our mayor is as enthusiastic about Right Libertarian economic theory as either Charles or David . . . . Koch, silly, . . . and maybe even Murray Rothbard, too. Just read these words:

    “Unlike “Section 8″ vouch- ers or the public housing program, the proposed plan does not require the government, with its attendant bureaucracies and inefficiencies, to be- come a market participant. Rather, it proposes that government play the role it is institutionally established to perform. Much like zoning ordi- nances, after rent control is passed, government should have very little involvement beyond policing activities.”

    That’s correct. This plan will keep government out of providing social services to the poor. After all, the proper function of government should not involve itself beyond policing the property of large housing complexes but definitely not involve itself in policing on behalf of owners of 2 and 3 family homes, except to devalorize those buildings as to make them more attractive to big real estate investment trusts who will send the money out of state; what a boon for our local economy!

    Some people, people who’ve been mislead, might think tax deductions would be an equitable way to go. Not so says Mayor Elorza:

    “This argument posits that tax deductions are preferable because the cost of the proposed plan is borne by all tax payers, rather than the absentee landlords. Further, it may be argued that tax deductions are more desirable because the implementation of rent
    control laws and the informal markets they produce present substantial
    213 concern.

    “However, rent controls maintain at least two significant advantages over tax deductions. First, tax deductions diminish the in-moving home- owner’s equity by increasing the purchase price.”

    I guess tax deductions don’t have any value towards lowering home ownership costs.

    And, I guess, it’s also correct that any kind of equitable way to provide tax breaks for resident landlords( but only resident landlords in 2 and 3 family buildings, not some entity like Brady-Sullivan, who enjoyed/enjoys? enormous tax benefits for renovating mill properties on streets like Carpenter St.) would make their buildings more valuable, thus moving away from a zero valuation in a positive direction. That would be so unfair, especially to big developers like Brady-Sullivan, who treat their workers so well. It would create unfair competition and inhibit Brady-Sullivan, and other companies like them from dominating the market.

    Lack of revenue to be able to maintain a building? The Elorza rent control plan has that covered:

    “Under the proposed rent control plan, however, the under-mainte- nance of the housing stock is a non-issue. Under-maintenance becomes a concern in traditional rent control schemes because homeowners are pre- vented from recouping their repairs and maintenance expenditures by in- creasing rents. However, assuming that absentee landlords are induced to sell their homes, under the proposed plan, the purchasing resident landlords are fully aware of the restrictions rent control places on them. As stated, the reduced expected rental income will be capitalized into the price paid for the home, and will not impact the homeowner’s expected profit. Whatever maintenance expenditures the homeowner expects are factored into the price paid for the home.”

    Sure, so after the value of your tenement has been devalorized by:

    1. the fact that it was built before 1978 and has lead paint
    2. the fact that it has knob and tube wiring
    3. the fact that it has inadequate insulation
    4. the fact that you can’t do anything about the inadequate insulation without doing a complete gut job because you can’t blow insulation into walls or attics with knob and tube
    5. the fact that the EPA demanded that Providence connect copper lines to lead water services causing galvanic degradation contaminating the water supply to the building and a new water service will now have to be installed

    prospective buyers can now add the deferred maintenance costs because of a lack of adequate revenue to further bargain the building’s value down to zero.

    And, why stop at just the blighted districts, as Elorza formerly recommended? Apparently he’s had a change of heart. After all, he hit everyone in the 2 and 3 family absentee landlord category with enormous tax increases all over the city without regard for the condition of the neighborhood. Tell me how that doesn’t make housing more affordable, especially for people who’ll move into luxury housing with tax amnesties!

    What about things like just compensation? Fuhgettaboutit. The Elorza plan has that covered, too:


    1. Substantive Due Process-Takings Clause

    The Fifth Amendment of the U.S. Constitution guarantees that “pri- vate property [shall not] be taken for public use, without just compensa- tion. ‘ ‘ 228 Of interest to this analysis is not whether the land is being put to “public use,” but rather, whether compensation should be paid to those burdened by the plan.229 The Court has recognized broad principles im- plicit in the Fifth Amendment’s guarantee, but it has been unable to pro- vide specific guidance as to what constitutes a taking, particularly where the alleged taking results from a government regulation that merely reduces the value of a person’s property.230 ”

    The best part of this plan is that it leaves big developers off the hook, developers who have lots of cash for their non-profits and to donate to their political friends. What could be fairer? I think after this plan is put into place we can start to think about floating bonds so that big charitable companies such as Amazon, where the working conditions, I hear, are so wonderful. Such a plan would enable them to have enough housing for the employees they treat so well. I hear many of them are on food assistance. I think we should do all we can to subsidize billionaires like Bezos – tax amnesties, TIF districts and that sort of thing are just not enough. Maybe we should just sell the whole city of Providence to him, Water Supply Board and all. It would resolve our pension crisis!

    Final thought, I was going to preface my comment with a lot of the stuff Elorza prefaced his conclusions with. Most of what he prefaced his conclusions with is not arguable. Of course, exclusionary zoning has been a huge problem, but not the way he presents it to support the conclusions he comes to, which amount to nothing more than a neoliberal dream sequence.

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