City Council Looks to Override Taveras Veto on Affordable Housing
Tuesday, March 04, 2014
The ordinance codifies the 8% affordable housing tax rate authorized under State law, which has historically included new construction.
Housing Groups, Councl Members Support Measure
Council President Michael A. Solomon said, “Jobs, investment in our neighborhoods, and providing safe, healthy, affordable housing to our residents—these are what this ordinance is all about."
Last Friday, GoLocal reported that the issue was heating up following the Council's approval of the ordinance, which counts among its supporters the West Elmwood Housing Corporation, and the Housing Network of Rhode Island.
Solomon was joined by Majority Leader Seth Yurdin and Councilman Luis A. Aponte, lead sponsors of the ordinance, along with Councilman David A. Salvatore, chairman of the Special Committee on Ways and Means, in expressing disappointment and surprise upon receiving notice of the Mayor’s veto of the affordable housing ordinance.
Yurdin stated, “The Council was surprised to learn about the change in the City’s policy, because Providence has always strongly supported affordable housing. This ordinance acknowledges the predictable tax formula prescribed under state law, which has been on the books since the 1995 and upon which community development corporations rely when seeking financing to build affordable rental housing.”
The ordinance affirms the tax rate for new and rehabilitated affordable residential rental units at eight percent of the previous year’s gross rental income, as provided for under Rhode Island General Laws § 44-5-12 (a) (1) and 44-5-13.11.
“We are living in an era in which there is an increase in the need of affordable rentals and a decrease in available resources to meet that demand,” said Aponte. “Rather than create barriers for affordable housing developers to bring these projects to fruition, the City needs to identify opportunities to simplify the process, and lower the cost of providing affordable homes to fill this housing gap. The Council’s ordinance keeps the City on the path of supporting affordable housing developments with a measure of predictability in operating costs.”
Affordable Housing Impact
According to HousingWorks RI, nearly half of Rhode Island renters spend more than 30 percent of their income on rent alone, and over a quarter (26%) spend more than fifty percent of their income on rent. The organization’s city and town fact sheets show that in Providence (not including the East Side), the average two-bedroom apartment is $1089. The income needed for an apartment at that amount to be affordable would be $43,560, yet median renter household income in the city is just $27,657.
Salvatore noted that the Council’s approval of the ordinance represents due diligence—both in terms of advancing stable neighborhoods through the creation of safe, affordable housing, and fulfilling a fiduciary responsibility to taxpayers. “With the approval by RI Housing of financing for two major affordable housing developments in Providence’s West End, the positive fiscal impact of this ordinance will be significant. The improved properties—with the eight percent tax treatment applied—are projected to bring in close to six times the amount of tax revenue they did in the 2013 tax year,” said Salvatore. “This is a win-win situation for the City and for Providence residents.”
A two-thirds majority—or ten members—is necessary to override the veto.
Related Slideshow: The Most Affordable Communities for Renters
In the below slides, communities are ranked from most affordable to least affordable. Affordability is determined based on the ratio of the median income in a community the average rent for a two-bedroom apartment. Find out where your community ranks.
About the ranking: Data was provided by the Providence Apartment Association. Median income figures are taken from the U.S. Census Bureau’s American Community Survey, which provides a five-year sample of incomes between 2007 and 2011. Rents are taken from survey data collected by Rhode Island Housing. Because of the insufficiency of rental data, the following 11 communities are not in the ranking: Exeter, Foster, Glocester, Hopkinton, Jamestown, Little Compton, New Shoreham, Richmond, Scituate, Smithfield, and West Greenwich.
Note: Since median incomes were only available for Providence as a whole, and not able to be broken out separately for the East Side, the apartment rental data for the East Side is included with the rest of the city. The data for the rents in the East Side and the rest of the city was merged using a weighted algorithm based on the approximate geographic range, putting one sixth of apartments on the East Side and rest in the city.
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