RI’s Housing Program Costs of Developing Units Found to Be As High as $500K Per Unit

RI’s Housing Program Costs of Developing Units Found to Be As High as $500K Per Unit

A new study of Rhode Island’s housing program has found that project costs have been "de-emphasized," and over half of the projects had total development costs of more than $400,000 per unit, and three exceeded $500,000 per unit.

These costs rival luxury buildings and, in some cases, are double the cost of federal projects.

The Rhode Island Public Expenditure Council (RIPEC) on Wednesday published an analysis of Rhode Island's housing policy, with a focus on the state’s recent investments in affordable housing — Rhode Islanders have poured hundreds of millions of dollars into housing in the past few years through approving bond issues and the use of federal funds.

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Rhode Island voters are being asked to borrow another $120 million this November.

The RIPEC report on the cost per unit is in stark contrast to a recent review of the cost of housing developed by the federal government.

“Average per-unit costs were $232,000, most for one-bedroom apartments, in a review of a U.S. Department of Housing and Urban Development program designed to build and preserve affordable housing,” found the Center Square. The Department of Housing and Urban Development's Housing Trust Fund program needs better oversight, according to a new report from the U.S. Government Accountability Office.

The RIPEC report on Rhode Island’s housing program raises other concerns.

 

Key Findings:

- The General Assembly made a historic investment of $332.2 million in SFRF dollars in housing beginning in 2022. This allocation represented 29.4% of SFRF funding received by the state—the second highest proportion among states.

 

- The state invested $244.7 million to support the new construction of 1,515 units of affordable and middle-income housing. The average state subsidy per affordable unit was $161,542. Affordable housing production programs were designed to be used in conjunction with each other and with other state funding sources.

 

- Of the 42 developments receiving SFRF financing for production, 33 relied on multiple streams of state and federal one-time money. The development of units for very low-income and low-income households was prioritized. More than 70% of units were reserved for households at or below 60% area median income. Social and other goals supplemental to housing were favored in the funding of projects.

 

- Twenty-five of 32 new construction developments contained at least one supplemental goal, such as restoring historic buildings or providing commercial space. Mixed-income developments were not prioritized. The majority of developments were either 100% affordable or 100% middle income, and of the mixed-income developments, more than two-thirds offered less than 25% of units for middle-income or market-rate households.

 

- Project costs were de-emphasized. Over half of the projects had total development costs of more than $400,000 per unit, and three exceeded $500,000 per unit. Based on its analysis of the most recent investment of SFRF and other funding, RIPEC projects that the $100 million slated for production from the $120 million housing bond would produce 586 new affordable and middle-income housing units. The total units produced from SFRF production programs, and the proposed bond together would increase the state’s affordable housing stock by an estimated 2,170 units, an increase of 5.7%.