With Rhode Island’s housing crisis reaching more residents and gaining more attention, politicians have stepped in to offer their solutions to the problem. One such solution is the so-called “Question 9,” a ballot initiative that authorizes a $50 million bond to raise funds for affordable housing development. If the bill’s wide bipartisan support and positive polling are any indication, the measure will pass this November.
The Spectator sat down with Fiona Heckscher ‘09 to discuss Brown’s involvement with the bond proposal. As Co-Coordinator of the Swearer Center’s Student Hunger and Housing Action Coalition, Ms. Heckscher has spent time working with affordable housing advocates around Rhode Island and analyzing such housing schemes around the nation. Question 9, she says, is an especially good proposal. She says it differs from the federal Section 8 (see Boris Ryvkin’s “Homelessness in Perspective”) because “it’s actually creating affordable housing rather than making existing housing affordable,” which is important for Rhode Island in particular because the US Census Bureau recently identified it as the state which built the fewest new housing units in 2005 (both in absolute and relative measures). According to Question 9 advocates, the bond would be used to borrow $450 million in investments from developers, creating a significant economic force that would produce a thousand new affordable homes. Developers would be subsidized as long as they agreed to keep the new units affordable for the next thirty years.
One thousand new affordable housing units are not enough to solve Rhode Island’s housing problem, but it is a start. If nothing else, it will attract future investment in the housing market. According to Ms. Heckscher, the average community development project requires seven sources of funding. With one large source of government-directed funding, the ease and efficacy of community development would increase dramatically. She continues, “It is prohibitively expensive to build housing – to make it affordable. Therefore it requires action.” Efforts have been made in the past to guarantee affordable housing by requiring that 10% of new developments be “affordable”, but those laws are according to Fiona, “toothless.” Developers cannot afford to build cheap units, so they don’t, and nobody forces them to do so. Only five communities in Rhode Island meet the 10% threshold.
According to Ms. Heckscher as well as representatives from Housing Opportunities for People Everywhere, “The Providence housing market is the third most overheated in the country behind New York and the Bay Area.” Unfortunately, Rhode Island has to solve not only its own housing problems, but also those of other metro areas. Boston’s poor management of its own housing crunch has led to a spillover of poor workers and homeless looking for homes in Providence. Which gives Rhode Island two choices: either make the state so undesirable for vagrants that they stay in Boston, or improve its housing affordability to meet the new demand.
It appears almost axiomatic that government intervention is needed soon. Question 9 proposes a palatable response to the growing problem by spending investors’ money now and paying it back with taxes in future years. Hopefully when the bonds mature, the tax burden will have been offset by increased economic activity generated by the new housing. Conservatives can (and should) appreciate such logic, even though it involves significant government activity in areas where government traditionally fails. However, there are still reasons to be skeptical. There is no guarantee that the $450 million in loans will not come back to haunt taxpayers in future years if the investment does not yield the results that are hoped for. Nor is there any reason for Rhode Islanders to trust the 30-year affordability guarantee that the bill puts on new housing – when the state guarantees some economic manipulation over a long period of time, it opens itself up to myriad abuses and may very well end in 30-year quagmire of bureaucratic wastefulness.
Though more and more Rhode Islanders are feeling the crunch of the state’s $285,000 median home price, it is not entirely clear how many people will benefiting directly from the bond. Lowerclass workers will appreciate the affordability, and of course investors want their efforts subsidized, but that doesn’t mean that taxpayers should be forced to oblige them. All too often government subsidies to particular industries are abused and forgotten. The telecommunication and airlineindustries provide too many examples of such a problem – the government gives large subsidies in return for promises of innovation but consumers never see the fruit of such promises. With affordable housing regulations as “toothless” as they are now, what guarantee is there that future investments such as Question 9 will not also fall prey to greedy contractors and lackadaisical officials? A more logical first step would be to enforce current regulations before concocting new and expensive solutions with their own regulatory overhead.
That having been said, Question 9 is a necessary step in a positive direction. Perhaps not enjoyable or ideal, but necessary nonetheless. Using private investors is a great strength of the bill, as is its broad scope of fuelling not just tenement construction but investment in the entire housing industry. And though conservatives may cringe at the prospect of subsidies and the opportunities therein for abuse, in Ms. Heckscher’s wise words, “any system has its parasites.” Hopefully Question 9 will have fewer than its share of parasites because of its use of sound economic investments instead of mere handouts, and hopefully a few years from now Rhode Islanders will look back on this November as the beginning of the end of their state’s housing crisis.
