Housing Programs in Rhode Island

To ensure a wide range of affordable housing options funding is needed for both capital and operating expenses. Typically, this funding comes from numerous sources for any single development, including multiple state and federal programs.

State Funded Programs

Unlike four of our New England neighbors, Rhode Island has no permanent funding stream for the creation of new affordable homes. Existing state programs are funded by occasional bonds as Building Homes Rhode Island (BHRI) and through Rhode Island Housing's Neighborhood Opportunities Program (NOP).

Building Homes Rhode Island

Building Homes Rhode Island is the state program created thanks to the majority of voters in 2006, and again in 2012 and 2016, that approved a $50 million bond to create affordable apartments and modest single-family homes throughout the state. The state's Housing Resources Commission awarded the full $50 million over four years to create 1,166 homes in 29 communities throughout the state. The subsequent bond in 2012 for $25 million awarded over two years created an additional 777 homes in 16 communities.

The $50 million voted on in 2016 will support additional construction and preservation of affordable housing as well as urban revitalization and blight remediation. The State will use $40 million to develop and implement affordable housing opportunity programs through the redevelopment of existing structures and/or new construction. The remaining $10 million will be used to provide funding to develop and implement programs for the improvement of properties that are blighted or in need of revitalization, including residential and commercial properties and public and community spaces.

Not only do these attractive and well-constructed units provide a quality home for someone to live in, but they also serve as a strong economic generator:

• The original $50 million of BHRI investments in Rhode Island generated close to $800 million in total economic activity, multiplying nearly 16 times throughout our state’s economy.
• In addition to offering a return of $16 per $1 invested, BHRI has also supported nearly 6,100 jobs in Rhode Island, generating about $300 million in wages, which workers use to purchase local goods and services and contribute to municipal and state economies.
• 53% of the total estimated cost of residential construction permitted from 2007 to 2010 was for developments supported by the Building Homes Rhode Island program.

Neighborhood Opportunities Program

The Neighborhood Opportunities Program is a unique program that was designed to provide homes for low-wage working families and individuals with disabilities. The program provides funds to cover the difference between the rental cost affordable to very low-wage Rhode Islanders and the cost to owners of operating the rental units. Essentially, NOP funding allows rents to be set at a level that is both affordable for renters and sustainable for owners.

Over the past decade, NOP has played an instrumental role in growing the stock of affordable housing for those at the lowest end of the income ladder. Since its inception, NOP has contributed $44 million in gap funding for the development and operation of 1,188 units in 173 developments throughout 28 communities in Rhode Island. This investment has leveraged $418 million—almost $10 for every dollar invested by the State.

Federal Housing Programs

Federal housing programs fall into two broad categories: rental assistance and provision of capital for the development of housing. While both categories require that the housing is occupied by households below a certain threshold of income, households in rental assistance programs pay only 30 percent of their income, but households in homes that have been developed by the capital programs pay a rent that has been presumed to represent 30 percent of their eligible income. For those households that fall below the maximum income allowed, it may leave them paying more than 30 percent of their income for rent.

Rental Assistance Programs

Public housing refers to federally funded rental housing developments owned and managed by a local Public Housing Authority (PHA). Households pay no more than 30 percent of their income on rent. No funds have been provided to build additional public housing developments since the mid-1990s, though operating costs, renovation , and maintenance continue to be minimally funded. Since the mid-1990s, units have been demolished or converted to long-term Section 8 Project-Based Voucher and Project-Based Rental Assistance contracts under the Rental Assistance Demonstration (RAD) program as PHAs finance improvements.

HUD Section 8 Project-Based Rental Assistance is a development-based rental subsidy, not portable tenant vouchers. The Section 8 Program was authorized by Congress in 1974 and developed by HUD to provide rental subsidies for eligible low-income households.

HUD Section 8 Rental Certificate Program, also known as Housing Choice Vouchers, is a "tenant-based" rental assistance program, whereby the rental subsidy pays the balance of a rent payment that exceeds 30 percent of a renter's monthly income. The program is administered by local housing authorities, which determine preferences and requirements based on their service area's affordable housing needs. The rental unit must be inspected and approved by the local housing authority and the rental amount must be at or below the Fair Market Rent set by HUD.

HUD Section 202 Supportive Housing for the Elderly Program was established in the Housing Act of 1959, and provides capital advances to private, non-profit sponsors to finance the development of housing for elderly residents (62 and older). Section 202 is comprised of two components: capital advances and operating assistance. The capital advances are provided to non-profits to cover construction, acquisition, or rehabilitation related expenses. HUD also provides rental assistance (known as Project Rental Assistance Contracts), which makes up the difference between the reduced rents that eligible seniors are required to pay (30 percent of adjusted income) and the operating expenses of a particular development. It provides very low-income elderly with options that allow them to live independently but in an environment that provides support activities such as cleaning, cooking, transportation, etc. Future capital projects were defunded in the Federal FY2012 budget. The program is similar to Supportive Housing for Persons with Disabilities (Section 811) described below.

HUD Section 811 Supportive Housing for Persons with Disabilities Program provides funding to develop and subsidize rental housing with the availability of supportive services for very low- and extremely low-income adults with disabilities.

USDA Section 515 Rural Rental Housing Loans provide competitive financing for affordable multifamily rental housing for low-income, elderly, or disabled individuals and families in eligible rural areas. Tenants pay basic rent or 30 percent of adjusted income, whichever is greater. An additional RD Section 521 Rental Assistance subsidy can be used to limit tenants’ payments to 30 percent of their income. Tenants may receive rent subsidies from other sources as well, such as US Department of Housing and Urban Development Section 8 vouchers or state assistance programs. A number of geographical areas within Rhode Island qualify for USDA Rural Housing Service assistance. For further information, please contact the local USDA Rural Development office.

Development Programs

HOME Investment Partnerships Program (HOME) provides formula grants to States and localities that communities use - often in partnership with local non-profit groups - to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people. HOME is the largest Federal block grant to state and local governments designed exclusively to create affordable housing for low-income households. Rental homes built with HOME funds are calculated to be affordable to households with income under 60 percent or 50 percent of Area Median Income (AMI); homeownership units are calculated to be affordable to households with incomes under 80 percent of AMI.

Low-Income Housing Tax Credits (LIHTC) was created by the Tax Reform Act of 1986. LIHTC gives State and local LIHTC allocating agencies the authority to issue tax credits for the acquisition, rehabilitation, or new construction of rental housing targeted to lower-income households. To qualify for the credit, a project must meet the requirements of a qualified low-income project. Project sponsors/developers (project sponsors) are required to set aside at least 40 percent of the units for renters earning no more than 60 percent of the area’s median income (the 40/60 test) or 20 percent of the units for renters earning 50 percent or less of the area’s median income (the 20/50 test).

These units are subject to rent restrictions such that the maximum permissible gross rent, including an allowance for utilities, must be less than 30 percent of imputed income based on an area’s median income. The tax credits made available to the states depends on a state's population, and awards are determined in accordance to the state's Qualified Allocation Plan (QAP). Given Rhode Island's population of just over 1 million, the state qualifies for what is called the "small-state LIHTC minimum." In 2016, that amount was $2,690,000. Rhode Island Housing oversees the LIHTC program in Rhode Island and annually issues the QAP.

Addressing Homelessness and Supportive Housing

Housing First Rhode Island

The Housing First supportive housing program in the RI Office of Homelessness is a cost-effective solution to the problem of chronic homelessness in Rhode Island. The supportive housing approach provides rapid access to permanent supportive housing and services that help chronically homeless citizens live independent, stable, and productive lives.

In a study completed in 2008 experts found that in the year prior to entering Housing First, the program's participants spent a combined total of 534 nights in hospitals and 9,600 nights in homeless shelters - for an annual institutional cost of approximately $31,600 per client. By contrast, during the first year of the Housing First program, study participants reported a combined total of only 149 nights in hospitals and 640 nights in shelters - for an annual cost of homelessness of approximately $7,635 per client.

Including the cost of supportive services ($9,500 per person) and housing subsidies ($5,643 per person), the Housing First program costs the state $22,778 per client - or $8,839 less than the institutional cost of homelessness.

Thresholds Program

RIHousing administers the Thresholds Program on behalf of the Rhode Island Department of Behavioral Healthcare, Developmental Disabilities & Hospitals (BHDDH) using bond funds. The program increases the supply of housing for people with serious and persistent mental illness.

The program requires participating housing sponsors to make units affordable to this population in return for:

1. funds to develop or refinance housing, and
2. the promise of mental health and social services for these units’ occupants.