PROVIDENCE — When Stefan I. Pryor is confirmed as the state’s housing secretary on Thursday, he’ll officially inherit a department that has been plagued by problems since it was carved out of the commerce department in July 2022.
“There’s universal recognition that this is a very important moment in time. There have been a number of false starts,” Pryor, who until June 2022 served as the state’s commerce secretary, told the Globe in a recent interview. “We have to carry out a substantial amount of work that will represent progress.”
Housing was elevated to a cabinet-level position in an effort to address the housing and homelessness crises in Rhode Island. But confusing legislation, outrageous spending, and incomplete planning by the previous housing secretary has hampered work even before it’s really begun.
“We’re just not where we need to be. We’ve had a lot of missed opportunities. We have to focus on what’s ahead of us,” said Melina Lodge, the executive director of the Housing Network of Rhode Island. “That means working collectively across stakeholders to meet the housing needs of Rhode Islanders.”
Some affordable housing developers were scrambling in the beginning of this year, when a new law went into effect that increased the amount construction workers on certain projects were paid. Though the legislation, sponsored by Senator Meghan Kallman and Representative Brandon Potter, applied to contracts entered into after Jan. 1, the state’s Department of Revenue apparently interpreted it differently, and allegedly told developers the higher wages applied to projects that were in agreement before Jan. 1 but not yet complete.
Since most financing is calculated during the pre-development stage, there were concerns that the new law would stall the construction of much-needed units.
“Asking people to pay more on projects that are already in the works while also not providing said required resources is a misalignment with the state’s articulated goal around increasing housing supply,” said Lodge. “It’s just a simple math problem at the end of the day. We can’t make projects work with more costs, the same amount of housing, and same the same amount of money.”
Paul Grimaldi, a spokesman for the revenue department, told the Globe that the Division of Taxation has since notified “anyone inquiring about this issue” that the wage requirements only apply to projects entering into an agreement on or after Jan. 1. But it took months of back-and-forth between developers and the state to reach that simple solution, and the level of frustration is still high.
Joseph F. Garlick, executive director of NeighborWorks Blackstone River Valley, told the Globe that the state sent a generic “blank letter” instead of offering details that could help move their projects forward.
“It’s like writing ‘Dear customer,’ instead of someone’s name,” he said on Monday. “For our projects, a blank letter isn’t good enough. We have investors and they want some assurances that this is not an issue anymore.”
Pryor told the Globe in mid-February he was “in discussions” with the bill’s sponsors, the governor’s office, and developers but would not say if McKee might write an executive order to clarify the law.
The state’s lack of clarity could be stalling housing in another way as well. In August 2022, Governor Dan McKee and the General Assembly earmarked $250 million for housing in this year’s budget. Of that, $10 million was earmarked for a new pilot program help build mixed-income public housing, which has historically been funded by the federal government. House Speaker K. Joseph Shekarchi pushed for this funding to incentivize housing authorities to increase their stock. The state’s housing secretary has to approve the program’s details ahead of releasing a request for proposals for housing authorities to apply to.
Because the state has not yet issued a request for proposals, “no one has even applied for a dime of it,” said Shekarchi in a recent interview. “It bewilders me.”
Hampered from the beginning?
When the housing department was made into its own entity in July 2022, Joshua Saal, who was the assistant commerce secretary under Pryor at the time, was named housing secretary, a newly created cabinet-level position with a nearly $191,000 annual salary. (Pryor is earning more than $240,000 each year, a bump from his former base salary of $233,000.)
Saal resigned in January after a series of missteps, including submitting incomplete and inadequate reports to the General Assembly. He had been housing secretary for less than a year.
Pryor told the Globe that it was his “hope and objective” to “help everyone involved look forward rather than backwards.”
But just one day after his resignation, Saal was hired as a contracted consultant for the housing department. He earns $105 per hour, according to his contract, and must work a minimum of 20 hours per week with a termination date of April 25. The state also covers his health insurance — another $823.07 each month.
Saal is required to submit a “detailed billing statement” at the end of each month specifying the work he performed. While sources in the housing department tell the Globe that Saal is performing tasks for the department, the results of a public records request show that as of Monday, the housing department has not received any detailed billing statements from him. It’s unclear what kind of work Saal has been asked to do.
Pryor told the Globe in late February that the state hired Saal as a consultant because the the transition in the housing department was “rather abrupt.”
The state is still picking up the pieces from Saal’s short tenure as housing secretary.
In late December 2022, Saal issued a request for proposals, or RFP, seeking a consultant to help him create a statewide housing plan. The RFP was supposed to explain Rhode Island’s current housing needs, the scope of work the consultant needed to do, and the timeline in which to do it.
It included none of that information. Still, McKee told the Globe in late January that the RFP would not be rescinded or rewritten.
In mid-February, Pryor told the Globe he agreed the RFP lacked necessary information, but said he would create the “parameters of the planning process” through a newly formed partnership with the Rhode Island Foundation, which would hire Boston Consulting Group to support the housing department.
According to sources at the Rhode Island Foundation, Blue Cross Blue Shield of Rhode Island, Partnership for Rhode Island, and Local Initiatives Support Corporation, the agreement with the Boston Consulting Group is expected to cost about $1 million, about half of which will be paid by the Boston Consulting Group itself. Rhode Island Foundation spokesman Chris Barnett declined to provide any financial details on Tuesday.
The consultants will focus on finding “immediate solutions” to meet the needs of unsheltered Rhode Islanders, “catalyzing new housing production, and ensuring long-term organizational alignment and capacity” within the state’s housing department, according to Barnett. The United Way of Rhode Island is advising the project.
”Given the transition in statewide housing leadership, as well as the opportunity presented by engagement from leaders across the governmental, nonprofit and civic worlds, there is an urgent need to advance statewide housing solutions,” said Neil D. Steinberg, the outgoing president and CEO of the Rhode Island Foundation.
Boston Consulting Group recently helped other states and municipalities form their own state housing plans. But the group’s research and analysis “will inform, but is separate from, the strategic plan that the R.I. Department of Housing is developing,” said Barnett.
Jennifer Hawkins, the president and executive director of One Neighborhood Builders, said while she found Pryor’s work to bring advocates, practitioners, businesses, and government together for a housing sprint is “wise,” it does not replace the need for a closer look by the state’s own department.
“Let’s lay groundwork for forthcoming state housing plan,” wrote Hawkins on Twitter recently. “For example, it’s Bananas – with a capital B – that we don’t have a clear understanding of how many housing units we need at each bedroom size, [area median income] level, and degree of service enrichment, in each region of the state.”
Those details were supposed to be included in Saal’s integrated housing report. They were not.
Shekarchi told the Globe recently that he “sees the frustration” people have with the housing department. He’s taking responsibility for helping to fix the problem: Each of the 14 bills in his newly unveiled housing legislation package are ways to tackle the housing crisis “outside of the department,” he said.
“This is a complicated issue. This is the biggest issue we’re facing,” said Shekarchi. “But that’s why I’m not just going to give $250 million to housing and move onto other things like [building Rhode Island’s] bioscience industry.”
He added: “We all need to do the work.”
Update: Additional information related to a $10 million program for public housing authorities was included after publication.