PROVIDENCE — After decades of underinvestment, a lack of state programs that incentivize housing production, and unnecessary red tape, Rhode Island has ranked dead last in the nation in recent years for annual housing production per capita, according to a new, independent review of the state’s housing supply shortage and homelessness.
The 182-page report, conducted by Boston Consulting Group, describes how one-third of all Rhode Island residents are struggling to afford housing, the second-highest growth rate among unsheltered families and individuals in the nation. High housing costs coupled with an aging housing stock have created the state’s housing crisis. Meanwhile, the report says, the state’s restrictive permitting has limited production of new housing units, municipalities do not have enough capacity to support developers, and the state historically has not allocated sufficient funding for housing production and has failed to take advantage of existing federal programs.
The report was commissioned by the Rhode Island Foundation, in partnership with the state’s Housing Department.
Housing has become a hot topic. “We’ve seen a convergence where the governor, the speaker, and the Senate president are all talking about housing,” said Neil Steinberg, outgoing president and CEO of the Rhode Island Foundation, in an exclusive interview with the Globe on Thursday. “Now the talk and leadership needs to produce some action.”
“This is at a point where we’ve got to make change,” Steinberg said. “Otherwise, something is going to break.”
The Foundation was the primary funder of the $1 million report, along with the Local Initiatives Support Corporation [LISC] Rhode Island, Blue Cross Blue Shield of Rhode Island, and Partnership for Rhode Island. The United Way of Rhode Island advised the project. About half the cost was covered by the Boston Consulting Group itself.
The consultants were tasked with identifying the state’s biggest challenges in its housing and homelessness crises, and with finding immediate and long-term solutions, to lay the groundwork for a long-anticipated statewide housing plan.
In the report released Monday morning, the authors said they spoke to scores of individuals from dozens of Rhode Island organizations, including housing and homelessness providers and advocates, city and state employees, nonprofit leaders, mental health workers, and developers, among others. Additionally, the authors said they solicited input from dozens of housing and homelessness experts outside of Rhode Island who were in charge of temporary structures and mobile shelters, as well as housing developers, and housing department leaders in neighboring states.
“After what we had gone through with the Housing [Department] over the last year, we needed to jumpstart action. We could not go another length of time without starting the work,” said Steinberg, referring to the state’s Department of Housing that has been plagued by problems since it was carved out of the Commerce Department in July 2022. Those problems range from confusing legislation, to outrageous spending, and incomplete planning by the previous housing secretary, which have hampered the work of the new department before it’s even begun.
Newly appointed Housing Secretary Stefan I. Pryor, who took over in early February and previously served as commerce secretary, has said there have been a “number of false starts.”
Here are the top takeaways from the report.
To close the gap in affordable housing today, Rhode Island needs an additional 24,000 units to “become affordable and/or be built.”
Across the state and all income levels, about one-third of the households are cost-burdened, which means they are spending more than 30 percent of their income on housing-related expenses alone. To close the gap, the report’s authors say that at least 24,000 units would need to “become affordable and/ or be built.” That number is only going to grow, experts say. Rhode Island produced only about 1,150 total units in 2021.
While the entire state needs affordable units, the report’s authors wrote that these units must be concentrated in Providence, Warwick, and Cranston, to help with cost-burdened families concentrated in those communities. Of those households that are cost-burdened, 24,000 are in Providence; 14,000 are in Warwick; and 12,000 are in Cranston, they wrote.
Rhode Island’s housing stock is older than other states’, and it’s losing more housing units.
Among all Northeast states, Rhode Island has the “highest percentage of housing units” built before 1940, and the second-lowest percentage of units built since 1980.
Jeanne Cola, who has served as the executive director of LISC Rhode Island since 2011, said she was surprised by the number of units Rhode Island loses annually.
“We need to prevent loss. We can’t afford to lose a single unit at any level,” she said ahead of the report’s release. “I’m so focused on production because of my work, that I lose sight of the units we’re losing.”
Cola said there are some simple programs that could be implemented to prevent unit loss, such as good home repair programs, and diversion programs to help keep people in their homes, among other ideas.
The report says there’s been loss to the housing stock as some homes are converted into short-term rentals like Airbnbs or become seasonal homes, or converted into non-residential units like offices and other commercial entities. Some properties are condemned, requiring demolition and a full rebuild.
From 2018 to 2021, the number of vacant housing units in Rhode Island decreased by nearly 30 percent. One theory, the report’s authors said, is the shrinking size of households, which could be increasing the number of households, and the demand for housing units. During this time period, the number of households in Rhode Island increased by 8 percent, but the number of new units being produced increased by just slightly more than 3 percent.
Demand is raising prices, forcing low-income residents to compete with higher-income residents for affordable housing.
Rental prices do not match the housing need, the report’s authors wrote. In fact, extremely low-income Rhode Islanders who earn less than $24,000 annually “vastly outnumber available units within their budgets.”
At the same time, Rhode Island faces a demand for workforce housing for households earning less than 80 percent of the area median income, a maximum of $61,000 annually, on average. But because of the lack of units, the report says, low-income residents are having to compete with higher-income earners.
Burrillville is the only municipality in Rhode Island where an average renter (which means they are earning about $38,399 annually) can afford an average two-bedroom apartment. But households earning the state’s median income —about $70,305 annually, on average — could not afford to purchase a home in any city or town in Rhode Island.
Rhode Island ranks last in the nation for annual housing production.
Rhode Island ranked dead last in the nation in 2021 for the net housing units produced per capita, according to the report’s data. The authors said that for every 1,000 residents, only one unit is built.
More multi-family homes are also needed, the report says. About 800 multi-family units have been built since 2011. And more than 55,000 smaller units like studios and one-bedrooms are needed, to match demand.
“Rhode Island faces a housing supply shortage which has resulted in a worsening affordability challenge that impacts all people in the state, especially those with low and moderate incomes,” the report said.
The homelessness challenge is growing worse.
Rhode Island has not faced a homelessness challenge of the “same magnitude as other parts of the country,” said the report, which indicated that the state ranks No. 32 for unsheltered homelessness and No. 17 for total homelessness in the United States. But unsheltered homelessness has grown by approximately 56 percent since 2020, the highest growth rate across the country.
“Homelessness must remain a key focus area for policy makers moving forward,” the consultants at Boston Consulting Group wrote. Creating permanent shelter units in state-licensed facilities, specifying certain units for people who are homeless, and expanding homelessness prevention services like legal aid for tenants facing eviction, are a few of the potential long-term solutions included in the report.
Unhoused people in Rhode Island also face a set of specific needs: about 35 percent are families with children; 15 to 20 percent have a substance-use disorder; 45 percent have mental health needs; 30 percent have a chronic health condition; and about 20 percent have a physical disability.
The Housing Department is still new. And it needs to take a leadership role in development and affordability.
Of the states evaluated by the report’s authors, Rhode Island’s housing department, which had been under R.I. Commerce until 2022, has the smallest number of per capita full-time employees, and the second-lowest per capita state budget. Rhode Island also has fewer full-time employees focused on housing production and homelessness than other states, the report said.
Municipalities don’t have the capacity. And there’s a lot of red tape.
Cola said she was “under the assumption” that municipalities had the capacity to carry out certain projects. But municipal leaders told the consultants that there are not enough people or technical resources in every city and town to support developers and coordinate permitting processes. Because of this, municipalities do not feel supported, the report states, and are turning to the Housing Department for answers. At the same time, restrictive land use and permitting has limited production of new units.
There’s a lack of financing tools and underutilization of existing federal programs.
Historically, Rhode Island has not allocated enough funding for housing production and has utilized federal financing tools, the report said. Rhode Island has the second lowest per capita state spend on housing production in the Northeast for the past eight years, the report said.