PROVIDENCE — Rhode Island’s affordable housing investments and policies are inefficient, and the hundreds of millions spent have had “no meaningful impact” on the state’s overall housing crisis, according to a Rhode Island Public Expenditure Council report released Thursday.
The business-backed group said state officials have made “enormous investments” in housing and taken steps to end “fragmented governance” of housing programs.
“The return on these investments, however, has been limited,” the report said. “The vast majority of recent funding has been directed toward newly constructed units for a relatively small number of households, producing no meaningful impact on housing affordability for the large majority of residents.”
In a statement, RIPEC President and Chief Executive Officer Michael DiBiase said Rhode Island has authorized more than $644 million for housing since 2021, while enacting “substantial” new and increased taxes.
“Yet we are struggling to convert this record investment into the production volume needed to meaningfully close our affordable housing gap,” he said. “Our research shows that the state relies on an overly complex strategy with policy incentives that fail to maximize housing production.”
The report comes as Governor Daniel J. McKee, a Democrat, has proposed a state budget that would place a $120 million housing bond question on the November ballot. And the House Finance Committee is poised to release and vote on its version of the state budget on Friday night.
The Executive Office of Housing is reviewing RIPEC’s report and has identified several inaccuracies and mischaracterizations, spokesperson Emily Marshall said.
For example, while RIPEC suggests Rhode Island is falling short on targets in the “Housing 2030 Strategic Plan‚” housing starts in 2025 reached nearly 3,800 — above the 3,000-per-year goal set in that plan, she said. Housing permitting has increased by 150 percent under McKee’s administration, she said.
“Under Governor McKee’s leadership, Rhode Island’s housing strategy reflects a coordinated, fiscally responsible approach to increasing supply, preserving affordability, and modernizing housing delivery,” Marshall said.
A key feature of that approach is “the disciplined use of public resources to address gaps the private market does not fill,” she said. State funding is most effective when it targets affordability challenges the private market cannot solve on its own, she said.
Under the McKee administration, nearly 7,000 state-supported housing units have been created, preserved, or are in the pipeline, with more on the way, Marshall said.
House Minority Leader Michael W. Chippendale, a Foster Republican, issued a statement, saying, “The RIPEC report confirms what many of us have warned for the past five years: Rhode Island is spending historic amounts of taxpayer money on housing, but the results are not matching the investment.”
Chippendale said state leaders often cite amount of money invested in housing. “But the real measure is not dollars spent — it is units produced," he said. “On that measure, they are far more vague, relying on phrases like ‘more building permits’ and ‘shovels in the ground’ while Rhode Islanders continue to struggle with housing costs they cannot afford.”
RIPEC’s 34-page report is titled “Rhode Island’s Housing Strategy: High Costs, High Subsidies, Low Returns.”
It begins by taking stock of the state’s housing crisis: About 150,000 Rhode Island households are considered cost-burdened, meaning they paying more than 30 percent of their income toward housing. To close that affordability gap, the National Low Income Housing Coalition estimates the state needs to add more than 23,000 affordable housing units for extremely low-income renters.
For decades, the state simply administered federal housing programs and occasionally invested in housing production with general obligation bonds, the report said. That “minimal state outlay,” when combined with some of the nation’s strictest land use restrictions, left Rhode Island with the lowest per-capita housing production rate and third-oldest housing stock as of 2023.
The state has begun to change land-use rules to speed up development and cut red tape, while creating the Executive Office of Housing in 2022 and issuing the strategic plan last year, the report said.
But RIPEC claimed Rhode Island is falling short of that plan’s targets and the overall need for housing. The 2024 and proposed 2026 housing bonds are projected to yield just 642 net new rental units, satisfying only 28.5 percent of the production goal, the report said.
A projected cumulative state investment of $522 million since 2021 is expected to yield 2,207 affordable units, which addresses only 9.6 percent of Rhode Island’s total affordable housing deficit of 23,222 units, according to the report.
The report said the state-funded housing had an average total development cost 49.5 percent higher than in the private market. That disparity is largely explained by how space is used within these projects, the report said.
Private market developments maximize value by prioritizing residential density, but state-subsidized projects sacrifice housing footprint for “social infrastructure,” including community buildings, staffed medical offices, and “wraparound service space.” Those features drive up building volume and construction costs while reducing living space, according to the report.
Also, the report criticized RIHousing’s 2026 Quality Action Plan for emphasizing “supplemental policy and administrative goals” such as “transit proximity,” supportive service agreements, and incorporating renewable energy.
“These requirements advance environmental goals but add layers of design and construction complexity that result in higher per-unit development costs,” the report said.
As this rate, it would take nearly $6 billion in state funding to bridge Rhode Island’s housing gap, as development costs top $500,000 per unit, and state subsidies approach $300,000 per unit, the report concluded.
“This is an inefficient and unsustainable path that requires a strategic shift to ensure a real return for taxpayers and an increase in housing production,” DiBiase said.
The report made a series of recommendations, including:
Policymakers should look for alternative ways to create housing affordability.
Providing incentives for market-rate projects already nearing completion could deliver affordable units faster and at a lower aggregate price than the current “high complexity” model, the report said. The state should explore rental subsidy and public development programs as ways to provide better value to taxpayers.
Dedicate at least half of the housing bond money to middle-income housing.
Current programs are putting tens of millions of dollars into “a high-cost model that serves relatively few Rhode Islanders,” the report said. Shifting from deeply subsidized projects to developing “middle-income workforce housing” would increase the overall housing supply more efficiently, the report said.
The state must deploy funds to maximize the production of housing units.
Policymakers should deemphasize “supplemental objectives” and remove regulations that inflate per-unit costs and limits output, the report said. The state can ensure its investments yields the highest possible number of housing units if it prioritizes “cost containment,” the report said.
The General Assembly should streamline and consolidate housing programming into a unified system.
The report called for clarifying the statutory roles between the Executive Office of Housing and RIHousing to eliminate overlaps in policy, planning, and program administration. The state also should consolidate its production programs to prevent excessive red tape, and improve program accountability, the report said.
RIHousing, the state’s quasi-public housing finance agency, was reviewing the RIPEC report Thursday and had no immediate comment, a spokesperson said.
Edward Fitzpatrick can be reached at edward.fitzpatrick@globe.com. Follow him @FitzProv.