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What is Affordable?

Affordable housing is a hot-button issue for several communities in Rhode Island, some struggling to meet state mandates set nearly a decade ago. This week Jim Hummel looks at one affluent community where affordable housing has become a controversial topic - but not for the reasons you might think.


Barrington has the reputation as one of Rhode Island's most affluent towns: a waterfront community,  chock full of wealthy people who live in upscale homes. And while that is true for some parts of this 15-square-mile community, there's another side to the story.

Morse: ``It has the illusion that everybody in Barrington is wealthy when, in fact, one third of the entire town could quality for affordable housing and one third of the houses in Barrington actually fall into the affordable guidelines.''

Gary Morse has friends living in Barrington who are struggling to make ends meet. Morse, who has been critical of the council's handling of affordable housing projects over the past decade, says the issue is not wealthy people trying to keep others out - but equity for those who live in what could be considered affordable housing - but don't get tax breaks and other benefits given to projects like these.

Morse: ``Some of the people who are living in those developments are actually making more money than the people who have to do the subsidizing.''

Using an intricate formula set by the state, Morse calculates that a third of all of the houses in Barrington would qualify as affordable housing under the state's definition - from laws passed in the 1990s and amended in 2004.

For  a family of four the ``affordable house'' price would be about $315,000 or under.

A family of three - just over $280,330

And a family of five - about $347,000.

The law mandates that 10 percent of a community's housing stock be ``affordable'' - but doesn't allow for the houses Morse figured in because in order to qualify by the state's definition they have to be subsidized in some way by the municipality and have at least a 30-year deed restriction on resale or re-rental.

That means Barrington officially has only 160 affordable units in town.

Morse: ``The law behind all of this is if you have a deed restriction on your house then you get this kind of treatment. If you don't have a deed restriction on your house - even if you're living at the poverty level - you have to pay the full weight of your (property) taxes. So it's a system by which government oversight is really taking control on what should be self-determination of a local town. The government is stepping in and saying we are going to enforce modification of your property tax system.''

So while a modest house like this one is paying nearly $4,000 a year in taxes and is subject to the town's periodic revaluation, the house in this affordable housing development, as defined by the state, has assessments that are locked in for 30 years. The only increase comes as the tax rate increases, but the assessments don't.

Morse: ``Now that this 10 percent mandate is upon us, now this question of the mandate to build out all of Barrington and have these projects subsidized, now suddenly many of those residents who are not living in affordable housing, but living on the financial edge, they are going to be asked to support lifestyles and property taxes for those who have much more.


This is what I really find to be a problem with how this is being implemented.''

Hummel: ``Is the 10 percent achievable?''

Speakman: ``I don't think it is, no. I think it's a noble goal and one that we've been moving toward diligently, and the state has acknowledged that, but it's very hard in this community to get to 10 percent given that it's built out and the property values are high so you really need a significant intervention into the market to make it happen and that's hard to do.''

Town Council President June Speakman was elected a decade ago as the town's first affordable housing development - Sweet Briar - was in its infancy.  Speakman says she's gotten an earful about affordable housing from her constituents.

Speakman: ``Why should I have to pay more taxes when they pay less taxes for a house that's essentially the same. And the answer is: because that's what state law mandates - then the question is why don't we change state law? And the answer is the Barrington Town Council  doesn't have the power to change state law our state  legislators do. And I've spoken with our state legislators many times about possible ways of alleviating the burden on the town, but I believe it's not perceived to be a burden on Barrington and other parts of the state.''

State law also mandates that a developer make 20 percent of the units of any development ``affordable'' - which means upscale projects like this one - built right before the law changed in 2004, could never be built again in Barrington.

Morse says Barrington, as a bedroom community with a scattering of small businesses, needs that type of tax revenue from the higher-end homes to help maintain its tax base - and affordable housing means every taxpayer is subsidizing the affordable housing developments as they come online.

Hummel ``Did you feel there wasn't a full disclosure on this? I mean most people watching this, this would be news to them? Or do you think this is known?"

Morse: ``Everyone I talked to this is news to them and they are shocked that this is actually how these things are being played out: And they're more shocked when they find out some of the people I've spoken to with very modest means in town are looking at some of the people in some of these affordable homes and saying `Wait a minute, I don't get that kind of consideration, why are they getting that kind of consideration?'"

Sweet Briar was the town's first major development and it was controversial from the start, with many residents concerned it would strain schools and town services. Local officials fought a losing battle against it all the way to the state Supreme Court. And in 2008, 47 rental units went up for low and moderate income residents.

Morse said as construction was nearly complete - the East Bay Community Development Corporation, which developed the project, came to the town for help.

Morse: ``The management group for Sweet Briar, the EBCDC, came to the town council and said `Look we've put in this project, but we can't make it work without property tax subsidies paid for by the local residents.'"

So the council at the time voted to give developers a significant tax break.

Hummel: ``Because they said in order to make this work financially on a monthly basis if the taxes are too high it's really not going to be affordable in spirit or letter of the law for the people who are moving in there. That was the pitch to the council, right?

Morse: ``That was the pitch.''

Speakman voted for the tax break in late 2008  based on a legal opinion that Morse says was a stretch of the law.

Speakman: ``It costs a lot to build  homes, right? And when you can only rent them at a legally restricted  amount you have to save money wherever you can. Construction, in taxes,  so  they came to us  and the council agreed to give them the 8 percent.''

Hummel: ``Did they not see that at the beginning of the road, as opposed to the end of the road?


"Cause in reality,  doesn't that really put the council in a tough position? It's holding the council hostage, is it not? Because what if you had turned them down on that?''

Speakman: ``Yeah, well I didn't see it as being held hostage. I saw it as helping us move toward our goal of getting that project completed."

What many don't know is that after 30 years the deed restriction goes away and the units can be sold or rented by the owners at market value - after receiving decades of tax breaks.

The town's second project - this 11-house affordable housing development called Walker Farm - was built two years ago. The single-family houses - which are for sale, not rent - cost as little as $170,000 with a federal subsidy. Six of the 11 have sold. And buyers enjoy the same freeze on tax assessments, based on a subsidized price from the government that is far below market value.

Speakman : ``I am completely supportive of the goals of affordable housing. I wish that it would happen naturally without these kinds of forced measures, but it won't. It's tricky, right?"

Hummel: ``Are you sounding a little bit like a Republican here?''

Speakman: ``Well, what I'm saying is...''

Hummel: ``I don't want to misinterpret! Let the market work the way....Am I hearing that correctly?''

Speakman: ``Well, but that's what determines the price of things, the market."

Hummel: ``I'm just busting your chops"

Speakman: ``That' fine, bust away, I can bust you back. But market dynamics are powerful forces and in order to make them work in the opposite way they're intended you have to use aggressive government intervention.''

Hummel: ``But the state's decided that's what you need to do to get it done."

Speakman: ``That's correct.''

The affordable housing issue is  likely to dominate much of the council's time after the election as several projects are in various stages of planning and development including the most recent off Sowams Road called Palmer Pointe.

Morse says the law needs to change.

Morse: ``Right now we're backed into a corner where any developer can come in and say this is what i want. I would prefer to see the town to say no we've already met our 10 percent mandate but we do need some affordable housing for seniors; so here's the middle of the road that we'd like to meet on. And I think that's the position I want the town to be in, not claiming that there's this arbitrary 10 percent mandate out there that they're going t do foolish things over.''

Hummel: ``Have you thought about going to the state maybe to ask for a little bit more aid or to take some revenue stream from the people who created this law? Did that discussion ever come up?''

Speakman: ``My understand of  the General Assembly's view of this legislation is that the suburban communities need to share in the housing of people of modest incomes. That the urban areas have done their share, many at 30 or 40 percent housing is rented or owned by people of low or moderate incomes and the suburban communities need to share in that. So the state would be less friendly I think towards helping more because the urban communities believe they helped enough in housing these populations."

Hummel: ``So in effect they've created the law and I don't mean to say it's a mandate without the funding stream..."

Speakman: ``Well that's what it is, though.''

Hummel: ``Is it?''

Speakman: ``Oh sure.

Hummel: ``We've created it then it's (wiping hands clean).  Alright, it's your problem now."

Speakman: ``Oh sure, it's definitely an unfunded mandate. It absolutely is. Because if these were high-income homes the town of Barrington would be taking  in more tax revenue, that's absolutely true, so that's a subsidy that the suburban communities are expected to take on in order to pursue this social goal."

In Barrington, Jim Hummel for The Hummel Report.