PROVIDENCE, R.I. (WPRI) — Rhode Island leaders are hailing the newly announced “Superman” building deal as a win for affordable housing, with one in five of the project’s planned apartments restricted by income.
But whether those units are truly “affordable” could be in the eye of the beholder.
Commerce Secretary Stefan Pryor — who led the McKee administration’s negotiations with building owner High Rock Development to craft the $220 million deal — said the state pushed the developer during the talks to increase the affordable share of the project’s 285 apartments from 10% to 20%.
A term sheet between the parties obtained by Target 12 divides those 57 affordable apartments into three tiers, each defined by the area median income, or AMI, in the Providence region.
Of the total, 14 apartments would be restricted to renters making up to 80% of AMI, which is $48,450 a year for a one-person household; 14 apartments would be restricted to renters making up to 100%, or $60,550; and 29 apartments would be restricted to renters making up to 120%, or $72,650. (The income levels increase with larger household sizes.)
The other 228 apartments would be rented at market rate.
“I think it’s fairly unprecedented for 20% of the units to be set aside for affordable housing,” Providence Mayor Jorge Elorza said at a news conference Tuesday celebrating the deal.
Yet spokespersons for Commerce RI and High Rock said Wednesday they didn’t have an estimate of how much the actual rent would be for those units, and also declined to say what rental price assumptions were used in crafting the deal.
A Commerce spokesperson said the goal is to set the rent for the designated apartments at 30% of a household’s gross income, the general standard for affordability. But the figure is not yet set in stone, and is still subject to negotiation.
At that level, the monthly rent for one of the income-restricted apartments would be $1,211 for an individual making $48,450; $1,513 for an individual making $60,550; and $1,816 for an individual making $72,650. It’s unclear whether the calculation would include other housing costs, such as utilities.
And whether those amounts qualify as truly “affordable” depends on who you ask.
“Rental units are only considered affordable at or below 80% AMI,” said Melina Lodge of the Housing Network of Rhode Island, an advocacy group, pointing to the definition of affordable housing in state law. (For homeownership, the state uses the higher standard of 120% of AMI.)
By that definition, Lodge said only 14 units of the Superman building should be called affordable housing.
“That would be woefully insufficient,” she said. “If it was really meant to be 20% of truly affordable rentals, it would be 20% at or below 80% AMI.”
Still, it’s good start in the eyes of Brenda Clement, who leads Housing Works Rhode Island, a research group based at Roger Williams University.
“It’s not enough, at least in my view, on the affordable level,” Clement said in an interview Wednesday. “The fact that we’re building more units in general is a good thing. We’ve been underproducing units on all income levels for a long time.”
She noted that the most dire housing need in Rhode Island is for people making 50% of AMI or less — about $30,000 — which is not a focus of this project.
There’s also a high demand for so-called “workforce housing,” which typically refers to middle-income earners making between 80% and 120% of AMI.
“I’m glad that the developer’s including them,” Clement said of the 57 units. “Always want to see more. But hopefully this is a good model for us to move forward to create more partnerships with private developers.”
The affordable housing component is a linchpin of the project’s complex financing, which proposes using a mix of federal, state and city subsidies to help the developer revitalize the nearly century-old Art Deco tower. The building has been empty since 2013.
The deal calls for the state to provide $26 million in various tax credits and incentives, with another $24 million in federal tax credits, a $5 million grant from the city of Providence, and a $10 million loan from the Providence Housing Trust.
The developer will also get a significant break from Providence on the building’s property taxes once constructed. High Rock is expected to apply for a 30-year tax treaty, which would require state legislative approval because it’s longer than the standard 20-year deal.
Both the tax deal and the $5 million appropriation would need to be approved by the Providence City Council and signed into law by Mayor Jorge Elorza or potentially the next mayor, depending on timing. (Elorza’s term ends in January.)
Elorza will propose his final budget as mayor later this month, and has not yet determined if the $5 million will go into that plan, according to spokesperson Theresa Agonia. The deal calls for the $5 million to be paid once the building gets a certificate of occupancy.
The $10 million 40-year loan from the Providence Housing Trust will be administered through the Providence Redevelopment Agency. The housing trust was funded by the city last year with a $24 million bond; the money must be used on housing for people with incomes at or below 120% of AMI, Agonia said.
The deal also calls for High Rock to work with a community group to prioritize Providence residents for the 57 lower-rent apartments.
The Rhode Island Republican Party on Wednesday slammed the deal for the amount of taxpayer money compared to the number of affordable units.
“What a waste of taxpayer money,” GOP leaders said in a statement. “In total, taxpayers will spend $65 million for 285 apartments of which 57 of them will be for affordable housing units. Therefore, taxpayers are spending about $1.1 million per affordable housing apartment. This is an incredibly poor use of taxpayer money.”
But state and city leaders say building more units is the overall priority to deal with limited supply and rising costs in the current housing market.
“We know that we are living through a housing crisis, and we need new units at every scale, from the high end to the low end to everything in between,” Elorza said.
Added Gov. Dan McKee: “How can we expect our sons and daughters to stay in the state of Rhode Island unless they have housing they can afford to live in?”
Ted Nesi (email@example.com) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter and Facebook