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Tuesday, April 9, 2024

Revival of Defunct Board Could Debunk Notion That Affordable Housing, Land Preservation Don’t Mix

Pay attention, Ruthie

By Rob Smith / ecoRI News staff

There’s a longstanding cliche in state politics, said by everyone from governors to mayors to planning board officials: you can build affordable housing, or you can preserve land, but it’s impossible to do both.

Conservation and housing advocates are aiming to dismantle that misconception this year with legislation that aims to boost resources for both housing and open space preservation by reviving a defunct state commission.

It’s called the Housing and Conservation Trust Board, and it has been on the books in Rhode Island since 1990. Lawmakers at the time based it on a similar model that had just been launched in Vermont to some success. The board’s purpose was to identify and funnel money to affordable housing projects that also conserved land, ideally by using the land trust model of affordable housing.

Despite being state law for more than three decades, there’s no evidence the state has done anything with the 11-member board since creating it; no affordable housing projects have been funded and no land has been preserved under its authority. The board has never been awarded a budget, nor has it had any members in the decades since its creation. It’s not clear, however, why it has never been used.

That could change under a pair of bills now under consideration in the General Assembly. Under legislation (H7699 and S2638) introduced by Rep. June Speakman, D-Warren, and Sen. Jacob Bissaillon, D-Providence, the board’s membership would be bumped up to 15, 11 of whom would be chosen from the general public. The governor would have until the end of next year to make the appointments.

During a committee hearing on the House version of the bill last week, Speakman told lawmakers it was aimed at disputing the notion that housing development and land conservation are opposed to each other.

“This is a false dichotomy,” she said. “All Rhode Islanders deserve affordable housing, and all deserve access to natural spaces. The future of our planet depends on preservation of forest, farmland, and coastal resources.”

Neither bill outlines any dedicated funding sources for the board, but they make two key changes. The bills would house any future funding within the Rhode Island Infrastructure Bank — which advocates say already has the necessary expertise to manage and raise money and find federal matching dollars — and split any future spending from the board in three ways: 35% designated for housing projects; 35% for conservation projects; and the remainder used for either category or both, with more weight given to proposals that satisfy both.

Under the model, individuals or families would buy a home that sits on land owned by a land trust. The land the house sits on would remain owned by the land trust, so the purchaser only pays for the house, making it more affordable than typical home-buying options.

It’s a model that has been used with some success in Rhode Island. The Church Community Housing Corp. in Newport has been using the model throughout Newport County since 1969. To date, it has developed some 900 homes and rehabilitated another 1,500.

The process is similar to one used by land trusts in Rhode Island that rent to farmers. The Westerly Land Trust rents some of its properties to four farmers, with the added advantage of making farmland more affordable.

Despite having no funding, advocates hope the board could forward the land trust model of affordable housing and help environmental groups and housing nonprofits better coordinate multiple land uses around affordable housing. For their part, environmental groups say the two have never been in conflict.

“How do we fit all together in this puzzle that is land use?” asked Kate Sayles, executive director of the Rhode Island Land Trust Council, in a recent interview with ecoRI News. “There is space to conserve important natural areas, forests, and farmlands, and there is space to make sure we have enough affordable housing stock. It’s a matter of facilitating the opportunity to work together on these issues. We’re just breaking down the silos.”

Sayles noted that Rhode Island doesn’t have a dedicated funding stream for land conservation. The state government traditionally relies on bond borrowing to fund various conservation programs through the state Department of Environmental Management. But while the state has added such programs to bond funding for nearly 40 years, the past few bond proposals from Gov. Dan McKee’s office has seen land conservation funding come up short.

Advocates are hoping to emulate what Vermont has accomplished. Established in the late 1980s, the Vermont Housing & Conservation Board (VHCB) spearheads affordable housing and land conservation projects around the state. According to the VHCB’s last annual report, the board has invested in 1,318 apartments, 25 farms, and conserved 3,451 acres of natural areas, forestland, and public recreation.

“I think Vermont is the shining example,” Sayles said.

By statute, the VHCB receives about half of the 1.5% property transfer taxes collected in the state. In 2022, it received nearly $30 million from its portion of the transfer tax alone. These days that revenue is less than a fifth of its total budget, because the Vermont Legislature chose to supplement the VHCB’s budget with additional appropriations last year. In total, the VHCB raised $113 million last year, between the transfer tax, state appropriations, federal grants, and other sources. That money is then distributed to different land trust organizations around Vermont.

Annette Bourne, research and policy director for Housing Works RI, is no stranger to the land trust model of affordable housing. Prior to moving to Rhode Island, Bourne worked four-plus years in the 2000s managing the homeownership center of the Vermont Community Land Trust in Springfield, Vt.

How it worked was pretty simple, she said. Depending on the income of the family making the purchase, the land trust would use its funds to offer a land grant, which would be deducted from the total mortgage of the home. The homeowners would simply have to pay a small monthly administrative fee, around $25 back then.

“Let’s say the home was $80,000,” Bourne said. “And I gave a family a land grant of $25,000. Then at the closing they would be getting a mortgage of only $55,000. And I literally had to attend the closing because the land trust was taking ownership of the land.”

If that person decides to sell the house in the future, the land grant goes with the house, keeping the land affordable well into the future, according to Bourne.

A hidden advantage of the model? Bourne said there is no reason Rhode Island can’t convert existing housing stock into the land trust model as is.

“We absolutely need more production,” she said. “But we could also utilize some of the more modest housing stock that could use some energy improvements and make it more accessible for older folks or people with disabilities.”

This year’s bills aren’t the first attempt to revive the Housing and Conservation Trust Commission. Lawmakers empowered a study commission in 2004 to study how the land trust model of affordable housing could impact development, and find a dedicated source of funding. The commission, chaired by Scott Wolf, executive director of Grow Smart Rhode Island, spent 18 months studying the issue.

“It was spurred by a significant and growing concern at that time that we had a serious housing affordability and supply problem,” Wolf recalled. “Unfortunately, we still have that problem today. We also had a sprawl problem that was eating up open space, and it was not in the best interest of the state for that trend to continue.”

The study commission submitted its final report to lawmakers in April 2006, recommending the state provide more money and a dedicated funding stream to meet land conservation and affordable housing goals. The commission also recommended better coordination between housing and conservation stakeholders to help both efforts.

So why didn’t anything happen? The commission was ultimately split on its recommendation for funding. The majority of the commission recommended increasing the real estate transfer tax at the time from $4 per $1,000 to $5.50 per $1,000. One dollar from the increase would go into the Housing and Conservation Trust fund, and the rest would go toward assisting municipalities to fund affordable housing and land conservation. The commission estimated the tax increase would bring in about $7 million annually.

But not all commission members were pleased with the recommendation. The increase in the transfer tax was strongly opposed by the Rhode Island Association of Realtors (RIAR), which issued its own minority report from the study commission, denouncing any tax increase.

“Although staff and university students spent a great deal of time researching alternatives from other states to assist the Housing and Conservation Trust Commission,” wrote the association, “it was clear from the first meeting of this commission that the majority wished to use the real estate transfer tax as a funding mechanism, and RIAR opposed the inevitable proposal to increase this tax. “

In its report, RIAR wrote that it preferred state funds for affordable housing and conservation be supplemented with funds from the private sector.

“It’s not a panacea,” Wolf said about an increase in the transfer tax. “Even if the real estate conveyance tax recommendation was enacted, it would only partially address the housing and conservation needs of the state.”

Wolf said while the state hasn’t done anything in the 20 years since the study commission, Rhode Island still faces a steep cliff of housing underproduction. Wolf estimated the state produces around 1,000 housing units a year, and to keep pace with demand the state should be producing 2,500 to 3,000 units a year.

“Every year we have this underproduction, the problem gets worse,” he said. “We have a growing cumulative shortfall, and that shortfall tends to create an accelerated affordability crisis. If your supply keeps getting lower than the demand and the gap grows, the cost pressure in the market is going to grow.”

Bourne said she thinks because the land trust model isn’t widespread already in Rhode Island, it’s difficult for people, banks and other institutions to wrap their heads around.

“It’s not a robust model here,” she said. “Honestly, in Vermont, it’s part of the culture and the ideology that it’s OK, we create affordable housing by leasing land. Here there seems to be confusion about it, or some sort of resistance to the fact that the way you would get to affordability is by having the improvement, namely the house, separated from ownership of the land.”

H7699 has been held in committee for further study. A hearing date for S2638 has not been scheduled.