Social Housing Task Force — Portland, ME
Date: 2025-12-10
Time: 18:00

SOCIAL HOUSING TASK MEMBERS
 City Councilor Kate Sykes, Co-Chair
FORCE City Councilor Sarah Michniewicz
 Paul Styslinger
Wednesday, December 10, 2025 at 6:00 Bill Stauffer
 Jason Spector
PM Cat Buxton
Portland City Hall Basement, Room 24 Wendy Cherubini
Kippy Richardson Room Cullen Ryan
 Matthew Peters
 Kristin Leffler
 Jon Fetherston, Co-Chair
 Jonathan Culley
 Tim Wells




The Social Housing Task Force will conduct this meeting in-person. If you are not able to attend in person, a
recording will be available in the Agenda Center following the meeting.

PUBLIC COMMENT INFORMATION:
To submit written public comment on an agenda item, email socialhousingtaskforce@portlandmaine.gov.
Submissions must be received by 12:00 pm the day before the Social Housing Task Force meeting to guarantee
their inclusion in the agenda packet. All submissions must include the commenter's name and legal address. To
help ensure your comment is submitted for the correct item, please include the name of the agenda item (see
below).


AGENDA:

1. Review and Approve Minutes from the November 12, 2025 Business Meeting

 i. SHTF Draft Minutes of Meeting held on November 12, 2025
2. Administrative Updates, Announcements, etc.

3. Follow-up Discussions

 i. Is SRO a desirable delivery model?
 ii. Compilation of questions for Corporation Counsel, Bond Counsel and Finance Director
 iii. Providence, Rhode Island Housing Bond Information
4. Stakeholder Mapping Discussion (led by Councilor Michniewicz)

 i. Stakeholder Mapping Bullet List




 1

SOCIAL HOUSING TASK MEMBERS
 City Councilor Kate Sykes, Co-Chair
FORCE City Councilor Sarah Michniewicz
 Paul Styslinger
Wednesday, December 10, 2025 at 6:00 Bill Stauffer
 Jason Spector
PM Cat Buxton
Portland City Hall Basement, Room 24 Wendy Cherubini
Kippy Richardson Room Cullen Ryan
 Matthew Peters
 Kristin Leffler
 Jon Fetherston, Co-Chair
 Jonathan Culley
 Tim Wells




The Social Housing Task Force will conduct this meeting in-person. If you are not able to attend in person, a
recording will be available in the Agenda Center following the meeting.

PUBLIC COMMENT INFORMATION:
To submit written public comment on an agenda item, email socialhousingtaskforce@portlandmaine.gov.
Submissions must be received by 12:00 pm the day before the Social Housing Task Force meeting to guarantee
their inclusion in the agenda packet. All submissions must include the commenter's name and legal address. To
help ensure your comment is submitted for the correct item, please include the name of the agenda item (see
below).


AGENDA:

1. Review and Approve Minutes from the November 12, 2025 Business Meeting

 i. SHTF Draft Minutes of Meeting held on November 12, 2025
2. Administrative Updates, Announcements, etc.

3. Follow-up Discussions

 i. Is SRO a desirable delivery model?
 ii. Compilation of questions for Corporation Counsel, Bond Counsel and Finance Director
 iii. Providence, Rhode Island Housing Bond Information
4. Stakeholder Mapping Discussion (led by Councilor Michniewicz)

 i. Stakeholder Mapping Bullet List




 1

 Page 1
Social Housing Task Force Minutes of Business Meeting held November 12, 2025 at 6:00 pm

A recording of the meeting is posted here. These minutes provide a record of those in attendance, the general
discussion taking place, and motions made. Please refer to the recording for discussion details.

In attendance:

City Councilor Kate Sykes – Co-Chair
Jon Fetherston – Co-Chair
City Councilor Sarah Michniewicz
Paul Styslinger
Bill Stauffer
Jason Spector
Wendy Cherubini
Cullen Ryan
Matt Peters
Kristin Leffler
Tim Wells

Greg Watson, Director of City’s Housing and Economic Development Department
Mary Davis, Division Director, City’s Housing and Community Development Division
Christian Roadman, GPCOG, Senior Planner


The meeting opened with review and approval of the minutes from October 22, 2025 (moved by Cullen Ryan, seconded
by Wendy Cherubini, with unanimous approval.
Matt Peters presented on a potential financial model developed by Jonathan Culley and himself. He explained that the
model illustrates how variables (such as unit mix, area median income (AMI) mix, property tax, land cost, building things
more cheaply or quickly) affect a potential project and its finances, to help direct discussion and prioritization of paths
forward. The model is for a new building, not for acquisition and rehabilitation of an existing building.
Matt Peters continued to explain and demonstrate the model, as well as what various input variables mean. Discussion
and clarifying questions from the committee followed. As part of one such discussion, Mary Davis provided the AMI
numbers for a household of four:
100% AMI: $129,800
80% AMI: $103,850
60% AMI: $77,900
Matt Peters continued, explaining relevant real estate concepts, such as net operating income and debt coverage ratio.
He explained that while most banks like to assume 5-7% vacancy as, that can vary by market, and Portland vacancy is at
approximately 1%. He explained that currently the model assumes zero property taxes and city donated land, but those
assumptions can be changed and their impact on project viability is significant.
Discussion and questions continued as the task force worked through the model and changed different inputs. Wendy
Cherubini noted that a project funded by the Jill C. Duson Housing Trust Fund, with free land and no property tax,
represents a very hefty subsidy. Greg Watson acknowledged that even with a huge amount of subsidy – those factors
plus a lower-than-market interest rate - the model is just barely able to work at 100% AMI. He noted that for any ideal
the task force wishes to pursue, there is a cost – and the overall effort is very challenging.
In response to continued discussion, Mary Davis provided relevant AMI for a one-person household:
60% AMI: $54,500



 Page 2
80% AMI: $72,700
Kristin Leffler acknowledged that teacher salaries, even one who’s been working in the Portland school district for six
years, is below those limits.
Matt Peters noted that an important policy question is whether rent relief is given today, or later. Because about 18
years out, rents could be reduced significantly as debts are paid off.
Chair Sykes asked about the potential of Single Resident Occupancy (SRO) housing. General discussion ensued about
potential paths forward, questions, etc.
Matt Peters added that there are market rate projects that are stuck, asking the group if it would be interested in
helping finance those projects simply to get more units (even if they are not significantly affordable, or affordable over
what is required under inclusionary zoning). He noted the group could ask developers that are stalled to identify what
might unlock these projects.
The meeting adjourned at 8:06 pm (moved by Tim Wells, seconded by Bill Stauffer, with unanimous approval).




 Page 3
 TO P I C S : B U I L D CO M M U N I T I E S


 P ROJ EC T S : H O U S I N G P O L I C Y




 How States and Cities
 Decimated Americans’
 Lowest-Cost Housing
 Option
 The intertwined history of single-room occupancy and homelessness
 in the U.S.

Issue Brief July 17, 2025 27 min




 Page 4
ALEX ESTAMATO / UNSPLASH




Overview
Low-cost micro-units, often called single-room occupancies, or SROs, were once a
reliable form of housing for the United States’ poorest residents of, and
newcomers to, New York, Chicago, San Francisco, and many other major U.S.
cities. Well into the 20th century, SROs were the least expensive option on the
housing market, providing a small room with a shared bathroom and sometimes a
shared kitchen for a price that is unimaginable today—as little as $100 to $300 a
month (in 2025 dollars).

In the late 19th and early 20th centuries, landlords converted thousands of
houses, hotels, apartment buildings, and commercial buildings into SROs, and by
1950, SRO units made up about 10% of all rental units in some major cities. But
beginning in the mid-1950s, as some politicians and vocal members of the public
turned against SROs and the people who lived in them, major cities across the
country revised zoning and building codes to force or encourage landlords to
eliminate SRO units and to prohibit the development of new ones. Over the next
several decades, governments and developers gradually demolished thousands of
SROs or converted them to other uses, including boutique hotels for tourists. And

 Page 5
as SROs disappeared, homelessness—which had been rare from at least the end of
the Great Depression to the late 1970s—exploded nationwide.

Now, as a nationwide housing shortage has pushed rents and homelessness to
historic highs, some states and localities are reconsidering the value of lower-cost,
small units with shared kitchens, bathrooms, and amenities. Ironically, had SROs
grown since 1960 at about the same rate as the rest of the U.S. housing stock, the
nation would have roughly 2.5 million more such units—enough to house every
American experiencing homelessness in a recent federal count more than three
times over.




 Page 6
The stone facade of a single-room occupancy hotel in New York City, circa 1900, includes a
fire escape.
MCNY COLLECTIONS




 Page 7
As governments throughout the United States seek to fill the gap in low-cost
housing, one promising and inexpensive model is gaining traction: making shared
housing legal, as it was for most of U.S. history. And one version of shared housing
—converting some of the vast supply of office space left empty since the COVID-
19 pandemic—looks especially promising: A single office building conversion could
add hundreds of low-cost homes near jobs and transit, while a large high-rise
could add more than 1,000 homes. Several states have passed laws in the last few
years to remove local legal barriers to building SROs or converting certain existing
buildings into SROs.

This brief explores the history of SROs and their close relationship with
homelessness. It also looks at strategies for adding large quantities of inexpensive
housing units to meet the needs of the nation’s most vulnerable residents as well
as others seeking low-cost housing.



Housing costs drive
homelessness
A wealth of research has examined the causes of homelessness over the past two
decades. These studies consistently find that the cost of housing is by far the
primary driver. For example, several studies have concluded that an area’s median
rent correlates far more closely with its homelessness rate than factors such as
weather, poverty rate, and rates of mental illness or substance use.

One study found that a $100 increase in median rent was associated with a 9%
increase in homelessness.1 Another found that as rent-to-income ratios increase,
homelessness increases in tandem.2 A separate study found a strong relationship
between home prices and homelessness.3 Several studies have found low rental
vacancy rates strongly predict high levels of homelessness.4 And when rents are
high, families squeeze more people into smaller spaces, with less room to help
struggling friends and relatives.5 Salim Furth, a senior research fellow at the
Mercatus Center at George Mason University, explains the link: “When housing is
cheap, relatives and friends tend to have more space in their homes, enabling


 Page 8
them to keep someone at risk of homelessness off the street. … When space is
tight, the people forced out are those who are hardest to live with.”6

Frequent explanations for homelessness focus on an individual’s characteristics.
Certainly, people experiencing homelessness have disproportionate rates of
disabilities, mental illness, and substance use compared with the general
population. But cities with an abundance of low-cost homes have far less
homelessness than high-cost cities, despite having similar rates of disability,
mental illness, and substance abuse.7 And, as noted earlier, even in New York, San
Francisco, and other expensive places, homelessness was uncommon as recently
as the 1970s, when those cities still had a large stock of SROs.

This relationship is apparent whether comparing cities or states.8 High-rent states
such as California, Hawaii, and New York have persistently high rates of
homelessness; states with low rents, such as Alabama, Mississippi, and West
Virginia, have low rates.9 California’s rate of homelessness is more than 10 times
Mississippi’s. The rate of homelessness in New York City and San Francisco is
about 15 times that of Houston, which has the lowest rents among the largest U.S.
cities. Memphis, Tennessee; Milwaukee; and Pittsburgh are three other cities that
have rents lower than most U.S. cities; all have consistently maintained lower-
than-average rates of homelessness.10 Nationwide, as rents rose, 2023 marked an
all-time high in homelessness. That mark was eclipsed in 2024.

We can be sure that high housing costs are causing high homelessness because as
housing costs change in a city or state, homelessness tends to move in tandem.
When rents rise quickly, homelessness does too; when rents rise slowly but
incomes keep increasing, that improves affordability, so homelessness declines.
Supply and demand are the primary drivers of rent: When jurisdictions have added
more housing, rent growth has slowed and homelessness has fallen.11 Where
housing supply is limited, rent growth has been faster and homelessness more
severe.



 Figure 1
 Homelessness Increased in Areas Where Rents Soared

 Page 9
 Percent change in median rent and homelessness per 10,000 residents,
 2017‑22

 Phoenix

 Tucson

 Sacramento

 Fresno

 Raleigh

 Austin



 United States



 Minneapolis

 Houston

 Philadelphia

 Chicago

 -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% 140% 160%

 Rent growth Homelessness rate growth



 Sources: Pew analysis of homelessness data from the U.S. Department of Housing and Urban
 Development, the U.S. Census Bureau's American Community Survey, and Apartment List.
 Homelessness data is for the Continuum of Care (often county).
 © 2025 The Pew Charitable Trusts



Another key indicator of the overwhelming relationship between housing costs
and homelessness is the limited effectiveness of interventions targeted at other
perceived causes of homelessness. An approach known as Housing First, for
instance, showed great promise in the early 2000s. Previous attempts to address
homelessness typically required individuals to participate in programs—drug
treatment is a prominent example—before they received permanent housing.
Housing First provided homeless individuals with a home along with access to
social services such as counseling or treatment. The administrations of both
George W. Bush and Barack Obama strongly supported Housing First, as did many
states and cities. People receiving help via the Housing First strategy were far
more likely to gain and keep a home than those that received conventional
services.12 But when the 2007-09 Great Recession hit, homebuilding across the
United States collapsed. The rate of homebuilding stayed low for the next decade
and has never fully recovered. The resulting housing shortage drove rents higher—
and with them, homelessness—despite the continued use of Housing First.
 Page 10
The contrasting experience of two large Texas cities demonstrates this
phenomenon clearly. Houston’s permissive homebuilding laws enabled it to
increase its housing supply and hold rents low. By contrast, Dallas added much
less new housing than Houston and saw much faster rent growth. Both cities used
Housing First to help tackle homelessness, but while Houston’s homelessness rate
fell—the city’s rate is just a fifth of the U.S. overall and by far the lowest among
large cities—Dallas’ homelessness rate increased.13



 Figure 2
 Rents Explain Divergence of Dallas and Houston on
 Homelessness Rates
 Percent change in median monthly rent and homelessness per 10,000
 residents, 2015‑24
 $1,800




 $1,600




 Median rent
 $1,400




 $1,200




 $1,000
 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

 Dallas Houston




 Page 11
 14




 Homelessness rate per 10,000 residents
 12



 10



 8



 6



 4
 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

 Dallas Houston



 Annualized Dallas’ rents increased by over $2,600 per year more than
 Houston’s. Houston lowered its minimum lot size, relaxed other restrictions,
 and built 42% more housing than Dallas from 2015 to 2023.
 Sources: Pew analysis of rent data from Zillow and point-in-time count data for homelessness
 from the U.S. Department of Housing and Urban Development for the jurisdictions' Continuum
 of Care.
 © 2025 The Pew Charitable Trusts



Raleigh, North Carolina, provides another example of the link between high rents
and homelessness. Median rents there jumped 34% from 2017 to 2022, and
homelessness rose 62%.14 But Raleigh enacted reforms that made it easier to
build homes, including town houses, accessory dwelling units, and two- and three-
unit buildings.15 Rents didn’t rise at all in Raleigh from the start of 2022 to the
start of 2024, and homelessness fell 35%.16 Austin, Texas, had a similar
experience, with rents and homelessness soaring from 2017 to 2022, but after
land-use reforms made it easier to add housing, Austin saw both rents and
homelessness decline.17

Extensive research has shown that adding housing supply, as Houston has done,
slows rent growth, improving affordability. The main mechanism for this is that as
new housing is added, there is less competition for older housing, which becomes
more affordable. New housing helps improve affordability immediately, increasing
supply and reducing demand pressure on the rest of the housing stock. In this way,
more construction of new housing helps ensure a steady supply of lower-cost
housing to accommodate lower-income residents. For example, when individual

 Page 12
markets such as Austin and Phoenix saw a large number of new apartments
delivered in 2023 (mainly projects that had started when interest rates were very
low a couple of years earlier), rents declined across the board.18 But they fell most
in older apartments with few amenities.



SROs and homelessness—an
intertwined history
A new era gives rise to a new housing model
Homelessness first became an issue on a national scale in the 1870s. Continued
upheaval in the aftermath of the Civil War and industrialization pushed more
people into “riding the rails” on the nation’s new railroad system in search of
jobs.19 The rise of these itinerant workers, in turn, drove the development of early
rooming houses and residential hotels, particularly for Americans at the lower end
of the income scale. Rooms could be rented by the night, week, or month.




 Page 13
A typical bedroom in an SRO hotel, circa 1900.
MCNY COLLECTIONS




Rooming and lodging houses were the first examples of SRO housing in the United
States. Often, they were converted from single-family houses, tenement
apartment buildings, or commercial office and warehouse properties. In other
cases, single-family homes were not converted, but owners rented out individual
rooms. American Enterprise Institute researchers have noted that before the
1920s, about one-third to one-half of urban residents were either boarders or
rented part of their home to boarders.20 However, hotels designed to serve
medium- and long-term tenants also began appearing in U.S. cities: Residential
hotels became the most common SRO model throughout the country. Some
residential hotels offered meal service in luxurious dining rooms, as well as regular
laundry and maid service; less expensive hotels featured dark rooms without
windows or even just a dry space on an open floor in a flophouse for 5 cents to 10
cents a night.21

 Page 14
Residential hotel construction peaked in the early 20th century in most cities. By
the 1920s, many cheap hotels in big cities such as New York, San Francisco, and
Chicago offered a mix of private rooms; large rooms converted to tiny, cubicle-
style bedrooms with partitions that did not reach the ceilings; and open-air wards
with rows of cots.22 At the time, a private room might rent for 25 cents to 40
cents a night and the semiprivate cubicles and open wards for 15 cents to 25
cents a night. That’s far less than anything available in modern U.S. cities: 40 cents
in 1924 is the equivalent of about $7.40 in 2025, roughly $230 a month. That
would be affordable even to a person living below the federal poverty line (defined
as $15,650 in income for a one-person household in 2025).



 Figure 3
 Low Rents in SROs Were Affordable Even to Those Below
 Poverty Line
 1924 SRO rent compared with 2025 one‑bedroom apartment rent, all
 in 2025 dollars


 Sources: Pew analysis of data from Apartment List and the U.S. Department of Health and
 Human Services; Paul Groth, "Living Downtown."
 © 2025 The Pew Charitable Trusts




Hotels nationwide were much different than they are today. They were much more
likely to host long-term occupants in the late 19th and early 20th centuries. One
1930 survey of hotels throughout the country found that long-term residents
occupied an average of 20% of the rooms in the most expensive third of American
hotels, and at least 75% of rooms in low- and midpriced hotels.23

In New York City, low-rent, single-room occupancy exploded during the Great
Depression and World War II, when tens of thousands of people moved from the
South and Puerto Rico to work in the city’s munitions factories and on major
construction projects. By the 1950s, the city had more than 200,000 SRO units,
accounting for more than 10% of the city’s rental housing stock.24 In 1986, 87,000
New Yorkers still lived in hotels, according to what was then the largest study of
inexpensive hotels undertaken by a city government in the U.S. Across the five
 Page 15
boroughs, 43% of SRO residents were under 40 years old and 32% were 40 to 60
years old; a third were Black; and a quarter were Latino.

During the same era in San Francisco, many long-term occupants of residential
hotels were retired Filipino or Chinese laborers or newly arrived families from
Southeast Asia.25 In 1977, 330 sheriff’s deputies and policemen showed up to
evict 40 elderly Filipino and Chinese residents from the International Hotel,
triggering outcry and concern as well as a congressional report.26



A backlash against SROs causes an explosion of
homelessness
Even as SRO hotels and rooming houses provided homes for many of the poorest
U.S. residents, problems arose. The housing was often of low quality and poorly
maintained, and some neighbors complained about SRO residents.

Some politicians scapegoated SRO residents, increasingly portraying them as poor,
dependent on alcohol or drugs, reliant on public welfare, transient, and immoral.27
This image was compounded by the condition of many SRO buildings, which even
in the early 1900s were often run-down and neglected. Reformers blamed
crowded apartments and unsanitary shared bathroom facilities for the spread of
common diseases like pneumonia and tuberculosis.28 Some policymakers and
activists viewed residential hotels and SROs as a public nuisance and a decaying
form of housing that should be eliminated. “The SRO should not be accepted as
lawful housing for any segment of our population,” an aide to New York City Mayor
Robert F. Wagner reportedly said in 1965.29 “No community should equate such
housing with the acceptable living standards of the 1960s.”

Many city and state governments began crafting policies in the 1950s and 1960s
that encouraged property owners to convert SRO buildings to tourist-oriented
hotels or traditional apartments. Newly enacted zoning codes and building codes
made creating SROs illegal or economically unviable. Researchers have noted that
market forces alone would have been unlikely to decimate the stock of SROs
because they were profitable to operate when allowed and declined only when
new laws targeted them.


 Page 16
The scale of the loss of low-cost housing in the second half of the 20th century is
staggering. There is no reliable count of the number of SRO units lost before 1970;
“estimates usually refer to ‘millions’ of rooms closed, converted, or torn down in
major U.S. cities,” the historian Paul Groth said.30 He estimates that another million
residential hotel rooms were destroyed or converted in the subsequent decade,
from 1970 to 1980.31 Almost all of that housing was destroyed or converted to
other uses in response to zoning and building code reforms or tax incentives
enacted for the specific purpose of eliminating SROs.

New York City, for example, banned construction of SRO buildings and the
creation of new SRO units from existing buildings in 1955. Over the next two
decades, the city enacted a series of other building code and zoning changes,
which raised the costs of operating SRO buildings and had the effect of
encouraging owners to convert them to other uses.32 This meant that apartments
in a building were required to have an average size much larger than SROs, in
addition to the ban on new SROs. In the 1970s, New York City enacted tax
abatements that gave SRO owners a financial incentive to convert SROs into rent-
stabilized apartments with bathrooms and kitchens included (and higher rents).
The tax break worked as intended, driving the conversion of 40 residential hotels a
year.33 In response to the city and state incentives and regulatory changes, owners
destroyed two-thirds of New York City’s remaining SRO units from 1976 to 1981,
a state Assembly study found at the time.34

New York City was not alone. Starting in the 1960s, for example, San Francisco
decided to redevelop South of Market, making way for what became the Moscone
Convention Center and Yerba Buena Gardens—an area where 41% of the 240
resident families lived in hotels. Justin Herman, who led the San Francisco
Redevelopment Agency from 1959 to 1971 and accelerated its urban renewal
efforts throughout the city, was quoted as saying, “This land is too valuable to
permit poor people to park on it.”35 Studies estimate that 40,000 residential hotel
rooms were destroyed by urban renewal programs in San Francisco—including
more than 6,000 in just five years from 1975 to 1980—though the city did not
maintain public records on the total.36

Similarly, Seattle demolished half of its SROs downtown—16,200 units—between
1960 and 1973.37 A catastrophic fire at the five-story Ozark Hotel in March 1970

 Page 17
led to a wave of demolition. After the fire, Seattle changed its building code to
require either sprinklers or fire-resistant doors and stairways for buildings where
residents lived on the fourth story or higher. These costly upgrades made it
challenging to operate inexpensive units. The city demolished 5,000 SRO units
during its enforcement of this one code change—the so-called Ozark fire code—in
the 1970s.38 Several other building code mandates followed, prompting many
residential hotel owners to abandon their buildings rather than incur the higher
costs to maintain them; by 1982, nearly 30% of the remaining units in downtown
Seattle sat vacant.39

Other notable examples include Boston, which lost nearly 90% of its SROs from
the 1950s to 1985; Chicago, which lost 80% of its SRO units—32,000 rooms—
between 1973 and 1984; and San Diego, which lost about 1,247 units from 1976
to 1984.40 Cincinnati is estimated to have lost more than 2,000 units during the
1970s, about 42% of its SRO stock.41

As the nation’s least expensive source of housing disappeared, homelessness
soared in major cities across the United States. In New York City, for example, the
number of homeless residents increased from a barely visible population to almost
30,000 by 1987.42 About half of men entering homeless shelters in the city in
1980 reported they had previously lived in SROs. The sudden loss of SROs and
commensurate rise in homelessness prompted an advocate in New York to remark:
“The people you see sleeping under bridges used to be valued members of the
housing market … they aren’t anymore.”




 Page 18
Comfortable furnishings welcome visitors to the entrance hall of the Margaret Louisa Home,
an SRO building for women in New York City, circa 1900.
MCNY COLLECTIONS



A series of social, political, and economic changes also battered large U.S. cities in
the 1980s, contributing to the homelessness epidemic. State psychiatric hospitals
released people suffering from mental illness without adequate provisions for
outpatient care. Property owners abandoned inner cities, leaving empty buildings.
AIDS arrived. The federal government reduced subsidies for public housing and
rental assistance and made it more difficult for people with disabilities to qualify
for Supplemental Security Income (SSI). Cuts to SSI—which largely benefits
disabled people and those over 65—and a tightening of eligibility for disability
payments in the early 1980s added to the financial instability of many struggling
Americans.43

In some regions, especially the Northeast, homelessness became less visible after
the initial surge in the early 1980s, as cities and towns increased shelter capacity.
As a result, a larger share of people experience sheltered rather than unsheltered
homelessness in cold-weather cities, especially in the Northeast. But the life
outcomes of people without homes who live in shelters are little better than for
those without homes who live on the street. Both groups lose decades of life
expectancy.44


 Page 19
By the 1990s, only a tiny fraction of SRO hotels were left in the United States.
Housing costs were lower in the 1990s than today (even in income-adjusted
terms), but the lack of SROs meant that homelessness continued unabated. With
the lowest rung on the housing ladder missing, many people could not afford rent
for conventional apartments or houses, including shared ones.45

Nationwide, homelessness has been rising since 2017 as housing has become
increasingly more expensive. Between 2022 and 2023 alone, the number of
homeless people in the U.S. rose by 12%, to more than 653,000, according to the
annual count compiled by the Department of Housing and Urban Development
(HUD).46 That meant 20 in 10,000 Americans were experiencing homelessness on
a single night in January, the most since HUD began counting in 2007.47 In 2024,
the homelessness rate jumped to 23 in 10,000.48 More than a third of all
individuals identified in the HUD count were living on the street, in abandoned
buildings, or beneath bridges—or, in the words of the HUD report, “in places not
meant for human habitation.”49 The 2023 record was broken in 2024, when HUD
released data identifying 771,480 homeless Americans, an 18% increase from
2023. These numbers are widely considered an underestimate.




  2.5 Million Missing Low-Cost Units
  In 1960, when the loss of SROs was just beginning, there were 6.9 million
  single-person households in the U.S. By 2023, that number had reached 38
  million.50 In that time, the nation’s housing stock grew by a factor of 2.5, from
  58.3 million homes to 145.4 million. Meanwhile, more than 1 million SRO
  units were destroyed or converted to other uses from 1970 to 1980 alone.
  Had the SRO stock grown at a similar rate as the rest of the nation’s housing
  supply, the U.S. would have added 1.5 million units rather than losing 1 million,
  for a net change of 2.5 million more SRO units. That’s more than triple the
  number of people experiencing homelessness in HUD’s 2024 count.51


 Figure 4
 More Than 1 Million SRO Units Were Lost

 Page 20
 1.5 million SROs would have been added if they had grown at the
 same rate as housing stock from 1960 to 2020

 Pew analysis of data from U.S. Census; Paul Groth, "Living Downtown."
 © 2025 The Pew Charitable Trusts



  New housing is usually expensive, and as homes get older, they get more
  affordable as high-income residents move into costly new housing. SROs,
  though, can be created at a much lower price point than other types of
  housing because the units are small and residents generally share bathrooms
  and kitchens. The same building using an SRO-style layout can simply fit more
  units that cost less than conventional apartments. Historically, SROs usually
  weren’t new construction; instead, they were created from other residential or
  commercial buildings whose original use no longer made sense. As the U.S.
  finds itself with more than a billion square feet of vacant office space in 2025,
  there is an opportunity to do what property owners did in the late 1800s and
  early 1900s: convert underused space into low-cost, well-located SRO-style
  housing units. It’s not possible to create all 2.5 million missing units this way,
  but SRO layouts are so efficient that a single high-rise building can hold more
  than 1,000 units.




Full circle: Surging homelessness drives
renewed interest in SROs
As early as the mid-1980s, the problem of homelessness in New York City had
gotten so severe that legislators tried to reverse course on SROs.52 The city
government passed Local Law 19 in May 1983, adding protections for SRO
tenants. The city ended tax benefits for converting SROs in 1983.53 Eventually,
the City Council banned the conversion, alteration, demolition, or warehousing
(holding units vacant for years to make them eligible for conversion or demolition)
of SRO units altogether. But the New York Court of Appeals ruled these bans
unconstitutional because they prevented property owners from determining how
their buildings could be used.54 Similarly, Chicago officials passed an SRO

 Page 21
preservation ordinance to discourage conversions or sales of SROs in 2014, but by
that time, the large majority had already been lost.55 The city’s zoning and building
codes made it challenging to build new ones.

Although New York City’s policy to block owners of SRO buildings from converting
them to new uses was overturned by courts, city officials took other steps to
preserve SROs even as different city laws banned the creation of new ones. One
of these statutes was an anti-harassment policy instituted decades ago, which
required that landlords looking to convert SROs prove that they had not harassed
tenants to move out, such as by making living conditions intolerable or failing to
perform needed maintenance. But this policy, known as a Certification of Non-
Harassment (CONH), added costs and administrative requirements for landlords,
contributing to the difficulty of operating SROs. The program was changed and
expanded in 2018 to require that landlords also get a CONH before renovating
SRO buildings.56 Ultimately, however, neither the city nor the state has taken
effective steps to rehabilitate or meaningfully expand the city’s SRO stock.57

Despite all of this, New York City probably still has the largest remaining stock of
SRO hotels and rooming houses in the country. A paper from the Furman Center
at New York University estimated that there were as many as 30,000 SRO units
remaining in the city in 2014.58 The city regulates SROs as part of its rent
stabilization program, meaning owners can raise rents by only a low amount each
year and need to file documentation with the city on each unit’s rent. In 2022, the
state housing agency reported 322 regulated SRO buildings with 11,051 units, of
which nearly half—more than 5,300—were rent-stabilized.59 The median monthly
allowable rent for these units was $1,018 in 2022, compared with $1,641 for a
regular rental apartment in the city in 2023 (including public housing, rent-
controlled housing, subsidized housing, and conventional, market-rate housing).60




Although New York has the most existing SROs, several Western states have been
the first to pass new laws to enable construction of single-occupancy units. State
governments have increasingly stepped in to require that certain types of housing
be allowed because localities have not taken adequate steps to address the
housing shortage.61 That was rare in the past: From 2011 to 2016, all states
 Page 22
combined passed an average of one law per year to allow more homes; from 2023
to 2024, that number jumped to 48 for all states combined. In 2024, the
Washington Legislature passed legislation requiring cities to allow SRO-type
housing wherever multifamily housing of six or more units is permitted, beginning
in late 2025.62 This legislation authorizes small units with shared bathrooms and
kitchens; limits off-street parking requirements to one spot for every four
bedrooms; and prohibits all parking mandates for buildings within half a mile of a
major transit stop.63 The bill was one of several that Washington passed to ensure
that some types of lower-cost housing are allowed even where local governments
had blocked them before or residents fought development.64 Seattle had
previously allowed development of low-cost micro-units, for example, but city
officials in 2013 enacted laws that effectively prohibited them.

The Oregon Legislature enacted similar legislation in 2023, allowing micro-units in
all areas zoned for residential use in cities across the state, including an SRO with
up to six units on a parcel zoned for single-family use.65 As of Jan.1, 2025, Hawaii
communities must allow the conversion of commercial properties into SRO
housing.66 Montana took a somewhat different approach, passing legislation in
2023 that created a housing “menu” for its cities and towns to choose from—a
series of options from which cities must choose at least five to allow more
housing.67 One of these is to permit co-living micro-units.

Perhaps the simplest method of creating low-cost shared housing is to allow
unrelated individuals to share a house in the same way that relatives are allowed
to share a house.68 But many communities limit the number of unrelated people
who can live together—in some places, to as few as two. Such laws make sharing a
house for a group of roommates—which usually enables rents lower than having
an individual apartment—illegal. The U.S. has a record number of unused
bedrooms, but many cannot be rented because of restrictions on house sharing by
unrelated roommates, even if that would be the most profitable use for the
landlord and the most affordable option for the tenants.69 To enable this low-cost
housing option, Iowa, Oregon, and Colorado all passed bipartisan legislation to
strike down local codes that prohibit house-sharing (in 2017, 2021, and 2024,
respectively).70



 Page 23
In all of those cases, states have stepped in when localities did not act, authorizing
lower-cost housing and limiting the ability of local governments to ban
inexpensive housing. The aim of those laws is to increase the rental market for
low- and moderate-income residents and make more use of existing housing
stock. If these bills succeed, and a large number of micro-units reach market, their
rents will likely be low, since individual rooms, when available, usually rent for far
less than houses or apartments.71 And while these units are intended for
individuals rather than larger households, Manhattan Institute researchers have
noted that they could “help release three- and four-bedroom apartments currently
occupied by unrelated millennials” for use by families.72




Individual rooms also cost less to build than apartments and houses. In October
2024, February 2025, and April 2025, The Pew Charitable Trusts and Gensler, a
global architecture, design, and planning firm, released three reports that
described how vacant office space in large cities could be converted into low-cost
micro-units with shared bathrooms and kitchens—essentially a safe, clean, code-
compliant, well-located version of SROs.73 The projected rents for rooms in these
converted buildings are about half of the median in the studied markets and
therefore affordable to residents earning 30% to 50% of the area median income,
with much lower public subsidies than are generally required to build low-cost
apartments.74 The small unit size (120-220 square feet), shared bathrooms, and
shared kitchens would lead to development costs at least 50% lower than the cost
of building new studio apartments. If these modern SRO rooms were priced right,
a wide range of residents might elect to live in conveniently located downtown
housing. But this option could make the biggest difference for low-income
residents who are now struggling to afford any type of home.

Many Americans are struggling. Nationwide, about 11 million tenant households—
one-fourth of all renters in the U.S.—are considered extremely low-income,
earning at or below the federal poverty line of $15,650 for a single person or
$32,150 for a family of four or if they earn less than 30% of their area’s median
income. According to the National Low Income Housing Coalition, the United
States is short more than 7 million rental units that are affordable for those

 Page 24
households.75 California has the nation’s largest extremely low-income renter
population, with nearly 1.3 million households.76 And of those, more than three-
quarters are severely “rent burdened,” meaning they spend more than 50% of their
income on housing costs. New York has the second-highest number of extremely
low-income renter households, at just under 1 million.77

New York State has taken fewer steps than some other states to house its poorest
citizens. In 2023, Governor Kathy Hochul (D) announced $50 million in funding to
help landlords repair 500 SROs across the state, a quiet reversal of long-standing
anti-SRO policies.78 And for the first time in decades, New York City has removed
one of the barriers to new SRO units as part of a slate of zoning changes, called
City of Yes for Housing Opportunity. City of Yes, which broadly aims to allow
modestly more residential development throughout New York’s five boroughs,
removed the minimum average unit-size requirements in Manhattan south of 96th
Street and in downtown Brooklyn.79 But New York City’s building code still has
other obstacles to converting space into SRO-style housing.

Even with these efforts to add low-cost housing and reduce homelessness, from
2022 to 2023, the U.S. added fewer than 37,000 beds specifically to help
individuals transitioning out of homelessness, an increase of just 7%. Providing
safe, affordable homes for the hundreds of thousands of Americans experiencing
homelessness will require far more ambitious policy initiatives informed by a
recognition of the vital role SROs have played in U.S. housing for a century and a
half.



Conclusion
Housing costs are by far the strongest determinant of homelessness. Areas with
high costs have high homelessness rates, and areas with low housing costs have
low homelessness rates. When rents rise quickly, homelessness does, too. When
rent growth is contained, homelessness drops. Increasing the housing supply helps
hold rent growth down, making housing more affordable. But adding low-cost
housing is especially helpful in preventing homelessness.



 Page 25
When SROs were widespread in the United States, even the nation’s poorest
residents could usually afford a home. But as targeted zoning, building codes, and
tax incentives led to the demise of the SRO housing stock, homelessness became
commonplace. Had the country’s stock of SRO housing merely grown in line with
other types of housing, the U.S. would have about 2.5 million additional low-cost
homes—more than triple the number of people counted as homeless in January
2024.

In an effort to bring back low-cost housing, some states that are struggling with
high homelessness rates have begun to remove legal barriers to the development
of co-living buildings that feature private micro-units with shared bathrooms and
kitchens. If more states and cities reduce regulatory barriers to this type of
housing—and ideally provide incentives to kick-start its development—the nation
has a real opportunity to once again make homelessness rare and ensure that the
most financially vulnerable Americans, such as those earning minimum wage or
receiving Social Security benefits, can afford a place to live.



External reviewers
This brief benefited from valuable insights and feedback from historian Jacob
Anbinder, a Klarman postdoctoral fellow at Cornell University, and Joy Moses, vice
president of research and evidence at the National Alliance to End Homelessness.
Although they reviewed drafts of the brief, neither they nor any institutions with
which they are affiliated necessarily endorse its findings or conclusions.



Acknowledgments
This brief was researched and written by housing author Rebecca Baird-Remba
and Pew staff member Alex Horowitz, project director of The Pew Charitable
Trusts’ housing policy initiative. The team thanks Pew colleagues Demetra
Aposporos, Esther Berg, Laurie Boeder, Frank Clancy, Jennifer V. Doctors, Gabriela
Domenzain, Chelsie Pennello, and Allie Tripp for providing important
communications, creative, editorial, and research support for this work.

 Page 26
Editor’s note: The endnotes for this brief were updated on Oct. 9, 2025.

 1. “Homelessness: Better HUD Oversight of Data Collection Could Improve
 Estimates of Homeless Population,” U.S. Government Accountability Office,
 Aug. 13, 2020, https://www.gao.gov/products/gao-20-433.

 2. Chris Glynn, Thomas H. Byrne, and Dennis P. Culhane, “Inflection Points in
 Community-Level Homeless Rates,” Annals of Applied Statistics 15, no. 2
 (2021), https://wp-tid.zillowstatic.com/3/Homelessness_InflectionPoints-
 27eb88.pdf.
 3. “HUD Homeless Count Fails to Connect Dots on Supply and Displacement,”
 Edward J. Pinto, Jan. 3, 2024, https://www.aei.org/op-eds/hud-homeless-
 count-fails-to-connect-dots-on-supply-and-displacement/.
 4. John M. Quigley and Steven Raphael, “The Economics of Homelessness: The
 Evidence From North America,” European Journal of Housing Policy 1, no. 3
 (2001): 323-36,
 https://escholarship.org/content/qt2dw8b4r3/qt2dw8b4r3_noSplash_a4686d
 01d6f0ce3406e61ab1a7f39933.pdf.
 5. Margot Kushel et al., “Toward a New Understanding: The California Statewide
 Study of People Experiencing Homelessness,” Benioff Homelessness and
 Housing Initiative, 2023,
 https://homelessness.ucsf.edu/sites/default/files/2023-
 06/CASPEH_Report_62023.pdf.

 6. “Why Housing Shortages Cause Homelessness,” Salim Furth, Dec. 5, 2024,
 https://worksinprogress.co/issue/why-housing-shortages-cause-
 homelessness/.

 7. Gregg Colburn and Clayton Page Aldern, Homelessness Is a Housing Problem:
 How Structural Factors Explain U.S. Patterns (University of California Press,
 2022), https://www.ucpress.edu/books/homelessness-is-a-housing-
 problem/paper.

 8. “How Housing Costs Drive Levels of Homelessness,” Alex Horowitz, Chase
 Hatchett, and Adam Staveski, Aug. 22, 2023,
 https://www.pewtrusts.org/en/research-and-



 Page 27
 analysis/articles/2023/08/22/how-housing-costs-drive-levels-of-
 homelessness.

 9. Tanya de Sousa and Meghan Henry, “The 2024 Annual Homelessness
 Assessment Report (AHAR) to Congress—Part 1: Point-in-Time Estimates of
 Homelessness in the U.S.,” U.S. Department of Housing and Urban
 Development, 2024,
 https://www.huduser.gov/portal/sites/default/files/pdf/2024-AHAR-Part-
 1.pdf.
10. “How Housing Costs Drive Levels of Homelessness,” Alex Horowitz, Chase
 Hatchett, and Adam Staveski.
11. “Minneapolis Land Use Reforms Offer a Blueprint for Housing Affordability,”
 Linlin Liang, Adam Staveski, and Alex Horowitz, Jan. 4, 2024,
 https://www.pewtrusts.org/en/research-and-
 analysis/articles/2024/01/04/minneapolis-land-use-reforms-offer-a-
 blueprint-for-housing-affordability.
12. B. O’Flaherty, “Homelessness Research: A Guide for Economists (and Friends)”
 (Department of Economics, Columbia University in the City of New York,
 2018), https://sites.asit.columbia.edu/econdept/wp-
 content/uploads/sites/18/2018/08/homelessresearchv2-080118.pdf.

13. “Zoning Reform Can Reduce Homelessness,” Alex Horowitz and Lisa Marshall,
 Feb. 19, 2024, https://www.pewtrusts.org/en/about/news-
 room/opinion/2024/02/19/zoning-reform-can-reduce-homelessness.

14. “How Housing Costs Drive Levels of Homelessness,” Alex Horowitz, Chase
 Hatchett, and Adam Staveski.
15. “Raleigh’s Zoning Reform Has Ushered in More Housing Options,” Zachery
 Eanes, June 21, 2024,
 https://www.axios.com/local/raleigh/2024/06/21/raleigh-sees-increase-in-
 townhouses-and-adus-from-zoning-reform.

16. Tanya de Sousa and Meghan Henry, “2024 Annual Homelessness Assessment
 Report.”
17. Joshua Fechter, “Austin Rents Have Fallen for Nearly Two Years. Here’s
 Why,” The Texas Tribune, https://www.texastribune.org/2025/01/22/austin-

 Page 28
 texas-rents-falling/.
18. J. Bunch, “High Supply Apartment Markets with Less Severe Class A Rent
 Cuts,” https://www.realpage.com/analytics/class-a-rent-cuts-high-supply-
 markets/.
19. National Academies of Sciences, Engineering, and Medicine, “Appendix B: The
 History of Homelessness in the United States,” in Permanent Supportive
 Housing: Evaluating the Evidence for Improving Health Outcomes Among People
 Experiencing Chronic Homelessness (Washington, D.C.: National Academies
 Press, 2018), https://www.ncbi.nlm.nih.gov/books/NBK519584/.

20. Edward Pinto and Hannah Florence, “The Decline of SROs and Its
 Consequences for Housing Affordability,” AEI Housing Center, 2024,
 https://www.aei.org/wp-content/uploads/2024/05/The-history-of-SROs-
 FINAL-v2.pdf.

21. P. Groth, Living Downtown: The History of Residential Hotels in the United
 States (Berkeley: University of California Press, 1994).

22. National Academies of Sciences, Engineering, and Medicine, Permanent
 Supportive Housing.
23. Paul Groth, Living Downtown: The History of Residential Hotels.
24. Brian J. Sullivan and Jonathan Burke, “Single-Room Occupancy Housing in
 New York City: The Origins and Dimensions of a Crisis,” City University of New
 York Law Review 17, no. 1 (2013),
 https://academicworks.cuny.edu/clr/vol17/iss1/5/.
25. Paul Groth, Living Downtown: The History of Residential Hotels.
26. U.S. Senate Special Committee on Aging, “Single Room Occupancy: A Need
 for National Concern,” 1978,
 https://www.aging.senate.gov/imo/media/doc/reports/rpt478.pdf.
27. Malcolm Gladwell, “N.Y. Hopes to Help Homeless by Reviving Single Room
 Occupancy Hotels,” Los Angeles Times, April 25, 1993,
 https://www.latimes.com/archives/la-xpm-1993-04-25-mn-27098-
 story.html.
28. Paul Groth, Living Downtown: The History of Residential Hotels.


 Page 29
29. Malcolm Gladwell, “N.Y. Hopes to Help Homeless.”
30. Groth, Living Downtown: The History of Residential Hotels in the United States.

31. Ibid.
32. Malcolm Gladwell, “N.Y. Hopes to Help Homeless.”
33. Brian J. Sullivan and Jonathan Burke, “Single-Room Occupancy Housing in
 New York City.”
34. Brian J. Sullivan and Jonathan Burke, “Single-Room Occupancy Housing in
 New York City.”

35. “Real Estate Team’s Winning Project Envisions a More Inclusive San
 Francisco,” Georgetown University School of Continuing Studies,
 https://scs.georgetown.edu/news-and-events/article/7216/real-estate-
 teams-winning-project-envisions-more-inclusive-san-francisco.

36. Groth, Living Downtown: The History of Residential Hotels in the United States.
37. U.S. Senate Special Committee on Aging, “Single Room Occupancy: A Need
 for National Concern.”
38. “Arsonist Kills 20 and Injures 10 at the Ozark Hotel Fire in Seattle on March
 20, 1970,” Greg Lange, Jan. 15, 1999, https://www.historylink.org/File/698.
39. “Roots of a Crisis,” Sinan Demirel, June 29, 2016,
 https://www.realchangenews.org/news/2016/06/29/roots-crisis.
40. “Small Rooms, Big Impact: Could SROs Help Fix Boston’s Housing Crisis?”
 Lucas Munson, Boston Indicators, March 13, 2025,
 https://www.bostonindicators.org/article-pages/2025/march/room-
 occupancy. The Brookings Institution, Henry Aaron and Charles L. Schultze,
 eds., Setting Domestic Priorities: What Can Government Do? (1992),
 https://www.brookings.edu/books/setting-domestic-priorities/.

41. The Brookings Institution, Aaron and Schultze, eds., Setting Domestic Priorities.
42. Jacob Pomeroy Anbinder, “Cities of Amber: Antigrowth Politics and the
 Making of Modern Liberalism” (doctoral dissertation, Harvard University,
 2023), https://dash.harvard.edu/handle/1/37378071.
43. National Academies of Sciences, Engineering, and Medicine, Permanent
 Supportive Housing.
 Page 30
44. Ilina Logani, Bruce D. Meyer, and A. Wyse, “The Mortality of the Us Homeless
 Population,” Becker Friedman Institute for Economics at University of
 Chicago, https://bfi.uchicago.edu/insight/research-summary/the-mortality-of-
 the-us-homeless-population/.
45. Edward Pinto and Hannah Florence, “The Decline of SROs and Its
 Consequences.”
46. Tanya de Sousa et al., “The 2023 Annual Homelessness Assessment Report
 (AHAR) to Congress—Part 1: Point-in-Time Estimates of Homelessness in the
 U.S.,” U.S. Department of Housing and Urban Development, 2023,
 https://www.huduser.gov/portal/sites/default/files/pdf/2023-AHAR-Part-
 1.pdf.

47. Tanya de Sousa et al., “2023 Annual Homelessness Assessment Report.”
48. Tanya de Sousa and Meghan Henry, “2024 Annual Homelessness Assessment
 Report.”
49. Tanya de Sousa and Meghan Henry, “2024 Annual Homelessness Assessment
 Report.”
50. “HH-4. Households by Size: 1960 to Present,” U.S. Census Bureau, 2024,
 https://www2.census.gov/programs-surveys/demo/tables/families/time-
 series/households/.

51. This estimate is at the low end of what is likely necessary to meet Americans’
 housing needs. In 1960, just 13% of U.S. households had one person. By
 2020, that figure was 28%. Because single-person households have increased
 more than fivefold from 6.9 million in 1960 to 38.1 million in 2023, more
 single-room housing units are probably needed as an overall share of the
 housing stock.
52. National Academies of Sciences, Engineering, and Medicine, Permanent
 Supportive Housing.
53. Debra S. Vorsanger, “New York City’s J-51 Program: Controversy and
 Revision,” Fordham Urban Law Journal 12, no. 1 (1984),
 https://ir.lawnet.fordham.edu/ulj/vol12/iss1/3.
54. Alan Finder, “Supreme Court Won’t Review S.R.O. Ruling,” The New York Times,
 Nov. 28, 1989, https://www.nytimes.com/1989/11/28/nyregion/supreme-

 Page 31
 court-won-t-review-sro-ruling.html.

55. Emily Badger, “What Happens When Housing for the Poor Is Remodeled as
 Luxury Studios,” The Washington Post, Nov. 12, 2014,
 https://www.washingtonpost.com/news/wonk/wp/2014/11/12/what-
 happens-when-housing-for-the-poor-is-remodeled-for-millennials/.
56. Local Laws of the City of New York for the Year 2018 (2018),
 https://www.nyc.gov/assets/hpd/downloads/pdfs/services/local-law-1-
 2018.pdf.

57. Brian J. Sullivan and Jonathan Burke, “Single-Room Occupancy Housing in
 New York City.”

58. Eric Stern and Jessica Yager, “21st Century SROs: Can Small Housing Units
 Help Meet the Need for Affordable Housing in New York City?,” Furman
 Center for Real Estate and Urban Policy, 2018,
 https://furmancenter.org/files/Small_Units_in_NYC_Working_Paper_for_Posti
 ng_UPDATED.pdf.
59. New York City Rent Guidelines Board, “2023 Hotel Report,” 2023,
 https://rentguidelinesboard.cityofnewyork.us/wp-
 content/uploads/2023/05/2023-Hotel-Report.pdf.
60. “2023 New York City Housing and Vacancy Survey: Selected Initial Findings”
 (New York City Department of Housing Preservation and Development,
 2024), https://www.nyc.gov/assets/hpd/downloads/pdfs/about/2023-
 nychvs-selected-initial-findings.pdf.
61. Eli Kahn and Salim Furth, “Laying Foundations: Momentum Continues for
 Housing Supply Reforms in 2024,” Mercatus Center, 2024,
 https://www.mercatus.org/research/policy-briefs/housing-supply-reforms-
 2024.
62. “Micro-Apartments Are Back After Nearly a Century, as Need for Affordable
 Housing Soars,” Hallie Golden and Claire Rush, March 21, 2024,
 https://apnews.com/article/micro-apartments-affordable-housing-
 homelessness-716346460edde132dd3701f8eda74331.
63. Laurel Demkovich, “WA House Approves Bill to Expand Dormitory-Like
 Housing,” Washington State Standard,

 Page 32
 https://washingtonstatestandard.com/2024/02/07/wa-house-approves-bill-
 to-expand-dormitory-like-housing.

64. “How Seattle Killed Micro-Housing,” David Neiman, Sept. 6, 2016,
 https://www.sightline.org/2016/09/06/how-seattle-killed-micro-housing.
65. Oregon Legislative Assembly, House Bill 3395, H.B. 3395 (2023),
 https://olis.oregonlegislature.gov/liz/2023R1/Downloads/MeasureDocument
 /HB3395/Enrolled.
66. Hawaii Legislature, A Bill for an Act Relating to Housing, H.B. 2090 (2024),
 https://legiscan.com/HI/text/HB2090/id/2975587/Hawaii-2024-HB2090-
 Amended.html.
67. Montana Legislature, Montana Land Use Planning Act, S.B. 0382 (2023),
 https://archive.legmt.gov/bills/2023/billpdf/SB0382.pdf.
68. Nicholas Kristof, “The Old New Way to Provide Cheap Housing,” The New York
 Times, Dec. 9, 2023,
 https://www.nytimes.com/2023/12/09/opinion/homelessness-housing-
 shortage.html.
69. “American Homeowners Are Wasting More Space Than Ever Before,” Diana
 Olick, Dec. 18, 2024, https://www.cnbc.com/2024/12/18/american-
 homeowners-are-wasting-more-space-than-ever-before.html.
70. “New Laws Open Doors to Affordable Shared Housing Arrangements,” Kery
 Murakami and Gabriel Kravitz, Dec. 4, 2024,
 https://www.pewtrusts.org/en/research-and-
 analysis/articles/2024/12/04/new-laws-open-doors-to-affordable-shared-
 housing-arrangements.

71. Aaron M. Renn and Alex Armlovich, “Microunits: A Tool to Promote Affordable
 Housing,” Manhattan Institute, 2016,
 https://manhattan.institute/article/microunits-a-tool-to-promote-affordable-
 housing.
72. Aaron M. Renn and Alex Armlovich, “Microunits: A Tool to Promote Affordable
 Housing.”

73. “Converting Offices to Tiny Apartments Could Add Low-Cost Housing,” Alex
 Horowitz and Tushar Kansal, Feb. 4, 2025,

 Page 33
 https://www.pewtrusts.org/en/research-and-
 analysis/articles/2025/02/04/converting-offices-to-tiny-apartments-could-
 add-low-cost-housing.

74. “Co-Living Could Unlock Office-to-Residential Conversions,” Alex Horowitz
 and Tushar Kansal, Oct. 22, 2024, https://www.pewtrusts.org/en/research-
 and-analysis/articles/2024/10/22/co-living-could-unlock-office-to-
 residential-conversions.

75. “The Gap: A Shortage of Affordable Homes,” National Low Income Housing
 Coalition, https://nlihc.org/gap.

76. N.L.I.H. Coalition, The Gap: A Shortage of Affordable Homes, accessed 2024,
 https://nlihc.org/gap.
77. “The Gap: A Shortage of Affordable Homes,” National Low Income Housing
 Coalition.
78. Mihir Zaveri, “New York Wants to Pay Landlords to Fix and Rent Single-Room
 Apartments,” The New York Times, Dec. 12, 2023,
 https://www.nytimes.com/2023/12/12/nyregion/new-york-sro-
 apartments.html.
79. “City of Yes for Housing Opportunity,”
 https://www.nyc.gov/content/planning/pages/our-work/plans/citywide/city-
 of-yes-housing-opportunity.



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Tenants Pushed Out As Developers Buy Single-Room-Occupancy Properties
AUGUST 19, 2019 · 7:20 AM ET

HEARD ON MORNING EDITION

By Chris Burrell



 4-Minute Listen PLAYLIST TRANSCRIPT



As many American cities grapple with an affordable housing crisis, one of the
cheapest types of rental housing is now under threat — single room occupancy
units, also known as SRO's or rooming houses.

Their chief characteristics are small rooms with no kitchens, a shared bathroom in
a hallway and hundreds of dollars cheaper monthly rent than a studio apartment.

Several cities have seen low-income tenants pushed out as investors buy up these
SRO properties in urban neighborhoods.

Nationally, housing advocates say SROs are vital unsubsidized shelter for the
poor, low-wage workers, the elderly and people with mental illness or drug
addiction.

But SROs don't have a great reputation. Considered substandard housing, cities in
the last 50 years eliminated hundreds of thousands of rooms in the name of urban
renewal and help create the nation's largest group of homeless: single people.

"There's no question that the loss of a lot of these units is a major contributor to
homelessness in places where they existed," said Nan Roman, the head of the
National Alliance to End Homelessness.

Roman said SROs, once seen as blight, are now viewed as one solution to
homelessness. Several cities — Chicago, New York, San Francisco and Portland,
Ore. — are trying to preserve SROs before owners convert them to higher-end
housing.



 Sponsor Message




 Page 36
In and around Boston, Mass., there are no such efforts. In one of the nearby cities,
a 72-unit SRO building sold last year for $2.2 million, and 20 tenants have
received eviction notices, according to records in the local housing court. Last
April, tenants were told rent was going up.

Richard — a 62-year-old tenant in the building – said he is worried that his rent
rose 27 percent from $550 to $700 a month. NPR is not using his full name
because he is fearful of reprisals from his landlord for talking to the media. He's
lived in this rooming house for three years.

"If I have to move out, who's going to take care of her?" he said, pointing to his cat,
Mia. "Her prior owner was a heroin addict who had OD'd."

Richard's hands trembled as he tried to operate his ceiling fan that dangled from
thin wires.

"Watch your head. I think you should step back because this is dangerous," he
said, as the fan blades clattered. "It will come down on your head."

Richard survives on a $700 a month disability check, living in this tiny room
whose most striking feature is that it has no windows. Inside these walls painted
pale pink, there's a single brown wooden bed, lots of books and artifacts from his
time spent teaching English in Asia.


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At least three other tenants share a small bathroom with cracked floor tiles and
decayed caulking around the tub.

 Page 37
Despite the downsides, Richard wants to stay put.

"One of the big problems for most people in the building is where are we going to
go? We can't afford the rent anymore. And you're talking about elderly disabled
people," he said.

Richard is not alone. In San Diego, city officials last spring were helping nearly
200 people relocate after a large SRO closed. In Boston, housing advocates see a
similar pattern.

"People are being thrown out. That's happening across the city because these
properties now are so valued," said Eloise Lawrence, an attorney at Harvard Law
School's legal clinic, who defends SRO tenants against eviction. "What was
considered sort of housing at the last resort is now seen as desirable and
profitable."

Last year in Boston, tenants in a 20-unit rooming house got eviction notices after
the building sold to an investor for $850,000.

Tunde Kunnu, 72, and other tenants formed an association and sought help from
local activists and legal aid to fight the evictions but the building is neglected with
trash strewn across the front and back yards and broken windows.

"Everybody deserves a good place to live. They just don't care," said Kunnu.

But real estate developers say running rooming houses is hard. And when the
economy is booming like it is now, there may be easier options — like turning the
place into condos. Alan Hope ran two rooming houses in Lawrence after being
appointed as a receiver for the derelict properties.

"It's very difficult, I think, if you're not a professional in maintaining a rooming
house to the standard that's required," said Hope. "Real estate in general is
becoming more higher-priced and valuable so investors are trying to get the most
they can out of it — maybe having more stable tenants that are probably earning a
living and not dependent on subsidies."


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 Page 38
 Housing experts say demand for such SRO-type housing is increasing as the
 number of single households in America who are renters has grown to 16 million in
 the last decade, and many of them are facing rent levels that eat up at least a
 third or half their income.

 Building new SRO housing is one response. Places like New York and Portland,
 Maine, are looking at proposals to do just that.




 Together, we chart the course.
 You count on public media for stories that help you understand your world —
 voices that bring us closer together.

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 Page 39
City of Portland | Housing and Economic Development
Department
Greg Watson, Director




To: Social Housing Task Force




MEETING DATE
December 10, 2025

AGENDA ITEM
Agenda Item 3. iii. Follow-up Discussion Providence, Rhode Island Housing Bonds

BACKGROUND/ANALYSIS

This memo summarizes the City of Providence, Rhode Island’s municipal bond program, as it
relates to housing development. This information was requested during the November 19
Education Meeting of the Social Housing Task Force.

The Providence Redevelopment Agency (PRA) is a quasi-public entity with the authority to issue
bonds under Rhode Island state law without voter approval. In 2021, the PRA issued a Special
Obligation Bond to capitalize the local Housing Trust Fund. Previously, the trust fund existed on
paper but had limited available funds. The debt service on the bond is paid with a combination of
project loan repayments and 10% of collected tax-stabilization revenues. Providence
supplemented the available resources in the Housing Trust Fund by subgranting American
Rescue Plan (ARPA) to the PRA. The PRA is also land-banking properties to create opportunities
for public-private partnerships focused on housing development.

Providence utilized its Housing Trust Fund for gap financing, primarily supporting rental
projects for households earning 80% of the Area Median Income (AMI) or less. A limited number
of homeownership projects were funded for households at or below 100% AMI. A significant
portion of the available funding provided gap financing for Low Income Housing Tax Credit
(LIHTC) projects, partnership with Rhode Island Housing, the state's housing finance agency.
This approach is consistent with how the City of Portland employs its Jill C. Duson Housing Trust
Fund. The attached 2025 Housing Progress Report details Providence's efforts to address its
housing shortage, demonstrating the utilization of the resources outlined in this memo.



Rhode Island's state tax exempt private activity bond (PAB) volume cap is about $370M. The state
devotes about $290M of that for Rhode Island Housing (finance agency). Every few years, the
State also issues voter-approved General Obligation Bonds for housing (a $120M bond was just
released).



 1

 Page 40
The City of Providence issues General Obligation Bond (GO Bonds) or Revenue Bonds to raise
funds for public works projects. Providence is considering placing a GO Bond on the ballot next
fall if debt service capacity permits and interest rates are favorable. The bond funding would be
placed in the local Housing Trust Fund.

The Providence Redevelopment Agency (PRA) or Providence Public Buildings Authority (PPBA)
are quasi-public and have bonding ability under state and local law. PRA typically issues Special
Obligation Bonds to finance projects (like the $25M that initially capitalized the local Housing
Trust Fund in 2021 and a port bond). The PPBA tends to issue Revenue Bonds (as school
construction is often reimbursable or there’s a lease-back for a revenue stream).Summary of
Providence, RI Municipal Housing Bond Program.

The State of Rhode Island is exploring public developer models. RIHousing and the Rhode Island
Department of Housing commissioned a report by NYU Furman Center (attached, dated August
22, 2024) to study the feasibility of public development and ownership models. The report
identified tools and strategies that Rhode Island can use to build on existing capacity and
resources to promote affordable housing development. The Rhode Island report was incorporated
into the Furman Center Policy Brief entitled “The Emerging Spectrum of Government-Led and
Publicly-Owned Housing Development Models” dated October 2024, which is part of the previously
included task force resources.

PREPARED BY


Mary Davis
Housing and Community Development
 Division Director



ATTACHMENTS

Attachment A - NYU Furman Center Report Prepared for RIHousing and the Rhode Island
Department of Housing dated August 22, 2024

Attachment B - City of Providence - 2025 Housing Progress Report dated October 2025

​




 2

 Page 41
August 22, 2024

Final Report

Publicly Driven Development
and Ownership of Housing:
A Feasibility Study for Rhode Island

NYU Furman Center for RIHousing and the Rhode Island
Department of Housing

Acknowledgements: This report was prepared by Claudia Aiken, Hayley Raetz,
Matthew Murphy, Tony Bodulovic, Daria Guzzo, and Will Viederman. We owe many of
the details and insights presented in this report to our interviewees, who have
included federal, state, and local policymakers and practitioners across the country,
as well as scholars in Vienna, Finland, and Denmark. We thank them for graciously
sharing their time and expertise with us and with Rhode Island.


This report was commissioned by the State of Rhode Island and the Rhode Island
Housing and Mortgage Finance Corporation (“RIHousing”), and was completed in
consultation with the Rhode Island Department of Housing and RIHousing.


This research does not represent the institutional views (if any) of research funders,
NYU, NYU School of Law, or the Wagner Graduate School of Public Service. Funders
do not determine research ﬁndings or recommendations in research and policy
reports by the NYU Furman Center.

The NYU Furman Center advances research and debate on housing, neighborhoods,
and urban policy. Established in 1995, it is a joint center of the New York University
School of Law and the Wagner Graduate School of Public Service. More information
can be found at furmancenter.org and @FurmanCenterNYU.




 Page 42
 1



Public Development and Ownership of
Housing: A Feasibility Study for Rhode Island
NYU Furman Center for RIHousing and the Rhode Island Department of Housing

August 22, 2024


Executive Summary
Study Purpose
Rhode Island is experiencing a significant housing shortage, especially in multifamily rental housing that
is affordable to low- and very low-income households. The state also ranks among the lowest in the U.S.
for housing production. One proposal for addressing these issues is to create or utilize a government
entity to play the role of affordable housing developer and owner. While public development was at one
point a major source of affordable housing in the U.S., these efforts have been gradually limited and
defunded over the last 50 years. Instead, publicly subsidized private development has become the
common affordable housing development model, centered around the use of the Low Income Housing
Tax Credit. In this model, federal, state, and local governments provide different forms of development
financing, among other financial and regulatory tools, to maintain oversight rather than a direct ownership
stake in a property. This report provides insights into the feasibility of public development and ownership
models as a means of delivering affordable housing in Rhode Island through 1) case studies of both
longstanding and emerging models of public development within the U.S. and internationally; 2) analysis
of the Rhode Island development context; and 3) a review of financing and regulatory mechanisms that
could facilitate public development in Rhode Island. Appendices provide more detailed descriptions of
each of the case studies and of the financial analysis.

Study Methods
The research includes:
 ● More than 20 in-depth interviews with experts, including:
 ○ 13 public development leaders in the U.S.
 ○ 3 international scholars of social housing
 ○ 8 Rhode Island stakeholders
 ● Financial analysis drawing on programmatic documents and underwriting data
 ● Analysis of 9 domestic and 5 international models of public development
 ● Analysis of 11 financing and regulatory mechanisms used in public development models

What Is Public Development and Ownership?
Public development and ownership involve scenarios where:
 ● Local or state government entities act directly as a real estate developer, or engage closely (i.e.,
 enter into a partnership or other development agreement) with development partners, with the end
 goal of ensuring some degree of public ownership in the project.




 Page 43
 2


 ● Local or state government entities invest significant financial resources in exchange for an active
 role in the decision-making, development process, and ongoing management of housing, beyond
 basic regulatory oversight. This includes retaining a full or partial ownership stake in the
 properties.
 ● They are long-term owners of the housing or the land on which it is built, maintaining continuous
 public control and oversight over the properties.

Domestic Models Overview
The domestic models of public development and ownership are categorized into three groups:
 ● Group A: Mixed-Income Housing (Affordable with Market-Rate)
 ○ Models like those in Montgomery County, MD; Atlanta, GA; and Chicago, IL use low-
 cost revolving loan funds to finance a portion of the construction of mixed-income
 housing developments. These funds work alongside conventional construction loans from
 private or governmental entities to replace the capital typically provided through private
 equity investments. They are designed to acquire a stake in a project that is proportional
 to its investment, thereby giving the public entity control over a portion of the
 development. Recently, the state of Colorado also developed a model that aims to
 produce mixed-income housing through government-funded direct equity investment,
 rather than loans.
 ○ Examples: Housing Production Fund (HPF) (Montgomery County), Atlanta Urban
 Development Corporation (AUD), Chicago’s Green Social Housing Revolving Fund,
 Colorado’s Affordable Housing Financing Fund.
 ● Group B: Public Housing Conversions
 ○ Public housing authorities like those in Boston, MA; Cambridge, MA; and Hawaii are
 expanding their portfolios using programs like Faircloth-to-RAD. They leverage existing
 public housing to redevelop and add units while maintaining an ownership stake in the
 property.
 ○ Examples: Boston Housing Authority, Cambridge Housing Authority, Hawaii Public
 Housing Authority.
 ● Group C: Affordable Housing (No Market-Rate Units)
 ○ Established public or quasi-public models showcase long-term public development and
 ownership with and without federal tax credits.
 ○ Examples: Dakota County Community Development Agency (CDA) (Minnesota), The
 Housing Company (THC) (Idaho).

Financial Analysis
We analyzed Rhode Island rent, development cost, and operating expense data and constructed a simple
analytical model of a hypothetical multifamily rental development. This allows us to better understand the
financial obstacles and possible pathways to developing affordable housing that does not rely on Low-
Income Housing Tax Credit equity in Rhode Island, given market conditions.

Key Tools for Emerging Public Development Entities
The study takes a closer look at 11 tools that public entities use to facilitate housing development,
including financing tools such as revolving funds, tax-exempt bond recycling, and risk-share lending from




 Page 44
 3


the Federal Housing Administration (FHA) and the Federal Financing Bank (FFB), as well as regulatory
and programmatic tools such as land banking, self-insurance, and special tax levies.We discuss the
potential impact of these tools and identify the statutes, rules, and conditions that shape how they may be
used, including in the Rhode Island context.

International Models Overview
The study also explores models from Vienna, Helsinki, Copenhagen, Singapore, and Hong Kong. These
models vary greatly due to different political and economic contexts but offer valuable lessons on cost-
based rents, the use of public land, and the role of nonprofits in housing development.

Recommendations and Conclusion
Models of public development and ownership show promise for delivering new housing because they
provide a package of financial resources and regulatory allowances that are designed to develop
multifamily housing that includes some mix of affordable housing. The models also grow out of specific
needs or historic experiences that make public development an evolution of their approach to building
affordable housing. But many of the models we examine are new and largely untested, making it difficult
to fully analyze their performance across different market cycles. This long-term analysis is critical when
assessing potential value of a public developer over a private one, particularly at the end of a regulatory
agreement, when affordability restrictions are set to expire. Others originated in market and political
contexts that are very different from Rhode Island’s; as such, these models cannot simply be copied and
pasted wholesale. Nevertheless, this analysis uncovered the various tools, mechanisms, and capacities
these models draw on, many of which can be applied in Rhode Island. It also suggested how Rhode Island
can harness, build on, and streamline its many existing strengths (such as RIHousing’s lending authority
and expertise, and the fact that multiple Rhode Island public housing authorities (PHAs) are already doing
public development) to promote affordable housing development. Based on this analysis, we recommend
that Rhode Island:

 ● Create a Publicly Capitalized Fund that Focuses on Creating New Affordable Housing:
 Establish a publicly-capitalized, revolving, discretionary fund to flexibly lend to or invest in
 mixed-income or 100 percent affordable multifamily housing projects.
 ● Identify Discrete Needs that only a Public Developer Could Fill: Start small to build capacity,
 experience, and a deeper understanding of statutory barriers. The State should identify specific
 needs that a public developer entity could address, either because for- and non-profit
 organizations are unable to fulfill these roles, or because a public developer would have a distinct
 advantage. Examples include disposing of publicly-owned land for mixed-income housing,
 handling tax lien foreclosed properties, or rehabilitating distressed government-owned properties.
 ● Establish Dedicated Funding Streams: Explore ways to establish dedicated funding streams for
 public investment in housing, similar to Dakota County’s property tax levy or Colorado’s income
 tax levy.
 ● Reform Multifamily Tax Exemption to Incentivize Affordable Housing Inclusion: Reform
 the “8 percent tax”1 to create a modernized multifamily tax exemption. This could be a model in



1
 See footnote 24.




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 4


 which a deeper tax exemption is made available as-of-right to projects that provide a higher share
 of affordable units, or a smaller share of units that are more deeply affordable.
 ● Maximize and Streamline Existing Programs: Maximize the use of programs like the Low-
 Income Housing Tax Credit (LIHTC), FHA/FFB risk-share loans, and the U.S. Department of
 Housing and Urban Development’s (HUD) Rental Assistance Demonstration (RAD) program to
 finance new affordable housing developments.
 ● Examine the Capacity to Allocate Additional Private Activity Bond Funding to Multifamily
 Housing Development: Assess the potential for increasing allocations to private activity bonds
 specifically for multifamily housing projects. This should involve a detailed evaluation of current
 usage rates, how the State uses private activity bonds to fund housing initiatives (between single-
 family and multifamily) compared to other eligible uses, the economic impacts of increasing
 limits, and the feasibility of directing these funds to high-need areas.
 ● Create a Technical Assistance Network: Create a technical assistance network for public
 housing authorities that 1) assists them in using Faircloth-to-RAD and other HUD programs that
 can facilitate (re)development; 2) helps them access RIHousing financing and federal tax credits;
 3) identifies and facilitates access to skilled development consultants, planners, and appraisers;
 and 4) provides a direct line of communication to HUD.
 ● Subsidize PHA Pre-Development Activities: Continue to provide grants to PHAs to support site
 selection, financial planning, appraisals, land entitlement and other regulatory processes, building
 design and other activities that impose costs before the construction phase.2
 ● Incentivize Density and Inclusionary Zoning: Provide models for and incentivize
 municipalities to allow more density as-of-right and to adopt inclusionary zoning programs that
 require permanent affordability in exchange for greater density.
 ● Understand How Government-Owned Land Can Be Turned into Multifamily Housing: The
 State should create a statewide inventory of public land as well as institutionally owned land (e.g.,
 land owned by healthcare facilities).The State should also consider drafting guidelines for
 repositioning this land for multifamily housing, including rules for its disposition, long-term
 ownership, and fair appraisals. Additionally, the State should establish a regulatory framework
 addressing key terms like affordability levels and rent increases. Finally, the State should require
 and assist PHAs to assess their available land’s potential for new housing development.
 ● Examine Solutions to Rising Insurance Costs: Convene a working group to explore ways to
 tackle rising insurance costs in the multifamily market, such as self-insurance.

Determining whether Rhode Island should create a public development entity is challenging. Our analysis
suggests that if Rhode Island pursues this approach, the entity's role should be well-defined and based on
a clear need where it possesses unique authority to address specific issues in a cost effective manner.
Rhode Island already has a sophisticated network of nonprofit housing organizations and PHAs capable
of developing multifamily affordable housing. Nonetheless, should the State decide to pursue the creation
of a public development entity, several considerations must be taken into account:

 ● Market Conditions: Understanding local market conditions, including land, construction, and
 labor costs, as well as rent levels, is vital. Cross-subsidization models, which rely on market-rate


2
 See footnote 15.




 Page 46
 5


 rents to subsidize affordable units, may be limited by local market conditions such as relatively
 high development costs.
● Cost and Revenue Management: Considerations of development costs, construction financing,
 operating costs, risk mitigation, and long-term revenue streams are essential. Public entities
 would need to balance these aspects to achieve financial viability, cost effectiveness, and
 maximum affordability.
● Risks and Returns: When public entities take on the role of real estate developers, they must
 navigate not only the risks associated with financing affordable housing but also the distinct and
 often greater risks inherent in development. Unlike lending, which is typically more cautious—
 especially for affordable housing projects funded through LIHTC—development carries a
 different risk profile. These include market risks, such as fluctuations in rental income and the
 possibility that projected rents are not met, as well as development risks like construction cost
 overruns. Public developers may also face unique challenges, such as the costs of overcoming
 public resistance to development, adapting to institutional changes under new political
 administrations, and managing long-term operational obligations with potentially insufficient
 resources. These risks must be carefully balanced against potential returns, which include the
 number of new housing units created, the depth and duration of affordability, profits that can be
 reinvested in further development or housing programs, and potential savings on future costs to
 preserve affordable housing.
● Long-Term Sustainability: Ensuring the long-term sustainability of publicly developed housing
 projects through proper maintenance, management, and reinvestment strategies would be critical.
 Such projects need re-capitalization every 15-20 years to address issues from aging building
 systems and require quality management for successful operations, including leasing,
 maintenance, and compliance with local, state, and federal laws.




 Page 47
 6



Table of Contents
Introduction .................................................................................................................................................. 6
 Study Purpose and Methods .................................................................................................................... 6
 What Is Public Development and Ownership?........................................................................................ 7
Domestic Models .......................................................................................................................................... 9
 Rhode Island Context ............................................................................................................................ 11
 Group A: Mixed-Income Housing (Affordable with Market-Rate) ...................................................... 13
 Group B: Public Housing Conversions ................................................................................................. 18
 Group C: Affordable Housing (No Market-Rate Units) ....................................................................... 20
Financial Analysis ...................................................................................................................................... 21
Key Tools for Emerging Public Development Entities ........................................................................... 32
 FHA/FFB Risk-Share Loans ................................................................................................................. 32
 Tax-Exempt Bond Recycling ................................................................................................................ 33
 Property Tax Abatements and Exemptions ........................................................................................... 34
 Faircloth-to-RAD .................................................................................................................................. 36
 Revolving Loan Funds .......................................................................................................................... 37
 Mixed-Income Housing with Cross-Subsidy ........................................................................................ 38
 Inclusionary Zoning .............................................................................................................................. 39
 Public Land............................................................................................................................................ 40
 Self-Insurance Programs ....................................................................................................................... 41
 Common Bond Funds ............................................................................................................................ 44
 Special Tax Levies ................................................................................................................................ 45
International Models ................................................................................................................................. 45
Conclusion .................................................................................................................................................. 48
Acknowledgements .................................................................................................................................... 49
Appendix 1: Case Studies .......................................................................................................................... 49
 Montgomery County, Maryland ..................................................................................................... 49
 Atlanta, Georgia .............................................................................................................................. 51
 Chicago, Illinois .............................................................................................................................. 53
 Boston, Massachusetts .................................................................................................................... 54
 Cambridge, Massachusetts.............................................................................................................. 56
 Hawaii ............................................................................................................................................. 57
 Dakota County, Minnesota ............................................................................................................. 57
 Idaho ............................................................................................................................................... 59
 Colorado.......................................................................................................................................... 59
 Vienna, Austria ............................................................................................................................... 61
 Helsinki, Finland ............................................................................................................................. 64
 Copenhagen, Denmark.................................................................................................................... 66
 Singapore ........................................................................................................................................ 67
 Hong Kong ...................................................................................................................................... 68




 Page 48
 7



Introduction

Study Purpose and Methods
The state of Rhode Island faces a severe housing shortage, particularly multifamily rental housing
affordable to low- and very low-income households.3 Despite the shortage, Rhode Island ranks at the
bottom of all U.S. states when it comes to housing production. Rhode Island is tied with Connecticut for
issuing the fewest building permits for new housing per capita of any U.S. state.4 One proposal for
addressing these challenges is to support the development and ownership of affordable housing through
one or more public entities, with the goal that such entities can find ways to achieve lower development
costs than private actors, and, acting as owners, can do more to ensure the durability of the affordability.5
Public development and ownership models exist across the globe, and in some cases, new ones are
emerging. This study conducts a targeted scan of public development and ownership models both in the
U.S. and internationally,6 and of the key financing and regulatory tools that these models employ. We pair
this analysis with a review of Rhode Island’s development environment, regulatory context, and
landscape of housing-related agencies to better understand how these models might translate to Rhode
Island.

This report presents findings from a six-month study period. Through a set of more than ten, hour-long
interviews with stakeholders who are pioneering public development models in the U.S. and with experts
on social housing systems abroad, along with an in-depth review of programmatic documents, reports,
and project-level underwriting (proformas), we identified models of particular interest for Rhode Island as
well as key financing, regulatory, and programmatic tools that can facilitate public development and
ownership. We then conducted eight additional interviews with Rhode Island stakeholders, including four
PHA directors, a HUD official, two nonprofit leaders, and a municipal policy expert, to learn more about
barriers to and opportunities for public development and ownership in Rhode Island. We also briefed two
elected officials on interim findings and incorporated their feedback. Finally, we used data on Rhode
Island’s land, construction, and labor costs, rents, financing terms, and other conditions to inform an
analysis of the feasibility of public development and ownership in the state.


What Is Public Development and Ownership?
For the purposes of this study, we define public development and ownership of housing as any scenario
in which a local or state agency puts together some combination of the following criteria, with the end
goal of ensuring some degree of public ownership.


3
  National Low-Income Housing Coalition. (2024). The Gap: A Shortage of Affordable Homes. https://nlihc.org/gap
4
  U.S. Census Bureau, Building Permit Survey, Annual History by State.
https://www.census.gov/construction/bps/annual.html
5
  For the context of this report, ‘affordable housing’ is housing whose cost consumes no more than 30 percent of a
low-income household’s income. Low-income households are typically categorized as those whose income is 80
percent of AMI or below.
6
  The scan conducted to identify case studies for this report was not exhaustive. Instead, it was targeted based on
media coverage, accessibility to publicly-available information and interviewees, and other factors.




 Page 49
 8


Public development and ownership involve scenarios where:
 ● Agencies act directly as a real estate developer, or engage closely (i.e., enter into a partnership or
 other development agreement) with development partners to secure some degree of public
 ownership in the project.
 ● Local or state agencies invest significant financial resources to secure an active role in the
 decision-making, development process, and ongoing management of housing, beyond basic
 regulatory oversight. This includes retaining full or partial ownership stakes in the properties.
 ● They are long-term owners of the housing or the land it's built on, maintaining continuous public
 control and oversight over the properties.

In theory, a public developer offers specific advantages over a private developer (non-profit or for-profit)
in fulfilling public policy goals. For example, a public entity would have a mission-driven focus rather
than being primarily motivated by maximizing financial returns (in the case of a for-profit developer). A
public developer would also have enhanced accountability, being directly accountable to the community
and elected officials, which could enhance transparency and align developments with public interests.
Such an entity would also likely have control over public land, ensuring it is used for its intended purpose
rather than being sold off for profit-driven developments. Additionally, a public developer would be able
to leverage public resources that may not be available to private developers. Finally, a public developer
can take a longer-term view on investments rather than focus on more immediate gains.

However, each of these could also be considered a potential disadvantage. Public developers may face
bureaucratic delays and inefficiencies, slowing down project timelines and increasing costs compared to
more streamlined private developers. Political influences and changing administrations can introduce
uncertainty and instability, potentially impacting long-term planning and consistency. The need for public
consensus and regulatory compliance can limit the flexibility and responsiveness of a public developer,
making it harder to adapt to market conditions or innovate. Reliance on public funding can be precarious,
as budget cuts and shifting policy priorities can reduce the availability of these resources, or make
projects more expensive, in turn leading to funding gaps and project delays, along with accrued deferred
maintenance. Long-term investments by public entities, such as spending more to address costly capital
repairs, may face scrutiny, particularly when there is pressure to prioritize immediate needs.

In the U.S., our highest profile case study of public development and ownership of housing is public
housing. America’s public housing portfolio has unfortunately encountered many of these challenges,
affecting its overall sustainability and quality. In America’s public housing program, local PHAs own and
manage public housing developments and are overseen by the federal government, which provides them
with operating and capital subsidies. Production under the program has largely ceased. Instead, the
prevailing paradigm for affordable housing production today is market-based, and largely relies on
leveraging the Low Income Housing Tax Credit (LIHTC) that the federal government makes available for
states to allocate to local projects. Figure 1 below shows low-income units built with LIHTC in relation to
the public housing stock in the U.S. and in Rhode Island. Despite its creation in 1986, the number of low-
income units that have been built using LIHTC is now more than double the number of public housing
units nationwide, and the count of LIHTC units overtook the count of public housing units in Rhode
Island by 2016.




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 9


Figure 1. Total Count of Public Housing versus Low-Income LIHTC Units




Note: the LIHTC trendlines represent all low-income units produced, regardless of expiration date, but exclude tax
credit projects missing year-placed-in-service information. Sources: HUD Picture of Subsidized Households 2000-
2020 and HUD LIHTC Property-Level Data 2000-2020.

There are two primary types of LIHTC (4 percent and 9 percent credits), but neither fully cover total
development costs of affordable housing. To make projects feasible, State and Local entities often
contribute some combination of soft (or “subsidy”) loans, grants, property tax discounts, other tax credits
or tax savings, and may facilitate pre-development zoning changes, to enable LIHTC-financed
development. However, those government entities tend to be more financially cautious, and generally do
not engage directly in development activities, hold an ownership stake in the buildings, or act as equity
investors.7 While LIHTC projects are required by statute to serve at least 20 percent of households at or
below 50 percent of the Area Median Income (AMI) or 40 percent of households at or below 60 percent
AMI, LIHTC-financed housing ends up serving many extremely low-income tenants who would
otherwise qualify for public housing (about 50 percent of LIHTC tenants earned less than 30 percent AMI
in 2021) because of the program’s interaction with vouchers and other subsidies.8




7
  Financial capital is essential for building housing, with equity investors and mortgage lenders playing significant
but distinct roles, each with different goals and risk profiles. Equity investors seek ownership in a property or
company, which grants them voting rights and the potential for high returns through dividends and capital
appreciation as the value increases. This ownership can be structured through direct ownership, joint ventures,
partnerships, or real estate funds, each offering different levels of control and involvement. This form of investment
carries higher risk because returns are not guaranteed and depend on the property's financial performance. In
contrast, mortgage lenders aim for lower risk and stable income by providing loans secured by the property,
prioritizing regular interest payments and being first to receive payments from a property's cash flow. Despite this
priority, there is still a risk that the property may not meet its financial obligations. The primary return for mortgage
lenders is the interest income from the loan, repaid over a defined term, often up to 30 years. This provides
predictable returns and the security of foreclosing on the property in case of default. In sum, equity investors seek
significant growth and ownership potential, while mortgage lenders focus on stable, reliable income with reduced
risk.
8
  In 2018, a revision to the tax code introduced a new income averaging option for LIHTC whereby new buildings
could rent to households who earn up to 80 percent of the AMI as long as the average rent and income limit of the
units designated as affordable does not exceed 60 percent of the AMI. This rule made it somewhat easier to cross-
subsidize in LIHTC developments.




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Domestic Models
Public development and ownership has gained increasing attention across the U.S. over the past year.9
Our scan identified nine domestic models that we consider far enough along in planning for or actually
constructing new units that they offer valuable insights for Rhode Island. We divide them into three
groups:

 ● Group A: Mixed Income Housing (Affordable with Market-Rate). These models–including
 the Housing Production Fund model pioneered by the Housing Opportunities Commission of
 Montgomery County, Maryland; the newly formed Atlanta Urban Development Corporation;
 Chicago’s Green Social Housing Revolving Fund; and Colorado’s Affordable Housing Financing
 Fund–invest, or intend to invest, public funds that take the place of private equity in the financing
 for large, mixed-income developments, and in turn, secure an ownership stake in these projects
 that goes beyond basic regulatory oversight. In this structure, any financial returns can be treated
 as profit that can fund other mission-based activities, or could be built into an individual project’s
 operations to maintain affordability, fund capital investments, support social services, or create a
 reserve fund, among other activities.
 ● Group B: Public Housing Conversions. These models–including innovative approaches being
 taken by the Boston Housing Authority, Cambridge Housing Authority, and Hawaii Public
 Housing Authority–highlight the potential of public housing authorities to redevelop and expand
 their portfolios using the Faircloth-to-RAD program and harness the powers they retain to issue
 bonds, grant tax exemptions, and more.
 ● Group C: Affordable Housing (No Market-Rate Units). These models–including Dakota
 County Community Development Agency’s senior housing program in Minnesota and The
 Housing Company in Idaho–are examples of public or quasi-public development that have
 existed for decades, yet have received little national attention. The former model draws on a
 special county tax levy and unique bond structure to build and own affordable senior housing
 without any tax credits. In the latter model, Idaho’s housing finance agency spun off a nonprofit
 that acts much like any other affordable housing developer, but is partially governed by the public
 agency.




9
  In February 2023, Seattle, WA voters approved Initiative 135 to create a Seattle Social Housing Developer
(SSHD) charged with developing and maintaining “social housing” in which higher-income tenants subsidize lower-
income ones. The SSHD does not yet have a dedicated revenue stream, though advocates submitted another ballot
initiative in February 2024 to fund it using a tax on salaries in excess of $1 million. Members of the California,
Massachusetts, and New York state legislatures have each since submitted bills to create their own state-level social
housing agencies. Governor Healey of Massachusetts has since included language for a social housing pilot in a
housing bond bill. Other states have been making strides to enable public development without calling it social
housing. For instance, Colorado passed a bill in 2022 to create the Middle-Income Housing Authority, which has the
power to “acquire, own, operate, and finance affordable rental projects” by issuing its own tax-exempt bonds and by
entering into public-private partnerships. Finally, in August 2023, the New York Times drew national attention to the
mixed-income public development model with an article titled “This Is Public Housing. Just Don’t Call It That”
showcasing The Laureate, a newly opened apartment building in Montgomery County, Maryland in which the
county’s public housing authority had a 70 percent ownership stake.




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Table 1. Characteristics of Selected Domestic Models


 Montgomery Atlanta Colorado Boston Cambridge Idaho Dakota
 County County*

 LIHTC ! !

 State Subsidy ! ! !

 Non-LIHTC ! ! !
 Federal
 Subsidy

 Property Tax ! ! ! ! ! !
 Exemption or
 PILOT

 Governance County City State City City State County
 Level

 Ownership County-level Municipal State equity Unknown Municipal Nonprofit County-
 PHA has PHA investment PHA retains with level PHA
 majority affiliate has generates small public owns in full
 ownership majority returns, but ownership sector
 ownership does not stake and oversight
 translate management owns in
 into responsibility full10
 ownership

 Affordability At least 30 At least 30 All units Unknown Unknown Close to Close to 100
 Mix percent of percent of must be 100 percent
 units are units are income- percent affordable
 affordable affordable restricted, affordable
 and
 restriction
 must
 average at
 or below
 90% AMI

 Units/projects 731 units in None None None 203 units in 2,010 1,800 units
 completed or 2 projects 2 projects units in in 29
 under 48 projects
 construction** projects

 Units/projects 2,399 units Unknown, 628 units 3,000 units 1,500 units Unknown Unknown
 in pipeline** in 4 projects 2 projects in 6 in an in an
 projects unknown unknown
 number of number of
 projects projects
*For the purposes of this table, we focus only on Dakota County CDA’s senior housing program.


10
 When THC develops LIHTC properties, those are initially owned by a limited liability company, but THC
includes a provision in the development contract ensuring that ownership transitions fully to THC after the LIHTC
compliance period expires so that the nonprofit can ensure their continued affordability.




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**Note that these numbers are drawn from a variety of sources, including interviews, presentations, and documents,
which date from late 2023 through mid 2024.


Rhode Island Context
Certain aspects of Rhode Island’s housing market and development landscape provide important context
for all three groups of models. There is widespread consensus on the need for new affordable housing,
although interviewees stressed that additional subsidy beyond LIHTC is needed to build that housing.
Interviewees from Rhode Island noted that 9 percent LIHTC credits can typically only fund about three
projects a year, and that the state is not maximizing its allocation of 4 percent credits.11 Interviewees also
stressed the particular importance of housing targeted to extremely low-income households (earning less
than or equal to 30 percent AMI).

Many financing tools and resources required for the models described below are available and/or actively
used in Rhode Island, including risk-sharing, property tax exemptions, Faircloth units, and Small Area
Fair Market Rents (SAFMRs). RIHousing, a national HFA, is approved by HUD for the risk-sharing
program, allowing it to spread risk without necessarily reducing financing costs. With this approval,
RIHousing can insure less than 50 percent of losses on risk-share loans and use its own underwriting
standards and terms, thereby reducing risk and borrowing costs.12 Rhode Island also has a law that can
lower property taxes for properties that restrict either or both the rents that may be charged to tenants of
the property or the incomes of the occupants of the property.13 Municipalities can also grant property tax
exemptions. Additionally, property owned by city-based housing authorities is exempt from property
taxes (unlike property owned by other housing authorities such as RIHousing). Model B relies on
leveraging “Faircloth units,” which are capped at the number of units PHAs owned or operated in 1999.
The state’s 730 Faircloth units offer a modest opportunity to expand the number of public housing units.
However, these units are not evenly distributed across the state–400 of those units are located in Newport.
SAFMRs allow PHAs to align rents with small area payment standards, allowing for higher levels of
federal subsidy in high-rent Zip Codes. Seven housing authorities in Rhode Island have implemented
SAFMRs.

Financing new development in Rhode Island can be difficult, impacting the feasibility of the models
outlined below. While many places in Rhode Island have high construction costs similar to those in
neighboring markets like Boston, rental markets are not as strong and may not be sufficient to support


11
 Maximizing the allocation of 4 percent Low-Income Housing Tax Credits involves full use of a state's “volume
cap” that is allowed by the federal government. The volume cap permits states to issue federally tax-exempt private
activity bonds, which attract investors due to their tax-exempt status. These private activity bonds can finance a
variety of projects, like highways or waste recycling facilities, but notably, they can also be used for multifamily
housing development that includes low-income housing components. A unique advantage of using these tax-exempt
bonds for multifamily housing is that they automatically qualify the projects for 4 percent LIHTCs. This dual benefit
of tax-exempt bonds and 4 percent tax credits significantly enhances the financial feasibility of low-income housing
projects. States that aim to maximize their 4 percent LIHTC allocation do so by dedicating a significant portion of
their volume cap to multifamily housing development. By doing this, they not only optimize the available federal tax
credits but also unlock additional federal funding that would otherwise remain untapped.
12
 For more information, see “FHA/FFB Risk-Share Loans” below.
13
 See footnote 24.




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models like those in Group A. Rising insurance costs in the state have further elevated ongoing costs.14
Group B models can benefit from the Moving-to-Work (MTW) designation–which facilitates shifting
funds between programs–but no PHAs in Rhode Island have such a designation. Furthermore,
interviewees observed a deficit of Community Development Financial Institutions (CDFIs) and other
gaps in the local financing ecosystem (including funding for pre-development efforts, although some
noted that recent grants for these costs have been helpful in filling the gap15) that make affordable housing
development particularly challenging.

A public developer in Rhode Island would also face challenges related to land use and public support.
While public land would help lower costs for public development in all three models below, interviews
indicated that the state has a limited amount of publicly-owned land, and that an inventory of the available
land would improve strategic planning for new development. In addition, many interviewees pointed out
the difficulty of drawing on efficiencies of scale for affordable development in a state with largely single-
family zoning. Interviews suggested that the parochial nature of Rhode Island’s development environment
(with 39 different cities and towns, and differing interpretations of zoning and land use), makes affordable
development challenging. Finally, concerns about the difficulty of fighting public opposition to affordable
development (“Not in my backyard (NIMBY)” attitudes) was another common theme in interviews with
Rhode Island stakeholders. For the past several years, Rhode Island legislators have introduced a wide
range of bills designed to streamline the development process, standardize land use and zoning
requirements, and allow higher density housing by right, particularly developments that incorporate
affordable housing.16

Critically, state and local housing agencies in Rhode Island already have affordable housing development
experience, although additional in-house capacity and expertise would likely be needed to implement the
models outlined below. RIHousing is a PHA and an HFA, and invested $1.2 billion into the state in 2023,
including $244 million in the form of financing for new or rehabilitated affordable homes.17 Indeed,
interviewees elevated PHAs as the entities best-positioned to develop and own public housing, and some
PHAs have already engaged in development at modest scales. For example, Coventry Housing Authority

14
 Voghel, J. (2024, March 29). Higher insurance premiums hindering new affordable housing. Providence Business
News. https://pbn.com/higher-insurance-premiums-hindering-new-affordable-housing/. Chen, D. (2024, June 7).
‘Not Sustainable’: High Insurance Costs Threaten Affordable Housing. The New York Times.
https://www.nytimes.com/2024/06/07/us/home-insurance-homeless-affordable.html
15
 In 2023, RIHousing created a new program to make grants to PHAs for “costs associated with the development of
public housing units” (including pre-development grants of up to $250,000 and technical assistance grants of up to
$50,000) using State and Local Fiscal Recovery Funds that were appropriated through the American Rescue Plan
Act (ARPA). By February 2024, the program had committed 5 pre-development awards, 7 technical assistance
awards, and 3 housing development proposals. Sources: RIHousing. (2024). “Approval of Public Housing Authority
Fund Program.” Request for Action by Board of Commissioners. https://www.rihousing.com/wp-
content/uploads/ARPA-PHA-Predevelopment-TA-Program-RFA-1.11.24.pdf; RIHousing. (2024). Memo to Board
of Commissioners, February 2024. https://www.rihousing.com/wp-content/uploads/Board-ED-Report-2.15.24-
Final.pdf
16
 RIHousing has summarized relevant bills introduced in 2023 here: https://www.rihousing.com/wp-
content/uploads/MTAP_Bill-Summaries_082023.pdf. In 2024, the General Assembly passed 14 housing bills,
several of which are designed to speed permitting and reform zoning:
https://www.rilegislature.gov/pressrelease/_layouts/15/ril.pressrelease.inputform/DisplayForm.aspx?List=c8baae31-
3c10-431c-8dcd-9dbbe21ce3e9&ID=374721
17
 RIHousing. (2024). Annual Report 2023. https://www.rihousing.com/annualreport2023/




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created a development arm to build four projects since 1999 (three LIHTC properties and one HUD 202
project). In addition, Newport Housing Authority recently redeveloped 262 units. However, many PHAs
have not developed properties in recent years, and even those who have would likely need to add capacity
to engage in larger-scale initiatives.


Group A: Mixed-Income Housing (Affordable with Market-Rate)
Group A models invest, or intend to invest, public funds that take the place of traditional mezzanine
financing and equity investments in the construction financing for large, mixed-income developments,
and in turn, secure a degree of public ownership in these projects that goes beyond basic regulatory
oversight. Many make this investment in part using a revolving loan fund, which is a pool of capital
from which loans with favorable terms are made to finance housing developments. Once these loans are
repaid, the funds are “revolved” back into that same pool, making them available for other projects. The
loan fund is sustained using this replenished capital. An exception is Colorado, where there is less
pressure for the state’s investment to revolve, because its fund, the Affordable Housing Financing Fund
(AHFF), is supported by a dedicated funding stream (a 0.1 percent state income tax). To the extent there
are returns to the State’s equity, , at least some of those returns will be distributed to tenants in the new
buildings as a way to promote wealth-building.

In Montgomery County and Atlanta, revolving loan funds are seeded with public capital and are used to
make short-term (5-year) construction loans. These loans are designed to replace higher-cost market-
financing, complementing conventional construction loans to complete the capital stack required for
housing development.18 Because these revolving loan funds are publicly driven, they offer financing at
lower interest rates compared to the private market. Similar to mezzanine financing, revolving funds
provide construction financing that is subordinate to senior construction loans. Funds like these can
participate as a hybrid of debt and equity, or as direct equity investments, but with the feature of accepting
lower financial returns than private market investors due to their public-oriented goals.19 In a hybrid
structure, the investment might grant varying degrees of ownership or control. In some cases, the public
entity may gain a direct ownership stake, while in others, it may have more limited influence, primarily
receiving financial returns or using that stake to prioritize social outcomes. In Montgomery County, HPF
loans come with interest rates that are significantly lower than those expected by private equity investors,
reflecting the public-oriented goals of the investment.20 Because the revolving loan is “taken out” (the
principal is repaid) by other forms of capital when a project converts to permanent financing, its main

18
 A capital stack is the structure of the various financing sources used to fund a real estate project, and typically
includes a combination of equity and debt. The stack determines who will receive the income and profits generated
by the development and in what order (usually, senior debt lenders are paid first, followed by mezzanine debt or a
“second” mortgage, then private equity). Each layer of the stack carries different levels of risk and return; senior
debt is the least risky and therefore has the lowest return, while equity is the riskiest and demands the highest return.
Often, a project has one set of loans with terms of 3-5 years specifically to finance the construction phase, followed
by a permanent loan phase upon a project’s completion.
19
 See footnote 7. In these cases, the entity might not act as a typical equity investor in that their primary goal is to
achieve positive social outcomes. In the case of affordable housing with market rate units included, they might seek
lower than market rate returns or to translate dividends back into building operations and/or other development
activities. The key distinction is that the investor is not also acting as the mortgage lender.
20
 Underwriting documents suggested that the interest rate on HPF construction loans ranges 3.5 and 5 percent (with
the higher rate assumed during the recent high inflation period).




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function is to help overcome the hurdle of construction financing (whether due to the cost of capital or the
lack of available capital altogether).

It is important to note that the model of a local government or HFA providing a low interest loan that
subsidizes the development of affordable housing is not new. In fact, such subsidized loans are
commonplace in affordable housing development. What is unique about this fund, which is relatively new
having been created in March 2021, is that it creates an ownership stake for the local government entity
(in combination with the use of other public financing tools). To establish the HPF, the county’s PHA,
called the Housing Opportunities Commission (HOC), issued a $50 million bond, with the County
Council agreeing to fund the principal and interest payments.21 The Council approved a second issuance
of an additional $50 million in May 2022 for a total of $100 million raised through the sale of bonds.
Each of the two $50 million fund tranches is expected to fund two projects at a time and revolve every
five years. One of the first projects to receive an HPF construction loan paid interest on that loan during
the construction period at a rate of 3.5 percent. The interest accrued during the construction term and was
repaid to the county, along with principal, at permanent loan closing. The HOC underwrote the project to
pay about $1.6 million in interest for a $14.3 million loan. The HOC anticipates that the HPF will cover a
total of $250 million in construction loans, funding approximately 3,000 units over the first 20 years. The
bond issuance is expected to be fully repaid within this period, after which they anticipate that the fund
will revolve with no additional costs.22 However, it is important to note that there might be ongoing costs
associated with maintaining below-market-rate interest rates.

There are two main approaches Group A models use for identifying viable projects. The first is to enter a
development project that has already secured permits, but has stalled due to lack of financing (such as due
to a lack of affordable financing). Montgomery County has used this approach, where the public entity
offers HPF financing in exchange for affordable housing commitments, effectively using government
investment to ensure the development of affordable units. Similarly, developers must already have site
control when they apply for an equity investment through Colorado’s AHFF, and are expected to close
within a year of receiving an equity award. A second option is to develop a strategy for using public land.
For instance, Chicago is exploring the potential for mixed-income development on sites that will open up
during the course of the Red and Purple Modernization, the largest capital project in the Chicago Transit
Authority’s history. This approach allows the public entity to manage projects from their inception.

These revolving loan funds are not designed to fully cover total development costs, rather, they fill a
financing gap that exists after a conventional construction loan is secured. As such, Group A models rely
on a package of public resources beyond a revolving loan fund. The HOC of Montgomery County is both
a housing authority and an HFA, and has discretion to provide low-cost capital, tax-exempt and taxable
bond financing, property tax exemptions, discounted land, and a County-run property insurance program.


21
 The HOC calculates that in exchange for issuing a low-cost triple-A municipal bond for $50 million, the County
might pay about $4.25 million per year in today’s high-interest environment. But the fund revolves at no cost after
20 years, and in the meantime, the HOC earns a 5 percent development fee on each project–totalling to about $2.5
million per year–which it repays to the County. This means that the HPF may cost the County as little as $1.75
million per year.
22
 Housing Opportunities Commission of Montgomery County, MD. (2024). Adopted Budget Book, p.147.
https://www.hocmc.org/images/files/Publications/FY_2024_Adopted_Budget_Book.pdf




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The HOC also has two lines of credit with a local bank in an aggregate amount of $210 million, which
allows it to act nimbly as a joint venture developer and/or lender, with more flexibility than comparable
entities.23 For example, in the case of the aforementioned HPF-financed deal, its financial feasibility relies
on the use of a full property tax exemption, a 40-year mortgage loan (supported by the FHA risk-sharing
program), cross-subsidy from market rate rentals (70 percent of all apartments), and a separate equity
investment from the HOC itself. In the case of Atlanta, the AUD operates as a subsidiary of the city’s
public housing authority, Atlanta Housing. Georgia law allows PHAs and their subsidiaries to grant tax
exemptions. The AUD also relies on public land, funding, and debt guarantees from the City of Atlanta,
and underwriting and development capacity from the city’s economic development agency, as well as
FHA risk-share loans for permanent financing.

Some of the tools used to finance affordable housing development or lower development costs in group A
models are actively used in Rhode Island, but not others. As mentioned, RIHousing is approved to use the
FHA risk-sharing program. In addition, there are a number of ways a public developer could lower
property taxes, whether via a statewide law that allows for capping taxes on affordable units,24
municipalities’ power to grant tax exemptions, and the exemptions applied to properties owned by city-
based housing authorities. However, interviews suggested that there is not a large supply of publicly
owned land in the state, and it has not been inventoried.25 Finally, insurance costs were also significantly
higher in Rhode Island mixed-income developments than in Montgomery County’s. The effect of higher
costs is to raise operating expenses, thereby lowering supportable debt.

Group A models are designed to create mixed-income housing by using the proceeds from market-rate
rents from some units to subsidize the lower rents of affordable units that are targeted to the 50-80 percent
AMI range. The projects tend to be built at a large scale, with typical projects including hundreds of units.
These are substantially larger than the typical LIHTC development in Rhode Island and elsewhere in the

23
 Housing Opportunities Commission of Montgomery County, MD. (2023). “New Issue: Multiple Purpose Bonds,
2023 Series C.” Bond Prospectus, October 19, 2023, p.8. https://prospectus.bondtraderpro.com/$MDHSG23.PDF
24
 Under Rhode Island statute §44-5-13.11 (enacted in 1995), properties in which a covenant restricts either rents or
tenants’ incomes (or both) may be taxed at a rate that equals eight percent of the property’s previous years’ gross
scheduled rental income, or a lesser percentage as determined by each municipality. There has been some debate
about whether the preferential tax treatments apply only to low-income units, or to the entire property, and whether
‘low-income’ should be better defined. Providence City Council in April 2024 passed an ordinance restricting
application of the ‘8-Law’ to housing that restricts tenants’ income to 80 percent of AMI, and where rent is capped
at 30 percent of income. Source: Alexandra Leslie. 2024. “‘8-Law’ Tax Break Ordinance Passes Providence Council
Despite Concerns.” WPRI, April 19, 2024. https://www.wpri.com/news/local-news/providence/8-law-tax-break-
ordinance-passes-providence-council-despite-concerns/. A recent report also found that not all low-income housing
in Rhode Island uses the 8 percent tax treatment. Potential reasons include the completion of developments prior to
the creation of the 8 percent% tax, the use of separate local tax stabilization agreements, or cases where the general
tax structure is more advantageous.
RI Housing. (2024). 2024 Report on RIHousing Development Activity and 8% Tax. https://www.rihousing.com/wp-
content/uploads/2024-Report-on-RIHousing-Development-Activity-and-8-Tax.pdf
25
 Providence used $8.5M in ARPA funds to launch a land bank program in 2022, which acquires, holds, and
transfers underused land for affordable housing. City of Providence. (October, 2022). Mayor Elorza, PRA, Partners
Announce Providence Neighborhood Land Bank. https://www.providenceri.gov/mayor-elorza-pra-partners-to-
announce-providence-neighborhood-land-bank/ RIHousing does manage the “Land Bank Program,” which provides
financing for non-profit and government entities to acquire properties, and could be used to support acquisition for
projects under the Group A model. RIHousing. Planning and Predevelopment: Land Bank Program.
https://www.rihousing.com/planning-predevelopment/




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country.26 Rhode Island’s zoning does not lend itself to large-scale development in many cases; 87
percent of land is zoned for single-family housing by right, and only eight percent is zoned for properties
with four or more units.27 To better facilitate affordable and mixed-income development, Rhode Island
could incentivize local zoning changes to allow higher-density development, as well as consider
inclusionary zoning programs that allow greater density for projects with income-restricted units.

Market conditions matter on both the demand and supply side. On the demand side, market rents need to
be high enough to generate income that can reliably act as a “cross-subsidy” to support the maintenance
and operating costs of income-restricted units. However, when unexpected events occur–a major
recession, for example, or a large storm–the government may need to step in to provide operating
subsidies or support the cost of updating and replacing major systems. Under a public development model
in which the expectation is that a public developer is self-sustaining over a long time horizon, there might
be pressure to redirect excess cash flow that is beyond debt and equity obligations to also fund future
projects. On the supply side, development costs must not be so high that the project becomes
economically infeasible, even with public subsidies. High land, construction, or labor costs, or too-low
rents, could make the model infeasible in certain markets. Indeed, Rhode Island interviewees noted that
the state faces construction costs on par with other high-cost places in Massachusetts, but felt that it
typically lacks the market rents needed to support Group A models. They suggested that outside of
Providence’s Jewelry District and certain coastal areas, market rents are not much higher than 120 percent
of AMI, potentially limiting the degree to which projects could benefit from cross-subsidization. The
financial analysis section of this report further investigates these conditions using market data. Local
interviewees also emphasized the state’s need for units targeted to extremely low-income households
(those earning 30% or less of AMI) rather than the 50-80 percent AMI units typically produced in this
model. They also anticipated opposition to using public resources for mixed income developments rather
than purely affordable projects.

Group A’s cross-subsidization model also relies on a willingness to use publicly-owned land and
investment to develop what might be considered “workforce housing,” as opposed to focusing only on the
most deeply affordable units. Proponents argue that Group A models can 1) complement the more
affordable projects already being built using competitive and limited LIHTC funding, filling an important
gap on the housing affordability spectrum; 2) accommodate, and even focus on voucher-holders who face
discrimination on the private rental market, thereby enabling deeper affordability; and 3) generate returns
over time through rental income and appreciation in property values, which could then be reinvested in
additional development and housing assistance programs. However, it is important to recognize that
capitalizing on appreciating property values can conflict with maintaining housing affordability, so the
degree of reallocating financial returns depends on the specific structure implemented (i.e. whether



26
 According to HUD data, the average size of LIHTC projects built between 2000 and 2019 is 80 units nationally
and 78 units in Rhode Island. The size of projects may be constrained both by land use regulations and by LIHTC
rules. Practitioners say that it is difficult to build tax credit properties that fall outside of a certain size range or that
are mixed-income (see: Miriam Axel-Lute. (2023). “The Only Tool In the Box.” Shelterforce.
http://shelterforce.org/2023/12/08/the-only-tool-in-the-box-what-it-means-that-lihtc-dominates-affordable-housing/ )
27
 HousingWorksRI. (2024). Rhode Island Zoning Atlas. https://www.housingworksri.org/learning-
center/rizoningatlas




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market rate residential units are included, and if so, whether the allowed rent growth is capped, or allowed
to adjust to market rents, or whether commercial income is included).

In these models, a public entity directly assumes the role of real estate developer, which puts a premium
on in-house capacity for, and experience with, real estate development and underwriting. Furthermore,
depending on the management structure, a range of capacities may be needed to manage the new units in
the long term. This could include directly managing a property’s operations or overseeing the work of a
private property manager, while also taking into consideration the risks of fluctuations in the market and
operating costs.

Montgomery County’s HOC has a high level of development expertise, which stems from the
Commission’s long history of public-private partnerships for mixed-income development. This proves
crucial for troubleshooting and implementing the model. The HOC typically hires a general contractor,
who is paid a “builder’s fee” of 4-4.5 percent of the construction contract for a new HPF-financed
building, but the HOC itself collects the developer’s fee. Similarly, by bringing together three separate
entities, Atlanta’s AUD is able to benefit from each of their relative strengths.

In Rhode Island, many existing state and local agencies have important experience with development and
financing, and if the state chooses to support a revolving loan fund, in addition to many budgetary
considerations of such a decision, it would need to consider the best location for an associated program
based on existing capacity and powers. Rhode Island interviewees suggested that PHAs might be the best
situated to use this model, because some already have development experience via the RAD program and
local development connections. However, in-house capacity and expertise may pose an obstacle for PHAs
(some of which have not developed properties in recent history), and interviewees stressed the importance
of working with a trusted developer partner. In addition, some PHA don’t see building units targeted to
households with 80 percent AMI or above as a key priority, given limited resources.


Key Takeaways
 ● Group A models are designed to produce large amounts of housing without the use of federal tax
 credits, especially in large developments located in high-opportunity areas that low-income
 households may not otherwise be able to access.
 ● The public ownership stake in these models can make it so that any excess cash flow can be
 redirected into additional development or other housing programs, if such profit is realized. At the
 same time, this approach also carries a higher degree of risk compared to traditional financing
 methods for affordable housing development, and efforts to maintain affordability may conflict
 with property value appreciation and the goal of generating returns. Depending on the design, a
 public ownership stake has the potential to generate durable affordability as well as long-term
 returns, but also exposes the public entity to the same risks and challenges any private real estate
 developer faces.
 ● These models require significant additional public investment beyond a revolving loan fund.
 Group A models pair these funds with favorable long-term financing (commonly generated from
 bond sale proceeds), property tax exemptions, and other tools to reduce total development costs
 and operating costs. Rhode Island actively uses some of these tools, but not others.




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 ● The feasibility of these models depends on specific local market conditions. As the financial
 analysis section of this report shows, Rhode Island has relatively high construction and operating
 costs, and relatively low rents. An analysis of census data surfaces only five census tracts where
 the 75th percentile of monthly contract rent exceeds $2,500; all of these tracts are located in
 coastal areas–including Melville (between Portsmouth and Middletown), Barrington, Portsmouth,
 and Little Compton–with the exception of one in North Providence (the village of Greenville).28
 According to CoStar data, the average rent in Providence was $1,920 (with a high of $2,180 in its
 most expensive submarket) as of summer 2024.29 This limits the potential for cross-subsidization.
 ● Public land is useful, but not always essential, in Group A models.
 ● In some cases, an already existing entity is better positioned to act as a public developer, while in
 other cases, it appears to require the creation of a new legal entity.
 ● A key consideration is the opportunity cost of each public dollar, as state or local funding
 allocated to one area cannot be used elsewhere. This is important because, in the context of Group
 A models, the absence of federal tax credits would almost always require additional local funding
 if the goal is to achieve the same affordability levels mandated by LIHTC rules.


Group B: Public Housing Conversions
The second set of models involves the redevelopment and expansion of existing public housing. Using
federal and other subsidies, Boston, Cambridge, and Hawaii’s public housing authorities aim to preserve
or replace existing affordable units, add additional deeply affordable units, and in some cases add market-
rate units to cross-subsidize rent-restricted units.

Importantly, the models in Group B all leverage Faircloth-to-RAD30 conversions. Faircloth-to-RAD is a
relatively new tool for public housing development. It allows PHAs to build new public housing units and
immediately convert them to units funded with project-based Section 8 subsidies, which often allows
public entities to unlock additional subsidies, but still, those subsidies come from a limited funding pool.
In the models we examined, PHAs used or anticipated using Faircloth-to-RAD to add new units as part of
redeveloping existing public housing sites. They also intended to retain an ownership stake in and
management responsibility for these units.




28
 These figures reflect American Community Survey (ACS) 5-year estimates from 2018 to 2022, reported in 2023
dollars, and may not fully capture recent rent increases in some neighborhoods.
29
 RIHousing. (August, 2024). Underwriting Report: 99 Water St.
30
 The Faircloth Amendment prohibited the construction of any new public housing beyond the number of units
PHAs owned as of October 1, 1999. Many PHAs have since de-densified their public housing stock through HOPE
VI and other programs, and so are below their “Faircloth Limit.” Faircloth-to-RAD allows these authorities to
convert their unbuilt Section 9 public housing units into Section 8 project-based vouchers. In 2021, HUD first
offered guidance for Faircloth-to-RAD conversions. Faircloth-to-RAD builds on the Rental Assistance
Demonstration (RAD) Program, which was created in 2011 to enable PHAs to preserve and improve their public
housing by converting it from Section 9 to project-based Section 8. Section 8 contracts are stable, predictable, and
can unlock opportunities to increase the subsidy the federal government pays for the unit relative to public housing
operating subsidies, though there are limits on when those opportunities are available. PHAs use this margin to
reinvest in their public housing stock. Faircloth-to-RAD uses the same model to enable housing authorities to build
new units.




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Faircloth-to-RAD comes with several caveats that PHAs must navigate. First, PHAs can only harness this
tool to build up to the number of units they owned or operated as of 1999 (their ‘Faircloth Limit’); some
PHAs have much less Faircloth capacity than others. Rhode Island PHAs collectively have approximately
730 unbuilt Faircloth units, and the majority of these (more than 400 units) are concentrated in Newport.
Second, although PHAs can better leverage Section 8 project-based vouchers to attract other private or
public financing for development, Faircloth-to-RAD typically still leaves a financing gap. The housing
authorities we include in our scan are finding different ways to address this gap. The Boston Housing
Authority, as a non-MTW authority that has implemented SAFMRs,31 has a special ability to increase
RAD rents to their small area payment standards, creating a deeper level of ongoing federal subsidy in
high-rent zip codes. The Cambridge Housing Authority, on the other hand, is an MTW authority, and so
does not have the ability to implement SAFMRS. Instead, the Cambridge Housing Authority must
combine Faircloth-to-RAD with LIHTC financing in order to make new development financially feasible.
Rhode Island does not have any PHAs with MTW status, but seven housing authorities have implemented
SAFMRs as of 2024.32

Also critical to these models is PHAs’ capacity, experience, and reputation as a developer or development
partner. The Boston Housing Authority has significant in-house development capacity which has allowed
them to successfully partner with private developers in large-scale public redevelopment projects. The
Cambridge Housing Authority has gained so much development expertise that it acts as a development
and preservation consultant to at least two other Massachusetts housing authorities. Some Rhode Island
PHAs have development experience, though at different scales. For instance, Coventry Housing Authority
(a relatively small agency that has a portfolio of 195 public housing units and 282 vouchers and has never
issued a bond) responded to the lack of nonprofit housing developers locally by creating its own nonprofit
development arm in 1999. The nonprofit, with the help of a consultant, has developed four new projects,
including three LIHTC properties and one HUD 202 development. In doing so, it collects rents and earns
a development fee that it can use much more flexibly than its other funds. The authority has recently
begun advising Smithfield on how to emulate this approach. Newport Housing Authority also has
development experience, having recently completed Phase IV of a five-phase redevelopment of Park
Holm, a 262-unit site. It partners with TAG Associates Inc., a small technical assistance provider focusing
on housing authorities, for all its development activities. Newport hopes to use its Faircloth authority to
add new units, but worries it may run out of land. Other PHAs, including Providence Housing Authority
(the largest PHA in the state with 2,606 public housing units and around 2,600 vouchers), have not
engaged in development in recent years. Providence Housing Authority solicits developers to apply for
project-based vouchers but focuses its own capacity on renovation and repairs, and on expanding services



31
 Moving to Work (MTW) is a demonstration program for PHAs that gives participating agencies the opportunity
to design and test new strategies. It exempts from many existing public housing and voucher rules and allows greater
flexibility with how they use their federal funds. Small Area Fair Market Rents (SAFMRs) are payment standards
for Section 8 voucher holders that are calculated at the Zip Code level, rather than at the level of the entire
metropolitan area. SAFMRs are designed to allow voucher holders to access high-cost neighborhoods by increasing
the amount a PHA can pay in those neighborhoods. HUD permits non-MTW agencies to augment Faircloth-to-RAD
rents in certain scenarios, including in zip codes where 90 percent of the SAFMR is more than 110 percent of the
metropolitan area FMR.
32
 The PHAs that have implemented SAFMRs are Providence, North Providence, South Kingstown, Bristol, East
Greenwich, Narragansett, and RIHousing.




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for their extremely low-income residents. In interviews, PHA leaders noted a tension between allocating
limited resources for current services versus developing new public housing.

Because of limited and uneven Faircloth authority and development expertise, Group B models may be
difficult to replicate at scale in Rhode Island. Nevertheless, by combining elements of Group B models
with Groups A or C, the state may be able to take advantage of Faircloth-to-RAD, tax-exempt housing
authority-owned land, and certain PHAs’ expertise for public development and ownership.


Key Takeaways
 ● Group B models take advantage of the important statutory powers retained by PHAs in order to
 improve the quality of existing public housing and add new, deeply affordable units.
 ● Group B models are best suited for housing authorities with sizable Faircloth capacity, like
 Newport Housing Authority in Rhode Island. Even with this capacity, the Faircloth-to-RAD
 program usually does not offer a deep enough subsidy on its own to cover the costs of
 development, leaving a financing gap that must be filled with tax credits and other sources.
 ● Group B models rely on public housing authorities’ development expertise. Some Rhode Island
 authorities have relevant experience, but on a relatively small scale. Others have not developed
 new housing in recent years, instead focusing their energy and resources elsewhere.
 ● Nevertheless, there is potential to combine elements of Group B with elements of models in
 Groups A and C.


Group C: Affordable Housing (No Market-Rate Units)
While Groups A and B include emerging models, there are longer-standing models of public development
and ownership in the U.S. One example is the Dakota County CDA in Minnesota, which has developed
new affordable housing for seniors without using federal tax credits since the 1980s. Minnesota state
statute allows the CDA to issue tax-exempt “essential function” bonds, which are credit-enhanced with a
general obligations pledge from Dakota County, to finance new senior housing developments. Each new
bond issuance is amended to join one, large common bond, which allows the CDA to pool revenue from
across its developments to service the debt. Aggregating all operating revenue and costs also allows the
CDA to spread out the cost of major repairs such as new roofs, windows, and siding over time –
something that is increasingly important as its earlier projects turn thirty and forty years old. Importantly,
in addition to its rent revenue, the CDA relies on a special property tax levy authorized by the
Minnesota legislature in 1999 to service a portion of the bond debt.

Because the CDA does not use any LIHTC financing for its senior housing program, it has more freedom
to design its projects without more expensive amenities such as dishwashers, in-unit washers, or large
common spaces. These construction cost savings are passed along in the form of more deeply affordable
rents. According to the CDA, it has not experienced any lack of demand for its units despite the absence
of such amenities, but it is not clear whether the same would be true in buildings aimed at families.

Dakota County’s approach has elements that appear particularly promising in the Rhode Island context. It
creates relatively small, 100 percent affordable buildings, which are likely to be more politically palatable




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in many Rhode Island communities than large-scale mixed-income developments. The Dakota County
CDA works with municipalities across the county to identify suitable sites, sometimes accessing
municipal land and other local subsidies; a Rhode Island public developer would need to work with each
of the state’s 39 municipalities in a similar way. In order to replicate this model, Rhode Island would need
to identify or create an entity with sufficient real estate development expertise and set up a dedicated
funding stream. Rhode Island interviewees typically pointed to PHAs as best-situated to engage in public
development, and no state-level entity surfaced as a clear candidate for such a role. Finally, it is important
to note that Dakota County CDA’s approach is successful partly because of its large portfolio, which
helps support the model. In contrast, Rhode Island, starting with a smaller portfolio, would likely face
greater risks and challenges during the initial implementation.

Another long-standing model in Idaho highlights the importance of developing a strategy to avoid
cannibalizing existing funding streams for affordable housing. The state’s HFA, the Idaho Housing and
Finance Company, created a nonprofit called The Housing Company (THC) in 1992, when there was
little competition for the state’s LIHTC allocation. THC has since become an effective affordable housing
developer, producing units all over the state, and like the Dakota County CDA, uses this large portfolio to
leverage investment into new developments. THC must perform a careful balancing act, however. On the
one hand, because it competes with other nonprofits for the state’s allocation of tax credits, it must be
seen as not benefitting from the HFA’s favoritism. On the other hand, its expertise and public mission
have made it an attractive way to funnel non-LIHTC financing, including Idaho’s American Rescue Plan
Act (ARPA) funds, into affordable housing. Replicating this model in Rhode Island today would risk
pitting a public developer against a well-established nonprofit housing sector. Rhode Island interviewees
instead stressed the need for more support for the current affordable housing development sector,
including more support for pre-development work and additional subsidy.


Key Takeaways
 ● Group C models create relatively small, 100 percent affordable buildings rather than large mixed-
 income developments.
 ● Some Group C models keep construction costs lower by building a different kind of end product
 than what LIHTC rules might require, which can translate to greater affordability. This approach
 would require careful review of building codes and political support for a model that does not
 provide certain amenities to households living in affordable housing.
 ● These longer-standing models show that public development can be sustainable over time and
 underline the value of developing a large portfolio of units, which can be used to spread out the
 cost of financing, management, and repairs.
 ● Group C highlights the importance of creating public development models that are additive rather
 than competitive. Public developers can complement the existing affordable housing development
 community and enhance existing efforts.
 ● For public development to succeed under any model, development capacity and expertise are key.
 Partnering with outside consultants, developers, and contractors can reduce the burden on public
 entities, but some in-house underwriting and real estate development capacity is essential in every
 case. Models across Groups A and C also underline the usefulness of combining this development
 capacity with HFA status.




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Financial Analysis

Using an Analytic Tool to Evaluate Obstacles and Opportunities
To explore the financial obstacles and possible pathways to developing affordable housing in Rhode
Island without LIHTC equity, we developed a simple analytic model of a hypothetical multifamily rental
project. Our goal was to arrive at a basic understanding of the magnitude of financial gaps in a
prospective project, as well as the potential impact of deploying various resources and strategies to fill
those gaps. To streamline the analysis, we made several simplifying assumptions, which are noted in the
discussion of variables below. It should be noted that the economics of this model hold regardless of
whether the development is owned and developed by a public, nonprofit, or for-profit entity. It is also
important to emphasize that this model cannot serve as a substitute for a full financial analysis of an
actual project.

Equally important to underscore is what this analysis does not show, that is, whether public development
or ownership generates long-term benefits that make it worthwhile, especially compared to the prevailing
model of nonprofit-led tax credit-financed development. Such an analysis would depend on the specific
structure of the public entity, the way it is capitalized and funded, its staff capacity and expertise, its
authority and ability to manage risk, the market competition it faces, and its access to public land, Section
8 subsidies, and other public goods. It also depends on long-term projections about the Rhode Island
context for developing and operating housing. While such an analysis is outside the scope of this study,
these are questions that Rhode Island would ultimately need to weigh if it chose to pursue a public
development and ownership model.


Variables
The analytic model utilizes several key variables:

 ● Project Scale. Our baseline case assumes a 100-unit rental project, which can be scaled up or
 down (as previously mentioned, this is larger than a typical LIHTC funded project in Rhode
 Island). For simplicity, the model assumes that the project contains only 2-bedroom apartments,
 each sized at 800 square feet. Both the number of units and average square footage per unit are
 variables that can be manipulated.
 ● Income Mix. The baseline model assumes the following mix of apartments by affordability:
 ○ Market-Rate Units. In the base case, 70 percent of the apartments (70 units) are available
 at market rents of $3,000 per month, which represents rents at the very highest end of the
 market, and the likely rent in a few years when a project is completed and leased up. In
 general, market rents vary by location (see Figure 2, below), and this market rent is not
 supported in Rhode Island’s lower-cost areas. Conversely, a well-located project with
 desirable amenities will support a higher market rent. Highlighting the aggressiveness of
 this assumption, an analysis of ACS microdata suggests that the 75th percentile of
 contract rents exceeds $2,500 in only five census tracts in Rhode Island, which are
 located primarily in coastal areas–Melville (a very small Census-designated place
 between Portsmouth and Middletown), Barrington, Portsmouth, and Little Compton–with




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 the exception of a tract in North Providence (the village of Greenville). These figures
 reflect ACS 5-year estimates from 2018 to 2022, and may not fully capture any recent
 rent increases. These tracts also all have high homeownership rates (averaging more than
 85 percent), which suggests that it may be difficult to build new multifamily rental
 buildings in these areas even if market rents would support development.
 ○ Moderate-Income Units. The model provides the user an opportunity to include
 moderate-income units affordable to households at 80 percent of Rhode Island’s AMI,
 although the base case assumes no units at this affordability band.
 ○ Low-Income Units. 20 percent of the apartments in the base case (20 units) are priced at
 rents that are affordable to low-income households earning 60 percent of AMI. In this
 model we assume a monthly rent for these apartments is $1,686.
 ○ Very Low-Income Units. Finally, 10 percent of the apartments (10 units) are priced at
 rents that are affordable to households earning 40 percent of AMI. In this model, we
 assume monthly rent for these apartments will be $1,124.

 The model allows the user to change the distribution of units and the rents charged for each unit
 type. The affordable rents presented in the base case are based on statewide averages. Actual
 AMI-based rents vary by region. Additionally, for simplicity, the model does not adjust for utility
 allowances. In an actual rather than a hypothetical mixed-income project, utility costs borne by
 low-income tenants are deducted from rent, resulting in a modest decrease in the revenue
 available to support the project.

 ● Operating Expenses. Based on an analysis of comparable market rate multifamily rental projects
 in Rhode Island, the baseline model assumes that it will cost $9,150 per unit per year to fund the
 operations of the project before property tax obligations. Operating expenses include maintenance
 and repairs, electricity and heating costs for the common areas of the building, water and sewer
 expenses, insurance, property management fees as well as staffing and administrative costs. It is
 possible to adjust operating expenses to reflect projects designed to operate at a lower cost, if, for
 example, passive house standards are used to reduce energy use, or if government co-insurance
 programs are available to reduce insurance premiums. They can also be adjusted upwards, if, for
 example, insurance costs escalate.
 ● Property Taxes. In the baseline case, we assume that the property will benefit from the 8-Law,
 which sets property taxes at 8 percent of scheduled gross rental income ($2,448 per unit).33
 ● Debt Sizing. Our model assumes that first mortgage debt is sized based on a 1.15 debt service
 coverage ratio, with a 30-year loan term and a fixed interest rate of 5.7 percent. Lending
 institutions use a debt service coverage ratio to lend to all developers, whether nonprofit or for-
 profit. The return on equity for the developer/owner is factored into this debt service coverage
 ratio. All three of these variables may be adjusted to understand how financing rates and terms
 can impact financing gaps. Under the baseline case, the project can support a maximum mortgage
 loan of $21.8 million.
 ● Development Costs. The following variables are used for the development budget, all of which
 can be manipulated:
 ○ Acquisition Cost. For this hypothetical analysis, we assume zero land acquisition cost.

33
 See footnote 24.




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 ○  Hard Construction Costs. Based on recently developed comparable projects, the analysis
 assumes hard costs of $325,000 per unit.34
 ○ Soft Construction Costs. For simplicity, we assume that soft costs are equal to 30 percent
 of hard costs, which equals $97,500 per unit. Soft costs generally include architectural
 and engineering fees, legal fees, permitting fees, environmental assessments, title fees,
 financing fees and carrying costs during the construction period.
 ● Developer Cash Equity. The analysis assumes that the developer invests 20 percent cash equity.

Figure 2. 75th Percentile Contract Rent by Census Tract in Rhode Island, (2022$), 2018-2022 5-year
ACS Estimates.




34
  This per unit cost translates to a hard cost of $325 per gross square foot. CoreLogic, Inc. (2024). *SwiftEstimator
Commercial Estimator: Gross Hard Cost per Square Foot (Luxury and Non-Luxury 10-Story Residential Apartment
Building with Elevators in Providence, Rhode Island). Marshall & Swift Licensed User Certificate.




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Baseline Case
The baseline model presents a 100-unit mixed-income project (70 percent market-rate and 30 percent
affordable) in which there are zero land costs and the project receives 8 percent property tax treatment.

As shown in Figure 3, below, the Base Case generates a financing gap of $12 million ($120,000 per unit)
to achieve breakeven, even with free land and preferential tax treatment. In this analysis, we rely on
aggressive assumptions about residential rental income, assuming rents at the very highest end of Rhode
Island’s sub-markets. We also do not include an upfront reserve requirement. Despite being aggressive on
residential rents, we conservatively do not include commercial or ancillary income, which would help a
project’s financial feasibility especially in markets where mixed-use commercial corridors are common.
We assume a 20 percent equity investment. If a government entity were also taking the place of an equity
investor, the subsidy per unit figures would need adjustment to account for both the subsidy loan and
equity investment.

Figure 3. Hypothetical Mixed-Income Project, Base Case




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Closing the Gap
There is no one single way to close a gap of this magnitude. Capital gaps are usually narrowed by
employing a variety of interventions. To better understand how changes in variables can impact project
feasibility, we modeled a variety of interventions and impacts.

In Figure 4, we show the impact of a full property tax exemption, which would relieve the property of
its estimated $2,448 per unit per year property tax liability and reduce the capital gap to $8.9 million.

Figure 4: Impact of a Full Property Tax Exemption.




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In Figure 5, we apply project-based Section 8 subsidies. These operating subsidies will increase the
rental income on the affordable units, thereby allowing the project to support more debt. Project-based
Section 8 rent subsidies would increase rental income on all affordable units to $2,250 while still ensuring
the tenants housed have incomes below the specific AMI requirement. This would allow the project to
support debt of $24.7 million, which would reduce the capital gap to $9 million. However, assuming all
affordable units would receive project-based subsidies, it’s important to note that Davis Bacon wages
would be required in the project’s construction; we do not model increased construction costs here (which
is an additional aggressive assumption).

Figure 5: Impact of Using Project-Based Section 8 Subsidies.




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Next, we explore the impact of local or state soft loans (subsidy loans). Subsidy loans from government
entities in the form of below-market subordinate loans to the affordable units are often used to narrow
financing gaps, whether in the form of a dedicated fund or trust, or just a direct loan from the government
entity itself. Figure 6 shows how $50,000 per affordable unit in a government subsidy loan would reduce
the overall financing gap by $1,500,000. A typical form of federal subsidy, again when not relying on
LIHTC, is funding under the HOME program. Using such a subsidy to fully close the gap would cost
upwards of $120,000 per unit, and about $400,000 per affordable unit created.

Figure 6: Impact of Using Government Soft Loans.




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Longer loan terms can also improve the financing package. As shown in Figure 7, extending the loan
term to 40 years allows for an additional $2.1 million in debt to support the project. If the government,
rather than a private bank, is the lender for such a 40-year loan, it would need to raise that capital from
borrowers, likely through general obligation bonds or project-level bonds.

Figure 7: Impact of Using a 40-Year Loan Term.




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Projects located in very high-rent locations may be able to support higher rents that generate more
revenue, thereby increasing borrowing capacity. As shown in Figure 8, increasing the rents on market rate
units from $3,000 to $3,500 would allow the hypothetical project to support $26.3 million in debt,
reducing the financing gap to $7.4 million.

Figure 8: Impact of Higher Market Rents.




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Using all of the above interventions in combination would eliminate the financing gap and make a
project financially feasible. With a full property tax exemption, $5,000/unit soft subsidy, very high market
rate income, a 40-year loan term, and the affordable units covered with rental income from Section 8
vouchers, such a project would have a residual land value of nearly $2.6 million (keeping in mind the
assumption that land acquisition is zero). Given Rhode Island’s development conditions, it is likely that if
a public developer were created to build and finance mixed-income projects like this, it would need
access to this full array of tools to make development realistic. See Figure 9.

Figure 9: Impact of Combined Interventions.




Financial Analysis Summary
Our financial analysis model highlights the challenges and opportunities of developing affordable housing
in Rhode Island without relying on LIHTC equity, emphasizing that such an effort would demand a
substantial commitment of public financing from state or local funds. Using data about Rhode Island’s
existing construction costs and market conditions, we find that in the baseline mixed-income case, there is
a substantial financing gap of $120,000 per unit (and nearly $400,000 per affordable unit). This is the case
even assuming no site acquisition cost. This gap highlights the necessity of deploying multiple strategies
to achieve financial feasibility. Key interventions such as project-based Section 8 subsidies, government
capital subsidies, extended loan terms, and targeting construction in higher rent markets could collectively
mitigate or eliminate this gap. In the next section, we provide detailed descriptions of how these various
tools work in practice.




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This analysis does not address whether public development or ownership generates long-term benefits
that justify its cost, particularly in comparison to the prevailing tax credit-financed development model.
Such an analysis would depend on several factors, including the specific structure of the public entity, its
capitalization and funding, staff capacity and expertise, authority and ability to manage risk, competition,
and access to public land, property tax exemptions, Section 8 subsidies, and other public goods. While
this deeper analysis is beyond the scope of our current study, these are critical questions that Rhode Island
would need to consider in order to grapple with the question of standing up a public developer entity.


Key Tools for Emerging Public Development Entities

FHA/FFB Risk-Share Loans
Background

The Section 542(c) Housing Finance Agency Risk-Sharing Initiative is a joint program of HUD and the
U.S. Department of the Treasury to share the risk of losses deriving from loan defaults across federal and
local agencies. Risk-share loans enable state and local HFAs to offer low-interest multifamily loans that
are credit enhanced by HUD's Federal Housing Administration (FHA) mortgage insurance and then
purchased by the Treasury's Federal Financing Bank (FFB). FHA risk-share loans were first introduced in
1992, and the program was strengthened in 2015 when HUD formally enlisted the FFB to provide the
capital for the loans. FFB’s ability to participate was allowed to lapse in 2018, but was reauthorized on a
temporary basis in 2021. The program was set to cease accepting applications in September 2024 but has
since been extended indefinitely, highlighting the volatility of programs that public developers could rely
upon.

HFAs must apply for HUD’s approval in order to participate in the program. Currently, 22 agencies are
approved to participate, with some lending more actively than others. RIHousing has Level II approval,
which allows the agency to insure less than 50 percent of any losses on risk-share loans and use its own
underwriting standards and loan terms for Level II loans. The HUD Office of Multifamily Housing
oversees the program.

FHA/FFB risk-share loans come with affordability restrictions (20 percent of units in a risk-share-
financed project must be set aside for families with incomes at or below 50 percent of AMI, or 40 percent
of units for families at or below 60 percent AMI), but these are typically less restrictive than those
imposed by the other sources or programs involved in a given project. The loans can be used both for new
construction and preservation or rehabilitation, including of occupied buildings. HUD is currently
working on an improvement to the program that would create greater interest rate certainty during long
construction timeframes.35




35
  Handelman, E. Deputy Assistant Secretary for Multifamily Housing Program, HUD. (2024, July 12). Public
Development Community of Practice Quarterly Meeting.




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Impact

FHA/FFB risk-share loans are typically the lowest-cost capital available for multifamily housing
development; by lowering interest rates on a first mortgage by 100 to 200 basis points, they can make a
critical difference in a project's feasibility. The loans can be especially valuable for jurisdictions that have
spent all of their volume cap for the year (see tax-exempt bond recycling, below).36

Since first receiving approval to participate in the risk-share program in 1994, RIHousing has executed
$319 million worth of risk-share transactions in over 31 projects, resulting in 3,200 new or preserved
affordable housing units. Although RIHousing has primarily used the program for preservation, with
interest rates climbing, it increasingly uses risk-share loans for new construction (a recent example is
West House II, a 54-unit senior building in Middletown). Kara LaChapelle, Chief Financial Officer of
RIHousing, reported earlier this year that taxable bonds have interest rates significantly higher than FFB
rates (she estimated the difference to be 1.7 percent).37

Risk-share Loans in Action

Montgomery County’s HOC, which is both a local housing finance agency and a public housing agency,
has used FHA/FFB risk-share loans as a source of permanent financing in its own developments,
including The Laureate. HOC Senior Vice President of Real Estate Zachary Marks notes that risk-share
loans trigger Davis-Bacon provisions requiring the HOC to pay contractors and subcontractors locally
prevailing wages, which adds to the cost of construction. At the same time, however, they are an excellent
source of low-cost, long-term financing with up to 40-year terms and lower interest rates than Fannie Mae
or Freddie Mac loans.38 In contrast, Rhode Island insures loan at a project's permanent loan phase, and
does not rely on it during construction, as a way of keeping hard costs lower.


Tax-Exempt Bond Recycling
Background

The Internal Revenue Service (IRS) allows state and municipal agencies to issue tax-exempt bonds for
endeavors with a qualified public purpose, including the development of affordable housing. Investors
who buy these bonds can exclude the interest income from federal taxes, which in turn lowers financing
costs for developers. This benefit can also indirectly reduce costs for localities by making it more feasible
to undertake affordable housing projects. Tax-exempt bonds also provide as-of-right 4 percent LIHTC to
housing projects that meet certain requirements.39 Every year, the IRS sets a “volume cap” limiting the


36
 Handelman, 2024.
37
 Mamet, Abram. (2024, June 1). Risk-Sharing Initiative Extended Indefinitely. Tax Credit Advisor.
https://www.taxcreditadvisor.com/articles/risk-sharing-initiative-extended-indefinitely/
38
 Marks, Zachary. Senior Vice President of Real Estate, Housing Opportunities Commission of Montgomery
County (2024, January 30). Public Development Community of Practice Quarterly Meeting.
39
 Biber, Joe. (2007). Financing Supportive Housing with Tax Exempt Bonds and 4% Low Income Housing Tax
Credits. Center for Supportive Housing. https://www.csh.org/wp-content/uploads/2012/01/Report_financing-
withbondsand-litch_1012.pdf




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maximum issuance of tax-exempt private activity bonds for each state. In 2023, this cap was set at the
greater of $120 multiplied by the state population or $358.8 million.40

The Housing and Economic Recovery Act of 2008 (HERA) first enabled the creation of tax-exempt bond
recycling programs.41 Under these programs, state and local housing finance agencies can reuse tax-
exempt bonds that have been repaid for other housing projects, as a way of generating additional capital
to fund multifamily projects. This is accomplished through the issuance of new bonds, which, for federal
tax purposes, are treated as refunding bonds for the bonds that financed the original project. By doing so,
new projects can be financed without the allocation of additional volume cap. However, recycled bond-
funded loans do not generate additional as-of-right tax credits, and therefore are not eligible for LIHTC.
As a result, recycled bonds are often used to encourage affordability in mixed-income projects and
provide a source of capital to do so.

Impact

If a state does not fully allocate its volume cap towards multifamily housing, as is the current case in
Rhode Island,42 then using the tax-exempt bond recycling program will not be necessary because it is
more likely that such agencies could just allocate additional tax-exempt bonds. In New York City, for
example, the lending activities of the Housing Development Corporation (HDC) generates roughly $150
million to $200 million in recycled bond cap per year (a substantial portion of its allocation), after
exhausting its volume cap that generates LIHTC credits.43 Through 2019, HDC has recycled
approximately $3 billion in bonds and financed 120 projects with over 35,000 units.44

Tax-Exempt Bond Recycling in Action

In addition to HDC, the California Housing Finance Agency (CalHFA) recycles its tax-exempt private
activity bond volume cap through its Bond Recycling program. The program functions in a similar
fashion to the one operated by HDC, in that CalHFA issues new bonds from loan prepayments and
therefore recycles volume cap that would otherwise expire. These recycled bonds can only be recycled
once, and must be issued within four years of the original issuance. Moreover, the recycled bonds can
only be used for multifamily housing, and cannot generate LIHTC credits. Examples of eligible projects
include 100 percent affordable projects and projects reaching the end of their tax credit compliance period
for preservation purposes.45



40
 Internal Revenue Service. (2022). Revenue Procedure 2022-38 (p. 15). https://www.irs.gov/pub/irs-drop/rp-22-
38.pdf
41
 Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289, 122 Stat. 2654 (2008).
https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
42
  Novogradac. (2022). 2022 State Bond Caps and Deadlines. https://www.novoco.com/resource-centers/affordable-
housing-tax-credits/2022-state-bond-caps-and-deadlines
43
 National Council of State Housing Agencies. (2013). Joint NYC HDC/NYS HFA Joint Recycling Program.
44
 California Housing Finance Agency. (2019). Presentation on the New York City Housing Development
Corporation and the use of Recycled Private Activity Bonds. https://www.calhfa.ca.gov/about/events/board-
meetings/books/2019/20191219/20191219-handout-1.pdf
45
 California Housing Finance Agency. (2022). Bond Recycling Program Term Sheet.




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Property Tax Abatements and Exemptions
Background

Property tax abatements reduce the total amount of tax owed, usually for a fixed period of time, whereas
tax exemptions adjust the rate of taxation or the value of the property that is subject to taxation, thereby
“exempting” some designated value from taxation. Jurisdictions may restrict eligibility for abatements or
exemptions based on the type of new housing built, its location, or its share of low-income units.46

Many states bar municipalities from collecting property taxes on housing projects owned by the federal
government or by local public housing authorities (regardless of who manages the project). In some cases,
housing authorities may still be required to make payments in lieu of taxes (PILOTs), which may be
calculated according to a statewide formula or negotiated at a municipal level.47 In some states, certain
nonprofits or “public charitable institutions” may also enjoy or be able to apply for property tax
exemptions.

Impact

Property tax abatements and exemptions effectively lower a project’s total operating costs, thereby
increasing the amount of debt that can be supported to finance a property’s construction. For example, a
2020 appraisal for a 62-unit mixed-income housing development in Providence estimated that property
taxes per unit would normally be more than $5,000. However, applying the state’s tax abatement would
reduce average per-unit taxes to about $3,300. This amounts to approximately $114,300 in savings for the
project per year, or about 15 percent of operating expenses.48 By forgoing this amount of tax revenue, the
municipality of Providence reduces revenues it receives and could spend for other public purposes. At the
same time, if it were fully taxed, the project would have required additional upfront subsidy to be built.
Conversely, if the project were fully taxed, it would have required additional upfront subsidy to be viable.
Although both approaches constitute forms of public funding, providing an upfront subsidy requires a
larger initial capital outlay compared to property tax discounts, which are spread out over time through
smaller, ongoing reductions.

Property Tax Relief in Action

Property tax relief is key to public development models. Many of the public development entities
captured in our domestic scan are public housing authorities whose property is exempt from taxes,
including the Boston Housing Authority, Cambridge Housing Authority, Montgomery County HOC,
Dakota County CDA. Atlanta Urban Development Corporation, as a wholly-owned subsidiary of the
housing authority Atlanta Housing, is also property tax-exempt. Under Georgia state law, housing
authorities and their subsidiaries can enter Private Enterprise Agreements (PEAs) with for-profit

46
 Local Housing Solutions Lab. (2021, February 25). Tax Abatements or Exemptions.
https://localhousingsolutions.org/housing-policy-library/tax-abatements-or-exemptions/
47
 See, for example, Connecticut policy on this topic: McCarthy, K. E. (2004, February 20). Property Taxes On
Hud-Run Housing. Connecticut General Assembly. https://www.cga.ct.gov/2004/rpt/2004-R-0193.htm
48
 See footnote 24.




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developers, managers, and owners of housing and grant them property tax exemptions for any units with
stabilized rents affordable to households earning below 140 percent of AMI.49 In Idaho, low-income
housing owned by nonprofits like THC is exempt from taxation.50

In Rhode Island, all state-owned property is tax-exempt,51 as is property owned by municipal housing
authorities, though they may be required to pay a PILOT.52 Rhode Island also allows for property tax
exemptions for new projects with rent or income restrictions.53 Nonprofits are not exempt from property
taxes in Rhode Island; instead, exemptions for certain properties belonging to certain nonprofits have
been written directly into state statute.


Faircloth-to-RAD
Background

The Faircloth-to-RAD program, established in 2021, allows PHAs to build new public housing (Section
9) units and immediately convert them to units with project-based Section 8 contracts. Importantly, PHAs
must remain within their “Faircloth Limit,” that is, the number of units they owned or operated as of
1999. Many PHAs have lost units since 1999, and so have a certain number of units which they could
now add using Faircloth-to-RAD, which is sometimes referred to as their “Faircloth authority.”54
Through Faircloth-to-RAD, PHAs can usually access deeper subsidies from RAD rents as compared to
public housing (Section 9) subsidies. The program guarantees a rental assistance contract prior to
construction, which PHAs may use to leverage other funding streams, including private debt and equity,
to build new units or preserve existing affordable housing. To use Faircloth-to-RAD, PHAs must first
identify a development opportunity and request a Notice of Anticipated RAD Rents (NARR) from
HUD.55 After HUD calculates RAD rents and issues the NARR, PHAs must submit a Mixed-Finance
Development Proposal (MFDP) for additional HUD approval.56 Once HUD approves the MFDP and
issues the RAD Conversion Conditional Approval (RCCA), PHAs can begin construction of new units.57
This process typically takes several months. Post-construction, RAD closing occurs, triggering the
beginning of Section 8 Housing Assistance Payments (HAP) in January of the following year.58




49
 Georgia Code §8-3-8 (2022). https://law.justia.com/codes/georgia/2022/title-8/chapter-3/article-1/part-1/section-
8-3-8/
50
 Idaho Code §63-602GG (2002). https://legislature.idaho.gov/statutesrules/idstat/title63/t63ch6/sect63-602gg/
51
 RI Code §44-3-3 (1896). http://webserver.rilin.state.ri.us/Statutes/TITLE44/44-3/44-3-3.HTM
52
 RI Code §44-25-30 (1956). http://webserver.rilin.state.ri.us/Statutes/TITLE45/45-25/45-25-30.htm
53
 See footnote 24 for more detail. RI Code §44-5-13.11 (1995). http://webserver.rilin.state.ri.us/Statutes/title44/44-
5/44-5-13.11.htm
54
 See footnote 30 for more detail.
55
 U.S. Department of Housing and Urban Development. (2023). Faircloth-to-RAD guide (p. 5).
56
 HUD 2023. Faircloth-to-RAD Guide, p. 5.
57
 HUD 2023. Faircloth-to-RAD Guide, p. 5.
58
 HUD 2023. Faircloth-to-RAD Guide, p. 16.




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Impact

While Faircloth-to-RAD primarily invests federal funds, the program may require additional local subsidy
depending on variables such as MTW status, FMRs, and whether the project is new construction or
preservation. The productivity of the program ultimately depends on each PHA's Faircloth authority.
However, some estimates indicate that Faircloth-to-RAD could generate up to 260,000 new units
nationwide.59

Faircloth-to-RAD in Action

Under Faircloth-to-RAD, new contract rent levels are calculated to cover operating costs alone and are
oftentimes not sufficient to enable new development, leaving a financing gap. As a result, many PHAs are
combining Faircloth-to-RAD with other tools. For example, voucher reserves can be used to augment rent
levels to 110 percent of FMR, and non-MTW agencies will see their annual voucher allocation increase to
cover those augmentations after the first year.60 PHAs can also transfer voucher reserves across agencies,
meaning that RIHousing could transfer reserves to a municipal PHA with Faircloth Authority.61 The
Boston Housing Authority has combined Faircloth-to-RAD with SAFMRs to increase RAD rents and
achieve a greater level of subsidy. The Cambridge Housing Authority has blended Faircloth-to-RAD with
LIHTC financing to help projects pencil out.62

In addition to the financing gap, Faircloth-to-RAD conversions come with additional considerations. For
example, Davis-Bacon rules about prevailing wages, as well as HUD standards for accessibility and
siting, each apply to Faircloth-to-RAD projects.63 The program also requires two closings and multiple
approvals from HUD, which may result in additional paperwork and extended timelines. Lastly, careful
planning is necessary to account for the timing of HAP payments for Section 8, which commence in the
January following post-construction closing.




59
 HUD 2023. Faircloth-to-RAD Guide, p. 3.
60
 HUD 2023. Faircloth-to-RAD Guide, p. 9.
61
 HUD 2023. Faircloth-to-RAD Guide, p. 2.
62
 Although the New York City Housing Authority (NYCHA) didn’t use Faircloth-to-RAD to create new units, it is
relying on RAD as part of an initiative to preserve existing public housing units. As of 2022, residents in select
developments can vote to remain in Section 9 (public housing), convert to Section 8 (project-based vouchers) via the
Permanent Affordability Commitment Together (PACT) program, or convert to Section 8 under the Public Housing
Preservation Trust. Under the Trust, NYCHA can gain access to additional funding streams while still remaining the
owner and manager of a property. This funding, raised via bond issuance, will be used to complete building
renovations at a higher quality and a faster rate. The Trust will also preserve existing rent caps and ensure resident
representation on its nine-member board. New York City Housing Authority. (2023). Residents Vote.
https://www.nyc.gov/site/nycha/residents/voting.page. New York City Housing Authority. (2022). Public Housing
Preservation Trust. https://www.nyc.gov/site/nycha/about/public-housing-preservation-trust.page
63
 HUD 2023. Faircloth-to-RAD Guide, p. 10.




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Revolving Loan Funds
Background

Revolving loan funds are pools of capital that provide loans for housing development, including
acquisition and construction. Upon repayment, funds are returned to the pool for use in other projects.
These funds are often seeded with public capital, either sourced by general obligation bonds or other debt,
or sometimes via a direct revenue stream. The public is able to accept a lower rate of return than private
investors, which means these funds can offer lower-cost financing for housing development than private
lenders or investors. In the context of public development, PHAs and local governments may create and
authorize revolving funds via local statutes as a means of replacing private equity and securing a public
stake in development.

Impact

In Montgomery County, the HOC issued a $50 million bond to seed a Housing Production Fund (HPF),
with the County Council agreeing to fund the principal and interest payments on the bond.64 The Council
approved the issuance of an additional $50 million for the HPF in May 2022. The fund is used to make
low-cost, short-term (2-5 year) construction loans that replace more expensive private equity in the
construction capital stack for new housing developments. When construction is completed and the project
converts to permanent financing, the HPF loan is repaid into the revolving fund. The bonds used to seed
the HPF will be repaid over the course of 20 years, after which point the fund will continue to revolve at
no additional cost to the county. The annual net cost to the county for the $100 million fund is
approximately $2.7 million.65 Overall, roughly $54 million in taxpayer funds will help enable roughly $2
billion in investment and 6,000 units.66

Revolving Loan Funds in Action

In addition to Montgomery County, various cities have created and seeded revolving loan funds. The San
Francisco Housing Accelerator Fund (SFHAF), for example, made its first loans in 2017 and to date has
invested $448 million to finance construction of 740 new affordable units and 32 commercial spaces and
preservation of 547 units.67 The fund combines public, private, and philanthropic capital, is managed by a
nonprofit organization created for the purpose, and offers a variety of loan products for predevelopment,
acquisition, rehabilitation, construction, and permanent financing. San Francisco's Low Income
Investment Fund (LIIF) manages multiple revolving loan funds, including a $50 million transit-oriented




64
 HOC 2024. Adopted Budget Book, p.147.
65
 U.S. Department of Housing and Urban Development. (2024). PD&R Quarterly Update: How Local
Governments Innovate to Meet Community Housing Needs.
66
 U.S. Department of Housing and Urban Development. (2024). PD&R Quarterly Update: How Local
Governments Innovate to Meet Community Housing Needs.
67
 San Francisco Housing Accelerator Fund. (2024). By the Numbers. https://www.sfhaf.org/statistics/




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affordable housing (TOAH) fund and a $49 million preservation pilot fund.68 LIIF also manages a $15
million transit-oriented development (TOD) fund with Invest Atlanta.


Mixed-Income Housing with Cross-Subsidy
Background

In stronger housing markets, income produced by market-rate units can be used to subsidize the costs of
affordable homes at either the building or portfolio level. Inclusionary housing programs, which are
increasingly widespread, depend on the ability of developers to cross-subsidize. Many PHAs also have
some experience with mixed-income housing development as a result of the HOPE VI and RAD
programs. Mixed-income housing can be an attractive option, as it is often high-quality and may help
revitalize the surrounding neighborhood.69

Impact

Cross-subsidization is only possible if revenues from market-rate units are significantly higher than the
cost to build and operate the property, which limits this tool’s efficacy outside of high-cost areas. Housing
vouchers can pay higher rents and provide a degree of cross-subsidization, but they are not a limitless
source. Project size is also an important criterion with larger projects more easily able to support a share
of affordable units.

Mixed-Income Housing with Cross-Subsidy in Action

In Montgomery County, cross-subsidization occurs at the building level, with individual rental
developments including both market-rate and income-restricted units. Revenues from market-rate units
(up to 70 percent of units in the building) subsidize the lower rents of the income-restricted units (at least
30 percent of units), which typically target the 50-70 percent AMI range.70 In Atlanta, the AUD aims to
pair public land with cross-subsidization to set aside one-third of units for households making less than 80
percent of the AMI, and half for households making less than 60 percent of the AMI.71




68
 Federal Reserve Bank of San Francisco. (2019). Funds for Kickstarting Affordable Housing Preservation and
Production. https://www.frbsf.org/wp-content/uploads/funds-for-kickstarting-affordable-housing-preservation-and-
production-lessons-for-new-investors.pdf
69
 Local Housing Solutions. (2021). Developing mixed income housing.
https://localhousingsolutions.org/refine/developing-mixed-income-housing/
70
 “At least 20% of units in a development financed using the HPF must be affordable to households earning 50% or
less of area median income with at least another 10% of units affordable to households earning incomes eligible for
the Moderately Priced Dwelling Unit (MPDU) program.” In the MPDU program, income eligibility is capped at 65
percent of AMI for a garden apartment and 70 percent of AMI for a high-rise apartment. Source: NMia, N., & Jong,
E. (2023, February 1). Housing Opportunities Commission (HOC) - Housing production fund update [Memorandum
to Planning, Housing, and Parks Committee]. Montgomery County Council.
https://www.montgomerycountymd.gov/council/Resources/Files/agenda/cm/2023/20230206/20230206_PH2.pdf
71
 Keenan, S. (2023, July 3). Atlanta plans to embrace “European-style social housing”.
https://atlantaciviccircle.org/2023/07/03/atlanta-launching-urban-development-corporation/




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Inclusionary Zoning
Background

Inclusionary zoning encompasses policies that incentivize or require new housing developments to
include a share of below-market-rate units. Localities can pass ordinances, such as Montgomery County’s
Moderately Priced Dwelling Unit (MPDU) law, to specify the zones where developments must include
rent-restricted units, the size and affordability of this set-aside, and the bonuses (additional density,
parking waivers, and etc.) that a developer may receive in return.72 Inclusionary zoning ordinances also
determine whether the inclusionary zoning policy is mandatory or voluntary, and whether developers may
pay into a fund instead of developing the required share of rent-restricted units themselves. After
enactment, housing and city planning agencies may oversee implementation to ensure that developers
abide by the ordinance and that tenants meeting income eligibility requirements access the set-aside units.
In Montgomery County, the Department of Housing and Community Affairs administers the MPDU
program.

Impact

Since inclusionary zoning policies rely on market dynamics, they tend to require little public subsidy,
though localities may trade density rights and other public goods to incentivize development. They create
the greatest number of affordable units in markets with strong market-rate development activity. In
Montgomery County, for example, the MPDU program has produced more than 16,000 units since 1976,
including roughly 10,000 for-sale units and 6,000 rental units.73 Each year, the program produces an
average of 130 new affordable rental units and 226 for-sale units.74 The program markets these units to
households earning up to 70 percent of the AMI.

In Montgomery County's public mixed-income housing development model, having a robust inclusionary
housing program means that the infrastructure for verifying income and eligibility standards for
affordable units, setting rents and prices for affordable units, and allocating inclusionary units is already
in place. But instead of abiding by a pre-imposed set-aside, through public development, the HOC can
underwrite a proposed development and determine the maximum amount of affordable housing that can
be provided in that particular project at that particular time that allows the project to acquire financing and
remain viable long-term.

Inclusionary Zoning in Action

Outside of Montgomery County, various cities employ both mandatory and voluntary inclusionary zoning
policies to increase their stock of below-market-rate housing. According to a 2016 survey conducted by
the Grounded Solutions Network, there are 886 jurisdictions across 25 states with inclusionary housing

72
 Montgomery County, Md., Code ch. 25A (1973).
https://codelibrary.amlegal.com/codes/montgomerycounty/latest/montgomeryco_md/0-0-0-133930
73
 Montgomery Planning. (2023). Overview of moderately priced dwelling unit (MPDU) program (p. 4).
74
 Montgomery County Department of Housing and Community Affairs. (2024). MPDU: By the Numbers.
https://www.montgomerycountymd.gov/DHCA/MPDU/index.html




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programs. Across these programs, incentives included zoning variances and expedited permitting, though
density bonuses were most common.75


Public Land
Background

Localities with a surplus of public land may engage in practices that leverage vacant, underdeveloped, or
otherwise available parcels for new construction. By strategically using public land for housing, local
governments can reduce development costs that would normally arise from the acquisition of private land.
Public developers can also gain additional flexibility by using public land, as it may streamline zoning
changes and other regulatory approvals. However, in some localities, developing public land may also
trigger processes that may not apply to private land, such as additional public hearings or environmental
reviews. If jurisdictions choose to leverage public land, they can employ different strategies, including:
acquiring vacant or underused land that is expected to appreciate in value (for instance, land near future
transit stations or in areas that will be upzoned); targeting blighted or structurally unsound properties for
demolition to make way for more intensive development of affordable or mixed-income housing; or co-
locating new housing with schools or other public buildings.

In many cases, municipalities create land banks and municipal real estate entities to acquire, assemble,
and convey publicly-owned land for new development or rehabilitation. While Rhode Island Senate Bill
2760 would have established a statewide “housing land bank” to buy, receive, and hold property for the
development of housing by PHAs or nonprofits, it did not pass this year.76 However, a 2022 bill that did
pass requires school systems to share information on vacant schools that may be available for
redevelopment.77 Finally, a special legislative commission on vacant and abandoned properties owned by
Rhode Island is currently building an inventory of those properties.78

Impact

For each locality, the breadth of savings will vary depending on the availability of public land. However,
given that rising land costs serve as one of the greatest barriers to development, the use of public land has
the potential to reduce development costs by millions of dollars. As a result, development may become
possible even in high-cost, amenity-rich neighborhoods, although it is less likely that state or local
governments own land in these areas.



75
 Grounded Solutions Network. (2018, January). What Do We Know About
Inclusionary Housing? Lessons from a National Survey of Programs. https://inclusionaryhousing.org/wp-
content/uploads/2018/02/grounded-solutions-network_ih_policy_highlight_january_2018.pdf
76
 Rhode Island Senate Bill 2760 (2024). https://legiscan.com/RI/text/S2760/id/2955116
77
 R.I. Gen. Laws § 45-53-10. For more information, see Rhode Island Department of Housing. Repurposing vacant
schools for affordable housing program. https://ohcd.ri.gov/media/2596/download
78
 Rhode Island Department of Administration. (2023). Vacant Properties Commission.
https://www.rilegislature.gov/commissions/VPC/commdocs/02-13-2023---
DOA%20Vacant%20Property%20Commission%20FINAL.pdf




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Public Land in Action

In Atlanta, the AUD partners with the city, Atlanta Housing, Invest Atlanta, and other public partners to
assess the development potential of publicly-owned land. After consolidating these properties, the AUD
works with private developers to redevelop the land into mixed-income housing. On a larger scale, THC
in Idaho has leveraged the considerable surplus of public land to finance and develop affordable housing
statewide.


Self-Insurance Programs
Background

Housing developments must be insured against many kinds of risk, including property damage and bodily
injury that can result from natural disasters, fire, personal accidents, and so on. Insurance costs have been
rising rapidly in the multifamily housing sector. Fannie Mae reports that multifamily property insurance
premiums rose by 75 percent in just four years between 2018 and 2022.79 This is likely due to a number of
factors including the increasing frequency and severity of climate-change-related weather events and the
rising costs of labor and replacement materials. But there is also evidence that insurers are discriminating
against low-income housing in particular.80 Initiatives that reduce the cost of insurance can have a
significant impact on the feasibility of affordable housing development.

Montgomery County has a self-insurance program that provides various kinds of coverage, including
property insurance, general liability, worker's comp, and auto liability, to approximately twenty public
agencies, including the HOC. Many of these agencies’ assets are masonry non-combustible buildings
(schools, firehouses, and commercial buildings), which is relatively low risk. The HOC’s buildings,
which are typically wood frame or wood frame on top of 1-2 stories of masonry, are comparatively more
risky. Thus, by pooling its risk with other county agencies, the HOC can access lower property insurance
rates than it otherwise might. Another benefit is that if Montgomery County were to experience a large,
damaging event, all of the agencies insured by the self-insurance program would have the same cause of
loss; they would not each be responsible for separate deductibles to third-party carriers. Finally, the self-
insurance program allows the HOC to access attorneys employed by the County who may have much
more capacity and be more invested in the public interest than attorneys at a commercial insurance firm.
HOC staff noted that there are also some challenges associated with the self-insurance program, including
that banks and investors are more skeptical of self-insurance and that municipal programs may require
less detailed information from participating agencies than a commercial insurer would, which can result
in partial coverage if the agency underreports its risk.

Another model that is attracting growing interest is captive insurance companies, which are insurers that
are wholly responsible to the entities that they insure; any profits they make are distributed to the insured

79
 Fannie Mae. (2024, May). Higher Insurance Premiums Continue to Impact the Multifamily Sector. Multifamily
Economic and Market Commentary. https://www.fanniemae.com/media/51396/display
80
 Fee, Rachel. (2024, April 5). Stop Insurance Carriers from Discriminating Against Affordable Housing. City
Limits. https://citylimits.org/2024/04/05/opinion-stop-insurance-carriers-from-discriminating-against-affordable-
housing/




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parties. In the context of affordable housing, captives have the potential to allow housing providers to
bypass discrimination among third-party insurance companies and access coverage tailored to their needs.
They also provide much greater transparency about how risks align with pricing, and allow housing
providers to exert some control over pricing decisions.

Finally, it is worth noting that some policymakers are working to combat insurance discrimination against
affordable housing through regulatory action. During New York State's FY2025 legislative session,
elected officials enacted into law a measure to ban insurance carriers from discriminating against
affordable housing properties. The statute prevents insurers from inquiring about, canceling, refusing to
renew, or increasing the premium of a policy based upon 1) a property having a regulatory restriction that
limits occupancy to specific income levels; 2) property or residents receiving rental assistance, including,
but not limited to, Section 8; 3) the level or source of income of a property’s residents; or 4) ownership of
a property by a limited-equity cooperative, public housing agency, or other affordable cooperative
corporations.81

Impact

Montgomery County’s self-insurance program is funded through contributions from participating
agencies, which are based upon an annual actuarial analysis of their exposures and outstanding and
projected future claims. Its total operating budget in 2024 was $95 million, which includes worker's
compensation, auto liability, and other non-property claims. Roughly $5.2 million of the budget (5.5
percent) is allocated for personnel costs.82 HOC staff estimate that participating in the County’s self-
insurance program yields savings of about 50 percent when it comes to property insurance. The agency is
less able to benefit from other forms of insurance offered by the County, however; it must purchase
general liability coverage from commercial carriers for many of its multifamily buildings which have
external property managers who are not comfortable with the County program’s caps on losses.

With respect to captive insurance companies, the impact on insurance costs and affordability may vary
greatly depending on who is selected to participate in the captive and how the captive is structured.

Self-Insurance Programs in Action

In Montgomery County, the self-insurance program insures up to $250,000 of a given claim, and losses
beyond that are insured by a commercial carrier, FM Global. The HOC was not an original member of the
program but gained admission several years ago. According to an interview, convincing the County to
admit the HOC required making a strong case that the HOC is an expert manager and has deep knowledge
of its risks and liabilities. At the HOC, the insurance division is currently staffed by two people. The
Director of Risk Management sits on a countywide panel that meets for three hours monthly to discuss


81
 VanAmerongen, D. (2024). New York State budget prohibits discrimination in insurance for affordable housing.
Nixon Peabody, April 23, 2024. https://www.nixonpeabody.com/insights/alerts/2024/04/23/new-york-state-budget-
prohibits-discrimination-in-insurance-for-affordable-housing
82
 Montgomery County, MD. (2024). FY24 Operating Budget and Public Services Program, (p.30-1).
https://www.montgomerycountymd.gov/OMB/Resources/Files/omb/pdfs/FY24/psprec/30-Finance-FY2024-REC-
Publication-Report.pdf




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losses and lawsuits and works closely with the HOC’s broker and with third parties. The second staff
person handles claim activity and intake for new projects.

One example of a captive insurance company specifically for affordable housing providers is the Housing
Partnership Insurance Exchange, or HPIEX. This captive is exclusively for affordable housing providers
that belong to the Housing Partnership Network (HPN). These providers tend to be larger owners with
portfolios of 1,500 units or more. As of 2019, HPIEX had 26 members and provided property insurance
for 80,000 units.83 Each member must each contribute capital to the captive in order to become an insured
member. The members govern the company and share each other's risk. HPIEX was formed in 2004, and
HPN worked with Merrill Lynch to provide $3 million in loans that members then used as their initial
equity in HPIEX (these have all since been repaid). HPN also retains an equity stake in HPIEX.84

In recent years, HPIEX has done better than the insurance sector at large (to date, HPIEX has returned
$13 million to its members), though risks and losses have increased in recent years. Members are notified
of what premium they owe on January 1st of each year; the premium is based on actuarial review of
expected losses over the next year (a combination of each member’s individual loss history over past 5
years, and industry trends). The insurance premiums paid by members are used to cover administrative
costs, property insurance (covering up to $500,000 losses), and reinsurance (losses exceeding $500,000).
If losses exceed a certain amount, the loss amount is distributed among the members, just as any profit is
distributed among members. This structure incentivizes members to invest in risk management, because
their own premium will respond.85


Common Bond Funds
Background

A common bond fund is a financing structure in which new bond issuances are amended to join a single,
large bond. This arrangement allows agencies to pool revenues and costs across developments to pay
operating expenses and debt services for all buildings, which enables efficient debt service and spreads
out risk.

Impact

The Dakota County CDA has developed about 1,800 units of affordable housing for seniors using its
common bond fund.




83
 Donna Kimura. (2019). “People on the Move.” Affordable Housing Finance, November 26, 2019.
https://www.housingfinance.com/management-operations/people-on-the-move-11-26-19_o
84
 Housing Partnership Network. (2023). “Owning Our Own Risks,” April 26, 2023.
https://housingpartnership.net/newsroom/articles/owning-our-own-risks
85
 Dolan, B. (2024, May 3). Insurance Risk Mitigation Strategies. Webinar, Enterprise Community Partners.




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Common Bond Funds in Action

The Dakota County CDA includes all of its senior housing developments in a common bond fund. All
rent revenues (supplemented by a special tax levy) enter a revolving fund where they pay operating costs
and debt service on the common bond. The CDA maintains a debt service coverage ratio of 1.15; in
addition it implements portfolio-wide replacement reserves, operating reserves, and insurance.

Many state HFAs already have some experience pooling several projects into one bond issuance in order
to lower upfront expenses and insurance costs. Another related innovation is the New York City Housing
Development Corporation’s (HDC) Multifamily Housing Bond Resolution, established in 1993. The
resolution, sometimes called an “open resolution” or “parity resolution,” allows HDC to issue an
unlimited number of parity bonds that do not take precedence over another in the payment of debt service
to bondholders. The proceeds of the bond issuance are then allocated to first mortgage and subordinate
debt financing for individual developments. This resolution has become HDC’s “largest single asset and
most flexible financing vehicle.”86 By capturing the spread between its debt service obligations to
bondholders and its first mortgage debt to deals (which would normally go to a bank), HDC manages to
generate very large surpluses, which, in turn, are lent back to deals in the form of subsidy loans.


Special Tax Levies
Background

Special tax levies can be a direct and reliable source of funding for affordable housing efforts. In
Minnesota, the state legislature passed enabling legislation in 1993 that allows Housing and
Redevelopment Authorities (HRAs) to levy a special tax upon all taxable property within their city or
county’s boundaries to fund that jurisdiction’s housing plan. The maximum levy may not exceed 0.0185
percent of taxable market value.87 The Dakota County CDA is an HRA that was created in 1971 and
today is both a PHA and an HFA. The CDA partnered with Dakota County in 1988 on a ten-year plan to
locally finance and construct affordable housing for seniors (they have since partnered on several
additional phases) and began levying a special property tax.88

Impact

The size of the special tax levy in Dakota County averaged $7.3 million per year between 2010 and 2020,
and the amount of tax proceeds paid towards housing development bond debt service averaged $5.4
million. The CDA has used these funds to build around 1,800 new affordable apartments for seniors to
date.




86
 New York City Housing Development Corporation. (2014.) Funding Housing Programs and Using Wealth
Created in a Parity Resolution. NCSHA Qualified Entry Form. https://www.ncsha.org/wp-
content/uploads/2018/05/NCSHASubmission_mgmtinnovation_final_07012014_v2.pdf
87
 Minnesota Code §469.003 (1993). https://www.revisor.mn.gov/statutes/cite/469.033
88
 Dakota County Community Development Agency. (2024.) About. https://www.dakotacda.org/about/




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Special Tax Levies in Action

The Dakota County CDA issues housing development bonds to finance the acquisition and construction
of senior housing developments. These bonds are credit enhanced by the County but are secured by and
payable from the pooled gross rent receipts and other operating revenues related to the operation of
housing developments financed by these bonds (in addition to an annual pledge of $5.6 million from the
special property tax levy). The property tax levy is certified in December of each year to finance the
budgeted expenditures of the subsequent fiscal year beginning on July 1st.89

A more recent example is Colorado’s Proposition 123, which directed 0.1 percent of state income tax
revenue to a statewide affordable housing fund. Some of these funds are used to make direct equity
investments of up to $15 million per project in mixed-income housing developments, which in exchange
must maintain an average affordability level of 90 percent of AMI or below for at least 30 years. The first
projects to receive equity investments as part of this program will be announced in the summer of 2024.90


International Models
We also studied five models of public development and ownership in international contexts: Vienna,
Austria; Helsinki, Finland; Copenhagen, Denmark; Singapore; and Hong Kong. These models are closely
tied to their historical, political, and socio-cultural contexts and have evolved in environments that are
often very different from Rhode Island’s. Factors including political movements, reliance on low-cost
foreign labor, or the gradual accumulation of land by the government over the course of decades have
played a role in shaping some of these systems and have no equivalent in the U.S. While it may be
tempting to view them simply as financing structures, they also reflect the political economy and culture
of their respective places, and may be difficult to transplant.91 Nevertheless, non-U.S. examples offer
important lessons.

Public development and ownership in the international context is often referred to as ‘social housing.’
This term has distinct connotations. It evokes models wherein the housing produced is available to a very
broad sector of the population (for instance, in Vienna, more than three quarters of residents are currently
eligible to access social housing). This has allowed social housing to escape much of the poverty-
concentrating effects and stigma associated with ‘public housing’ in the U.S. or ‘council housing’ in the
United Kingdom.

Many—though not all—social housing models have cost-based rents. This means that rents are
calculated based on the cost of developing, operating, and maintaining a housing development. This cost
may be calculated at the project level or set at the portfolio or national level. Rents are lower than they are
in privately-owned units only because 1) they are not expected to generate a profit and 2) governments


89
 Dakota County Community Development Agency. (2022.) Annual Comprehensive Financial Report for the Year
Ended June 30, 2022. https://www.dakotacda.org/wp-content/uploads/2016/02/CDA-2022-ACFR.pdf
90
 Colorado Housing Financing Fund. (2024.) Equity. https://coloradoaffordablehousingfinancingfund.com/equity/
91
 For instance, Vienna’s political history of socialism, combined with a largely homogeneous population, created
favorable conditions for social housing, though this system may face challenges with the arrival of migrants.




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lower development costs by using publicly-owned land at no acquisition cost, lower-than-market-rate
interest loans, and other mechanisms. In these models, households do not pay higher rents or lose their
home if their income increases. An additional “housing allowance” (rental assistance that is not tied to the
unit) is available to ensure housing stability for the lowest-income households in Vienna, Helsinki, and
Copenhagen, while in Singapore, lower-income households benefit from additional mortgage assistance.
In some countries, robust healthcare, educational, and other social supports may also contribute to helping
households afford cost-based rents.

Key features of the models we studied include:

Vienna, Austria
 ● Social housing rents are calculated based on the cost of developing, operating, and maintaining
 housing.
 ● In some Viennese social housing, tenants contribute equity to help cover the costs of land
 acquisition and construction.
 ● Low-cost development loans issued to limited-profit housing associations are partially revolving;
 as they are repaid, each region reinvests in new development.
 ● After these loans are repaid, rent decreases to a level sufficient to cover day-to-day administration
 and maintenance, as well as renovations.

Helsinki, Finland
 ● After mortgage loans guaranteed by the national government are repaid, rent restrictions on social
 housing expire, and municipal and nonprofit housing associations are free to privatize the housing
 or raise rents.
 ● Although, as in Vienna, rents are cost-based, housing associations have the ability to “equalize”
 them across their portfolios. This means that rents for new construction can be kept lower.

Copenhagen, Denmark
 ● Municipalities and nonprofit housing associations collaborate closely to decide when, where, and
 how much social housing to build, and to allocate units to applicants.
 ● After mortgage loans are repaid, rents remain steady, and the revenue formerly used to service the
 loans flows into a National Building Fund that is used to make major renovations, invest in new
 construction, and fund programming for social housing residents.

Singapore
 ● Although Singapore’s housing authority retains perpetual ownership of the land on which social
 housing is built, residents can buy, sell, and inherit units, making them valuable commodities that
 can build residents’ wealth over time.
 ● Mandatory personal savings accounts for every employed person are the principal way residents
 pay their mortgages, as well as a fund the government borrows against.
 ● New development occurs on a build-to-order basis (i.e., prospective residents “order” a unit, and
 ground does not break on a new social housing project until 70 percent of its units have been
 bought).
 ● Public land and low-cost imported labor from South Asia keep development costs low.




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Hong Kong
 ● The region’s housing authority owns a diverse portfolio of commercial and residential property
 The revenue from leasing these assets, and from selling some units as homeownership housing,
 helps subsidize public rental housing.
 ● Deep and direct investment by the Hong Kong government, including grants of public land,
 infrastructure, and social programming, help the housing authority keep rents extremely low in a
 high-cost market.



Table 2. Selected Characteristics of International Models


 Vienna Helsinki Copenhagen Singapore Hong Kong

 Cost-based ! ! ! !

 Income-based !

 Public land ! ! ! ! !

 Low-cost labor !

 Participation ! ! !
 of nonprofits

 Ownership ! ! !
 option

 Privatization ! !
 or resale
 option



Key Takeaways
 ● Scale and social mix can create financial and political stability for social housing systems in the
 long term.
 ● Cost-based models in Vienna, Helsinki, and Copenhagen point to the value of pushing rents down
 as far and as close to operating cost as possible, rather than legislating a certain level of
 affordability upfront.
 ● Social housing models are countercyclical; they tend to generate the most new affordable units
 when conditions are unfavorable for market-rate development.
 ● Singapore’s model is idiosyncratic, but suggests the potential of social housing as a wealth-
 building tool.
 ● Hong Kong’s model shows how non-housing public investments, including in revenue-generating
 infrastructure and social programs, can help make a social housing system financially feasible.




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Conclusion
This study reviewed nine domestic and five international models of public development and ownership,
and in doing so identified distinct model types as well as a suite of tools that public developers rely on to
develop affordable housing. The models varied in terms of governance structure, and in the type, volume,
and level of affordability of the housing produced. The most innovative approaches combined regulatory
and financing authority in new ways and knit together a variety of tools to support new development.

Many of these models, particularly in the U.S., are novel and have not been tested across different
economic cycles. They are also rooted in their particular political and economic context, and so may be
hard to wholly transplant. Nevertheless, they offer important lessons for Rhode Island about the
groundwork needed for public development, including establishing a strong financial framework and
clearing regulatory pathways to ensure housing can be developed. They also speak to both the
opportunities and to the risks and challenges that are inherent in public development and ownership.

Rhode Island must carefully consider whether there is a distinct, unmet need that a new public
development entity could address more effectively than the current landscape of for- and nonprofit
developers. This analysis should extend beyond merely identifying gaps; it should also assess the
potential for a public entity to effectively bridge these gaps given the possible limitations such an entity
would be likely to encounter. Independent of this decision about whether to pursue public ownership,
establishing new financing mechanisms such as a publicly capitalized fund could support housing projects
broadly; exploring reforms in tax policy and land use regulation; and more strategic use of federal
housing programs could increase the impact of existing resources, and in turn, the availability of sorely
needed affordable housing.


Acknowledgements
This report was prepared by Claudia Aiken, Hayley Raetz, Matthew Murphy, Tony Bodulovic, Daria
Guzzo, and Will Viederman at the NYU Furman Center. Esther Sandrof and Marc Jahr of Forsyth Street
contributed expert financial analysis. We owe many of the details and insights presented in this report to
our interviewees, who have included federal, state, and local policymakers and practitioners across the
country, as well as scholars in Vienna, Finland, and Denmark. We thank them for graciously sharing their
time and expertise with us and with Rhode Island. Thanks also to Ben Hitchcock for his research
assistance.




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Appendix 1: Case Studies
Montgomery County, Maryland
The Housing Opportunities Commission (HOC) is the public housing authority of Montgomery County,
Maryland. It also acts as a public developer and a housing finance agency, with the ability to issue taxable
bonds rated A2 by Moody’s.92 The HOC is governed by a volunteer commission appointed by the County
Executive and approved by the City Council. The Commission’s FY24 operating budget of $339 million
mainly consists of voucher funding and federal subsidy pass-throughs, while its capital budget of $255
million is funded by bond proceeds and tax credit equity.93 Importantly for the model, the HOC has a lot
of development experience, including developing mixed-income housing. The HOC’s real estate division
includes about seventeen staff members, including project managers, analysts, quality oversight,
relocation managers, and construction professionals. The HOC typically hires a general contractor, who is
paid a “builder’s fee” of 4-4.5 percent of the construction contract for a new HPF-financed building, but
the HOC itself collects the developer’s fee.

The HOC’s Housing Production Fund (HPF) seeks to provide “revolving, low-cost, construction-period
financing to HOC’s developments.”94 These revolving funds are designed to replace market-based equity
investments (“private equity”) in the construction financing capital stack. HPF loans have a 5 percent
interest rate, which is significantly lower than the 15-20 percent rates of return expected for private equity
investors. The revolving loan is repaid before a project converts to permanent financing, which means
that its main function is to help overcome the hurdle of construction.

According to local officials, the HPF arose from necessity: Montgomery County needed to expand their
pipeline of affordable housing but they were running out of private activity volume cap. The HPF was
approved by the Montgomery County Council in March 2021, and the Council agreed to fund the
principal and interest payments up to $3.4 million annually for a $50 million bond issuance by the HOC.
The Council then approved a second issuance of an additional $50 million in May 2022 for a total annual
appropriation of $100 million in bond revenue.95 The HOC anticipates that the HPF will cover a total of
$250 million in construction loans, funding approximately 3,000 units in a 20-year period.96 Over this
period, the bond issuance will be fully repaid, after which point it will revolve at no additional cost.97 It is
important to note that separate from the HPF, the HOC has two lines of credit with PNC bank in an
aggregate amount of $210 million, which allows the HOC to act nimbly as a joint venture developer
and/or lender, with more flexibility than comparable entities.



92
 Housing Opportunities Commission of Montgomery County, MD. (2018). We Are Housers: Strategic Plan 2018-
2022. https://www.hocmc.org/images/files/ResourceDocs/Strategic_Plan_Current.pdf
93
 Housing Opportunities Commission of Montgomery County, MD. (2023). Presentation to Public Development
Community of Practice. November 2, 2023.
94
 Housing Opportunities Commission of Montgomery County, MD. (2024). Adopted Budget Book Fiscal Year
2024, p.147. https://www.hocmc.org/images/files/Publications/FY_2024_Adopted_Budget_Book.pdf
95
 HOC 2024. Adopted Budget Book, p.147.
96
 HOC 2024. Adopted Budget Book, p.147.
97
 HOC 2024. Adopted Budget Book, p.147.




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The HOC often leverages publicly-owned land, including aging public housing developments, as a way to
lower total development costs (TDC). For example, its first HPF-financed project, The Laureate, was
recently constructed on the site of a 95-unit public housing development adjacent to a metro station.98
However, in other cases, the HOC has paid market prices to acquire land for HPF projects. In the HOC’s
experience, using public land lowers the cost of the project by 10-15 percent: a substantial but not
tremendous impact.

The HOC’s status as both an HFA and a qualified risk-share lender is extremely useful in this model in
that it allows them to issue fixed-rate, lower cost debt and combined development with other tools like
vouchers. With FHA risk-share, the HOC is able to fund projects with a 40-year amortization in term, at a
relatively low rate.

As is often the case for income-restricted new housing development, HPF projects pull together a number
of tools to make their projects financially feasible. What is unique in this model is the non-reliance on
LIHTC. Achieving this requires a mixed-income model that is supported by a mix of different types of
operating subsidies and fee reductions. For example, HPF projects partially rely on tenant-based
subsidies. Although the HOC has not executed any Faircloth-to-RAD projects yet, in the future, the
HOC’s publicly-developed housing projects could be paired with Faircloth-to-RAD allowances and
vouchers that provide deep operating subsidies for a portion of the units, which has the advantage of
being able to house extremely low-income residents, while collecting closer to market rents.99 Other tools
include reductions in operating costs and development fees. The HOC’s ownership of the completed
properties allows them to unlock reductions in property tax liabilities (via tax exemptions), which have
the effect of lowering a property’s operating costs. In addition, if a certain share of units in the property
(greater than 25 percent) are deemed affordable, the project qualifies for impact fee reductions and other
exemptions from the County. In the case of The Laureate, the financing is structured such that after
construction, the developer will stay in the deal with the addition of a mezzanine lender, possibly a
mission-focused private investor. The permanent debt will cover the construction loan and pay off as
much of the HPF financing as possible, with FHA risk-sharing between FHA and the HFA coming
through at permanent loan conversion.100

Compared to a typical market-rate developer, the HOC can access less expensive construction financing
through the HPF, unlock tax abatements, lower the cost of insurance (through self-insurance
mechanisms), and help guide the project through local approvals, shortening the entitlement process. In
addition, the requirement to include affordable units acts as a boon in some ways, because those units
lease up relatively quickly. Montgomery County can be a challenging development environment, and the
HOC is sometimes able to enter a project that has stalled to help move it forward. As an example of this
model in practice, the HOC’s current projects include one begun by a private developer who was awarded
permission to develop on private land but then faced financing issues, which allowed the HOC to enter
the deal, infuse the project with affordable units, and also gain control of the development.



98
 HOC 2023. Presentation to Public Development Community of Practice.
99
 HOC 2023. Presentation to Public Development Community of Practice.
100
 HOC 2023. Presentation to Public Development Community of Practice.




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Atlanta, Georgia
The Atlanta Urban Development Corporation (AUD) is an incorporated subsidiary of Atlanta Housing
(AH), the housing authority of the City of Atlanta. AH is well represented on the AUD board; four board
members are also board members of AH, and three others are recommended by the Mayor and approved
by AH. As a wholly owned subsidiary of AH, the AUD can issue bonds, own property, and award
property tax exemptions just like a PHA.101 As a start-up entity that does not share AH’s balance sheet,
however, the AUD generally relies on a “benefactor” like the City or Invest Atlanta to issue debt on its
behalf.

The AUD is also responsive to the City of Atlanta and Invest Atlanta, the City’s economic development
authority. Besides recommending the three AUD board members, the City supports AUD with seed
funding. The City is currently considering acting as a debt guarantor for AUD projects (the City is AA+
rated). Invest Atlanta’s role includes helping intake, underwriting, project approval and closing, and it
may also work with AUD to develop long-term public financing in the future.

Funded by the 2023 Housing Opportunity Bond, a $38 million appropriation from the City of Atlanta, the
Housing Production Fund (HPF) is structured to provide “mezzanine-level, low-interest construction loan
to developments that commit to long-term affordability through AUD ownership.”102 The joint effort
requires AUD to identify HPF projects, with Invest Atlanta managing the bond financing and controlling
and approving fund drawdowns. The AUD HPF model calls for the loans to cover up to 20 percent of the
construction capital stack for up to a five-year period, with the below-market loans intended to be taken
out at permanent loan conversion. By providing the interest-only construction financing at lower than
market rates, and building on publicly-owned land (which reduces overall construction costs, thereby
acting as a form of additional equity), the AUD HPF model – like the HOC’s HPF – is designed to lower
total development costs in exchange for the creation of affordable units.103

Because the HPF was created so recently, the AUD is exploring different financing structures. The AUD
has released two Requests for Qualifications (RFQs) to date, the redevelopment of Fire Station 15 and
Phase I of the redevelopment of Thomasville Heights. In these, AUD outlined an example capital stack:
5-10 percent of TDC would be AUD land acting as equity; another 5-10 percent of TDC would be
additional (investor or private) equity; up to 20 percent lower-cost debt, funded by the HPF as described
above (at an interest rate of 6 percent or lower); and the remaining 60 percent of funding in the form of a
market-based construction loan.104 Importantly, the projects will be able to leverage Private Enterprise

101
 It is important to note that while PHAs in Georgia are exempt from property taxes, special exemptions, and
payments in lieu of taxes, and can exempt for-profit housing developers and managers from property taxes through a
“private enterprise agreement,” the same is not true in every state. O.C.G.A § 8-3-8 (2010).
102
 Atlanta Urban Development. (2024). Request for Qualifications for Phase 1 of the Redevelopment of
Thomasville Heights, p.21. https://assets-global.website-
files.com/657ad30f1454198c9d8e1d97/65f348991e2b812a59cdc5a4_Thomasville%20Heights%20RFQ_Final.pdf
103
 AUD 2024. RFQ for Thomasville Heights, p. 21.
104
 AUD 2024. RFQ for Thomasville Heights, p. 21; Atlanta Urban Development. 2024. Request for Qualifications
for Redevelopment of Fire Station 15 with Integration of New Affordable and Market Rate Housing, p.12.
https://assets-global.website-
files.com/657ad30f1454198c9d8e1d97/65a1dea1fa5edfde7724124c_01%2011%202024%20-
%20Midtown%20Fire%20Station%20RFQ.pdf




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Agreements (PEAs), which allows PHAs to grant a full (100 percent) tax exemption for City, County, and
school taxes for all units in the project that are affordable up to 140 percent AMI. The participation of a
public entity like AUD in these deals can also speed up the entitlement process, creating additional
savings.

As the AUD explores different approaches to project financing, it is taking a number of factors into
consideration. First, the agency is weighing standardization and scalability. While pairing HPF loans with
more conventional financing could increase the model’s ability to scale, the team is also open to other,
less scalable funding structures, including a 100 percent bond-financing deal where the AUD would be
the full owner. The timing of when public money can enter a project is also a critical consideration.
Funding a project with public money in the pre-development phase can increase return on investment for
investors, allowing investors to ask for less return when the project is finished. However, such an
approach would open the AUD up to more risk, and they would plan to take more of a leadership role on
those projects. A third and final consideration is the availability and flexibility of complementary public
finance tools. For example, Tax Increment Financing (TIF, a way to capture property tax revenue from
new development in order to fund improvements needed for the development) can help with funding the
construction of affordable housing, but none of its funding can be used in the pre-development phase.

In terms of exiting a project, there are a number of considerations. Primarily, the AUD will want to have a
controlling stake in the project and determine the exit by deploying permanent financing (with the goal of
achieving low-cost permanent financing in the future). When considering how to allocate the equity
stakes of a project, the AUD will consider the relative risk for the corporation. For example, the AUD
might be more interested in retaining a full equity stake and compensating its development partner with a
developer fee for a project providing workforce housing that should have no trouble finding households
interested in leasing up units affordable at 80 percent AMI. Alternatively, projects with more market-rate
units are riskier because units with higher rent levels will be more challenging to fill. However, those
units have higher returns and help finance projects in higher-opportunity markets. In those cases, the
AUD might be more interested in pursuing an equity position for the developer partner to ensure that the
entire team has a stake in the successful outcome of the project.

The affordability of AUD projects will vary depending on the project structure. In the RFQ for both Fire
Station 15 and Thomasville Heights, the AUD notes that all AUD projects must have at least 20 percent
of rental units affordable to households earning at or below 50 percent of AMI and 10 percent of rental
units targeted to households at or below 80 percent AMI. The Thomasville Heights project should also
include homeownership units, including equivalent levels of affordability or deeper. The RFQs also note
that neither project should make use of LIHTC funding. Instead, that equity is meant to be replaced by the
following combination: no land acquisition; lower-cost equity investment from a government entity; an
exemption from property tax payments; and cross-subsidizing with market based rents.

This model needs three components to work as designed: land, public investment, and capacity. Capacity
is key; the public entity needs a very skilled development entity or PHA to support with underwriting and
structuring the deal. Bringing these components to the project allows the AUD to lead on the structure of
the deal.




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Chicago, Illinois
Modeled on the Montgomery County and Atlanta HPFs, the Green Social Housing Revolving Fund in
Chicago is intended to help fill a funding gap for affordable housing as almost 45 TIF districts expire over
the next three years. The fund will be seeded with $115-135 million out of a $1.25 billion bond issuance
approved by the City Council in the spring of 2024. Similar to the HPFs described above, the revolving
fund will provide lower cost construction loans, which would be repaid over three to five years. The bond
book notes that the developer would “sell the building back to the local government when it is completed”
and that the government would then contract with a third party for property management.105

Because the Fund is so new, much of the structure of the final program remains unclear. However, the
City would likely create a separate entity through a program ordinance to run the program. The Chicago
Department of Housing would likely be involved, and would be able to contribute underwriting
experience gained from its role on LIHTC deals. The City is looking into a number of ways to lower total
development costs and subsidize affordable units, many of which were also used or explored by
Montgomery County and Atlanta. For example, projects in the program would be able to get a tax
abatement under a statewide program. In addition, there is a hope that the Illinois Housing Development
Authority would be able to collaborate as a risk-share lender to help lower costs. Finally, Chicago has
some of the largest numbers of Faircloth units in the country, and the City is also interested in using the
program on Faircloth-to-RAD projects to inject additional subsidy for affordable units.

Although the proposal states that the properties would include affordable units and would not require
longer-term subsidies (like LIHTC), more detail on the selection criteria and process for developing new
projects would be determined by a program ordinance that would need to be passed by the City Council.
The City estimates that the revolving fund would produce 600 or more new rental units each year.106

The City is weighing a couple of options in terms of building out a potential pipeline of projects. The first
would be to enter a project that has stalled and offer financing in exchange for a stake in the final project
and the inclusion of affordable units. A second option would be to consider sites that will open up during
the course of the Red and Purple Modernization, the largest capital project in the Chicago Transit
Authority’s history.107 The higher rents in some of those neighborhoods could be sufficient to subsidize
mixed affordable properties and would allow the City to manage projects from the beginning of their
development.




105
 City of Chicago. (2024). 2024-2028 Housing and Economic Development Bond: June 2024, February 2024.
https://www.chicago.gov/content/dam/city/sites/business-and-neighborhood-development-strategy/pdf/Housing-
and-Economic-Development-Bond-Book-(Updated-2024.07.03).pdf
106
 City of Chicago. (2024). 2024-2028 Housing and Economic Development Bond: June 2024, February 2024.
https://www.chicago.gov/content/dam/city/sites/business-and-neighborhood-development-strategy/pdf/Housing-
and-Economic-Development-Bond-Book-(Updated-2024.07.03).pdf
107
 Chicago Transit Authority. “About the RPM Phase One Project.” Accessed April 8, 2024.
https://www.transitchicago.com/rpm/about/




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Boston, Massachusetts
The Boston Housing Authority (BHA) is a traditional federally-funded public housing authority.108 The
agency is managed by an administrator who is appointed by and serves at the pleasure of the Mayor of
Boston. The Mayor also appoints a nine-member Monitoring Committee – of which five members are
public housing residents and one is a voucher-holder – to oversee the work of the BHA and report on its
activities.109

BHA is currently engaging in a major redevelopment and expansion of the Mary Ellen McCormack
complex, the city’s oldest public housing development, located in South Boston.110 The redevelopment
will demolish the existing structures on the land and rebuild all 1,016 affordable apartments, as well as
adding another 2,000 middle-income and market-rate units.111 BHA is doing so in partnership with a
private developer. BHA will continue to own the land under Mary Ellen McCormack while the private
developer will own the buildings. BHA provides the subsidy for the replacement public housing units.
The project’s market-rate units will also help to cross-subsidize some of the affordable and middle-
income units. Construction of the redevelopment will be financed with a combination of private debt,
LIHTC (for the first redevelopment phase only), BHA equity, private developer equity, and grants from
both the city and state. At stabilization, BHA will receive rental payments on the land, transaction
payments if the private partner resells the building, and a portion of profits if the market-rate rents pass a
profitability threshold. While Mary Ellen McCormack is not an example of “public development” as
defined above, it does involve a public entity partnering in the construction of new, cross-subsidized
development and retaining long-term control over the outcomes of that development.

BHA intends to branch out beyond the Mary Ellen McCormack model in an effort to build income-
restricted units without the need for LIHTC, as the Group A models do. To do so, BHA intends to use
HUD’s Faircloth-to-RAD program. Because of significant de-densification since 1999, the BHA has
about 3,000 units of Faircloth authority today. However, the Faircloth-to RAD program typically does
not provide enough subsidy to finance new construction. To bridge the gap, BHA intends to issue debt on
the project-based vouchers it will receive for these 3,000 units, generating significant leverage. Prior to
the Faircloth-to-RAD program, BHA was unable to take advantage of its unbuilt Faircloth authority.
Leverage on the approximately $800-per-month Section 9 subsidy was insufficient to support new
construction. In this case, converting Section 9 subsidies to project-based vouchers through Faircloth-to-
RAD increased the level of subsidy to about $1,200 per month per unit.

Boston’s transformative opportunity stems from the combination of Faircloth-to-RAD with SAFMRs.
SAFMRs allow PHAs to provide housing subsidies for vouchers at a neighborhood – instead of
metropolitan – level, so tenants have access to much higher subsidy levels in more expensive

108
 Boston Housing Authority. Mission and History. Accessed April 8, 2024. https://bostonhousing.org/en/About-
BHA.aspx
109
 Boston Housing Authority. Monitoring Committee. Accessed April 8, 2024. https://bostonhousing.org/en/Center-
for-Community-Engagement/Resident-Empowerment/Monitoring-Committee.aspx
110
 DeCosta-Klipa, N. (2023). In Southie, Boston’s Oldest Public Housing Project Is Getting a Makeover. WBUR
Boston, December 15, 2023. https://www.wbur.org/news/2023/12/15/mary-ellen-mccormack-housing-
redevelopment-south-boston-newsletter
111
 Winn Companies. Mary Ellen McCormack. Accessed April 8, 2024. https://www.memredevelopment.com/home




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neighborhoods. In July 2023, HUD gave non-MTW housing authorities that have implemented SAFMRs
the ability to raise Faircloth-to-RAD subsidy levels to the small area payment standard (MTW authorities
are not able to do the same). This will give BHA up to $3,200 per unit per month in subsidy in certain
neighborhoods, instead of $1,200.112 The increase in federal subsidy per unit will enable BHA to more
than double the debt it could generate for construction, broadening the scope of feasible development.

BHA manages most new development and redevelopment projects in partnership with private developers
who provide expertise or technical capacity. As it embarks on its Faircloth-to-RAD development pipeline,
the agency anticipates exploring alternate management models, including possibly bringing all
development in-house or hiring private developers for turnkey projects. BHA also often relies on
partnerships with the City of Boston and MassHousing, the state housing finance agency, to execute on its
deals. BHA has bonding authority but relies on MassHousing to support financing at the scale of its
recent, large developments. Furthermore, many of BHA’s redevelopment efforts have utilized grant
funding from the City of Boston or the state budget to support non-construction needs like remediation or
tenant relocation.

Thus far, all of BHA’s development and redevelopment efforts have been on land already owned by BHA
and therefore exempt from property taxes. As the agency creates a plan for developing its 3,000 Faircloth
units over the next decade, it has identified 50 publicly owned sites of varying sizes that could support
development.

BHA’s federal subsidies create significant flexibility in its rent mix, and the agency can thus target
development priorities to the highest needs in the Boston area. BHA is the only developer in the area that
is able to build homes that support extremely low-income families (those with incomes at or below 30
percent of AMI), so the agency attempts to maximize units affordable to those households. BHA projects
over the past decade have typically included 80 percent of units with market-rate rents and 20 percent
targeted towards extremely low-income households using project-based vouchers. The agency also finds
that efforts to provide homes affordable to households with incomes 60-70 percent of AMI are relatively
well-resourced locally, homes targeting rents affordable to households with incomes 80-100 percent of
the area’s AMI are relatively scarce. As BHA expands its public development work over the next decade,
it is interested in evolving its model to support more homes affordable to households with incomes just
below 100 percent AMI.


Cambridge, Massachusetts
The Cambridge Housing Authority (CHA) is a federally-funded public housing authority like BHA. It is
managed by a five-member board: one resident, three community members appointed by the town
manager, and one community member appointed by the Governor.113 CHA has already begun using the
Faircloth-to-RAD model to great success – with some local innovations and creative alterations to the
program.


112
 SAFMRs set voucher rents at the 40th-percentile rent of a given zip code rather than an entire region, which
enables much higher voucher payments in expensive neighborhoods. See also footnote 31.
113
 Cambridge Housing Authority. Board of Commissioners. Accessed April 8, 2024. https://cambridge-
housing.org/about/board-of-commissioners/




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CHA is not able to blend Faircloth-to-RAD conversions with SAFMRs in the way that has made BHA’s
Faircloth-to-RAD financing so promising. Unlike BHA, CHA has a MTW designation from HUD, giving
it greater flexibility to shift funds between programs but excluding it from the special ability to raise
Faircloth-to-RAD subsidy levels in line with small area payment standards. Instead, CHA combines
Faircloth-to-RAD with LIHTC, soft debt from the state HFA, and, in some cases, investments from the
city of Cambridge.

A recent CHA redevelopment project has used this model and is about to begin construction. The project
relies on $10-12 million from LIHTC, approximately $12 million in soft debt from the state, debt on
Faircloth-to-RAD subsidies, and $44 million in funding from the city of Cambridge. Unlike BHA’s recent
development efforts, CHA’s project is 100 percent affordable, with many units put aside for extremely
low-income residents. CHA is placing much less of an emphasis on cross-subsidization and mixing
incomes and is prioritizing deep affordability.

Most of CHA’s redevelopment work in recent years has relied on LIHTC, but caps on tax-exempt private
activity bonds have slowed CHA’s development plans. Private activity bonds are issued by states
annually to fund projects in the public interest and are exempt from taxes. When private activity bonds are
used for housing projects, they automatically come with 4 percent LIHTC, which can be a useful piece of
a complex capital stack in affordable housing development (as seen in CHA’s stack discussed above).114
The federal government places a cap on the amount of private activity bonds that a state can issue every
year, and in recent years many states, including Massachusetts, have run up against the cap.115 In the
absence of the cap, CHA could be working on up to 15 affordable housing projects, but with the cap in
place, they are limited to one or two per year. The cap on private activity bonds and resulting bottleneck
of LIHTC has driven CHA to begin to explore other financing options.

CHA has a long history of innovation in preservation and development and began using Faircloth-to-
RAD before many other PHAs. As such, it has begun working as a consultant and development partner
with other PHAs that have unbuilt Faircloth authority – particularly small PHAs in the Boston region that
do not have the technical expertise to make full use of HUD’s financing tools. Massachusetts allows
PHAs to operate anywhere in the state which enables CHA to blend its own subsidies with other PHAs in
other towns and cities and operate across town lines. Given the complexity of some of these projects and
the fact that Faircloth-to-RAD subsidies are often insufficient to generate new housing units on their own,
CHA sees these consulting partnerships with other PHAs as an important effort to operationalize
Faircloth-to-RAD.




114
 Local Housing Solutions Lab. Increased Use of Multifamily Private Activity Bonds to Draw Down 4 Percent
Low Income Housing Tax Credits. Accessed April 8, 2024. https://localhousingsolutions.org/housing-policy-
library/increased-use-of-multifamily-private-activity-bonds-to-draw-down-4-percent-low-income-housing-tax-
credits/
115
 McAnaney, P. (2024, March 8). How Federal Stimulus Accidentally Bottlenecked Affordable Housing in D.C.
Greater Greater Washington. https://ggwash.org/view/93101/how-federal-stimulus-accidentally-bottlenecked-
affordable-housing-in-dc




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Hawaii
The Hawaii Public Housing Authority (HPHA) is governed by an eleven person Board of Directors
appointed by the Governor and is also overseen by the state legislature.116 In partnership with the Hawaii
Housing Finance and Development Corporation, HPHA has recently explored large-scale redevelopment
of its statewide portfolio under a similar program as Boston and Cambridge. The authority recently
received approval from the Hawaii state legislature to build mixed-income housing (as opposed to
housing targeted just to low-income households) and has identified a private developer partner –
Highridge Costa Development Co – to implement HPHA’s Ka Lei Momi project.117

Under Ka Lei Momi, the HPHA and Highridge Costa Development Co will work together to build and
manage 10,000 new units of affordable and workforce housing on 9 properties already owned by the
HPHA. These units will be financed by RAD conversion of both existing public housing units and unbuilt
Faircloth authority (like BHA and CHA above), as well as supplemental funding from HPHA’s MTW
funds, LIHTC, and private equity financing through Highridge Costa.


Dakota County, Minnesota
The Dakota County Community Development Agency (CDA) was created in 1971 as an independent
legal entity and is now a recognized and respected affordable housing developer in the communities it
serves. During the first 20 years of the CDA’s senior housing program, the Dakota County Board, which
is elected, appointed the CDA’s Board of Directors. In approximately 2010, however, members of the
County’s board appointed themselves to serve as the CDA’s board. This has the effect of holding the
CDA directly accountable to county residents for high-quality development and fiscal responsibility.

When planning a new development, the CDA’s typical practice is to look for underused sites in the
county. Occasionally these sites are publicly-owned, but that is not the norm. They work closely with
municipalities within Dakota County to identify ideal sites, especially redevelopment opportunities. The
CDA has two distinct housing programs: publicly-owned senior housing and workforce housing
(typically townhomes for families with children). All of the CDA’s projects have an affordability
component. Its workforce housing utilizes LIHTC and sets affordability levels accordingly, while the
senior housing program targets households with incomes at or below 80 percent of AMI.

The CDA’s senior housing program constitutes true public development and ownership according to our
definition. Minnesota state statute allows the CDA to issue tax-exempt “essential function” bonds, which
are credit enhanced with a general obligations pledge from Dakota County, to finance new senior housing
developments. Each new bond issuance is amended to join one, large common bond, which allows the
CDA to pool revenue from across its developments to service the debt.118 Aggregating all operating


116
 Hawaii Public Housing Authority. Our Team. Accessed April 8, 2024. https://hpha.hawaii.gov/team
117
 Office of the Governor, Hawaii. (2023, July 3). The Hawaiʻi Public Housing Authority Announces Master
Developer To Create More Than 10,000 Affordable Rental Units: Press Release.
“https://governor.hawaii.gov/newsroom/news-release-the-hawai%CA%BBi-public-housing-authority-announces-
master-developer-to-create-more-than-10000-affordable-rental-units/
118
 Dakota County Community Development Agency (CDA). Senior Housing Development Program. Presentation.
Shared with the research team via private email.




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revenue and costs also allows the CDA to spread out the cost of any major repairs such as new roofs,
windows, and siding – something that is increasingly important as its earlier projects turn thirty and forty
years old. Importantly, in addition to its rent revenue, the CDA relies on a special property tax levy
authorized by the Minnesota legislature in 1999 to help service its bond debt.119 This allows Dakota
County’s backing of the bonds to remain strictly a credit enhancement; it does not use its own tax receipts
to service the bond.

Typically, the CDA begins construction on a new senior housing development immediately after floating
a new bond, without the need for separate construction loans. The CDA generally hires a general
contractor through a public bidding process (it does not negotiate) and simply draws down the funds
needed to make each month’s construction payment. The agency pays a sales tax on the construction
contract, but can obtain a rebate on construction materials from the state at the end of construction.
Another important aspect of the development package is that the CDA is exempted from property taxes
(though it does pay a PILOT in order to help pay for public services for their affordable senior projects).
The CDA chooses to pay prevailing wages for the construction of all its senior housing developments,
even though they are typically not using any federal financing that triggers Davis Bacon laws.

The common bond structure serves as a safety net across the properties and underlines the advantage of
building up a larger portfolio. Today, the CDA owns and operates more than 1,700 senior units in nearly
30 properties. The ability to issue the tax-exempt bonds to fund development is reflected in the rent
structure. Initially, the CDA set a minimum and maximum rent for each building and residents paid 30
percent of their income towards rent within that range. More recently (for the newest 10-12 buildings), the
agency has transitioned to a flat rent structure. Because most of its projects are small (the CDA now aims
for ~65-unit buildings), cross-subsidization is less feasible and the agency has not pursued a mixed-
income approach to date.

CDA senior housing is high quality, but the agency has deliberately chosen not to include expensive
amenities such as dishwashers, in-unit washers and dryers, and common areas in order to maximize
affordability for its residents. This has not appeared to deter interest in the developments. The CDA has
the freedom to make this choice, as well as greater flexibility with rent structures, because the essential
function bond and county-level tax levy come with few strings attached compared to using LIHTC. The
CDA also has its own maintenance staff and conducts all property management in-house.


Idaho
The Idaho Housing Finance Association (IHFA) is the state’s self-sufficient housing finance agency,
operating much like a nonprofit. Its core responsibilities include administering housing tax credits and
overseeing the state’s HUD-insured developments. In 1992, in response to the underutilization of LIHTC
in the state, the IHFA created The Housing Company (THC) to be a 501(c)(3) nonprofit development and
property management organization. THC’s Board of Directors consists of 50 percent independent
members and 50 percent IHFA-appointees – a structure that HUD accepted. As a nonprofit developer that


119
 Office of the Revisor of Statutes. (1999). Chapter 238, S.F. no 1876. Minnesota Legislature.
https://www.revisor.mn.gov/laws/1999/0/248/#laws.0.3.0




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uses LIHTC, THC does not meet our criteria for public development and ownership. Nevertheless, its
public mission and relationship with IHFA makes it relevant for this report.

THC typically coordinates with municipalities to identify new development opportunities, sometimes
drawing on the considerable surplus of public land throughout the state. Alternatively, sometimes land is
donated to THC, although this occurs less frequently. In terms of financing, THC acts much like a typical
affordable housing developer. It commonly relies on LIHTC – both the 4 percent and 9 percent credits.
THC projects also use CDBG funding when it is available. THC has used HOME funding for several of
its rural projects which are usually smaller in size, from six to 15 units per project. THC also sometimes
receives philanthropic donations to subsidize its developments, including for single-family homes with
deed restrictions to ensure long-term affordability or with a shared-equity model. In recent years, THC
successfully accessed $50 million of ARPA funds, used in combination with 4 percent credits, to create
approximately 1,200 workforce units. This is a model that THC would like to replicate with future funds
from the state.

THC manages, and to some extent owns, all of its properties. With tax credit projects, the investor LLC
holds majority ownership in the project while THC only owns a small stake, but THC includes a
provision that passes full ownership to the organization after the compliance period. By serving as a
property manager, THC can and does exercise the option to raise rents more slowly than the market
would merit, thereby keeping units as affordable as possible. All of THC’s projects have some
affordability component, and they typically establish a preference for voucher holders.

THC is now recognized for its long history as a successful developer. This reputation, combined with the
rules established to clearly distinguish THC from IHFA and the straightforward and transparent nature of
the state’s QAP, is key in protecting THC from a perception of a conflict of interest due to its relationship
to IHFA. Experts in Idaho expect that this model may be hard to replicate today because developers may
view a similar entity as a competitor with an unfair advantage for receiving tax credits.


Colorado
In 2022, Colorado voters approved Proposition 123, a ballot measure that funds housing initiatives by
setting aside 0.1 percent of state income tax revenue. The measure is expected to generate over $300
million in 2025, and 40 percent of those funds are set aside for the Department of Local Affairs (DOLA)
through the Division of Housing (DOH). DOLA and DOH administer the Affordable Housing Support
Fund, which supports programs that prevent homelessness, promote affordable homeownership, and
develop local planning capacity.120

The remaining 60 percent of the Proposition 123 funds go to the Office of Economic Development and
International Trade (OEDIT).121 OEDIT and the Colorado Housing and Finance Authority (CHFA)
manage the Affordable Housing Financing Fund (AHFF), which finances affordable housing


120
 Colorado Department of Local Affairs. (2023). Proposition 123 Commitment Updates.
https://engagedola.org/prop-123/news_feed/proposition-123-commitment-updates
121
 Colorado Affordable Housing Finance Fund. (2023). About Proposition 123.
https://coloradoaffordablehousingfinancingfund.com/about/




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developments across the state. To receive funding from AHFF, localities must first commit to increasing
their affordable housing stock by 3 percent per year for three years.122

AHFF oversees three primary initiatives: a land banking program, a concessionary debt program, and an
equity program. Roughly 15 percent to 25 percent of the AHFF is allocated to the land banking program,
which provides grants and forgivable loans to local governments and eligible nonprofits. Funding must be
used for the acquisition or preservation of land for affordable for-sale or rental homes. The program
prioritizes high-density, mixed-income housing, with income limits set at 60 percent of the AMI for
rentals and 100 percent of the AMI for homeownership.123

Approximately 15 percent to 35 percent of the AHFF is allocated to the concessionary debt program,
which provides gap financing for LIHTC projects and other low- and middle-income multifamily rental
developments. The average income for tenants in income-restricted units cannot exceed 60 percent of the
AMI. Up to 25 percent of the development's units may be market-rate; however, those units are not
eligible for financing via the program.124 The concessionary debt program also offers debt financing for
modular housing, which includes tiny homes, kit homes, and 3D-printed homes.125 Interviewees estimated
that the program will fund approximately 3,000 units this year.

The remainder and bulk of the AHFF, roughly 40 percent to 70 percent, is allocated to the equity
program. In this program, the state makes below-market-rate equity investments for the construction of
new mixed-income housing developments.126 The program prioritizes mixed-income housing for low- and
middle-income households, but maintains affordability by ensuring that income-restricted units do not
exceed an average of 90 percent of the AMI.127 As of July 2024, the program announced $39.4 million in
equity investments for 628 units across six new buildings, with the individual awards ranging from $2.8
to $15 million128 Funding for the equity program is expected to more than double in 2025, which will
increase the number of developments funded (awards are capped at $15 million). Tenants in these units
will also be enrolled in the Tenant Equity Vehicle (TEV), a program designed to allow renters to tap into
the value of their buildings. After living in a state-equity-financed building for at least a year, and in
exchange for on-time rent payments, tenants will begin to access monthly and end-of-year cash payouts
that they can either use or save up, e.g. for a future downpayment on a home. The exact parameters of the

122
 Colorado Office of Economic Development and International Trade. (2023). Proposition 123 - Program
Summary. https://oedit.colorado.gov/proposition-123-colorado-affordable-housing-financing-fund
123
 Colorado Affordable Housing Finance Fund. (2023). Land Banking.
https://coloradoaffordablehousingfinancingfund.com/land-banking/
124
 Colorado Affordable Housing Finance Fund. (2023). Concessionary Debt.
https://coloradoaffordablehousingfinancingfund.com/concessionary-debt/
125
 Colorado Housing Finance Agency. (2023).
Innovative Housing and Modular Manufacturer Financing. https://www.chfainfo.com/business-lending/loan-
programs/innovative-housing-manufacturer-financing
126
 Colorado law limits how the state interacts with private businesses, so these equity investments will yield returns
for the state but do not currently translate into an ownership stake, though this may evolve in the future.
127
 Colorado Affordable Housing Finance Fund. (2023). Equity.
https://coloradoaffordablehousingfinancingfund.com/equity/
128
 Office of Colorado Governor Jared Polis. (2024). More Housing Now: Proposition 123 Funds to Help Create
628 Affordable Housing Units. https://www.colorado.gov/governor/news/more-housing-now-proposition-123-
funds-help-create-628-affordable-housing-units




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TEV are still under development. Funding will initially come from the interest the state collects in its
concessionary debt program, but may eventually come from the appreciation of equity-financed buildings
themselves.


Vienna, Austria
In Vienna, social housing accounts for more than 43 percent of all housing units–one of the highest
proportions in the world.129 This 43 percent is nearly evenly split between two social housing systems:
‘municipal housing’ built and owned by Wiener Wohnen, a city-owned company whose budget is
approved by the Viennese City Council, and ‘limited-profit housing’ built by limited-profit housing
associations (LPHAs). Both systems 1) exclusively produce rental housing, which is owned by either the
municipality or LPHA indefinitely130; 2) base rents on the cost of developing and maintaining the
housing; 3) have broad eligibility, such that households of varying income levels, etc. can access this
housing stock.

LPHAs can be organized as limited liability companies, public liability companies, or cooperatives, but –
in order to receive LPHA status and receive access to low-interest government loans – they must abide by
an Austrian law (the Wohnungsgemeinnützigkeitsgesetz, or WGG) that dictates how they calculate the
cost of a given development and prohibits them from charging rents either above or below the cost-
recovery level for a given development.131

Municipal housing in Vienna is financed primarily by a federal income tax. A portion of the tax revenue
is distributed to each of Austria’s nine states, which decide whether to use it for housing construction or
for subsidies (since the early 2000s, they may also invest it in infrastructure). The City has an annual
budget for new development and renovation of about $700 million, of which $530 million comes from the
national government.132

Financing for limited-profit housing is more complex. New LPHA developments are usually financed
with 1) a low-interest, subordinate loan from the regional government, making up 30-40 percent of the
capital stack; 2) a bank loan, also making up 30-40 percent of the capital stack, typically with a 25-30
year term and an interest rate of 1-1.5 percent (when interest rates increase, special-purpose housing
construction banks exist to offer affordable rates); 3) equity from the LPHA itself, comprising 10-20
percent of the stack; 4) a tenant equity contribution making up 5-10 percent of the total investment; and 5)
additional public grants, often 5 percent of the stack, to cover the expense of meeting secondary policy
objectives such as adding renewable energy sources.133



129
 Kadi, J. & Lilius, J. (2022). The Remarkable Stability of Social Housing in Vienna and Helsinki: A Multi-
Dimensional Analysis. Housing Studies. DOI: 10.1080/02673037.2022.2135170
130
 Except in the case of right-to-buy units, see information on tenant equity contributions below.
131
 Pittini, A., Turnbull, D., & Yordanova, D. (2021). Cost-based Social Rental Housing in Europe: The Cases of
Austria, Denmark and Finland. Housing Europe, December 2021. https://www.housingeurope.eu/resource-
1651/cost-based-social-rental-housing-in-europe
132
 Forrest, A. (2019, February 5). Vienna’s Affordable Housing Paradise. HuffPost, February 25, 2019.
https://www.huffpost.com/entry/vienna-affordable-housing-paradise_n_5b4e0b12e4b0b15aba88c7b0
133
 Pittini et al. (2021).




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The regional low-interest loans that finance LPHA development are, in part, revolving. Historically, as
LPHAs repaid their loans, regional governments were required to reinvest these funds in new
development. This statutory obligation no longer exists, but LPHA loan repayments still account for
about two-thirds of the funds used to issue new LPHA development loans. The remainder comes from the
regional government’s own revenue, often drawing on a regional housing-specific tax of 1 percent on
gross salaries. LPHAs do not have to service the interest on these regional loans until their other loans
have been repaid.134

The City of Vienna also subsidizes social housing, where possible, through public land. Wohnfonds
Wien, a public land bank, has been acquiring public land for the last forty years. In order to be granted an
opportunity to buy public land or (more recently) access it via a 99-year ground lease, LPHAs must go
before a jury, and if the project is large, compete against other proposals. Entries are judged based on
criteria of economic feasibility, ecology, architectural quality, and social sustainability. Municipalities can
also specially zone land for LPHA housing, helping to limit the cost of land. Nevertheless, rising land
prices combined with cheap financing available on the private market for non-social housing in recent
years has dampened LPHA production. Conditions are only now becoming more favorable due to rising
interest rates.

Tenant equity contributions are another distinctive component of LPHA financing and are often invoked
when a development incurs high land acquisition or other up-front costs. In this model, tenants are
required to make a down payment at move-in. These down payments have risen significantly in recent
years because of the rise in land prices. In Vienna today, they may vary between 200 and 800€ per square
meter ($20-80/ft2), and so could reach 30.000€ ($32,400). The down payment is returned to tenants–
minus a deduction of 1 percent per year–when they move out. Tenants whose down payment exceeds a
certain amount have the right to buy their unit after a tenancy of five years. Nevertheless, the tenant
equity contribution represents a significant barrier for some, so Vienna offers loans to cover it. The
absence of this requirement in Vienna’s municipal housing makes it more accessible than LPHA housing
for low-income households.135

In Vienna, social housing rents are based on the cost of developing and maintaining a given project. The
WGG, which regulates rent calculations in limited-profit housing, factors in all planning, construction,
financing, and management costs for a development. Because calculations must occur at the level of an
individual development, cross-subsidization between developments–even those owned by the same
LPHA–is impossible.136 Once the LPHA’s loan is paid off, a development’s rents typically decline,
though not precipitously. LPHAs continue to charge a base rent (set by the WGG at 1,87€/m2 in 2021,
updated every two years, and indexed to CPI), plus maintenance, service, and renovation costs. Surpluses
are reinvested by the LPHA in new development.137 Meanwhile, in Vienna’s municipal housing, rents are
set by the City in line with federal rent regulation laws, and are slightly cheaper than LPHA rents.138

134
 Pittini et al. (2021).
135
 Kadi, J. (2015). Recommodifying Housing in Formerly ‘Red’ Vienna. Housing, Theory, and Society 32: 247-
265.
136
 Pittini et al. (2021).
137
 Pittini et al. (2021).
138
 Kadi and Lilius (2022).




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In 2016, average rents in Vienna’s municipal housing was 3,97€/m2 (40¢/ft2), compared to 4,84€/m2 in
limited-profit housing and 6,34€/m2 in private housing.139 A version of LPHA housing called “smart
housing,” which has efficient ground floor plans and fewer amenities, also has lower rents and down
payments. Social housing recipients may also be eligible for a housing allowance–but these are fairly rare
in Vienna because rents remain largely affordable.

Together, the municipal and LPHA systems have helped keep housing affordable in Vienna. Only 10
percent of households report that meeting their housing needs represents a “heavy financial burden,”
compared to nearly 30 percent in the EU as a whole.140

Social housing is available to much of the Viennese population. The application process and basic
eligibility requirements for municipal and limited-profit housing are the same; the 2023 after-tax income
cap of 53.340€ ($57,600) for an individual – and higher amounts for larger households – qualifies about
75 percent of the population.141 Municipal housing is now additionally restricted to those who have lived
at their current address in Vienna for at least two years; this was introduced as an “exclusion mechanism”
in the early 2000s as a response to rising international migration. Tenants in both municipal and limited-
profit housing can only receive a unit that fits their current household size (with some exceptions), and
municipal housing is prioritized for those with urgent needs (overcrowding, doubling-up, or cost
burden).142

Vienna’s social housing system dates to the 1920s, when the city’s Social Democratic government built
60,000 municipal apartments in vast “people’s palaces” (Wolkswohnungspaläste).143 Today, Wiener
Wohnen owns and manages about 221,000 units in Vienna.144 The city’s 58 LPHAs manage another
200,000 units.145 Between 2001 and 2020, there was a net increase of about 60,000 units of social housing
units in Vienna.146 The massive scale and age of the social housing system in Vienna creates advantages
that would be hard to replicate elsewhere; buildings whose mortgages have long since been paid continue
to generate rent revenue that can be used to cover repair needs and invest in new development, and the
system is so established that it is immune from the whims of politics. On the flip side, there have not been
any new LPHAs founded in Vienna in the recent past, as it is difficult to newly enter the social housing
space.



139
 Lukas Tockner. 2017. “Mieten in Österreich und Wien, 2008 bis 2016.” Arbeiterkammer.
https://www.arbeiterkammer.at/infopool/wien/Mieten_in_Oesterreich_und_Wien_2008_bis_2016.pdf
140
 EU-SILC database, Table [ilc_mded04].
141
 Stadt Wien. “Flat Allocation Criteria.” Accessed March 28, 2024. https://socialhousing.wien/tools/flat-
allocation-criteria
142
 Kadi and Lilius 2022.
143
 Richard Conway. 2023. “Vienna Launched a Public Housing Revolution in the 1920s.” Bloomberg CityLab,
November 8, 2023. https://www.bloomberg.com/news/features/2023-11-08/the-design-history-of-vienna-s-world-
famous-social-housing
144
 Wiener Wohnen. 2022. Geschäftsbericht. https://www.wienerwohnen.at/ueber-uns/geschaeftsbericht.html
145
 Stadt Wien. “Limited Profit Housing Construction.” Accessed March 28, 2024.
https://socialhousing.wien/tools/limited-profit-housing-construction
146
 Kadi and Lilius 2022.




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Helsinki, Finland
In Helsinki, social housing accounts for 19 percent of the housing stock as of 2020,147 compared with 11
percent of the housing stock in Finland as a whole.148 The Finnish social housing sector bears some
resemblance to Vienna’s dual system of municipal and limited profit housing associations. ARA, the
national agency which regulates social housing, partners with about 800 social housing providers across
the country. These can be either municipalities (or housing associations principally owned by a
municipality) or ARA-approved nonprofits specializing in social housing development. In reality, up to
80 percent of social housing in Finland is managed by municipally owned housing associations.149 The
largest provider in the country, with about 50,000 units, is Heka, Helsinki’s municipal housing
association.150 The most important aspects distinguishing Finland’s system are: 1) new social housing is
financed primarily by bank loans, but these are guaranteed – and interest rates are subsidized – by the
state; 2) after these loans are paid off, the rent restriction period comes to an end and the social housing
provider has the option to gradually increase rents, privatize the units, and/or decide on their own
allocation criteria; and 3) social housing providers in Finland (unlike in Austria) are permitted to equalize
rents across their stock, making some cross-subsidization possible.

The principal financier of social housing in Finland is MuniFin, a bank collectively owned by the
Republic of Finland, Finnish municipalities, and the public sector pension fund. Munifin finances not just
housing but schools, hospitals, and other infrastructure, and grants loans with terms of up to 41 years.151 It
lent 827 million euros for new social housing in 2020 and made a net profit of 197 million euros. Loans
from MuniFin and other private financial institutions typically make up 95 percent of the cost of
developing a new social housing project, but loans are guaranteed by ARA to reduce risk and improve the
loan terms.152 As interest rates currently exceed 3.9 percent, the state has intervened further to reduce debt
service costs for social housing providers. Social housing providers must invest the remaining 5 percent
in the development cost, either out of their own savings or via a separate, non-guaranteed bank loan.

The City of Helsinki owns a large amount of land, which represents an important input for affordable
development. The City leases land to social housing providers at about 10 percent below market rent.
(Other cities have chosen to sell public land directly to social housing providers). In either case, the ARA
sets a maximum price or rent that is pegged to the social housing provider’s market value.153

Rents in Finland’s social housing are regulated by the ARA, which caps them at the cost of providing the
housing, factoring in development, maintenance, renovation, and administration costs. A key distinction


147
 City Hall, Helsinki. 2020. Asumisen ja siihen liittyvän maankäytön toteutusohjelma.
https://dev.hel.fi/paatokset/media/att/57/575b338de14f698c1228a244265057ed428f7ed4.pdf
148
 Pittini et al. (2021).
149
 Pittini et al. (2021).
150
 City of Helsinki. Heka rental apartments.\ Accessed March 28, 2024. https://www.hel.fi/en/housing/rental-
housing/heka-rental-apartments
151
 MuniFin. (2022, November 18). Finnish System for Affordable Social Housing Supports Social Mixing and
Brings Down Homelessness. https://www.munifin.fi/whats-new/finnish-system-for-affordable-social-housing-
supports-social-mixing-and-brings-down-homelessness/
152
 Pittini et al. (2021).
153
 Pittini et al. (2021).




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from the Austrian cost-based model is that Heka and other social housing providers can “equalize” rents
across their entire stock–including even units whose mortgages have been repaid, and are therefore no
longer rent-restricted, as long as the effect is to lower rents in the restricted units. This means that rents
can be low even in newer, more expensive housing, and that the cost of major renovations or repairs can
be spread out across a large group of tenants.154

About 40 years after construction, when the loans for a social housing project have been repaid, cost-
based rent rules longer apply. The ARA can also end the restriction period for a project early if, for
instance, population decline has resulted in an oversupply of social housing and it is challenging to find
households willing to pay the cost-based rent. Generally, though, the projects are still owned by the same
municipal housing association at the end of the restriction period and the same social motivation
remains.155 Studies show that rents do not change after the rent restriction period in about 80 percent of
cases.156

The differential between private and social rents is especially large in high-demand areas like central
Helsinki. In 2017, social housing in Helsinki rented for an average of 12,75€/m2 ($1.28/ft2), compared
with 19,58€/m2 ($1.96/ft2) for market-rate units.157 Low-income households may also be eligible for rental
assistance.

All households are theoretically eligible for social housing in Finland. In practice, preference is given
based on the household’s income, wealth, and urgency of need. Helsinki’s allocation process is somewhat
opaque but designed to promote a social mix such that people who all speak a certain language, or who
are all unemployed, will not be grouped in a single building. About 3,000 social apartments become
available in Helsinki every year, but there are 10,000 applications in the queue at any given time.
Applicants must reapply every three months until they are selected.158

Finland’s social housing sector underwent a major change in the late 1990s, when two major nonprofit
developers transformed their business strategy and became real estate investors. They have since
converted and sold off most of their social housing stock. Nevertheless, the overall share of social housing
in Helsinki has remained stable thanks to municipal production of about 3,200 new units between 2001
and 2020.159

Finland is experiencing a slow shift away from promoting housing affordability purely through social
housing production toward subsidizing housing costs for low-income households. This shift jeopardizes
the many advantages that a large stock of social housing brings, including very high-quality, affordable
housing in desirable neighborhoods. There is also ongoing political debate about whether the government

154
 Pittini et al. (2021).
155
 Pittini et al. (2021).
156
 Hietala, M., Kaleva, H., Kumpula, S., & Lahtinen, R. (2021). Rajoitksista vapautuneet ARA-khotet 2010-2020.
Reports of the Housing Finance and Development Center. https://www.ara.fi/fi-
FI/Tietopankki/Julkaisut/Aran_raportteja_julkaisusarja/Rajoituksista_vapautuneet_ARAkohteet_201(61475)
157
 City of Helsinki. (2017). Vuokranmäärits Hekassa, cited in Kadi and Lilius 2022.
158
 City of Helsinki. Hekan vuokra-asunnot. Accessed March 28, 2024. https://www.hel.fi/fi/asuminen/vuokra-
asunnot/hekan-vuokra-asunnot
159
 Kadi and Lilius. (2022).




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should periodically verify income for social housing tenants, in order to encourage those whose means
have improved to transition to private housing; Helsinki has opposed this proposal.


Copenhagen, Denmark
Denmark’s social housing sector is, in reality, a nonprofit housing sector. There are over 500 nonprofit
housing associations in the country, which (though they vary widely in size) all have the same basic legal
structure and all produce exclusively rental housing. These nonprofits have produced over 560,000
housing units, making up about 20 percent of the Danish housing stock as of 2021.160 This housing type is
thought of as “social” for two reasons. First, as in Austria and Finland, rents must be purely cost-based.
National law requires that the income and expenditures of nonprofit housing organizations match, and
rents must be determined annually based on an operating budget for the coming year. The State also sets a
maximum per-square-meter cost of new nonprofit housing construction by housing type and region,
which helps keep rents low.161 Second, municipalities – including Copenhagen – work closely with
nonprofit housing associations to decide how much and where to build, and have the right to directly
administer the tenant screening and selection process for a quarter of the units in every development. In
exchange, municipalities typically pay about 10 percent of the cost of new construction. Every year
municipalities and nonprofit housing associations engage in “dialogues” in which they jointly plan for
new construction.

A distinctive aspect of the Danish system is that when the mortgage is paid off for a given social housing
project, its rents do not decrease. Instead, they continue to increase in line with a national home price
index until the 45th year after loan take-up, after which the nominal rent level is maintained in perpetuity.
The share of rents previously used for debt service then flows into a National Building Fund (NBF).
Denmark uses the NBF to subsidize renovations, fund social programs, and sometimes to invest in
construction of new social housing, for example, through the remediation of environmentally damaged
sites. The NBF is a critical element in the social housing system; it creates a permanent, dedicated stream
of revenue for social housing, and prevents politicians as well as residents from perceiving social housing
tenants as welfare-dependent.

In 2015, Denmark began encouraging municipalities to set aside up to a quarter of large new
developments for social housing units. This policy was intended to address the reality that developing
social housing is more difficult during economic growth periods when land prices soar. So far, this
approach has been principally tested only in the major cities of Copenhagen and Aarhus, and will be
formally evaluated in 2024-5.162 One early problem with the approach is that the nonprofit-developed
social housing units were often the last to be built, and so their rents were set when the costs of
construction were the highest. A new law has forced a stop to this practice, and a single developer now
typically builds the entire complex at once, handing the keys to the nonprofit for the social units when
they have been constructed.


160
 Pittini et al. (2021).
161
 Pittini et al. (2021).
162
 Nielsen, R. S., Nordberg, L. W., & Andersen, H. T. (2023). Taking the Social out of Social Housing? Recent
Developments, Current Tendencies, and Future Challenges to the Danish Social Housing Model. Tidsskrift for
Boligforskning, 6(2): 136-151.




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Singapore
Singapore’s social housing system is of a scale and design that wholly departs from those found in
Europe. Beginning in the 1960s, Singapore’s Housing and Development Board (HDB) began churning
out massive, high-rise projects as a way to combat informal communities (kampongs) forming on the
urban periphery.163 This public housing stock (which exceeds a million units and continues to grow) today
houses nearly 90 percent of the country’s citizens and permanent residents.164

There are four especially noteworthy aspects of Singapore’s model. First, a large majority of social
housing residents are effectively homeowners, because they can buy, sell, and inherit their government-
built units–though in reality, HDB sells them a 99-year lease and the agency perpetually retains
ownership of the land on which social housing is built. As of 2021, only 3 percent of the resident
population are renters.165 In 2021-2022, the price of a typical one-bedroom unit ranged from SGD
$372,000 to $525,000 (USD $276,000 to $389,400).166 Generous housing grants are available to first-time
homebuyers with lower incomes.

Second, Singapore has a unique way of financing this public homeownership. The country’s Central
Provident Fund (CPF), which started out as a retirement savings scheme, creates a compulsory savings
account for every employed Singaporean. Account-holders contribute 20 percent of their wages and their
employers contribute another 17 percent each month.167 The Singaporean government sells bonds to the
CPF board in order to access CPF savings, which are then used to finance the public building program
through various loans and grants to the HDB.168 Meanwhile, beginning in the 1960s, the government
began allowing individuals to withdraw from their CPF accounts before retirement. This has allowed CPF
accounts to become the primary way that families repay their HDB mortgage loan; no private financial
institutions are involved in the transaction.169

A third salient characteristic of the Singapore model involves the nation’s strategy for keeping
development costs low. An eminent-domain-style land acquisition program dating to the 1960s means
that the government today owns 90 percent of the country’s land, and it awards construction contracts for


163
 Seng, L. K. (2009). The Politics of Fires in 1950s Singapore and the Making of the Modernist Nation-State, Ch.
5., in Reframing Singapore: Memory, Identity, and Trans-Regionalism. Amsterdam University Press, pp.89-108.
164
 Chua, B. H. (2014). Navigating Between the Limits: The Future of Public Housing in Singapore. Housing
Studies 29(4): 520-533.
165
 Housing and Development Board. 2023. Key Statistics: HDB Annual Report 2021/2022.
https://assets.hdb.gov.sg/about-us/news-and-publications/annual-
report/2022/ebooks/Key%20Statistics%20FY21.pdf
166
 Housing and Development Board 2023.
167
 The CPF contribution rates fluctuate with the economy. They reached as high as 25 percent from both
individuals and employers in the early 1980s. Employers’ contributions were lowered in order to keep labor costs
low. Employer contribution rates also get progressively lower for workers older than 50. Source: Chua, B. H.
(2014).
168
 Phang, S. Y. (2007). The Singapore model of housing and the welfare state. SMU Research Collection School of
Economics. http://ink.library.smu.edu.sg/soe_research/596/
169
 Hoe N. K. (2018). Public housing policy in Singapore. Lee Kuan Yew School of Public Policy, National
University of Singapore. https://lkyspp.nus.edu.sg/docs/default-source/gia-documents/public-housing-policy-in-
singapore_with-graphics(1).pdf?sfvrsn=7c4b6c0a_2




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entire urban districts to private construction companies whose only customer is the state.170 Another
important input is cheap, foreign labor. Singapore does not have a minimum wage and relies on low-paid
temporary workers from elsewhere in South Asia to construct new social housing. These workers are not
eligible for HDB housing themselves and instead live in crowded dormitories.171

Fourthly, in response to a period of oversupply when HDB units were sitting vacant, the agency has
shifted to a build-to-order model. Prospective residents purchase an apartment plan, and HDB begins
construction on a new project only when 70 percent of units have been presold. This strategy creates up-
front financing for the government, but also leads to longer waits (3 to 5 years) for households acquiring a
new unit.172

Ultimately, the structure of Singapore’s model creates a delicate balancing act for its conservative
government. There is an active resale market for HDB units, and resale units can be significantly more
expensive than HDB units. Singaporean homeowners of course benefit when home prices rise, as this
increases the value of the asset which represents their retirement savings.173 The HDB must try to protect
the appreciation of existing units, while also providing affordable units to newly formed households.


Hong Kong
Hong Kong until recently has been one of the most expensive housing markets in the world.174 In this
context, public housing is an especially important resource. The Hong Kong Housing Authority (HKHA),
established in 1973, is the primary provider of public housing in the region. As of 2023, the authority
owned 193 public rental housing estates, containing more than 800,000 units.175 Perhaps the most
distinctive characteristic of HKHA’s model is that the authority owns a diverse portfolio that includes
market-rate commercial and industrial spaces, car parks, and former warehouses converted to apartments
that it leases. HKHA also leases commercial spaces within its public housing projects at near-market
rates.176 In 2020, HKHA’s total income was HK $46 billion, of which 45 percent came from rent
collections in commercial, industrial, and rental properties and 50 percent from the sale of apartments via



170
 Woltersdorf, A. (2018). A Bold Approach to Public Housing. The Politics of Housing. IPS Journal, June 18
2018. https://www.ips-journal.eu/in-focus/the-politics-of-housing/a-bold-approach-to-public-housing-2800/
171
 Kirk, M. (2015, June 9). The Peculiar Inequality of Singapore’s Famed Public Housing. Bloomberg CityLab.
https://www.bloomberg.com/news/articles/2015-06-09/for-migrant-workers-in-singapore-it-s-build-high-live-low
172
 Lee, M. (2023, August 10). Housing Lessons from Singapore. PolicyNote, August 10, 2023.
https://www.policynote.ca/singapore-housing/
173
 With Singapore’s society beginning to age, the government has created two new programs to help retirees tap the
value in their homes. Very low-income retirees are allowed to sell their lease back to HDB in exchange for a
monthly income and without having to vacate their unit. Others are allowed to sublet, creating a stream of income
while still allowing them to bequeath their home to their children. Source: Source: Chua, B. H. (2014).
174
 Wong, J. (2024, February 29). How the World’s Priciest Property Market Stumbled. Wall Street Journal.
https://www.wsj.com/economy/housing/how-the-worlds-priciest-property-market-stumbled-9b5d3eec
175
 Hong Kong Housing Authority. (2023). Annual Report 2023, Key Figures.
https://www.housingauthority.gov.hk/mini-site/haar2223/common/pdf/1-Key-Figures.pdf
176
 Hui, E. C. M., and Wong, F. K. W. (2004). The Hong Kong Housing Authority and its Financial Arrangement
over the Past 50 Years. Department of Building and Real Estate, the Hong Kong Polytechnic University, HKSAR,
China. https://www.housingauthority.gov.hk/hdw/ihc/pdf/thkhafa.pdf




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its Home Ownership Scheme. These profits are used to subsidize the maintenance of public housing
estates and to build new housing.177

To finance new development, the HKHA draws on its own reserves, supplemented by permanent capital
or loans from the government.178 It also receives grants of free or very cheap land; in Hong Kong, all land
is owned by the People’s Republic of China and managed by Hong Kong’s special administrative
government.179 Finally, the HKHA benefits from free infrastructure and social services provided by the
government.180 Thus, public rental development is primarily financed purely with public funds, rarely
leveraging any private investment.

Rents in Hong Kong’s public rental housing are income-based, not cost-based. Rent caps were first
implemented in 1997, requiring that the ratio of median rent to income cannot exceed 10 percent. HKHA
certifies tenants’ income every two years and makes rent adjustments accordingly. As of March 2020,
public housing monthly rents averaged only HK $2,070 ($265), compared with HK $20,000 ($2,550) for
a private-market apartment.181 The deep rent discount means that public housing estates sometimes
operate at a deficit and also makes these units extremely attractive.182 Using a centralized application
system, the HKHA channels applicants onto three waiting lists: one for families of low income (with
income capped at about $3,750 for a family of four), another for low-income elderly applicants, and a
third for non-elderly single applicants. Waiting times for families usually exceed five years. Younger
single applicants wait longer, since although about 10 percent of units are reserved for this group, large
numbers of Hong Kong residents apply as soon as they are 18.183




177
 Li, X. & Shamsuddin, S. (2022). Housing the Poor? A Comparative Study of Public Housing Provision in New
York, Shenzhen, and Hong Kong. Housing Policy Debate 32(4-5): 678-696.
178
 Li and Shamsuddin (2022).
179
 Community Legal Information Centre. Basic knowledge of land ownership in Hong Kong. Law and Technology
Centre, University of Hong Kong.
https://www.clic.org.hk/en/topics/saleAndPurchaseOfProperty/basic_knowledge_of_land_ownership_in_hong_kong
180
 Hui and Wong (2004).
181
 Li and Shamsuddin (2022); Liu, P. & Lam, J. (2018, August 20). Nearly half of Hong Kong flats rent for
US$2,550 a month – 70 per cent of median household income. South China Morning Post.
https://www.scmp.com/business/article/2160554/nearly-half-hk-flats-rent-us2550-month-70-cent-median-
household-income
182
 Hui and Wong (2004).
183
 Li and Shamsuddin (2022).




 Page 113
 Building Community Resilience through Housing
 Production, Preservation, and Protection


 2025 HOUSING
 PROGRESS
 REPORT
 City of Providence




2025 | OCTOBER
 Page 114
A LETTER FROM THE MAYOR

 Dear Neighbor,

 There’s no question that Providence is facing a serious housing
 shortage. Across all of our neighborhoods, too many residents are
 struggling to find safe, affordable, and stable homes. Fixing this is
 one of our city’s most urgent challenges and also one of our
 greatest opportunities.

 Over the past year, we’ve made important progress toward that
 goal. We have worked to speed up housing development,
 preserve existing homes, and protect residents at risk of losing
 theirs. We created a new Department of Housing and Human
 Services that combines housing with health and social supports to
 better address issues affecting residents’ well-being.

 This first Housing Progress Report highlights what we have
 achieved so far in three key areas: Production, Preservation and
 Protection.

 We know the housing shortage is complex, and no single solution will solve it. That’s why our effort
 brings together every tool we have available: collaboration across all levels of government, strong
 partnerships with organizations in and out of our city, private and public investment, and the
 support of our community. This past year, we expanded partnerships, aligned housing with health
 and human services, and streamlined development processes to speed up construction and better
 leverage public and private resources.

 Housing security is the foundation for community well-being and economic resilience. Our focus has
 been on building more housing at prices people can afford, preserving existing homes to be safe and
 affordable, and helping residents at risk of losing their homes.

 Without new housing added to our city, affordability will remain out of reach for too many families.
 But by combining pro-housing policies with smart investment and development efforts, Providence
 is already delivering results.

 While we celebrate the progress we’ve made, we also recognize the serious housing needs that
 remain in our city. Providence will continue to lead with urgency, transparency, and a shared
 commitment to building the best-run city where every person has a safe, affordable, and accessible
 place to call home.

 Sincerely,




 Mayor Brett P. Smiley



 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 115 2
TABLE OF
CONTENTS
 4 Executive Summary
 Purpose
 Our Shared Challenge
 FY2025 Key Achievements
 The Three Ps Framework


 8 Production
 Expanding Supply to Meet Community Needs
 FY2025 Key Achievements
 Key Local Funding Sources to Support Housing and Shelter
 Policy Implementation to Support Production
 Tax Policy and Incentives
 2025 Progress on Housing Production


 14 Preservation
 Protecting and Maintaining Affordable Housing
 Preserving Affordable Units
 Housing Quality and Emergency Repairs
 Department of Inspections and Standards Revolving Fund
 CDBG Home Repair Program
 Lead Safe Providence Program
 2025 Progress on Housing Preservation



 20 Protection
 Keeping People Housed Through Stability Services
 Eviction Defense and Legal Services
 Shelter and Transitional Housing Expansion
 Homelessness Response, Behavioral Health, and Harm Reduction
 Behavioral Health and Harm Reduction Investments
 2025 Progress on Housing Protection



 24 Progress
 Sustaining Momentum, Advancing Progress
 Conclusion



 27 Appendix
 Contact Information
 Providence Housing Trust Fund Investments
 HUD Investments


CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT 3
 Page 116
EXECUTIVE SUMMARY
Building Community Resilience through Production, Preservation, and Protection


 Providence is tackling one of its most urgent challenges: the housing shortage.
 This report summarizes the City of Providence’s coordinated efforts in FY2025 to
 expand the supply of housing, preserve and improve existing units, and protect
 people at risk of displacement or homelessness.

 Housing challenges are shaped by many factors, from economic conditions and
 market pressures to aging buildings. An analysis of HUD State of the Cities Data
 Systems Building Permits Database found that Rhode Island has consistently
 ranked 50 t h in housing production per capita in recent years, despite national
 research showing that housing production is the primary driver in improving
 housing affordability, slowing rent growth and gentrification, and eliminating
 homelessness.

 In response, the City is working across departments and with partners to deliver
 practical, data-informed, and community-driven solutions.

 This report sets up a clear way to measure progress by tracking units built,
 dollars invested, and households supported. Regular reporting will ensure that
 Providence stays on track and accountable as we address our city’s most
 pressing housing needs.



 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 117 4
  2018 | MARCH MEMPHIS SOLUTIONS

EXECUTIVE SUMMARY
Our Shared Challenge
 We know how deeply the housing shortage affects families, neighborhoods,
 and our city as a whole. Providence shares the concern of residents and
 community advocates, and we are committed to addressing them with urgency
 at our city level and with the help of our state and federal partners. This report
 reflects not only what we’ve accomplished in FY2025, but how we are evolving
 our approach to increase housing at a pace that outpaces our peer cities to
 lower costs for more families.

To guide our work, we launched major planning efforts based on proven policies and
strategies, and shaped by community voices:


 Sets the 10-year vision and policy framework
 THE for how Providence should grow, covering
 COMPREHENSIVE housing, land use, economic development,
 PLAN transportation, and climate resilience. This was
 shaped by community engagement and data
 analysis to assess future housing needs.



 2020
 ANTI-DISPLACEMENT Identified actionable strategies to increase
 & COMPREHENSIVE housing options over a 10-year timeline.
 HOUSING STRATEGY


 A federally required strategy that guides the use
 2025-2029 of our annual U.S. Department of Housing and
 Urban Development (HUD) funding to meet our
 CONSOLIDATED
 highest priorities, based on housing affordability
 PLAN gaps, infrastructure needs, and service gaps for
 low- and moderate-income residents.


 Developed in collaboration with the State of
 REGIONAL ANALYSIS Rhode Island and other Rhode Island cities, this
 OF IMPEDIMENTS TO identifies barriers that prevent or delay housing
 FAIR HOUSING access and proposes coordinated strategies
 across our state.


 Conducted by national firm RKG Associates, this
 analysis examined whether inclusionary zoning
 INCLUSIONARY would be a viable tool for Providence. The study
 ZONING FINANCIAL evaluated a range of possible scenarios to
 FEASIBILITY determine what level of inclusionary zoning makes
 ANALYSIS sense for Providence or subsidy and tax policy
 changes that would be required to make it work.


Together, these planning processes laid the foundation for a coordinated, community-
informed strategy that aligns housing policy, land use, and investment.

 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
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EXECUTIVE SUMMARY
Key Achievements


 In FY2025, Providence made big progress:

Accelerated housing production through our Surpassed more than $6 million in
once-in-a-decade Comprehensive Plan update investments in emergency shelter, warming
and zoning amendments­—increasing housing centers, and transitional housing—including
density, streamlining development, and being the host city and a co-funder for the
expanding by-right development opportunities. state’s first “pallet shelter” model expanding
 private, dignified low-barrier shelter options.
Surpassed $55 million in funding
committments to affordable housing through Launched the Department of Housing and
the Providence Housing Trust Fund, supporting Human Services to align housing with public
over 1,600 new or preserved deed-restricted, health and behavioral health strategies, investing
affordable units, with a focus on extremely low- $1.2 million+ in Opioid Settlement Funds for
income households. recovery housing and harm reduction services.

 Hundreds of these units are dedicated
 Improved outreach and behavioral health
 Permanent Supportive Housing, deeply
 response, particularly around homelessness and
 subsidized rental housing with ongoing
 encampments, following national best practices
 wraparound services for the chronically
 for humane and effective intervention.
 homeless and people with disabilities.

 Units are income- and rent-restricted to Significantly outpaced peer cities in rate of
 ensure long-term affordability. permitted housing units per capita.

Streamlined approval processes with:

 Concurrent permit review.

 Parent permits.

 Unified development review.




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
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EXECUTIVE SUMMARY
The Three Ps Framework


 Providence’s housing strategy is organized around
 the prominent ‘3 Ps’ framework




 PRODUCTION
 Investment in new housing construction, streamline
 permitting, and updates to the City’s Comprehensive Plan
 and zoning to increase housing density and remove
 development barriers.



 PRESERVATION
 Rehabilitate and maintain existing housing, while
 extending long-term affordability and quality, including
 bringing obsolete buildings back into productive use.



 PROTECTION
 Stabilize households through rental support, legal
 services, expanded shelter and placement support, and
 public health-informed outreach that addresses root
 causes of housing instability.


 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
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 PRODUCTION
Expanding Supply to Meet Community Need
Like other New England cities, Providence is experiencing a housing shortage that
drives up rents and home prices, reduces vacancy rates, and makes it especially hard
to find deeply affordable housing not produced by the private market.

The Smiley Administration and City Council have made housing production a top priority to address
the problems of housing affordability and availability for our residents. We committed historic levels
of investment to new construction, streamlined development processes, and advanced long-term
policy changes to support steady growth in housing supply.


Unit Production in FY2025
 Providence had a strong housing production
 Units Granted pipeline in FY2025, with 857 new residential
 Fiscal Units Certificates Population Units/
 units permitted, a rate of 4.40 permits per
 Year Permitted of Occupancy (ACS) 1,000
 1,000 residents. This pace outperformed
 (COs)
 larger cities like Boston and New York City1 ­
 FY2023 439 319 190,214 2.30 and goes far beyond the state’s expected
 target of 600-620 units for our city to help
 FY2024 678 376 194,706 3.48 effectively close the statewide housing gap,
 according to the State of Rhode Island’s
 FY2025 857 453 194,706 4.40 Housing 2030 plan. While some cities,
 including Boston, have seen steep declines in
 Source: City of Providence Permitting Database (Viewpoint OpenGov)
 permitting year-over-year, Providence’s permit
 activity has remained strong.
These projects include a mix of new construction,
adaptive reuse, and infill development delivering
homes across a range of price points.

Of the units completed or underway and tracked
in the City’s Development Mapper, 22% are
reserved for households earning 60% or less of Research shows that
the Area Median Income (AMI). Many of these are building more
dedicated as Permanent Supportive Housing, ­
 housing at all levels
long-term housing paired with wraparound
services for residents facing behavioral health improves overall
challenges, substance use disorder, or chronic affordability, reduces
homelessness.
 homelessness, and
1
 slows rent growth.2
Source: Brinker, A., & Carlock, C. (2025, June 30). Amid housing crisis,
Boston’s building boom has gone cold. How much of that is due to Mayor
Wu? The Boston Globe. Retrieved from
https://www.bostonglobe.com/2025/06/30/business/boston-housing-
construction-policy-affordable-housing/

2
 Rodnyansky, S., Su, D., & Horowitz, A. (2025, July 31). New housing slows
rent growth most for older, more affordable units. The Pew Charitable
Trusts. Retrieved from https://www.pew.org/en/research-and-
analysis/articles/2025/07/31/new-housing-slows-rent-growth-most-for-
older-more-affordable-units



 Page 121 8
Through fiscal year 2025, total funding committed to affordable housing projects through the
Providence Housing Trust Fund reached over $55 million. The City also invested an additional $10
million using HUD grants. These investments are helping to create or preserve more than 1,600 deed-
restricted affordable homes, with a focus on serving households with extremely low incomes. For a
full list of projects completed, started, or awarded during the year, see the Appendix.

In today’s high-cost, high-interest development environment, most affordable housing projects
cannot move from permit to construction without local government support. City financing often fills
critical funding gaps or provides matching dollars needed to unlock larger, multi-layered projects.
For deep affordable housing, homes priced for households earning at or below 30% AMI, subsidies
are essential to building housing and keeping it affordable over the long term.


 In FY2025, affordable housing developments supported by the City and the
 Providence Redevelopment Agency leveraged more than $700 million in
 public and private financing.


Funding came from a mix of sources, including:


 Low-Income State housing bonds, tax
 Housing Tax Credits credits, and capital grants



 Conventional Private equity and
 loans philanthropy


 When awarding competitive City funds, priority goes to developments that serve very low-income
 households and special populations, like those experiencing homelessness. These homes are rarely
 built by the private market without subsidy.

 The City also gives preference to projects that:

 Advance climate goals, such
 Incorporate being fully electric or
 universal design meeting higher energy
 for accessibility standards and “green” codes
 (e.g. Stretch Energy Code)



 A financial commitment from a host community can make or break a
 project’s chances of winning competitive funding, such as Low-Income
 Housing Tax Credits or State tax credits. Local support signals
 community backing and helps projects meet matching or leverage
 goals—often a deciding factor in whether a project gets built.


 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 122 9
Key Local Funding Sources to Support Housing and Shelter



 Funding Source Description/Use


 Local fund administered by Providence Redevelopment Agency
 Providence Housing Trust Fund used to support affordable housing development; capitalized with
 2021 Special Obligation Bond and American Rescue Plan Act funds.

 One-time post-pandemic federal stimulus (Treasury, State, and
 American Rescue Plan Act (ARPA) Local Fiscal Recovery Funds) used for shelter, rental assistance,
 capital projects, and service pilots.

 Community Development Block Federal HUD program used for local housing rehabilitation,
 Grant (CDBG) infrastructure, and public services.

 HOME Investment Partnerships Federal HUD program supporting local affordable housing
 Program (HOME) construction and rehabilitation.

 Federal HUD funding for local homelessness prevention and rapid
 Emergency Solutions Grant (ESG)
 rehousing.

 Funding Providence and other local communities received from
 lawsuits against pharmaceutical companies. These funds advance
 Opioid Settlement Funds the City’s Overdose Prevention Strategy—supporting harm
 reduction, recovery housing and programming, and behavioral
 health services.

 The City’s own dollars and resources­—like direct project funding,
 General Funds
 waived fees, donated land, or tax relief agreements.




 CITY OFPage 123
 PROVIDENCE | FY2025 HOUSING PROGRESS REPORT 10
Policy Implementation to Support Production
In FY2025, Providence advanced a series of policy and administrative strategies to speed up housing
development and make it easier to build the homes our community needs.


Comprehensive Plan Adoption
The City adopted a new Comprehensive Plan that identifies ways to increase housing density, promote
mixed-use development, and expand the variety of housing types available in Providence. Housing
affordability and inclusion were top land use priorities identified through community input and
engagement.

An initial round of zoning changes adopted in 2025 include:




 Upzoning to allow more
 housing types in residential
 and commercial areas.




 Expanded R-4 zones in areas with strong transit and
 neighborhood amenities.




 Accessory dwelling units
 (ADUs) permitted by right in all
 residential zones.




 Expanded multi-family, rowhouse, and cluster development,
 making nearly all land in the City available for building housing.




 Pending proposals to be adopted include:
 Reduced parking minimums. Density bonuses for affordable housing.


 Height bonuses and generational dimensional
 By-right shelter and transitional
 standards to encourage dense mixed-use
 housing permitting.
 development (D-1, C-2).

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 PROVIDENCE | FY2025 HOUSING PROGRESS REPORT 11
Streamlined Permitting and Administrative Reforms

The City cut red tape and lowered costs for housing development by:


 Process improvements, including:

 Parent Permit Program: Developers can submit a building plan once and
 reuse it for future projects.

 Unified Development Review: Consolidated approvals under the City Plan
 Commission.

 Concurrent Permit Reviews: A project’s multiple permit applications are
 reviewed at the same time, rather than one after another.


 Providing and prioritizing pre-development technical assistance to help projects get
 started.

 Discontinuing the Capital Center Commission, removing a redundant approval process
 for downtown projects.

 Expanding administrative approvals for compliant housing projects, eliminating
 unnecessary board and commission reviews, saving time and money.



 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 125 12
Tax Policy and Incentives
In 2024, Providence adopted a new tiered property tax classification system, replacing the old
system with one that is more equitable and creates stronger incentives for residential development.
Built through an extended public process and lots of financial planning research, the new system
lowers overall tax rates while better reflecting the value and use of property. Now, there are clearer
incentives for residential development. Key features include:

 Separate tax rates for residential, commercial, and mixed-use properties, aligned with
 the costs and benefits of each use.

 Revised multifamily tax treatment, with a focus on smaller rental properties, many of
 which are owner-occupied and provide naturally occurring affordable housing.

In addition, the City continues to offer Tax Stabilization Agreements (TSAs) for qualifying
developments. TSAs provide temporary tax relief during the initial financing and lease-up phases,
encouraging redevelopment, reducing risk, and creating a predictable path to full commercial taxation.

Finally, nearly 200 eligible multi-family rental properties with qualifying affordable apartments receive
special local tax treatment equaling eight percent of the property’s previous years’ gross scheduled
rental income (the 8% tax or “8 Law” established under RIGL § 44-5-13.11), ensuring low-income
housing can operate with below-market rents sustainably throughout their affordability periods.


2025 Progress on Housing Production

 Category Outcome

 Total Housing Units Permitted 857


 Total Housing Units Completed 453


 Providence Housing Trust Fund
 $55M committed since 2022  →  1,600+ affordable
 units (plus $700M+ leveraged funding)




 The Foundry TSA: A Redevelopment Success Story
 Now on the National Register of Historic Places, 13 mill buildings—one million
 square feet—were rehabilitated and transformed into a vibrant mix of
 commercial and residential spaces. The project began in 2002 under a TSA
 with a property value of $1.6 million and an annual tax bill of $58,201. Today
 at full taxation, the Foundry is valued at $52 million and contributes more
 than $1.48 million in property taxes each year—a huge increase in both tax
 revenue and economic activity for our city. This success story shows how
 TSAs can turn underused properties into major community assets.




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 126 13
 PRESERVATION
Protecting and Maintaining Affordable Housing
Preserving existing housing is just as important as building new homes especially in Providence,
where much of the housing stock is older and many properties are at risk of deteriorating or losing
their affordability protections.

In FY2025, the City advanced a multi-layered preservation strategy focused on:

 Rehabilitating aging homes.

 Maintaining affordability.

 Improving housing quality through code enforcement, capital investments,
 and homeowner assistance programs.


Preserving Affordable Units
Rhode Island law (Low- and Moderate-Income Housing Act) requires municipalities to keep at least
10% of their year-round housing stock affordable. This means housing is subsidized by a federal,
state, or local source and with a minimum 30-year affordability restriction. Providence consistently
exceeds this benchmark. In 2024, more than 16% (12,442 units) qualified as affordable.

In FY2025, Providence preserved affordable housing units by:



 Renewing affordability restrictions that were set to expire on properties.

 Investing in capital repairs and modernization for nonprofit-owned or income-
 restricted units, including:

 50 units of transitional housing for veterans—$1,000,000 in Providence
 Housing Trust Funds and $500,000 in CDBG to renovate YWCA Gateways
 to Independence.

 108 units of deed-restricted affordable rental housing—$1,250,000 in
 Providence Housing Trust Funds and $250,000 CDBG to Lockwood Plaza
 Phase I, including unit modernization and 30-year extension of affordability.

 Improving public housing, with $150,000 in CDBG for quality upgrades, climate
 resiliency, and safety improvements at Providence Housing Authority complexes
 (Hartford Park, Manton Heights, and Roger Williams).

 Rehabilitation of naturally occurring affordable housing (unsubsidized but
 affordable housing) through homeowner repair programs that prevent
 displacement or deterioration.



 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 127 14
Additionally, to ensure long-term affordability and safety, the City contracted with FinePoint
Associates, a women-owned firm with national expertise in housing compliance. In FY2025, FinePoint
conducted on-site inspections and compliance reviews at 48 developments, checking housing quality,
rents charged, and tenant income certifications. This monitoring ensures our city-subsidized rental
housing remains safe, high-quality, and in compliance with federal, state, and local requirements.




 The City also committed an
 additional $1.8 million in
 HOME funds and $300,000
 in CDBG for Lockwood
 Plaza Phase II, which will
 modernize 101 more units
 of deed-restricted
 affordable rental housing
 beginning in FY2026.




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 128 15
Housing Quality and Emergency Repairs
Providence made significant investments to make sure homes are safe and livable especially for low-
and moderate-income homeowners and tenants living in older buildings that make up our naturally
occurring affordable housing stock.




 The Department of Inspection and In FY2025, the City also pursued 550
 Standards played an important role in court cases against property owners
 this work, completing 14,985 who failed to comply, while
 inspections across the City over the successfully closing or resolving 684
 year to keep properties safe. active code cases. These efforts
 These included: generated $688,000 in fines, which
 were reinvested in future housing
 3,974 inspections for compliance work.
 code enforcement.

 1,162 of those
 inspections were for
 dangerous lead-based
 paint violations.




 When health and safety problems Importantly, code enforcement was
 were found, inspectors issued: closely coordinated with the City’s
 housing programs. This means
 inspectors could connect property
 owners directly to funding sources
 for repairs, helping them bring
 1,871 warning and homes into compliance without
 violation notices excessive financial strain.




An interdepartmental team also participated in an intensive technical assistance engagement with
the Center for Community Progress in FY25 which resulted in recommendations for improvements to
advance equitable code enforcement with best-practice strategies to encourage prevention and
compliance. These recommendations will inform FY26 initiatives and reforms.




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 129 16
Department of Inspections and Standards Revolving Fund

The City launched a program to help
property owners address code violations and 61 homes enrolled.
emergency repairs in small rental properties
and owner-occupied units. Administered
through Providence Revolving Fund using $2,295,000 in direct
money from ARPA and Housing Court fines, lending committed.
the program offers low-interest or forgivable
loans up to $50,000. This helps landlords 161 code violations
and homeowners fix unsafe conditions
 corrected or under repair.
without passing repair costs onto tenants.




Community Development Block Grant (CDBG) Home Repair Program

Through its annual federal CDBG allocation, the
City provides also provides 0% interest, deferred
payment loans to income-eligible homeowners
for urgent repairs. This work prevents tenant
displacement and keeps properties from falling
into disrepair.


Common repairs included roof replacements,
accessibility modifications, sewer line
replacements, plumbing and electrical repairs,
and heating system improvements.




 21 homes enrolled.

 $350,000 in direct
 lending committed.




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 130 17
Lead Safe Providence Program

In FY2025, Providence secured a $6.5 million HUD
Lead Hazard Reduction Demonstration Grant to
expand our Lead Safe Providence Program. The
program provides forgivable loans to property
owners to eliminate lead-based paint hazards and
make homes safer for families.

 89 units inspected and
 How It Works assisted in FY2025.
 Owner-occupied homes ⟶ loan forgiven
 after three years.


 Investor-owned properties ⟶ loan forgiven
 after five years.


 Requirements: Rental units must remain 1,738 units made
 rent-stabilized (rented at or below Fair lead-safe to date.
 Market rent) and prioritized for families for
 at least three years.


Families benefit from a thorough lead inspection, mitigation work by licensed
contractors, and education on lead poisoning prevention.




 CITY OFPage 131
 PROVIDENCE | FY2025 HOUSING PROGRESS REPORT 18
The City also partnered with community-based organizations and nonprofits to expand the reach of its
housing preservation work. These partnerships ensured that residents benefitted from both housing
improvements and health, safety, and energy upgrades:



 Green & Healthy Homes Initiative (GHHI): Community Action Partnership of
 Through the Healthy Providence Healthy Providence: Provided weatherization and
 Homes Program, GHHI delivered energy efficiency improvements for
 integrated health and safety upgrades to properties renovated through City
 reduce asthma triggers for children. programs.



By combining funding sources and streamlining referrals, these partnerships stretched every
preservation dollar further. Together, they helped protect housing affordability, improve resident health,
and prevent displacement.


 2025 Progress on Housing Preservation

 Metric Outcome

 Affordable Units Preserved 158

 Total Rehabilitation Investment $5.7 million+

 Rehabilitation Loans Issued 171

 Code Inspections Completed 3,974

 Code Repair Orders Issued 1,871 (warning and violation notices)




 CITY OFPage 132
 PROVIDENCE | FY2025 HOUSING PROGRESS REPORT 19
 PROTECTION
Keeping People Housed through Stability Services
Keeping People Housed through Stability Services

Housing protection is about more than buildings. It means helping people remain stably housed
through direct assistance, supportive services, and crisis response. In 2024, Rhode Island hit an all
time high of 2,422 people experiencing homelessness in the Point-in-Time count.

In FY2025, Providence expanded efforts to protect vulnerable residents from the cascading
consequences of housing instability by providing:


 Legal defense for at-risk tenants. Rental and rehousing assistance.

 Shelter and warming center
 Street outreach.
 expansions.

 Homelessness response.



Eviction Defense and Legal Services
Providence continued funding a collaborative eviction defense program with Rhode Island Legal
Services, Center for Justice, Direct Action for Rights and Equality and HousingWorks RI. This program
increased access to free legal representation for low- and moderate-income tenants by providing:


 Legal representation, mediation, and “know your rights” education to
 tenants facing eviction.

 Court navigation and support services to prevent displacement.

 Proactive outreach in neighborhoods and at Housing Court to connect
 tenants with support.


In FY2025, 652 households (1,546 residents) received support. Outcomes included:


 Preventing eviction or extending time to find new housing.

 Reducing back owed rent.

 Lowering eviction cases ending in default judgments.

 Retaining eligibility for subsidized housing.

 Providing navigation to help find alternative housing.




 CITY OFPage 133
 PROVIDENCE | FY2025 HOUSING PROGRESS REPORT 20
Shelter and Transitional Housing Expansion
To meet urgent shelter needs while more permanent housing is developed, Providence invested
over $6 million in American Rescue Plan Act capital and operational funds through the
Consolidated Homeless Fund (CHF). A nationally recognized partnership of the cities of
Providence, Pawtucket, Woonsocket and State of Rhode Island, CHF streamlines applications and
coordinates funding of service providers and priority projects.




 Key Initiatives:
 182 new shelter beds and transitional units were created since 2023
 through funding and/or permitting assistance, including:


 ECHO Village: $475,763 to support 45 low-barrier
 private pallet shelters with on-site services for
 individuals typically underserved by traditional shelters.

 Pete and Andy’s Place: $172,342 for a new 6-bed pilot
 transitional program for women exiting incarceration
 into homelessness—includes recovery support, training,
 and education.

 Amos House Family Shelter at Charlesgate: $475,394
 to expand from 41 to 57 beds, serving 362 individuals
 across 121 families.

 $115,725 invested for warming centers during extreme winter weather in
 FY2025.

 $423,613 invested in Crossroads Rhode Island’s Rapid Rehousing Program,
 helping 54 households secure housing paired with support services like
 housing navigation and landlord engagement—addressing barriers such as
 poor credit, eviction history, or criminal background­—paired with rental
 assistance.




 CITY OFPage 134
 PROVIDENCE | FY2025 HOUSING PROGRESS REPORT 21
 Homelessness Response, Behavioral Health, and Harm Reduction
 With the creation of the Department of Housing and Human Services, Providence combined
 housing, health, and behavioral health services to better respond to housing instability and
 often connected health challenges.



 Expanded services through partnerships in FY2025:

 Mobile diversion and street outreach programs operated by Crossroads Rhode
 Island and East Bay Community Action Program engaged with individuals
 through an estimated 280 encampment outreach contacts facilitating critical
 connections to shelter, behavioral health services, and long-term housing
 solutions. In FY25, these programs facilitated more than 1,000 unique
 behavioral health encounters, oversaw the distribution of more than 3,200+
 doses of naloxone, and provided nearly 3,500 basic needs resources.

 Mobile Health 1, Providence Fire Department’s mobile unit delivering wound
 care, medical support, and transportation to warming centers during extreme
 weather, responded to over 1,400 calls for service.

 Amos House’s A Hand Up Program was expanded through $315,232 in CDBG
 and City General Funds, providing low-barrier financial assistance and
 workforce development for individuals transitioning from homelessness into
 housing.

 Through the Rhode Island Coalition to End Homelessness, the SOAR Program
 was sustained with $75,000 in City General Funds to help unhoused
 individuals with complex medical, mental health, or substance use conditions
 apply for federal disability benefits. Despite national cuts to matching funding,
 the program continued operating and made 200+ referrals, accepted 100+
 clients to assist, and filed 50+ applications for federal disability benefits
 (SSI/SSDI).



Behavioral Health and Harm Reduction Investments

 $1.2 million+ in Opioid Settlement Funds for recovery housing, harm reduction,
 and behavioral health services.

 $156,824 to Amos House for recovery housing, including programming, staff
 training, and intensive care coordination.

 Providence supported the launch of New England’s first Overdose Prevention
 Center, offering supervised consumption, clinical care, and direct connections to
 housing and recovery support.


 Together, these efforts show Providence’s holistic approach to housing protection, combining eviction
 defense, legal services, shelter, street outreach, and behavioral health investments. This response
 ensures residents can access the services, safety, and stability needed for lasting housing security.


 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 135 22
2025 Progress on Housing Protection


Metric Outcome


Households Receiving Rapid Rehousing 54


New Shelter and Transitional Housing Beds 182


SOAR Applications 50


Opioid Settlement Funds Allocated $1.2 million+


Encampment Outreach Contacts 280


Tenants Assisted Through Eviction Defense 1,546


Emergency Housing-Related Investment $6 million+




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 136 23
PROGRESS
Sustaining Momentum, Advancing Progress
The City of Providence enters FY2026 with a clear mandate:
turn plans into action. With the 2024 update of the
Comprehensive Plan and the 2025–2029 Consolidated Plan
now in place, the City is well-positioned to continue
accelerating housing production through new zoning, major
investments, financial incentives, and streamlined processes.

Key zoning and process reforms are already creating greater
predictability for development approvals. Building on that
foundation, the City will focus on:

 Redeveloping underutilized land.


 Accelerating the pipeline of development projects.


 Leveraging new state legislative changes that
 streamline approvals and supports affordability
 and production.

Our goal is clear: create more housing for residents at every
income level, encourage inclusive housing growth, and open
up new development opportunities for our families and
economy. In FY 2026, these goals will be furthered by:


Production: Building New Housing


 The City will pursue strategic redevelopment projects
 on public parcels, and when appropriate, voluntarily
 acquire and hold parcels in the Providence
 Neighborhood Land Bank to facilitate future
 redevelopment as housing. In FY2026, the City will issue
 Requests for Proposals (RFPs) for such key
 redevelopment sites as:

 246 Prairie Avenue: A four-acre site for
 affordable housing and community-serving
 development.

 158 Messer Street: The former Messer Street
 School site (seven parcels in the R-3 zone,
 totaling 48,482 square feet in the West End
 neighborhood—within the Historic Overlay
 District) with a preference for adaptive reuse
 and housing.


 Page 137 24
 Help to guide redevelopment of underutilized hospital-adjacent sites through the
 Hospital District Vision Plan into vibrant, mixed-use neighborhoods that integrate
 housing, health services, and economic development.


 Reinvest in the Providence Housing Trust Fund to continue providing gap financing for
 priority housing projects and increase the number of units available.


 Propose lower taxation and predictable tax incentives to support residential developments
 that meet affordability and community benefit goals.


 Advance a Commercial-to-Residential Conversion program to adapt vacant and
 underutilized commercial buildings into housing.


 Advocate for new State Housing Bond funds and discretionary funding dedicated to
 municipalities leading on pro-housing reforms (Housing Champions).


 Co-locate permitting offices (Department of Public Works and Department of Inspection
 and Standards) at a new facility on Chapman Street to improve customer service and
 convenience.



Preservation: Maintaining Quality and Affordability of Existing Housing


 Establish long-term funding strategies for the Housing Trust Fund and Department of
 Inspection and Standards Revolving Loan Fund, ensuring stable resources for affordable
 housing production and preservation.


 Support the Providence Housing Authority in improving the quality of housing for those
 living in PHA properties.



Protection: Keeping Homes and Residents Safe and Secure


 Advance expanded tenant protections, ensuring tenants can only be evicted for
 statutory reasons, have access to counsel, and increasing protections and predictability
 for tenants with month-to-month or unwritten leases.


 Proactive and equitable code enforcement to ensure safe and habitable housing.


 Protect homelessness supports in the face of federal funding cuts, including providing
 new local funding to address acute seasonal needs, shortfalls, or other service gaps.




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 138 25
Conclusion
This housing shortage was not created overnight and will not be solved in one year. In order to
decrease costs and increase housing stock, partners across Providence must remain committed to the
cause with urgency, equity and transparency. We see other communities who build more housing
using innovative policy tools reduce the financial burden on their constituents by increasing the
housing available across neighborhoods. Those strategies and the priorities outlined in this report
address today’s immediate needs while laying the foundation for long-term progress. That progress is
critical to our community’s collective success because a stronger housing system means a stronger
Providence.

The path forward should be clear for all stakeholders, continue to produce, preserve and protect. By
advancing sound policies, sustaining investment and fostering strong partnerships, Providence is
transforming short-term progress into long-term change.




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS
 CITY OF REPORT | FY2025 HOUSING PROGRESS REPORT
 PROVIDENCE 26
 Page 139
APPENDIX
Contact Information
This section outlines contact information and resources for housing programs mentioned in this report.



 Program Program Program


 Brandon Lehman, PRA Program
 Providence Housing Trust Fund blehman@providenceri.gov
 Manager

 Alyssa McDermott, Director of
 Amcdermott@providenceri.gov
 CDBG Home Repair Program Housing & Community
 401-680-8400
 Development

 Department of Inspections and
 DIS Revolving Fund 401-680-5201
 Standards

 Paula Baron, Program Pbaron@providenceri.gov
 Coordinator 401-680-8400
 Lead Safe Providence Program
 Diana Pena Espinal, CAPP dpespinal@cappri.org
 Resident Educator 401-273-2000 ext. 213


 Healthy Providence Healthy Anabel Espinal, GHHI Client aespinal@ghhi.org
 Homes Program Intake Specialist 401-400-8424


 Community Action Partnership
 Lidia Nunez, Weatherization & Lnunez@cappri.org
 of Providence Weatherization
 Healthy Homes Clerk 401-273-2000
 Assistance Program



  For report-specific inquiries, please contact:
  Emily Freedman, Director of Housing & Human Services
  efreedman@providenceri.gov, 401-680-8400

  For media inquiries, please contact:
  Michaela Antunes, Director of Communications for Economic Development
  Mantunes@providenceri.gov




 CITY OF PROVIDENCE | FY2025 HOUSING PROGRESS REPORT
 Page 140 27
Providence Housing Trust Fund: ARPA Commitments
The below outlines American Rescue Plan Act (ARPA) commitments, as of July 2025, via the Providence Housing Trust Fund to support
housing progress in the City of Providence.

 American Rescue Plan Act (ARPA) Total Funding

 American Rescue Plan Act; commitment deadline 12/2024; expenditure deadline 12/2026. Permanent debt or subsidy for
 $29,226,239
 affordable rental & homeownership housing meeting federal guidelines.



 ARPA Housing Development Units Units Total Affordable*
 Closed Projects Project Summary Status
 Trust Funding Cost Added Preserved Units Units

 Marathon Development New construction / 124 Project
 - Copley Chambers II & $3,818,000 $45,605,311 rental units / all restricted 124 0 124 124 completed and
 III (220 Broad) to 60% AMI or below occupied

 New construction / 37 Project
 Pennrose (as Parcel 9 rental units / 16 units
 $1,496,414 $16,233,425 37 0 37 16 completed and
 Phase I-4 LLC) - Tempo restricted to 60% AMI or occupied
 below

 New construction / 29 Project
 Pennrose (as Parcel 9
 $1,403,586 $15,047,041 rental units / all restricted 29 0 29 29 completed and
 Phase I-9 LLC) - Tempo
 to 60% AMI or below occupied

 Sojourner House - River Rental rehabilitation / 4 Grant closed;
 $450,000 $1,719,191 rental units / 4 @ 65% or 4 0 4 4 project under
 Avenue
 below construction

 New construction / 79
 units / 16 @ 30% AMI or
 Omni/Wingate - Project
 Joseph & Jordan $1,400,000 $28,369,305 below, 5 @ 50% AMI or 79 0 79 76 completed and
 below, 55 @ 60% AMI or
 Caffey occupied
 below; 3 unrestricted but
 targeted at <80% AMI

 New construction / 176 Loan closed;
 Crossroads Rhode rental units / 0-60% AMI /
 $2,500,000 $83,948,559 176 0 176 176 project under
 Island - Summer Street permanent supportive construction
 housing

 *affordable as defined by R.I.G.L. 42-128-8.1(d)(1)



 —continued on next page—
 Page 141 28
Providence Housing Trust Fund: ARPA Commitments (Continued)
The below outlines American Rescue Plan Act (ARPA) commitments, as of July 2025, via the Providence Housing Trust Fund to support
housing progress in the City of Providence.



 ARPA Housing Development Units Units Total Affordable*
 Closed Projects Project Summary Status
 Trust Funding Cost Added Preserved Units Units

 New construction & rental
 preservation/ 39 rental Loan closed;
 ONE Neighborhood units constructed, 46
 $802,172 $31,237,553 39 46 85 85 project under
 Builders - The Avenue preserved / 18 @ 30% or construction
 below, 50 @ 31-59%, 17 @
 60-80%

 OMNI Development New construction / 4 Grant closed;
 Corporation - 28 - 30 $668,525 $1,518,525 homeownership units / 4 0 4 4 project under
 Portland 80% AMI construction
 Homeownership

 YWCA Rhode Island - Rental preservation/ 50 Project
 Gateway to $1,000,000 $5,183,102 units / <30% AMI 0 50 50 50 completed and
 Independence transitional housing occupied

 New construction & rental
 preservation/ 20 rental Loan closed;
 SWAP, Inc. - Potters
 $700,000 $17,325,382 units constructed; 37 20 37 57 57 project under
 Tigrai
 preserved / 12 @ 30% or construction
 below, 45 @ 31-60% AMI

 Marathon Development New construction / 178 Loan closed;
 - The Flynn (220 $5,500,000 $77,133,063 rental units / 31 @ 30% or 178 0 178 178 project under
 Blackstone) below, 115 @ 60-79%, 32 @ construction
 80-99%
 WinnDevelopment Loan closed;
 Rental preservation/ 108
 - Lockwood Plaza $1,250,000 $22,820,099 0 108 108 108 project under
 units / 108 @ 60-80% AMI
 Phase I construction

 *affordable as defined by R.I.G.L. 42-128-8.1(d)(1)




 —continued on next page—
 Page 142 29
Providence Housing Trust Fund: ARPA Commitments (Continued)
The below outlines American Rescue Plan Act (ARPA) commitments, as of July 2025, via the Providence Housing Trust Fund to support
housing progress in the City of Providence.



 Closed Projects ARPA Housing Development Project Summary Units Units Total Affordable* Status
 Trust Funding Cost Added Preserved Units Units

 New construction/ 61 Loan closed;
 Pennrose (Parcel 9, rental units /13 @ 30% or
 $400,000 $34,131,560 61 0 61 36 project under
 Phase II) - Tandem below; 2 @ 31-59%; 21 @ construction
 60-80% AMI

 New construction/ 41 Loan closed;
 SWAP, Inc. - 321 Knight $900,000 $22,785,200 rental units / 7 @ 30% or 41 0 41 41 project under
 below, 30 @ 31-59%, 4 @ construction
 60-80% AMI

 Crossroads Rhode New construction / 35 Loan closed;
 rental units / 35 @ 30% or
 Island - Health & $1,000,000 $18,769,316 35 0 35 35 project under
 below / permanent-
 Housing construction
 supportive housing

 Projects Approved ARPA Housing Development Project Summary Units Units Total Affordable* Status
 (Pending Closing) Trust Funding Cost Added Preserved Units Units

 New construction/ 52
 OMNI Development rental units/ 11 @ 30% or Approved -
 Corporation - 300 $750,000 $18,757,326 below, 19 @ 31-59%, 11 @ 52 0 52 41 closing 2025
 Valley 60-80%, 11 @ 100-120% (Loan)
 AMI

 New construction / 76 Approved -
 Lincoln Avenue Capital
 $2,000,000 $28,246,564 rental units / 68 @ 60% 76 0 76 76 closing 2025
 - 322 Washington
 AMI; 8 @ 30% AMI (Loan)

 ONE Neighborhood New construction / 20 Approved -
 Builders - 45 Sheridan $1,000,000 $7,682,388 homeownership / 5 @ 60- 20 0 20 20 closing 2025
 Street 80%; 15 @ 100-120% AMI (Grant)

 New construction / 1
 Approved -
 SWAP, Inc.- Oxford homeownership unit with
 $299,239 $458,635 2 0 2 1 closing 2025
 Homeownership rental/ @ 60-80%; 1 (Grant)
 unrestricted

 *affordable as defined by R.I.G.L. 42-128-8.1(d)(1)

 —continued on next page—
 Page 143 30
Providence Housing Trust Fund: ARPA Commitments (Continued)
The below outlines American Rescue Plan Act (ARPA) commitments, as of July 2025, via the Providence Housing Trust Fund to support
housing progress in the City of Providence.



 Projects Approved ARPA Housing Development Units Units Total Affordable*
 Project Summary Status
 (Pending Closing) Trust Funding Cost Added Preserved Units Units

 New construction / 1
 Approved -
 SWAP, Inc. - Public homeownership unit with
 $114,000 $712,260 2 0 2 1 closing 2025
 Homeownership rental/ @ 60-80%; 1
 (Grant)
 unrestricted

 Rental rehabilitation / 3 Approved -
 Amos House - Pine
 $495,000 $1,145,000 rental units / 3 @ 31-60% 3 0 3 3 closing 2025
 Street
 AMI (Grant)

 22 - new construction
 West Elmwood Approved -
 rental; 51 - rental
 Housing - New $718,000 $19,185,217 22 51 73 73 closing 2026
 preservation / 15 @ 30% or
 Horizons (Loan)
 below; 58 @ 31-60% AMI


 Total committed $28,664,936 $498,014,022 1,004 292 1,296 1,234


 *affordable as defined by R.I.G.L. 42-128-8.1(d)(1)




 Page 144 31
Providence Housing Trust Fund: Bond Commitments
The below outlines Bond commitments, as of July 2025, via the Providence Housing Trust Fund to support housing progress in the City of
Providence.


 Source Funding
 Amount

 2021 PRA Housing $24,746,668 Special Obligation Bond for construction lending on multifamily housing projects.
 Bond

 Principal & Interest
 $2,154,246.86 Repaid principal, interest, fees.
 Repayments

 Total funding $26,900,914.86


 Development Units Units Total Affordable*
 Closed Projects Committed Project Summary Status
 Cost Added Preserved Units Units

 Loan closed;
 ONE Neighborhood New construction / 30 project
 Builders - King Street $146,000 $17,231,057 rental units / @ 60% AMI 30 0 30 30 complete.
 Commons or below Occupied, loan
 in repayment.

 Loan closed;
 Historic mill conversion /
 project
 Alexander Group - 101 rental units / 44 @ 60%
 $5,380,000 $35,700,000 101 0 101 101 complete.
 Paragon Mills AMI or below, 57 @ 60-
 Occupied, loan
 120% AMI.
 in repayment.

 Loan closed;
 ONE Neighborhood project
 New construction / 8 rental
 Builders - Bowdoin $450,000 $2,202,371 8 0 8 8 complete.
 units / 8 @ 50-80% AMI
 Rowhomes Occupied, loan
 in repayment.

 New construction / 79
 units / 16 @ 30% AMI or Loan closed;
 Omni/Wingate - below, 5 @ 50% AMI or project
 Joseph & Jordan $2,175,000 $28,369,305 below, 55 @ 60% AMI or 79 0 79 76 complete.
 Caffey below; 3 unrestricted but Occupied, loan
 targeted at or below 80% in repayment.
 AMI

 *as defined by PHTF regulations
 —continued on next page—
 Page 145 32
Providence Housing Trust Fund: Bond Commitments (Continued)
The below outlines Bond commitments, as of July 2025, via the Providence Housing Trust Fund to support housing progress in the City of
Providence.

 Development Units Units Total Affordable*
  Closed Projects Committed Project Summary Status
 Cost Added Preserved Units Units

 Historic building Loan closed;
  Marathon Development conversion / 26 rental units project
  - Copley Chambers I $718,146.86 $6,400,000 for youth aging out of care 26 0 26 26 complete.
 / 8 units @ 30% AMI or Occupied, loan
  (206 Broad)
 below, 18 units @ 80% AMI fully repaid.
 or below.

 Loan closed;
  Marathon Development New construction / 124 project
  - Copley Chambers II & $2,500,000 $45,605,311 rental units / @ 60% AMI 124 0 124 124 complete.
  III (220 Broad) or below Occupied, loan
 in repayment.

 Loan closed;
 New construction / 80- project
  SWAP, Inc. - Hannah substantially
 $1,011,000 $3,259,878.40 120% AMI homeownership 6 0 6 6
  Homes complete &
 with 3 rentals @ or below
 80% AMI funds repaid via
 resales.

 Loan closed;
 New construction / 80- project
  SWAP, Inc. - Portland 120% AMI homeownership substantially
 $1,516,000 $2,104,385 10 0 10 10
  Homes with 5 rentals @ or below complete &
 80% AMI repaying via
 resales.

 New construction / 178
  Marathon Development rental units / 36 units @ or Loan closed;
  - The Flynn (220 $2,500,000 $77,133,063 below 30% AMI, 102 units 178 0 178 178 project under
 @ or below 60% of AMI, 40
  Blackstone) construction.
 units @ or below 80% of
 AMI




 *as defined by PHTF regulations



 —continued on next page—
 Page 146 33
Providence Housing Trust Fund: Bond Commitments (Continued)
The below outlines Bond commitments, as of July 2025, via the Providence Housing Trust Fund to support housing progress in the City of
Providence.

  Projects Approved Development Units Units Total Affordable*
 Committed Project Summary Status
  (Pending Closing) Cost Added Preserved Units Units

 Conditional
 Historic building
  High Rock Board approval
 conversion / 285 rental
  Development - 111 $10,000,000 $223,121,399 285 0 285 57 9/2022; full
 units / 57 @ 80-120% AMI,
  Westminster application in
 228 market
 process.


  Total $26,396,146.86 $441,126,769.40 847 0 847 616


 *as defined by PHTF regulations




 —continued on next page—
 Page 147 34
HOME and CDBG FY2025 Investments
The below outlines HOME Investment Partnerships Program (HOME) and Community Development Block Grant (CDBG) FY2025
investments to support housing progress in the City of Providence.

 Closed HOME CDBG CDBG-CV Total Project Units Units Total Affordable* Status
 Projects Development Summary Added Preserved Units Units
 C
 SWAP - New Project
 232 construction / 1 complete;
 sold to a low/
 Alabama $178,134 $- $- $350,509 homeownership 1 0 1 1
 moderate
 Avenue unit/ @ or
 income
 (FHDC) below 80% AMI
 homebuyer

 SWAP, Inc. Project
 New
 - 78 complete;
 construction / 1
 Burnside sold to a low/
 $143,980 $- $- $328,346 homeownership 1 0 1 1
 Home- moderate
 unit/ @ or income
 ownership
 below 80% AMI homebuyer
 (FHDC)

 SWAP, Inc. Project
 New
 - 94 complete;
 construction / 1
 Potters sold to a low/
 $153,397.82 $- $- $352,398 homeownership 1 0 1 1
 Home- moderate
 unit/ @ or
 ownership income
 below 80% AMI
 (FHDC) homebuyer

 New Project
 SWAP - 18 complete;
 construction / 1
 Van Buren sold to a low/
 $191,607 $- $- $370,140 homeownership 1 0 1 1
 Street moderate
 unit/ @ or
 (FHDC) income
 below 80% AMI
 homebuyer

 New
 construction / 1
 homeownership
 SWAP - 26
 unit with rental/ Grant closed;
 Croyland
 $286,762 $- $- $354,273 homebuyer @ 2 0 2 1 project under
 Road
 or below 80% construction
 (FHDC)
 AMI,
 unrestricted
 rental


 *As defined by HUD regulations —continued on next page—
 Page 148 35
HOME and CDBG FY2025 Investments (Continued)
The below outlines HOME Investment Partnerships Program (HOME) and Community Development Block Grant (CDBG) FY2025
investments to support housing progress in the City of Providence.


 Total
 Closed Project Units Units Total Affordable*
 HOME CDBG CDBG-CV Development Status
 Projects Summary Added Preserved Units Units
 Cost

 Rental
 Amos rehabilitation / Project
 House - 3 rental units /
 $200,878.46 $- $- $854,000 3 0 3 3 completed &
 418 all restricted to occupied
 Friendship 60% AMI or
 below

 Project
 Habitat for New
 complete;
 Humanity - construction / 1
 273 $75,000 $- $- $315,000 homeownership 1 0 1 1 sold to a
 Bucklin unit/ @ or low/moderate
 income
 Street below 80% AMI
 homebuyer

 YWCA
 Rhode Rental
 Island - Project
 preservation/
 Gateway $- $- $500,000 $5,183,102 0 50 50 50 complete;
 50 units / @ or
 to occupied
 below 30% AMI
 Indepen-
 dence

 New
 construction /
 79 rental units /
 16 @ 30% AMI
 Omni/Win
 gate - or below, 5 @ Project
 Joseph & $880,000 $- $- $28,369,305 50% AMI or 39 0 39 36 completed
 Jordan below, 55 @ and occupied
 Caffey 60% AMI or
 below; 3
 unrestricted but
 targeted @ or
 below 80% AMI

 *As defined by HUD regulations

 —continued on next page—
 Page 149 36
HOME and CDBG FY2025 Investments (Continued)
The below outlines HOME Investment Partnerships Program (HOME) and Community Development Block Grant (CDBG) FY2025
investments to support housing progress in the City of Providence.



 Closed Total Project Units Units Total Affordable*
 HOME CDBG CDBG-CV Development Status
 Projects Summary Added Preserved Units Units
 Cost

 New
 Pennrose construction / Loan closed;
 (as Parcel 37 rental units / project
 9 Phase I-4 $400,000 $- $- $16,233,425 16 units 37 0 37 16
 complete and
 LLC) - restricted to occupied
 Tempo 60% AMI or
 below

 Project
 Providence Substantial
 complete;
 Revolving rehabilitation/ 1
 Fund - 226 $- $280,061 $- $506,023 homeownership 1 0 1 1 sold to a
 low/moderate
 Sackett unit / @ or
 income
 Street below 80% AMI
 homebuyer

 New
 Crossroads construction /
 Rhode 176 rental units Loan closed;
 Island - $1,000,000 $- $- $83,948,559 / 0-60% AMI / 176 0 176 176 project under
 Summer permanent construction
 Street supportive
 housing

 WinnDevel
 Rental
 opment - Loan closed;
 preservation/
 Lockwood $- $250,000 $- $22,820,099 0 108 108 108 project under
 108 units / 108
 Plaza construction
 @ 60-80% AMI
 Phase I

 Substantial
 Sojourner rehabilitation/3 Grant closed;
 House - $ $746,175 $- $890,431 rental units/ @ 3 0 3 3 project under
 Inkerman or below 80% construction
 AMI

 *As defined by HUD regulations

 —continued on next page—
 Page 150 37
HOME and CDBG FY2025 Investments (Continued)
The below outlines HOME Investment Partnerships Program (HOME) and Community Development Block Grant (CDBG) FY2025
investments to support housing progress in the City of Providence.



 Closed Total Project Units Units Total Affordable*
 HOME CDBG CDBG-CV Development Status
 Projects Summary Added Preserved Units Units
 Cost

 Sojourner Rental
 rehabilitation / Grant closed;
 House -
 $- $250,000 $- $1,719,191 4 rental units / 4 0 4 4 project under
 River
 4 @ 65% or construction
 Avenue
 below

 New
 Pennrose construction/ 61
 rental units /13 Loan closed;
 (as Parcel
 $400,000 $- $- $34,131,560 @ 30% or 61 0 61 36 project under
 9, Phase II)
 below; 2 @ 31- construction.
 - Tandem
 59%; 21 @60-
 80% AMI

 Projects Total
 Approved Project Units Units Total Affordable*
 HOME CDBG CDBG-CV Development Status
 (Pending Summary Added Preserved Units Units
 Cost
 Closed)

 Habitat for New
 construction / 1 Approved -
 Humanity -
 $75,000 $- $- $275,000 homeownership 1 0 1 1 closing 2025
 26 Hannah
 unit/ @ or (Grant)
 Street
 below 80% AMI

 ONE
 New
 Neighbor-
 construction / 1 Approved -
 hood
 $114,515 $- $- $249,515 homeownership 1 0 1 1 closing 2025
 Builders -
 unit/ @ or (Grant)
 46 Laura
 below 80% AMI
 Street

 *As defined by HUD regulations




 —continued on next page—
 Page 151 38
HOME and CDBG FY2025 Investments (Continued)
The below outlines HOME Investment Partnerships Program (HOME) and Community Development Block Grant (CDBG) FY2025
investments to support housing progress in the City of Providence.


  Projects
 Total
  Approved Project Units Units Total Affordable*
 HOME CDBG CDBG-CV Development Status
  (Pending Summary Added Preserved Units Units
 Cost
  Closed)

 Rental
 rehabilitation /
  Amos
 3 rental units / 3 Approved -
  House -
 $650,000 $- $- $1,145,000 @ 31-60% AMI / 3 0 3 3 closing 2025
  477 Pine
 permanent (Grant)
  Street
 supportive
 housing

  WinnDevel
 Rental
  opment - Approved -
 preservation/
  Lockwood $1,815,000 $300,000 $- $22,602,382 0 101 101 101 closing 2025
 101 units / 60-
  Plaza (Loan)
 80% AMI
  Phase II

 New
  SWAP - 77
 construction / 1 Approved -
  Beacon
 $215,000 $- $- $459,700 homeownership 1 0 1 1 closing 2025
  Avenue
 unit/ @ or (Grant)
  (FHDC)
 below 80% AMI

 New
 construction/ 1
  SWAP - homeownership Approved -
  140 Oxford $68,500 $- $- $653,739 unit; 1 2 0 2 1 closing 2025
  (FHDC) unrestricted (Grant)
 rental / @ or
 below 80% AMI

 New
  SWAP - construction/ 1
 homeownership Approved -
  225 Public
 $327,500 $- $- $745,950 unit; 1 2 0 2 1 closing 2025
  Street
 unrestricted (Grant)
  (FHDC)
 rental / @ or
 below 80% AMI
 *As defined by HUD regulations —continued on next page—
 Page 152 39
HOME and CDBG FY2025 Investments (Continued)
The below outlines HOME Investment Partnerships Program (HOME) and Community Development Block Grant (CDBG) FY2025
investments to support housing progress in the City of Providence.


  Projects Total
  Approved Project Units Units Total Affordable*
 HOME CDBG CDBG-CV Development Status
  (Pending Summary Added Preserved Units Units
 Cost
  Closed)

  Women's
 Rental
  Develop- Approved -
 preservation/
  ment Corp $497,661 $- $- $15,585,403 0 47 47 47 closing 2026
 47 units / 60-
  - West End (Loan)
 80% AMI
  III

  Lincoln New
  Avenue construction /
 Approved -
  Capital - $421,434 $- $- $28,246,564 76 rental units / 76 0 76 76 closing 2026
  322 8 @ 30% AMI or
 (Loan)
  Washing- below, 68 @
  ton 60% AMI

  Total $8,094,369.28 $1,826,236 $500,000 $266,689,614 417 306 723 671


 *As defined by HUD regulations




 Page 153 40
Page 154