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Obstacles To Building Affordable Homes

There are many nonprofit and for-profit developers in Rhode Island who know how to build quality affordable housing. Here’s what holding them back:

Rhode Island's Super-High Cost of Land
Maybe you can afford the structure. What you can’t afford is the land it sits on. Rhode Island land is prohibitively expensive, far above the national average. A finished lot in the Ocean State is 45 percent of the total house price. Nationally, a finished lot costs just 34 percent of the total.

Slow Permitting that Eats Up Profitability
From idea to CO (certificate of occupancy), a developer in Rhode Island can expect to wait two to five years before seeing a return on his or her investment of time and money. Much of that time is spent waiting for permits and approvals. According to an economic study released in 2004 by then-Fleet Bank and Rhode Island Public Expenditures Council, “it takes 2 to 2 1/2 years for approval of a new development” in Rhode Island. And that’s just approval. Then you have to build.

It doesn’t have to be this way. Quality projects and fast permitting are compatible, others have proven. In the rapidly growing vicinity of Dartmouth College, for example, permitting is now as quick as six weeks. It’s almost never more than a year.

Slow permitting makes affordable housing especially unattractive for commercial builders to attempt. Already-lean profit margins shrink while the clock runs and interest payments on the land purchase continue. Slow permitting is one reason big, expensive houses are so popular. “McMansions” are the only projects that yield enough profit so a developer can survive the long wait until a payday.

Exclusionary Zoning
Many towns impose zoning restrictions, code requirements and development conditions that have the effect of driving up the costs of new houses. These forms of so-called “exclusionary zoning” curb the development of rental housing and sometimes prohibit lower-cost housing types, such as townhouses and duplexes, altogether.

Restrictions of this kind can include minimum lot-size requirements, floor area ratios, land use-intensity ratios, setback and yard requirements, minimum house-size requirements, ratios comparing number and types of housing units to land area, limits on units per acre and other means.

Since the 1960s there has been a desire to control sprawl and “suburbanization” (translation: new developments full of kids and houses). Density became something of a dirty word, outside urban areas. In the 1970s towns like Foster passed large-lot minimum zoning requirements (4.6 acres).

Among other reasons: a wish to “preserve the rural character of the town.” If that was the aim, it missed. The town is rapidly filling with houses, many modest (it’s all anyone can afford after buying the land), each on its own deep 4.6 acre lot with the required 300-foot frontage. It might not be intentional, but exclusionary zoning has a predictable result: it shuts out low- and moderate-income families from a community.