Obstacles to Building Affordable Homes

There are many non-profit and for-profit developers in Rhode Island who know how to build quality long-term affordable homes, but they often face more obstacles to building than market-rate developments. Here’s what holding them back:

Rhode Island's 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.

A Better Way

Kingstown Crossings in North Kingstown, developed by Crossroads, wholly redeveloped formerly US Naval housing, into 58 rental homes with supportive services for families.

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.