Office of Senator Jack Reed: After Delivering Federal Affordable Housing Funds, Reed Calls for Action to Help Build More Homes That RIers Can Afford
FOR IMMEDIATE RELEASE: August 2, 2022
CONTACT: Chip Unruh, 202-224-4642
After Delivering Federal Affordable Housing Funds, Reed Calls for Action to Help Build More Homes That RIers Can Afford
WASHINGTON, DC -- Rhode Island has a shortage of 24,000 affordable homes for low-income residents, according to data from the National Low Income Housing Coalition. And a new report by Boutique Home Plans ranks Rhode Island last in the country for new home construction per capita. The State of New Residential Construction in America found Rhode Island issued just 1.27 new housing permits per 1,000 residents in 2021. Utah topped the list, with 11.9 permits per 1,000 residents.
As Rhode Island faces this persistent affordable housing shortage, U.S. Senator Jack Reed is working at the federal level to help build new high-quality affordable housing units throughout the state, expand housing options for seniors and working families, and help finance the construction of new homes in an affordable price range to meet demand.
Senator Reed has already delivered $1.67 billion in federal American Rescue Plan funds for the state, $250 million of which is being set aside by state lawmakers to increase access to safe housing everyone can afford. Senator Reed also helped deliver $1.25 billion in flexible state and local aid for Rhode Island in the CARES Act to ensure Rhode Island could effectively respond to the pandemic, including housing needs. And Reed successfully fought to bring an additional $352 million in federal COVID-19 rent relief available through RentReliefRI over the last two years, as well as $50 million for Rhode Islanders through the Homeowner Assistance Fund.
In addition to this federal funding, Senator Reed says the U.S. Treasury Department will soon implement a simple reform he has long advocated to unlock a wave of new resources to produce and preserve the affordable housing Rhode Island needs. Earlier this year, Senator Reed joined with Senator Patrick Leahy (D-VT) and Susan Collins (R-ME) in introducing the bipartisan LIFELINE Act (LIHTC Financing Enabling Long-term Investment in Neighborhood Excellence), to improve how flexible State and Local Fiscal Recovery Funds from the American Rescue Plan Act can be used with the nation's largest affordable housing funding mechanism, the Low-Income Housing Tax Credit (LIHTC).
Under previous Treasury guidance, the use of LIHTC with State and Local Fiscal Recovery Funds was disincentivized. Due to the structure of the tax credit, federal grants used to fill gaps in LIHTC-funded construction are almost always provided as long-term loans. Treasury initially stated that State and Local Fiscal Recovery Funds must be obligated by 2024 and spent by 2026 and therefore cannot be loaned. The LIFELINE Act sought to solve this problem by allowing states and localities to loan State and Local Fiscal Recovery Funds to LIHTC projects. Now, thanks to the bipartisan advocacy of Leahy, Collins, Reed, and others, the U.S Treasury Department is moving to revise its guidance for spending American Rescue Plan dollars in line with the goals of the LIFELINE Act to better pair the money with LIHTC projects.
Among the many financial worries for average Americans, particularly young families just starting out, is finding a safe, affordable place to live.
The simple fact is that we don't have the supply of housing to meet demand. Indeed, we have a shortfall of 7 million affordable housing units according to the National Low-Income Housing Coalition. Certainly, the Covid-19 pandemic reduced housing production and created kinks in the supply chain for important raw materials like lumber, but the truth is that we were lagging when it came to building and maintaining affordable housing long before Covid-19.
Back in 2020, a Rhode Island family earning the state's median income couldn't afford to buy a home at the median price anywhere in the state. It has only gotten worse since then.
Across the country, home prices have risen 13.4% from last year, with the national median price now at $416,000.
In my state, the Rhode Island Association of Realtors reports that the median price of homes sold in June 2022 reached an all-time high of $430,000. That's 11.7% higher than a year earlier.
A large reason that homeownership is out of reach for many Americans is that the inventory levels are so low. In recent months, sales have dropped as interest rates have increased, but we are still nowhere near a balanced market.
In a healthy housing market, there is usually a 6-month supply of homes available for sale at any given time. Right now, our country has less than a three-month supply of homes and Rhode Island has less than a two-month supply.
As potential home buyers are priced out of the housing market, they remain in the rental market, adding additional pressure to rental prices. According to apartmentlist.com, rent has grown 14.1% nationally since last summer. In Providence, Rhode Island, rents have jumped 23.8% from last year. When supply is tight and rents go up, it's harder for our more vulnerable community members to afford housing, that's seniors, people with disabilities and the unhoused. People who have been a part of the fabric of our community for decades are no longer able to afford staying. It is a problem facing too many Americans.
This didn't happen overnight. According to the National Low-Income Housing Coalition the number of homes with low monthly rents declined by 4 million between 1991 and 2017.
And the underbuilding of starter homes for decades has caught up to us, creating a major housing supply crunch that has led to soaring rents and home prices.
Developers have more incentives to build six-bedroom McMansions and luxury apartments. That doesn't help folks who just need a safe, affordable place to live in their community. And it doesn't meet the needs of young families who just want about 1,800 square feet, four walls, and a roof.
We now have a housing market where police officers, firefighters, teachers, and nurses cannot afford to live in the communities that they serve. Simply put, our current housing stock does not have homes to match what families want and what families need.
Also contributing to the problem, our housing market has been flooded with speculators, private equity firms and large institutional investors who are starting to come in looking for big profits. This is why Chairman Brown, Senator Warren, and I have called on HUD to stem the flow of single-family homes to institutional investors and help level the playing field between families and large investors.
In this kind of market, it's hard for everyone, especially first-time buyers. Over the last two years, the federal government has made substantial investments in affordable housing, helping people experiencing homelessness and keeping people stably housed. Without the measures we adopted, the housing situation for millions of Americans would be even worse.
I was part of the bipartisan working group that negotiated the CARES Act, which was a step towards keeping people safe, protecting public health, and preventing an affordable housing crisis from becoming an eviction disaster. But clearly the CARES Act wasn't enough. That's why I introduced a bill to provide rental assistance and homeowner assistance to families. That legislative initiative led to the influx of more than $46 billion in emergency rental assistance to help renters who have struggled to pay their rent and utilities during the pandemic. Those funds have also been used to help with housing stability, particularly for unhoused individuals. In total, emergency rental assistance has helped over 34,000 families in Rhode Island alone. And I also worked with colleagues to deliver nearly $10 billion under the Homeowner Assistance Fund to help homeowners who experienced COVID-19 hardships keep up with house payments and stay in their homes. Over $50 million from this fund is helping homeowners in my state.
Rhode Island and other states are also committing their American Rescue Plan dollars towards building new affordable housing. It is hard to overstate the impact that this cushion of support has had for families in our state and across the country. Putting a historic emphasis on housing support helped eliminate a major potential economic hardship that could have been catastrophic for millions of Americans. Without the worry of how to make rent or mortgage payments, families didn't need to scramble to find shelter and uproot themselves from their support systems. Kids had safe homes and could stay in the same school. It helped parents keep their jobs, helped seniors stay connected to their communities, and kept all of us healthier and safer. We need more of this kind of support for families, not less.
Measures like Emergency Rental Assistance and the Homeowner Assistance Fund were temporary, and those programs are going to be wrapping up in the next few months. As we look ahead to the future, it's time for us to think—what have we learned? What are the acute needs of housing today?
There is no question we need to build more affordable housing. We need to invest in rehabilitating old homes, but also in building new homes specifically for low-income families. We need to fortify the federal programs that incentivize private investment in affordable housing, like the National Housing Trust Fund, the Capital Magnet Fund, Low-Income Housing Tax Credits, and HOME Investment Partnerships. That includes extending available Low-Income Housing Tax Credits by reinstating the 12.5% boost that expired at the end of 2021. It also means passing the bipartisan LIFELINE Act introduced by Senators Leahy, Collins, Wyden, myself, and many others, so that we can maximize the impact of the State and Local Fiscal Recovery Funds from the American Rescue Plan when states put those funds towards building and maintaining affordable housing.
We need to invest in apprenticeship and training programs to create a more skilled construction workforce, with a focus on attracting more diverse workers. We need more innovation, with quicker building techniques and high-tech materials. This is not a pipedream -- Rhode Island has already shown the world how to get innovative in the housing space with ONE Neighborhood Builder's Sheridan Small Homes and Bowdoin Street Rowhouse. These are innovative construction projects, small homes with many energy saving aspects. They are the future, and we have to invest in that future.
And as I said, we have to build to focus on a green future that includes the effects of climate change. That means we need to pass the Green Retrofits Act, which I introduced with Senator Collins. This bill would boost energy efficiency in thousands of multi-family residential homes nationwide by bolstering public-private partnerships to make healthy home upgrades and creating a new program to distribute energy efficiency grants and loans.
We need to increase our assistance and our commitment to Homeless Assistance Grants. That includes funding for the Continuum of Care Program, which serves over 750,000 people experiencing homelessness each year, and for Emergency Solutions Grants, which support over 350,000 who are in emergency shelter each year.
We need to fully fund housing choice vouchers, make them easier to use in communities, and incentivize landlords to take those vouchers, which is being done presently in Rhode Island.
Investing in housing will not fuel the fire of inflation—it will tackle one of the key contributors to rising costs and help stabilize family budgets.
On many of these fronts, state and local action is also needed to move the ball forward. State and local governments must address the issue of exclusionary zoning. In far too many places, there are barriers to building multi-family homes or townhouses and too-high minimums for lot sizes, making it very challenging to build affordably.
It should be easier for people to convert their garage into living space for a family member such as an in-law suite above a detached garage, and that is just one example. Some of these challenges can be traced back to 'not in my backyard' attitudes, which we must all do our part to overcome.
Madam President, every family should have a decent, affordable place to live and we need to commit ourselves to making the investments and adopting policies to make that possible. And emphasizing once again, investing in housing will lower costs for families, which will be an effective way to help overall -- not immediately, but overall -- to lower inflationary pressures on working families.
Courtesy of Senator Jack Reed's Office