Rhode Island has gotten a poor return on its investment after spending more than half a billion dollars on housing over the last five years, according to a new report by the business-backed Rhode Island Public Expenditure Council.
RIPEC found that while the state has moved away from underfunding housing production, recent changes have focused on a model based on high costs and high subsidies that ends up serving relatively few Rhode Islanders.
“Rhode Island authorized over $644 million toward housing since 2021, including substantial new and increased taxes, yet we are struggling to convert this record investment into the production volume needed to meaningfully close our affordable housing gap,” RIPEC President/CEO Michael DiBiase said in a news release.
Part of the problem, DiBiase said, is the high cost for developing housing through state bonds, which include substantial interest costs.
For example, $52 million from a 2024 bond and other sources created 200 new housing units.
In total, RIPEC found, housing bonds from 2024 and a similar proposal for this year will create 642 net new rental units, satisfying 28.5% of a state housing production goal.
RIPEC also found that housing funds have focused on creating affordable housing, with not enough attention on the middle part of the market.
“Given the extraordinary spending to date and the need for more units, RIPEC recommends that the General Assembly dedicate at least half of the proposed 2026 housing bond to middle-income housing,” DiBiase said. “We should not continue to ask taxpayers to fund a model that fails to benefit the vast majority of Rhode Islanders.”
Rhode Island’s housing crisis developed after the number of housing starts went into a sustained decline in the 1980s.
State Rep. Joe Shekarchi, who recently stepped down as speaker, championed the housing issue in recent years, and the issue is typically a top priority in polls of Rhode Islanders.
Gov. Dan McKee recently hailed an increase in housing permits as a sign that the state is chipping away at the housing crisis.
But House GOP Leader Michael Chippendale (R-Foster) said RIPEC’s report confirms what some people have said in recent years.
“State leaders are quick to rattle off exactly how much money they have ‘invested’ in housing,” Chippendale said in a statement. “But the real measure is not dollars spent – it is units produced. On that measure, they are far more vague, relying on phrases like ‘more building permits’ and ‘shovels in the ground’ while Rhode Islanders continue to struggle with housing costs they cannot afford.”
Chippendale said the RIPEC report should be a wake-up call.
While affordable housing and targeted assistance are important, he said, “government cannot keep making housing more expensive to build and then congratulate itself for spending taxpayer money to subsidize the costs its own policies helped create.”
