Rising land values and Rhode Island's relative affordability spur a coastal building boom

01:00 AM EDT on Sunday, June 11, 2006

BY MICHAEL MELLO
Journal Staff Writer

The tall, angular design of Carol Adams' contemporary-style house stands out among the traditional Capes and beach cottages along East Providence's tightly packed Narragansett Avenue.

The two-story home's large, rectangular windows and modern design are nods to the future of a neighborhood that, like other coastal areas in the state, is undergoing a facelift. Cottages and other onetime summer homes are giving way to multistory structures, as longtime residents and out-of-state buyers alike scramble to build on increasingly valuable -- and scarce -- waterfront lots.

"I always loved the ocean," said Adams, explaining her 1998 move from Providence's East Side to a half-acre lot in East Providence's Riverside section.

Adams, a psychotherapist who lives with two dogs and a shaggy black cat, immediately set about knocking down walls. She added a rear deck overlooking Narragansett Bay. A renovation she hopes is completed this summer will nearly double her living space, to about 2,200 square feet.

Similar projects are lurching skyward all along the water in Riverside, a microcosm for development in recent years in coastal areas across the state.

"This neighborhood has such potential," said Adams, who's playing a key role in its rehabilitation.

A few years after moving to Narragansett Avenue, she bought a neighboring house. She's now renting it to a couple renovating another nearby house.

Adams also sold some land between her house and the neighboring property, creating a new lot where another house will soon be squeezed in.

"We are probably never going to get to be [like] . . . Martha's Vineyard," Adams said, "but we can get close.

"They aren't making any more waterfronts, you know," she said, gazing out over the tranquil bay.

Rising land values and Rhode Island's relative affordability compared with other coastal areas have spurred a waterfront building boom that began in the early 1990s.

Since 1991, the annual number of building permits issued statewide by the Coastal Resources Management Council (CRMC) for projects along the water -- excluding permits issued for minor projects -- has grown from just over 400 to about 700 last year, according to a recent analysis of the data by Donald Robadue Jr., who is an associate coastal resources manager at the University of Rhode Island's Graduate School of Oceanography.

In the mid-1990s, annual permits issued by the CRMC spiked to more than 1,000. In those years, the totals were inflated because they included permits the CRMC began issuing for docks built before 1985, when new regulations took effect. The program helped the CRMC compile accurate data on docks statewide and ensure they were being properly maintained.

Robadue began studying CRMC permits issued since 1970 to look for trends in the use and development of Rhode Island's waterfront land.

"The CRMC is one of the only coastal programs in the country that keeps information on their decisions," Robadue said. "But no one had looked at it . . . for a year-to-year cataloging of development changes."

He said he hopes the town-by-town data helps the CRMC develop collaborative land-use plans with coastal communities.

"Permitting is not the best use of the council's time, networking is," Robadue said.

Grover Fugate, the CRMC's executive director, says the data shows, for the first time, what CRMC officials have long known anecdotally: Coastal projects are increasingly focused on expanding or replacing existing structures, rather than new construction.

"Cottages are being torn down and huge houses built" in their place, Fugate said. "Redevelopment is a big issue in coastal communities."

Since 1999, the annual number of rehabilitation projects, which includes expansions and replacements, has nearly doubled, to just Below 400 last year. The number of new construction projects during that period has been constant at around 200 a year.

Last year, the CRMC issued 693 permits for significant coastal building projects. The permits cover all types of construction, including residential. The year before, 832 permits were issued, the most since the mid-1990s when the totals included new permits for old docks.

In 2005, Warwick led the way with 119 coastal building permits. South Kingstown and Narragansett were next, with 74 and 72 respectively.

In some communities, such as East Providence, many of the projects are by long-time residents taking advantage of their rising property values and what, until recently, have been historically low interest rates.

But out-of-state buyers are helping fuel the coastal boom statewide, Fugate says.

"Most of the shoreline between Boston and New York is developed and land prices are high," Fugate said. "Out-of-state developers are coming in [to Rhode Island] and driving prices up."

A decade ago, Rhode Island waterfront property values were as much as 50 percent below properties comparable in size and location in New York, Connecticut and on Cape Cod, according to John Hodnett, a longtime Narragansett real estate broker.

The price gap has narrowed, although Rhode Island waterfront property on average is still about 15-percent cheaper than comparable land in neighboring states, he says.

Hodnett hasn't seen a statistical analysis of those waterfront property values. He relies instead on his own research and anecdotal information from buyers to track trends in waterfront sales.

The upward trend in Rhode Island real estate prices the past decade has been well-documented.

The year-end median sales price for all existing single-family homes in the state in 1995 was $115,000, according to the Rhode Island Association of Realtors. At the end of March 2006, the median price had skyrocketed to $280,000.

Along the water, where prices are highest, even small, quarter-acre lots with beach cottages can top $1 million, Hodnett says.

"If you looked long and hard you could find something for under $1 million, but probably not with what we call wide-open water" views, he said.

At $1 million and up, buyers typically want a newer, larger house, says Russell "Bo" Brown, South Kingstown's longtime building inspector.

Often it makes sense to simply tear down the old house, he says.

Sometimes "lumber sizes don't match up," Brown said. Other times, the only parts of the old house worth saving are "a foundation and a first-floor deck.

"A lot of times, the new house is quite larger than what was on the lot," he said.

To get water views, Kevin Coyle had to tear down a 43-year-old two-bedroom cottage he bought on South Kingstown's Rosebriar Avenue in 2004.

"It's two-tenths of a mile from the beach. We hear the waves -- it's nice," said Coyle, a Connecticut builder of modular homes who paid $360,000 for the 7,500-square-foot lot. He's building a two-story modular home that will serve as a summer getaway for himself, his wife and 15-year-old son.

He builds houses for a living in Connecticut's Fairfield County. In that area, he said, "there's nothing available for this price [$360,000], where you can hear the water."

He built another house on a larger undeveloped lot nearby in South Kingstown that he bought in 2002 for $190,000. The house, a little farther from the water than the one he's now building, sold for $830,000 in 2004, he said.

He said he hopes the Rosebriar Avenue property, a Cape with ocean and pond views, will join the crowded club of neighborhood homes valued at $1 million or more. Those properties include enormous multistory homes along exclusive Green Hill Beach Road.

Coyle already feels at home in the neighborhood, he said. Summer homes on both sides of his property are owned by Connecticut residents.

Rosebriar has a mix of mostly small and midsized cottages and contemporary-style homes.

"This is very quiet, tranquil," Coyle said of the dead-end street, explaining why he's willing to drive two hours for a summer escape. "Where we are [in Connecticut] is just mobbed. My blood pressure drops every time I come here."

Brown, the building inspector, laments the increased workload associated with inspections for the coastal properties. But he says the development is only good news for the community, particularly when the owners live part of the year out of state.

"Any town would welcome people who are building a large house and living here only six months" a year, he said. "They don't have kids in the schools, so it's all [tax] income."

Fugate says the growth in coastal development is a double-edged sword for the environment.

Rehabilitation projects often allow longstanding septic concerns and other issues to be addressed. But increasingly, larger houses often leave less open land on lots. That can alter drainage patterns and lead to increased runoff into local waterways, he said.

The town-by-town analysis, he said, will help the CRMC better compare the need and effectiveness of land-use plans in each community.

In East Providence's Riverside, there's been some grumbling that bigger houses may cost the area some of its charm, acting City Manager Jeanne M. Boyle said.

"But generally, people are welcoming the investment," she said. "It's good from the city's standpoint, because of the tax dollars. And it has a spinoff effect, by helping increase other people's property values."

Albert W. Quattrucci, the city's building official, is convinced Riverside is changing for the better.

"A lot of those houses were nothing but beach houses before they were converted for year-round use," he said of the narrow streets off Narragansett Avenue. "Many were abandoned and in terrible condition" when he started as building official 17 years ago.

Since then, "a lot of professional people have moved into that neighborhood," he said.

Marian Downs moved in before the facelift began. She bought "a handyman's special" 25 years ago, two doors down from where Carol Adams now lives.

Like Adams, she's praying an extensive renovation project is finished this summer. Downs' project "has been one problem after another," she said, citing permitting issues and other delays.

She has enclosed a rear porch and added a sliding door that opens to a sweeping view of Narragansett Bay and a sandy beach.

The project includes a new garage, with an apartment over it with a full kitchen and water views on two sides.

"The house was too small . . . I really wanted to take advantage of the view, it's really beautiful," she said. Nice enough, she hopes, to get $1,000 a month to rent the apartment.

"It has to be finished this summer," she said, looking out over the calm Bay waters.

mmello@projo.com / (401) 277-7355