They say that a bill that would boost the state's current contribution to create more affordable housing units is not not nearly enough to cope with soaring prices and increased need.

01:00 AM EDT on Monday, June 20, 2005

BY RANDAL EDGAR
Journal Staff Writer

Nestled between a law office and a two-family home, the former St. Francis Convent, in Warwick, stands a few yards from the nearest bus line and just minutes from the nearest mall.

Once a residence for nuns, the two-story structure is being transformed into a place for the homeless and mentally ill. House of Hope, a nonprofit developer, plans to open 11 studio apartments there in December.

The work that lies ahead -- construction, upgrades, screening for tenants -- is the easy part.

The real work started two years ago, when Jean Johnson, House of Hope's executive director, began searching for money.

Her plan to turn the convent into subsidized, income-restricted affordable housing will draw on more than a dozen sources of financing -- some government, some charitable, some volunteer.

A church youth group raised $500, to buy pots and pans, glasses, and other kitchen items. An Eagle Scout candidate raised $500, to buy linens and three microwave ovens.

"There's all kinds of stuff coming in," Johnson said. "All I did, I think for two years, was write grants."

TWENTY MILES to the north, the Woonsocket Neighborhood Development Corporation is building 43 affordable apartments, along with 15,000 square feet of commercial space, just outside Woonsocket's downtown.

The project, expected to cost $10 million, is being financed with a mix of federal and state grants, tax credits and low-interest loans, said Joseph Garlick, the agency's executive director.

Garlick, who broke ground on the project last summer, said he expects it to finish in December.

Raising the money took longer. "Two and a half years," he said.

SINCE 1970, Rhode Island's nonprofit developers have created more than 5,000 affordable housing units that were rented or sold at below-market costs.

Housing advocates say that's a good track record for builders who depend on grants and charitable donations to cover land and construction costs, as well as operating costs.

But, they add, it's not enough.

In a state where housing prices have nearly doubled in five years, where the numbers of homeless have reached all-time highs, where housing production is at a 20-year low, the advocates want more.

And they want the state to help.

Rhode Island has been providing money for affordable-housing creation since 2001, through the Neighborhood Opportunities Program.

With allocations of $5 million a year, the program has helped to create about 250 affordable apartments and houses. Another 190 housing units are under construction, and 160 more have been approved and are in the works. The units -- some new construction, some renovations -- are located in 22 cities and towns.

A bill sponsored by House Majority Leader Gordon D. Fox, D-Providence, and Sen. Walter S. Felag Jr., D-Warren, would raise the state's annual contribution to $7.5 million.

The bill is one of four that a coalition of housing, community, and business groups is backing. The other bills would move people with disabilities from temporary shelters to subsidized housing; help the chronically homeless to gain life and work skills; and help nonprofit developers with operating costs.

Housing advocates staunchly support the bills, even as they insist that the 50-percent increase the first measure proposes for the Neighborhood Opportunities Program is not enough.

Brenda Clement, executive director of the Housing Network, a group of nonprofit developers, said that $7.5 million a year would still leave Rhode Island behind its neighbors.

Massachusetts, with roughly six times the population of Rhode Island, spends about $67 million a year -- nine times more -- to create affordable housing, according to that state's Department of Housing and Community Development.

Connecticut, with roughly three times the population of Rhode Island, spends about $36 million -- four and a half times more -- according to the Connecticut Housing Coalition.

GOVERNOR CARCIERI has proposed giving Neighborhood Opportunities $5 million next year -- the same amount the program received in its first four years. But he spoke well of the program, and said he hasn't ruled out supporting an increase.

Fox, a prime sponsor of the original Neighborhood Opportunities bill in 2001, said he is optimistic, that when the General Assembly adopts its new budget, some additional money will be there. He isn't sure how much more.

"This is one of those synergistic bills that really is a win-win," he said earlier this month. "Just the fact that we're building housing, it's an enhancement to the economy."

The fate of the housing measures will have big ramifications for nonprofit developers, who are Rhode Island's top creators of affordable housing.

Though nonprofits have many places to turn for money, they are constantly struggling to find enough. Unlike for-profit developers, who sell at the highest-possible prices, nonprofit developers try to keep prices low enough for people who can't afford what the market dictates -- lower, even, than what the housing costs to build.

THE NEIGHBORHOOD Opportunities Program is one of the nonprofits' first stops.

The program is unusual in that its goal is to make housing affordable to the most needy: people earning minimum wage and people with disabilities. To accomplish this goal, the money it distributes can be used to offset construction costs, and property operating costs, as well, if the developer is building rental housing. The operating money allows rents to be set even lower.

For the House of Hope project in Warwick, the program is providing $412,420: $200,000 for renovations and $212,420 to help cover operating costs once the apartments have tenants. This will allow the apartments -- expected to cost about $163,000 apiece to build -- to be rented for $351 a month, if the tenant is earning minimum wage, or $186 a month, if the tenant receives disability income, says Jeannie Lamb, House of Hope's housing development director.

For the Woonsocket Neighborhood Development Corporation project, the program is providing $753,803: $300,000 for construction and $453,803 to offset costs for tenants. Again, this will allow some apartments to be rented for $351 a month, to people earning minimum income.

In Westerly, Habitat for Humanity of South County is using Neighborhood Opportunities money to build an owner-occupied duplex.

The units will each cost about $162,000, including land and construction, says Lou Raymond, South County Habitat's executive director. They will be sold to people earning about 50 percent of the median income, for about $100,000 apiece, he said.

AFTER THE federal HOME program, which helps to create income-restricted apartments and houses for people earning 60 percent of the median income, the Neighborhood Opportunities Program is the largest grant program available for affordable-housing creation in Rhode Island, according to Chris Barnett, spokesman for the Rhode Island Housing & Mortgage Finance Corporation.

The money is crucial, Barnett said, in "closing the gap between what it costs to create this housing and what the neediest among us can afford to pay."

But developers like the program for more than just the flexibility and the size of pot.

Unlike many federal programs, it has no huge bureaucracy. The program is administered by three people, who use three rented cubicles at the RIHMFC headquarters, in Providence. This is the staff of the Housing Resources Commission, which seeks developer proposals three times a year, says Susan Baxter, the commission's chairwoman.

To receive money, developers must already have other potential financing lined up, and they must commit to breaking ground within six months. Those that don't follow through either forfeit the money or have to return it, Baxter said.

When developers are turned down, she said, it's usually because they don't have such details in place.

"The bottom line is: Is it viable?" she said.

"While we're very pleased that we have had this $5 million available to us the last number of years, we have to be very vigilant. Five million will not meet the kind of need that is out there."

Housing advocates say the money is making a difference, however. The state contribution has helped developers to obtain about $34 million a year, on average, from other sources, multiplying the state's investment.

JOHN RINEER, 51, a commercial painter, is one of the people who has benefited.

He lives in a House of Hope apartment on Haswill Street, in Warwick, that was renovated, in part, with Neighborhood Opportunities money. Rineer and his wife had been paying $1,000 a month before House of Hope found them a place. Rineer, alone since his wife died of cancer, now pays $513.

"We would have been in trouble, serious trouble," he said. "We probably would have been on the street, because we couldn't pay the thousand dollars a month."

House of Hope held its formal groundbreaking for the Warwick convent project last month. The new facility will be called the Fran Conway House of Hope, in honor of Sister Francis Conway, a longtime advocate for the poor and homeless.

But the fundraising isn't over.

Johnson and Lamb are hoping that a grant from the Champlin Foundations, one of Rhode Island's leading philanthropies, will provide furniture for each apartment. Lamb said they are also looking for people to donate new computers, and books, too, for a library that will help the residents with job and life skills.