A parking lot on Broad Street in Providence is a proposed site for affordable housing, but a planned midyear budget revision by Governor Carcieri may jeopardize the project.

The Providence Journal / Bill Murphy

PROVIDENCE — Buried deep in the long list of proposed cuts in the governor’s midyear budget revision are two that advocates say could have a devastating impact on affordable housing in Rhode Island.

The first plan would scoop $26 million from Rhode Island Housing, the independent state agency that lends money and provides grants for affordable-housing projects. The second eliminates all money for the $7.5-million Neighborhood Opportunities Program, the seven-year-old state fund that helps finance affordable housing for those who make less than $30,000 a year.

If either proposal is approved by the General Assembly, advocates say projects throughout the state will probably be canceled and in some cases families will be left without homes they’ve been waiting for.

“They’re talking about taking critical housing resources from one of our biggest financial partners and then coupling that with zeroing out the help from the Neighborhood Opportunities Program. It just ties our hands,” said Brenda Clement, executive director of the Statewide Housing Action Coalition.

A Carcieri spokesman repeated the now familiar refrain that the administration has been forced to make difficult decisions as it tries to close a $150-million budget gap, even when it comes to programs like these, which the governor has supported in the past.

But another state official, Noreen Shawcross, executive director of the state’s Housing Resources Commission, acknowledged that the proposed cuts would have a tremendous effect on affordable housing. “Certainly I understand the fiscal problems at the state, but I would be the first to say this program has accomplished its objective and has been a great investment for the state,” Shawcross, a former advocate for the homeless, said of the plan to cut the Neighborhood Opportunities Program.

The Rhode Island Housing proposal is one of several in the budget revision that call for digging funds out of the state’s quasi-public agencies. But since the housing agency receives no appropriation from the state, advocates wonder why the state would take money that never belonged to it in the first place.

Carcieri spokesman Jeff Neal said that in looking for extra revenue to snap up, “the budget office noted that Rhode Island Housing had approximately $31 million of free cash … that had not been spent or obligated.” The cash, he said, “seemed appropriate to use.”

Rhode Island Housing officials reject that idea as “just not true.” Their agency, they say, does not have anywhere near that kind of money on hand.

As a financing agency that sells bonds to help Rhode Islanders secure affordable mortgages, Rhode Island Housing sees millions of dollars flowing through its accounts, said Executive Director Richard Godfrey, but that money is neither free nor unaccounted for. In fact, he said, the only money the agency generates for its programs and operating expenses is the money it gets on the sale of its bonds.

“Simply put, Rhode Island Housing does not have $26 million to spare in our operating budget. In fact, the organization has no surplus cash,” Godfrey said. “With only $17 million to spend on programs this year, even if we shut down all operations and programs, it would be impossible for Rhode Island Housing to fund a $26-million payment over the next five months.”

Last night, Neal said the budget office “has had additional discussions with Rhode Island Housing to see what funds were available given [Rhode Island Housing’s] contention.” He could not elaborate on what the discussions might mean for the agency.

In the meantime, Rhode Island Housing says “given the current housing and foreclosure emergency in the state and the nation,” it is working to come up with an alternative to help the state close its deficit. That may involve a plan in which the agency would purchase blighted state lots and upgrade them. The state would get a fast infusion of cash and Rhode Island Housing would use its bonding program to help improve local properties. It’s a previously proposed idea that Godfrey said could help resolve this crisis. He could not provide further details yesterday.

Eliminating the Neighborhood Opportunities Program could be equally damaging to the foundation of affordable housing in the state.

Created in 2001, the program produces rental housing units for the poorest Rhode Islanders. Before its inception, Rhode Island was one of only two states nationwide that did not allocate money for affordable housing. The now-popular fund has since helped to build more than 1,000 affordable housing units and support programs that keep them inexpensive. It differs from the 2004 statewide affordable housing bond in that it targets the lowest wage earners and those with disabilities, as opposed to working Rhode Islanders making slightly more.

Advocates call the Neighborhood Opportunities money the often-critical piece of the financing puzzle that helps projects get off the ground and keeps units affordable once they open. And since there is no other state fund for projects of this kind, “There isn’t any other source to go to,” Clement said.

Without the funding, she said, as many as seven proposed projects may have to be abandoned. That includes 46 proposed rental apartments in Providence’s Elmwood neighborhood, some of which involve rehabilitations of old buildings and some that call for new construction.

The Elmwood Foundation’s director of community revitalization, Rachel Newman Greene, said the organization is “still reeling” from news that its major construction project could be put on hold. Further north, in Woonsocket, Joseph Garlick, executive director of NeighborWorks Blackstone River Valley, said he too may be forced to cancel a proposed project. “Without this funding, I can’t do it,” he said.

Beyond providing safe, affordable homes, advocates say projects like these help transform neighborhoods and bring in money and resources to communities that need them most. For that reason, they are an investment in the state’s future.

It’s a theory that at one time was not lost on Governor Carcieri, who in 2003 praised the Neighborhood Opportunities Program and affordable housing in general as an important piece of the state’s economic engine.

“It doesn’t do us any good to generate jobs,” he said at the time, “if people don’t have a place to live.”

cneedham@projo.com