Why I'm Voting No on Question 7

This started out as an open-thread post, on Rhode Island ballot question 7. The question itself will read...

7. AFFORDABLE HOUSING BONDS -- $25,000,000 -- (Chapter 241 - Public Laws 2012)

Approval of this question will allow the State of Rhode Island to issue general obligation bonds, refunding bonds, and temporary notes in an amount not to exceed twenty-five million dollars ($25,000,000) for affordable housing.

I wanted to provide readers with a little more detail about what they were being asked to finance, so I went to the legislation that authorized the ballot question. Here is the full legislative description of the purpose of the $25M bond, from Article 5 of this year's state budget...

Question [7] relating to bonds in the amount of twenty-five million dollars ($25,000,000) for Affordable Housing.

Provides funding to the Housing Resources Commission to provide state funds to promote affordable housing through redevelopment of existing structures, or new construction.

OK, next I figured within the Governor's budget request for this year, there'd be some detail about the Housing Resources Commission and various programs it runs. The Housing Resources Commission actually appears in two places in the budget. One place is in the "Quasi-Public Agencies" sub-section of the state budget, where $89,040 in operating expenses are listed for each year between FY2011 and FY2013. The other place is as part of "Housing and Community Development", under the "Planning" section of the Department of Administration budget, though no disaggregated total for Housing Resource Commission costs is listed there.

Members of the Housing Resources Commission as well as its various powers and duties are spelled out in Chapter 42-128 of state law. The commission membership is listed below the fold; depending on the exact process used for allocating the bond money, there are potentially significant questions about how much influence members of private organizations should have over direct expenditure of public funds.

The Rhode Island Secretary of State's Voter Handbook says that the bond funds "are expected to be matched by approximately an additional $225M in funding from other sources". As Justin mentioned yesterday, that's an 8:1 match (resulting in 9 times the original bond money being available, under the suitable definition of available). But in a Rhode Island Public Radio interview with Flo Jonic, Question 7 advocate Richard Godfrey mentioned that this bond would be matched at a 5:1 rate, for 6 times the bond amount in total.

The RIPR report mentions that this bond would be used to build 600 housing units. Using the 5:1 match, and adding in about $12M in interest on the principal, that's about $270K per unit. Also according to RIPR, a previous $50M bond approved in 2006 was matched at 8:1 and was used to construct 1300 units. That puts the cost for the previous measure, with any reasonable level of interest added in, at over $350K per unit. There seems to be substantial variability in how much housing is constructed per dollar under the mechanism that's being proposed.

Finally, the Hummel Report from this past week touched on the subject of how "affordable housing" projects have all kinds of implications for local communities, in terms of tax-abatements and building approval.

In short, this ballot question asks voters to put $25M into a not very well-explained process and trust the people involved to use their insider positions to do good with it. This is certainly not reasonable under current fiscal and economic conditions, and needs to be more transparent under any circumstance. For those reasons, I will be voting no on 7.

According to state law, the members of the Rhode Island Housing Resources Commission are...

The commission shall have twenty-seven (27) members as follows: the directors of departments of administration, business regulation, elderly affairs, health, human services, mental health retardation and hospitals, the chairperson of the Rhode Island housing and mortgage finance corporation, and the attorney general, shall be ex officio members; the president of the Rhode Island Bankers Association, or the designee of the president, the president of the Rhode Island Mortgage Banker's Association, or the designee of the president; the president of the Rhode Island Realtors Association, or the designee of the president; the executive director of the Rhode Island Housing Network, the executive director of the Rhode Island Coalition for the Homeless, the president of the Rhode Island Association of Executive Directors for Housing, or the designee of the president, and thirteen (13) members who have knowledge of and have a demonstrated interest in housing issues as they affect low and moderate income people, appointed by the governor with the advice and consent of the senate: one of whom shall be the chairperson, one of whom shall be the representative of the homeless, one of whom shall be a representative of a community development corporation, one of whom shall be the representative of an agency addressing lead poisoning issues, one of whom shall be a local planner, one of whom shall be a local building official, one of whom shall be a representative of fair housing interests, one of whom shall be representative of an agency advocating the interest of racial minorities, one of whom shall be a representative of the Rhode Island Builders Association, one of whom shall be a representative of insurers, one of whom shall be a representative of a community development intermediary that provides financing and technical assistance to housing non-profits, one of whom shall be a non-profit developer, and one of whom shall be a senior housing advocate.

4:30 PM | Housing | TrackBack (0)