Providence has become an increasingly large part of the Boston housing market, but federal housing funding has been cut, and construction costs have shot up with rising energy and utility prices.
Housing demand has far outpaced supply, a sharp departure from the 1990s, when the market was in slight recession, according to Chris Barnett, spokesman for Rhode Island Housing, which has financed affordable housing development in Providence neighborhoods for nearly 30 years.
"Fifteen years ago there were a lot of abandoned houses, but the big problem now is escalating values," said Barbara Fields, executive director of the Rhode Island branch of the national non-profit organization Local Initiatives Support Corporation. An abandoned lot today costs six or seven times the price it would have cost 10 years ago, she added.
But as house prices and rent rates have climbed in Providence, household income has not kept pace. Barnett said that since 2000 single-family home prices have increased six times faster than household income. "What we have now is a place that is very desirable to live in, and yet we're not creating an environment for everyone else to live here," Barnett said.
Defining affordabilityFinding an exact definition of affordable housing remains problematic, said Thomas Deller, director of planning and development for the city. Housing available to households earning 80 percent or less of the area median family income technically qualifies as affordable housing. The city's housing trust aims to subsidize housing for families that fit this definition, but Deller said families just above the cutoff may have similar problems finding housing.
Luxury developments downtown have not displaced lower income families - there were few existing residents downtown before the "Renaissance" - but have led to calls for regulation of equitable housing.
"Any housing that gets created in a market like this helps relieve some of the price pressure, but the real crisis is for folks at the minimum wage," Barnett said.
Fields said roughly 18 percent of housing built under Mayor David Cicilline '83 has qualified as affordable. Deller said though City Hall aims for 20 percent of Providence's new housing to be affordable, there are no government structures in place to guarantee equitable housing.
"The problem that we face in the economy is that you've got to balance the fact that development brings jobs and opportunity to people (with) putting structures (in place) that make sure that everyone gets a chance," he said.
Luxury developments downtownDevelopers interested in downtown Providence are aided by the historic tax credit, which Gov. Don Carcieri '65 raised in 2001 to exempt 30 percent of a project's renovation costs.
Local developer Buff Chace bought the historic Smith Building at 1 Fulton St. a decade ago, and his firm, Cornish Associates, has since converted much of Downcity Providence into residential apartments. "It was determined that it couldn't be just one building here," said Francis Scire, director of marketing and retail for Cornish. "You had to establish a critical mass."
Scire said he thinks Cornish's downtown developments have formed a new Downcity neighborhood of what he describes as "urban dwellers." But Scire preferred to describe what some call gentrification in downtown Providence as "revitalization."
"How do you gentrify a vacant wasteland? ... There was nothing going on there, except for Lupo's (Heartbreak Hotel), which is now on Washington Street," Scire said.
While the Smith building includes a handful of affordable units, and future projects may provide more, Scire said Cornish converted the Downcity buildings largely with affluent tenants in mind, due in part to high renovation costs.
"Is a $3 million condo affordable? No, but we have to figure out ways to subsidize others," Deller said. "A $3 million dollar condo pays a hell of a lot more in property taxes than a $200,000 house."
Changing neighborhoodsAlso thanks to the historic tax credit, the Baltimore-based Steuver Brothers firm, which redeveloped Faneuil Hall in Boston, converted the Rising Sun Mills in Olneyville into loft apartments.
The Rising Sun development garnered attention because it displaced nearly 30 small businesses. Though developments like Rising Sun rarely displace families, their impact on the neighborhood increases surrounding property values, often forcing low-income families to move.
Frank Shea, executive director of the Olneyville Housing Corporation, a community non-profit organization that develops affordable housing, said Olneyville's residential core has experienced equally dramatic price increases. "It's not just the mills, there's plenty of gentrification going on," he said.
While the mills' former residents - "younger artist types" - have moved out, families formerly living in Olneyville's residential center have often relocated to substandard housing at high prices, Shea said.
"People are paying exorbitant rates for units that shouldn't be habitable," Shea said, adding that illegal immigrants, who make up a portion of the Olneyville population, are unlikely to report landlords to housing court. Although this has always existed to some extent, Shea said the situation in Olneyville has worsened in the past 10 years.
In the Mount Hope neighborhood, resident Tony Sanders said high prices are forcing families to move to South Providence and some even south to the Carolinas or Kansas - states where the cost of living is cheaper. Saunders works for the Mount Hope Neighborhood Association.
Sanders said the city is experiencing the reverse of suburbanization. "(Before the 'Renaissance') there were so many minorities living in the city that a lot of people would rather commute to Providence," Sanders said. "But now it's up and coming, they want to move back, and people who have been living here the majority of their lives are finding they can't afford it."
As homeowners receive inflated offers for their homes, Sanders said many find they cannot refuse the offers. Public housing is unlikely to provide a solution, he added, as the state would have to compete with private buyers for limited land.
Finding solutions for the housing crunchWithin existing neighborhoods, community development corporations, or CDCs, actively scout underused or old properties to buy and convert into affordable housing. By putting the houses in a trust, the CDC can ensure these properties remain within reach of working families and control prices indefinitely, Shea said.
"We're trying to get as much good housing in working people's hands that will be affordable forever," he said.
Fields, whose organization helps finance these affordable developments, said CDCs in Providence have become more active in the last 10 years, but available funding for such projects has not increased.
Some suggest inclusionary zoning or "linkage" - which requires a portion of units in new developments be affordable - as possible ways to provide housing for lower income families.
"I think the city definitely needs inclusionary zoning," Shea said, adding that more than 1,400 housing units have been built between Providence Place Mall and Olneyville Square in a three-year period, only four of which qualify as affordable housing.
Cicilline supported inclusionary zoning in his 2002 campaign, and Ward 1 City Councilman David Segal recently proposed an inclusionary zoning ordinance, though whether this measure will be adopted remains unclear.
