Low and Moderate Income Housing Act:
Program Analysis
Abstract:
1. The four towns in this study (Charlestown, Richmond, Hopkinton and Exeter) are relatively prosperous, with an Annual Median Household Income (AMI) ranging from 29-79% above the AMI for the state, and a family poverty rate less than ¼ of that for the state. Of the year-round homes in the four towns, 80-90% are owner-occupied, 83-90% of the population lives in an owner-occupied home, 19 to 30% of owner-occupied homes are mortgage-free, and 54 to 66% of the mortgaged homes require less than 30% of household income to pay the costs of ownership. The need for LMIH-subsidized home ownership is not evident from the economic profile of residents of these four towns.
2. Few LMIH proposals reach the stage of final approval, owing to a combination of untoward factors, including contentious resistance from area residents, litigation to stop the projects, withdrawal by applicants in favor of more attractive options (sham proposals), and changes in market conditions unfavorable to the developer.
3. Of the six LMIH-supported projects that have reached the construction stage in the four towns, one by Habitat for Humanity (2 LMIH homes) and one by the Women’s Development Corporation (WDC; Saugatucket Springs, 53 LMIH units) are completed and fully occupied. Another by WDC (Deer Brook, with 31 LMIH units) is 90% complete and occupied. A fourth (Rockville Mills, with 14 LMIH units) has just recently been completed, and is currently being advertised for occupants. The remaining two projects under construction report less progress. Canonchet Woods (WDC, 20 LMIH units) is only 10% built over 5 years, with 2 units occupied, and Village Farm (32 LMIH units) is less than half built over 4 years, with 4 of 12 completed LMIH units unoccupied. The successful projects build mostly for clients at 50 – 80% AMI, whereas the troubled projects build mainly for clients at 100-120% AMI. Probable causes for the disparity of performance among these projects require further study, but targeting an appropriate base of AMI appears to be a contributing factor.
4. Of the 92 occupied LMIH units for which records could be obtained, residents of a majority of the units had relocated from the same or an abutting town, and virtually all were relocated from other municipalities in Rhode Island. Basically, the clients served are drawn primarily from the town in which the LMIH is built, or from surrounding towns.
5. Results shown primarily address LMIH-subsidized home ownership, where several projects allowed comparisons. These, and the success of the single LMIH rental project, suggest greater interest in LMIH housing for clients at or below 80% AMI.
6. Eligibility for LMIH based on AMI is seriously flawed. Examples show that other assets should be taken into account to assess need for LMIH-assisted housing.
7. The inventory of conventional housing in Charlestown with assessed values eligible for purchase by clients within the 80-120% AMI range, and unencumbered by LMIH restrictions, offers stiff competition for sellers of LMIH housing in this AMI range.
Introduction: In 2004, the State Legislature enacted the Rhode Island Low and Moderate Income Housing (LMIH) Act (RIGL 45-53-2) to stimulate construction of affordable housing consistent with the local needs in each community. While the law provides no metric for establishing what is meant by local needs, it asserts that 10% of all housing in each municipality must meet its criteria for “affordable housing”: that is, the housing must be deed restricted for 30-99 years, during which time it can only be sold to a buyer who meets the income requirements of the RI Housing Authority, and it must be built with a government subsidy. Although the state keeps an inventory of the number of homes built under the law, there has been no analysis to determine whether the law, with its associated government subsidies, is achieving the stated goal of meeting local needs. What follows is an account of the performance of the law in four rural towns, all without a municipal source of drinking water or sewage disposal (towns said to be outside “the urban services boundary”). Towns dependent on individual wells for drinking water and individual septic systems for sewage disposal are particularly vulnerable to environmental pollution from the high-density housing commonly proposed for rural LMIH projects.
Government Subsidies: The law encourages developers to build LMIH-qualified housing by offering them a variety of government-issued incentives. Among these are financial assistance for writing proposals, waivers of permitting fees, waivers of school impact fees, and the density bonus. The density bonus is most prized because it allows developers to build more housing units per unit of land than is allowed by existing municipal zoning regulations. Essentially, the density bonus gives the developer free lots upon which to build houses. The density bonus is among the most generous of the government subsidies because the developer is not constrained by local zoning restrictions on the number of houses that can be built on a parcel, and up to 75% of the housing erected need not be affordable; ¾ of the project can consist of houses priced at any amount the builder speculates the market will bear. Only 25% of the housing need be affordable by LMIH definition. The intent is to create neighborhoods with a mix of high-end and more modest homes, with little uninhabited space between them.
Buyer Eligibility: Qualified applicants for the purchase of LMIH affordable housing must be employed, with sufficient earnings to pay for mortgage, taxes, and homeowner’s insurance with no more than 30% of household income. Housing price qualifying for purchase by eligible applicants is proportional to the targeted Annual Median Household Income (AMI). Some assistance may be available to meet this requirement. The LMIH Act provides government-subsidized housing for households earning up to 120% of the AMI in their geographic region. It is the household AMI that determines eligibility for purchase of LMIH-subsidized housing. A comparison of the AMI for the Chariho towns and Exeter with that for the entire state is given in Table 1.
Table 1
Income Characteristics for the Chariho Towns and Exeter1
| Town | Population | Median Household Income(2) | Median Family Income(3) | Family Poverty Level |
|---|---|---|---|---|
| Charlestown | 7,827 | $70,969 | $81,696 | 1.8% |
| Richmond | 7,708 | $72,819 | $79,762 | 1.9% |
| Hopkinton | 8,188 | $71,104 | $81,121 | 0.4% |
| Exeter | 6,045 | $98,438 | $111,121 | 2.1% |
| Statewide | 1,052,567 | $54,902 | $70,663 | 8.4% |
1(Source of data: U.S. Census Bureau, American FactFinder, Selected Economic Characteristics, 2010; see also Appendix I and II).
2When all household incomes are ranked from high to low, the median income is that at the center, with an equal number above and below. Since averages are likely to be skewed by values at the extremes, the median is thought to be a better indicator of the population as a whole.
3Family Income differs from Household Income in that the latter includes unrelated occupants.
Income eligibility is set by the U.S. Department of Housing and Urban Development (HUD), based on U.S. census data. The Chariho towns and Exeter fall into a collection of 33 RI municipalities in which the AMI for a household of 4 was determined by HUD to be $74,500 in 2011. Since households at 120% AMI are LMIH-eligible, the maximum qualifying income for a household of 4 is $89,400, which would allow purchase of LMIH-subsidized housing valued at about $366,158 (Appendix III).
LMIH Program Evaluation
Specific Aims: The objectives at the conception of the project were as follows:
1. Has the LMIH program succeeded in relieving housing stress among residents of the host towns? Data should include:
(a) A list of approved LMIH projects in each town, along with the date of approval and projected date of completion;
(b) Designation of the project as non-profit or for-profit construction, and percent dedicated to LMIH-affordable housing vs percent designated to market rate homes;
(c) Indication of household income, as % of Area Median Income, targeted by the affordable housing component of the project;
(d) The current status of each project (percent completion), percent occupancy of completed units, and a possible explanation for any vacancies;
(e) Marketing strategies used to recruit occupants of the LMIH units;
(f) Immediate prior residency (city and state) of households occupying LMIH units;
(g) The estimated cost to each town for the housing built through the density bonus awarded to developers of LMIH. A formula for estimating such costs per unit in Charlestown is provided at this link: https://charlestowncitizens.org/cost-of-development-calculator/ The formula is easily modified to reflect values specific to each town.
2. Is there evidence from a comparison of successful projects with those stalled that might suggest strategies to avoid delay and promote success with future projects?
3. What might account for any regional differences observed for the demand for LMIH units?
4. What percentage of year-round housing has an assessed value within the limit eligible for purchase via LMIH at 80, 100, and 120% of Area Median Income for households of 2 and 4?
5. What specific changes to LMIH policy does analysis of these data suggest for each of the towns studied?
Collection of data from the four towns revealed a smaller population of projects at or near the final stage of approval than had been anticipated which, in addition to the limited availability of resources, reduced the scope of the study. Most of the questions are answered below.
Methods: In January 2012, the Charlestown Planning Commission authorized an analysis of performance of the LMIH Act of 2004 (RIGL 45-53-2) for the Chariho towns (Charlestown, Richmond, and Hopkinton) and Exeter. Planners for each of these four towns were notified of the specific aims of the study, and recruited to participate by supplying data from their respective towns pertinent to the specific aims (Appendix IV). A part-time summer intern was hired to help gather and collate data from the four towns. Data for Charlestown were retrieved from the files in its Planning Department. Data for the other three towns were supplied by the respective Town Planner (Appendix V – VII).
Only those projects which had met with final approval, or are awaiting application from the developer for final approval, are included in the study. Excluded are a number of incomplete proposals, proposals withdrawn in various stages of review as a result of conflicts with state regulations (e.g., CRMC, DEM, Land Use Plan 2025, preservation of archaeological sites), those in litigation over such conflicts, and those withdrawn to pursue an alternative land use plan more advantageous to the applicant. It is not uncommon for an applicant to use an LMIH proposal as leverage to gain relief from regulations constraining the applicant’s preferred land use. While such proposals appear on the docket for review, they are never realized, offer no insight into an analysis of LMIH performance, and are excluded from the present study.
Data reported below for each of the four towns was forwarded to, and verified by, the respective Town Planner. The report is to be submitted to the Charlestown Planning Commission for approval, then to be forwarded to the Charlestown Town Council and other interested parties. The author is solely responsible for its contents.
Results: A summary of results for LMIH projects in each of the four towns is shown in Tables 2-5. The affordable housing component of each project is designated “AH”.
Table 2
Summary of Approved LMIH Projects in Charlestown
APPROVED PROJECTS AH Units Market Units %AH Status
Village Farm
Feb, 20082@80%AMI
2@100%AMI
28@120%AMI24 57 12 AH units built
4 AH units vacant
2 Market units built
(25% complete)Habitat for Humanity
April, 20082@60%AMI none 100 occupied
Edwards Lane
Sept, 20075@80%AMI
3@120%AMInone 100 no activity until new developer was assigned in 2012
Eight additional owner-occupied homes qualify as AH because they are deed-restricted, but are not shown above because they were not built with LMIH subsidies. Charlestown is credited with 69 occupied AH units, 53 of which are group-home beds (Appendix VIII). One project not shown (Botka Woods) is in litigation. No LMIH application has been denied by the Charlestown Planning Commission.
Table 3
Summary of Approved LMIH projects in Richmond
| APPROVED PROJECTS | AH Units | Market Units | %AH | Status (to be constructed) |
|---|---|---|---|---|
| Altamonte Ridge | 6@50%AMI 7@60%AMI 10@80%AMI 30@120%AMI | none | 100 | Approved by SHAB(1); awaits application for final approval |
| Fox Run (Condominiums) | 25 @ mix of up to 120% AMI | 75(2) | 25 | Awaits application for final approval |
1State Housing Appeals Board (SHAB) overruled rejection of the project by the town.
2Market rate units (all 2 bedroom condos) were forgiven payment of school impact fees. Richmond is credited with 55 occupied AH units, 34 of which are group-home beds (Appendix VIII).
Table 4
Summary of Approved LMIH Projects in Hopkinton
| APPROVED PROJECTS | AH Units | Market Units | %AH | Status |
|---|---|---|---|---|
| Saugatucket Springs Aug 2005 | 53@50%AMI | none | 100 | 100 % completed and occupied (all rentals) |
| Canonchet Woods (Cardinal Lane) Mar, 2007 | 20@120%AMI | 33 | 38 | 10% completed and 2 AH units occupied |
| Rockville Mills Nov, 2010 | 14@50%AMI | none | 100 | just completed and recruiting occupants |
Hopkinton is credited with 222 occupied AH units, 190 of which are for the elderly and 27 of which are group-home beds (Appendix VIII). Two projects not shown (Clarks Falls and Brushy Brook) are in litigation.
Table 5
Summary of Approved LMIH Projects in Exeter
| APPROVED PROJECTS | AH Units | Market Units | %AH | Status |
|---|---|---|---|---|
| Deer Brook Via SHAB ruling court approved in June, 2005 | 31 | 99 | 24 | nearing completion Occupied Units: 24 @ 80% AMI 3 @ 100% AMI 60 market units sold |
Exeter is credited with 54 AH units, 24 of which are group-home beds (Appendix VIII).
In Charlestown, the Edwards Lane project made no progress over five years, during which time it lost an existing AH home to foreclosure. It has recently been rescued by a pair of different developers, who have been before the Planning Commission with preliminary plans that show good prospects for success, so the project was included in Table 2. Of 32 AH units proposed for Village Farm, 12 have been built, 4 of these are vacant. The AH component of the project is about 40% completed after 4 years, and the entire development is only 25% completed.
In Richmond, both projects await application from the developer for final approval. It seems reasonable to speculate that market conditions are a likely cause for delay.
In Hopkinton, the Rockville Springs project earned favorable publicity upon its completion this past summer, and is now recruiting applicants for occupancy, with preference given to current Hopkinton residents. The Saugatucket Springs project has been completed, and its 53 AH rental units are fully occupied by the elderly. The Canonchet Woods project is 10% complete after 5 years, with only 2 AH units occupied.
In Exeter, the Deer Brook project is nearing completion, with 27 of the proposed 31 AH units occupied, and 60 of the planned 99 units of market-rate homes sold. The AH component of Deer Brook is primarily at 80% AMI.
There is insufficient data to explain with confidence the varying degrees of success for these projects. Deer Brook has nearly filled its LMIH units with clients mostly at 80% AMI, as has Saugatucket Springs with clients at 50% AMI. The less successful Village Farm and Canonchet Woods projects target clients primarily at 120% AMI. It may be that success is linked to targeting clients at the lower end of the AMI scale. Note that over half of all occupied LMIH units in the four towns are rental units for clients at 50% AMI, in an age-restricted development for the elderly (Saugatucket Springs). While the overall sample size is small, these data suggest that a focus on housing for clients at or below 80% AMI might more effectively meet market interest in LMIH housing than would LMIH subsidized home ownership for clients at 100-120% AMI.
Analysis of Need: In the interest of all taxpayers, as well as in the interest of the intended beneficiaries, enactment of government subsidized programs should be subject to a timely assessment of performance in meeting the stated goals. The author is not aware of any such assessment of the performance of the current LMIH Act, which has been in effect since 2004. While the sample size of LMIH-subsidized housing in the four towns represented in this report is too small to make broad generalizations about LMIH performance overall, it is adequate to provide some insights into both need and the potential impact of competition from similarly affordable conventional housing.
The stated legislative intent of the LMIH Act is to assure that “each city and town provide opportunities for the establishment of low and moderate income housing” (RIGL 45-53-2), and that “The proposed development is consistent with local needs as identified in the local comprehensive community plan” (RIGL 45-53-4). “Consistent with local needs” is defined as “reasonable in view of the state need, considered with the number of low income persons in the city or town affected…”(RIGL 45-53-3).
Ignoring the distinction between local needs and local demand, we might ask, “Did the LMIH projects respond to interests in the towns in which the housing was built?” Of the monitoring agents who responded to requests for prior residency of occupants of LMIH, we obtained the data shown in Table 6 (Appendix VII and IX). Of the 92 entries shown, the prior residence of 25 (27%) was in the same town as the LMIH housing they now occupy. However, the majority came from the same or an abutting town, and the previous address of all but 1 was in RI. Occupancy may not have met local interests in the strictest sense, but virtually all those who benefited from LMIH were Rhode Island residents. While we can say Rhode Islanders benefitted, we have yet to establish evidence of need.
Table 6
Prior Residence of Occupants of LMIH
| Location of LMIH Units | Same Town | Abutting Town | Elsewhere |
|---|---|---|---|
| Charlestown: 10 units | 2 | 3 | 5 |
| Hopkinton: 55 units | 20 | 29(1) | 6(1) |
| Exeter: 27 units | 3 | 11 | 13 |
1 Data provided for Hopkinton did not allow accurate tabulation: 20 of 55 are from Hopkinton, fewer than 29 are from abutting towns, and more than 6 are from elsewhere. Of the 92 entries shown, all but 1 were relocated from municipalities in RI.
It is often stated that LMIH is needed to provide affordable housing for first responders and municipal employees who can no longer afford to live in the town where they work. Evidence bearing on this claim was sought from the record for Charlestown municipal employees (requests for such records from the other towns were, disappointingly, not successful). From a list of the salaries of 59 current Charlestown municipal employees (exclusive of teachers), paired with the town in which each lives (Appendix X), it can be seen that about 1/3 live in Charlestown and most (81%) live in Charlestown or an abutting town. From a ranking of these salaries (Appendix X) it can be determined that the median salary for the group as a whole is $55,188. The median for those living in Charlestown is 25% below the median for all, for those living in abutting towns it is 18% below, and for those living beyond these communities it is12% above (Table 7).
Table 7
Residence and Median Salary of Charlestown Municipal Employees
| Residence | Number | Median Salary | % of Median for All |
|---|---|---|---|
| Charlestown | 19 | $41,355 | 75 |
| Abutting Towns | 29 | 45,524 | 82 |
| Outside the Above | 11 | 61,624 | 112 |
| All Employees | 59 | 55,188 | 100 |
These data indicate that first responders and municipal employees at the lower end of the pay scale can, and do, afford to live in the town where they work. Indeed, the more distant the residence from work, the higher the salary, suggesting that those who live further away do so, in part, because they can better afford the added cost of commuting.
Additional evidence for the affordability of housing in Charlestown was obtained from a pairing of the purchasing power under LMIH guidelines with the full assessed value of Charlestown’s inventory of conventional housing. While it seems a given that LMIH subsidies for households earning below 80% AMI fulfill true need, the same is not evident for households at or above 80% AMI. Pairings of inventory with income indicate that inventory is quite adequate to provide opportunities for the LMIH-eligible worker in the 80-120% AMI range to buy a home. One fourth of the general housing inventory in Charlestown is assessed at an LMIH-eligible value for purchase at 80% AMI, and almost 2/3 is LMIH-eligible for purchase at 120% AMI (Table 8).
Table 8
Inventory of Housing Affordable by LMIH Pricing Limits in Charlestown
LMIH Housing Eligibility1 Comparable Housing Inventory2
| AMI for 4 | Income Limit | LMIH Housing Limit | Number | Percent |
|---|---|---|---|---|
| 120% AMI | $89,400 | $366,158 | 2866 | 64% |
| 100% AMI | 74,500 | 303,431 | 2125 | 47% |
| 80% AMI | 59,600 | 240,755 | 1181 | 26% |
1 LMIH values are as of 11/10/2011 (Appendix III).
2 All single family homes, residential condos, and mobile homes as of 09/20/2012 (Appendix III).
Another indicator of affordability of housing in the general inventory is the extent to which homes are owner-occupied, and degree to which the owners are burdened by ownership costs. Of all housing occupied year-round in Charlestown, 84% is owner-occupied, and 85% of all residents live in an owner-occupied home (Table 9). Additionally, almost 2/3 of homeowners met the LMIH guideline for cost of ownership (no more than 30% of household income) used in determining LMIH eligibility. The results shown in Tables 8 and 9 are contrary to the proclaimed need for LMIH-subsidized housing for households earning 80-120% AMI in Charlestown.
Table 9
Housing Characteristics for Charlestown
| Total Units | Seasonal Units | Occupied Units | Owner Occupied(1) | Rental Units |
|---|---|---|---|---|
| 5142 | 1648 | 3247 | 2720 | 527 |
| % of Total: | 32% | 63% | ||
| % of Occupied: | 84% | 16% |
1Year-round housing.
Mortgage Status: Of owner-occupied units, 29% held no mortgage, and 64% of the mortgage holders paid less than 30% of monthly income for cost of home ownership.
Of 7827 residents, 6660 (85%) live in owner-occupied homes (Appendix XI).
A similar evaluation was made for owner-occupied housing in the other three towns, and the results are compared with those for Charlestown in Table 10.
Table 10
Owner-Occupied Housing and Ownership Cost Burden
| Town | Occupied Housing Units (Total) | Owner Occupied | Mortgaged Units(1) | Ownership Costs below 30% of Income(2) | Population in Owner-occupied Home |
|---|---|---|---|---|---|
| Charlestown (% of Total) | 3247 (100) | 2720 (84) | 1916 (59) | 64% | 85% |
| Richmond (% of Total) | 2779 (100) | 2499 (90) | 2022 (73) | 54% | 90% |
| Hopkinton (% of Total) | 3196 (100) | 2551 (80) | 1950 (61) | 55% | 83% |
| Exeter (% of Total) | 2319 (100) | 1992 (86) | 1504 (65) | 66% | 89% |
1 For Charlestown, Richmond, Hopkinton, and Exeter, 30%, 19%, 24%, and 24% of owner-occupied homes are mortgage free, respectively (see Appendix XI).
2 Values are shown as a percent of the pool for homes with a mortgage.
Along with the data shown in Table 1, the results in Tables 9 and 10 indicate that the population of all four towns is relatively prosperous, and a need for government-subsidized home ownership for this population is not evident.
Discussion: The LMIH Act is intended to meet the housing needs of each community in RI, but those needs have never been assessed. Instead, we have a law by which need is arbitrarily set at 10% of the total housing inventory, with only construction of government subsidized-housing counted toward the 10%. To meet its objectives, the law contains a provision that awards developers lots on which they would otherwise be forbidden to build by local zoning ordinances and long-standing comprehensive land use plans approved at both the local and state level. There is no accounting for the inventory of existing housing that the average worker could afford to buy, or for preservation of the character of the community. Not surprisingly, proposals for LMIH housing are often given a hostile reception, especially in towns that value their rural character, and are vulnerable to environmental pollution from exceeding the carrying capacity of the land. The purpose of this study was to examine the performance of the LMIH Act in four rural towns. Evidence in support of imposing such high density housing on reluctant rural communities is overwhelmed by evidence to the contrary.
Population in the four towns is comparable, and population density indicates the degree to which these four towns are rural (Table 11).
Table 11
A Comparison of Population Densities1
| Town | Population | Area | Population Density |
|---|---|---|---|
| Charlestown | 7,827 | 59.3 sq miles | 132/sq mile |
| Richmond | 7,708 | 40.8 sq miles | 189/sq mile |
| Hopkinton | 8,188 | 44.1 sq miles | 186/sq mile |
| Exeter | 6,045 | 58.4 sq miles | 104/sq mile |
| Narragansett | 15,868 | 37.8 sq miles | 420/sq mile |
| Cranston | 80,392 | 29.9 sq miles | 2689/sq mile |
1Data from town websites.
Median household income is also comparable for three of the four towns, but about 35% greater for Exeter (Table 1). Family poverty levels are less than ¼ that for the state as a whole. The four towns are relatively prosperous (Tables 1, 9, and 10). Few of the proposed LMIH projects have reached the stage for final approval (not all data shown), and fewer still have been built out (Tables 2-5). LMIH projects are stalled by contentious litigation, uneven interest in LMIH housing (as indicated by lack of progress at Village Farm and Canonchet Woods), and tough competition from current housing costs on the open market (Table 8). Variation in performance suggests that LMIH might more successfully provide housing for those in need with projects targeting clients below 80% AMI. The results at Saugatucket Springs suggest a greater emphasis on rental units might improve the success rate. LMIH rentals might logically include rehabilitation of existing properties within village centers, where supporting services are more readily available to the client.
Charlestown employees who live in town have the lowest median income as a group, and wages rise the further the employee lives outside of Charlestown (Table 7). These findings are exactly opposite what one would predict from the claim that a housing need arises from the inability of first responders and municipal employees to live in the town where they work. Unfortunately attempts to obtain additional such data from the other towns in the study were unsuccessful. Given the data at hand, results contradict a need for subsidized housing to meet the needs of municipal employees. Consistent with this interpretation, affordable housing in the true sense (housing the average worker can afford to buy) is plentiful in Charlestown. Some 64% of Charlestown’s housing inventory is assessed in the price range for LMIH housing, 26% at the 80% AMI level (Table 8). With the LMIH requirement that no more than 30% of income be dedicated to mortgage, taxes, and insurance, these homes could be purchased with a conventional mortgage and no deed restrictions. The burst of the housing bubble effectively competes with LMIH as a source of affordable housing. Indeed, 84% of year-round housing in Charlestown is owner occupied, and 85% of the people residing in Charlestown live in owner-occupied homes. These statistics tell us quite clearly that housing in Charlestown, by anything but LMIH standards, is quite affordable without government intervention. Given the turmoil over application of the density bonus to build high-density LMIH housing in rural communities, and the paucity of evidence in support of the need for LMIH housing in these communities, the law as it applies to rural RI should be amended or repealed.
A critical area for further study is the establishment of more equitable terms for LMIH eligibility. Estimating the need for subsidized housing is confounded by the simplistic criterion employed, namely, annual household income. An example of the inadequacy of this measure of eligibility is illustrated by comparison of purchasing power of three couples equally eligible for LMIH with an identical gross income of $71,500. The first is a self-employed working couple, the second a state employee with a stay-at-home partner, and the third a retired couple with Social Security income, recently required to initiate minimum withdrawals from a million-dollar IRA savings account. All three couples claim $71,500 gross income, but their purchasing power after expenses, and their need for housing assistance, are anything but equal (Table 12). Ignoring assets other than income in assessing eligibility seems particularly blind to a needs assessment. An equitable metric would re-define eligibility by adjusting for these disparities.
This report is focused primarily on home ownership. Since there was only one occupied project consisting of rental units, there was insufficient data for comparisons of performance of LMIH in promoting the availability of rental properties. However, the success of that one project (Saugatucket Springs at 50% AMI) suggests a promising direction for future efforts.
This report was prepared for the Charlestown Planning Commission
by George Tremblay, Planning Commission member
first draft submitted 19 September 2012
for review and discussion by the Planning Commission on 26 September 2012
Revised 27 September 2012
Revision submitted to the Charlestown Town Council 28 September 2012
Revision and Appendices to be Posted on Town of Charlestown Website
Acknowledgements:
Information made available by the Planners of each of the four towns is gratefully acknowledged, as is the additional help of Ashley Hahn Morris, Mary Goff, and Bruce Lofgren (Charlestown Town Planner, Assistant to the Planner, and Planning Intern, respectively) in gathering and collating the data necessary to prepare the report. Errors of analysis and interpretation are solely those of the author.
Table 12
Couples Eligible for LMIH At $71,500 Income
| Self-Employed | State-Employed | Retired | |
|---|---|---|---|
| Wages(1) | $71,500 | $71,500 | ----0---- |
| Social Security(2) | (11,440) | (5,720) 5,720 | $29,500 |
| Pension Fund (IRA)(3) | (10,010) | 6,435 (3,575) | 42,000 |
| Health Insurance | (14,000) | 14,000 | (3,100) |
| Sick Days(4) | ( 2,750) | 2,750 | |
| Holidays(5) | ( 2,200) | 2,200 | |
| Vacation Pay(6) | ( 2,750) | 2,750 | |
| Net Income | $28,350 | $96,060 | $68,400(7) |
1 Gross income.
2 Estimated at 16% of gross income.
3 14% of income for state employees: 9% from state, and 5% from employee.
4 Assumed 10 working days per year @ $275/day for $71,500 income.
5 Assumed 8 per year @ $275/day for $71,500 income.
6 Assumed two weeks vacation pay @ $275/day for 10 days.
7 Retiree income = $29,500 in Social Security income + $42,000 from 4.2% withdrawals from a $1,000,000 IRA account at age 71. Medicare value not added to net wages.
List of Appendices
I. American FactFinder (AF) DP03: Selected Economic Characteristics, 2006-2010 American Community Survey 5-Year Estimates (for Chariho towns and Exeter).
II. Ditto, for the entire State of Rhode Island.
III. (a) 2011 Rhode Island Income Limits for LMIH Households.
(b) 2011 Purchase Prices for LMIH Households.
(c) Inventory of Charlestown housing assessed within LMIH purchasing power as of 09/20/2012, per Tax Assessor Spreadsheet.
IV. Letter to planners of four towns describing the LMIH project and its specific aims.
V. Correspondence from planner in Richmond on status of LMIH projects.
VI. Ditto for Hopkinton.
VII. Ditto for Exeter.
VIII. (a) Status of LMIH inventory for each RI community as of 08/15/2012, as recognized by RI Housing Authority.
(b) details of (a) specifically for the Town of Charlestown.
IX. Location of prior residency for occupants of LMIH housing in Charlestown.
X. (a) Salary and residence of municipal employees of Charlestown.
(b) Estimation of median salary for each category of municipal employee.
XI.
(a) AF 2010 Census details on housing tenure and mortgage status for Charlestown.
(b) AF QT-H2 Tenure, Household Size, and Age of Householder: 2010 Census Summary File 1.