2025 -- S 0717

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LC002177

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2025

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A N   A C T

RELATING TO TOWNS AND CITIES -- ZONING ORDINANCES

     Introduced By: Senators Gu, DiMario, Mack, Bissaillon, Kallman, and Burke

     Date Introduced: March 07, 2025

     Referred To: Senate Housing & Municipal Government

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 45-24-46.1 of the General Laws in Chapter 45-24 entitled "Zoning

Ordinances" is hereby amended to read as follows:

     45-24-46.1. Inclusionary zoning. [Effective January 1, 2025.]

     (a) A zoning ordinance requiring the inclusion of affordable housing as part of a

development shall provide that the housing will be affordable housing, as defined in § 42-128-

8.1(d)(1); that the affordable housing will be of comparable size and quality to the market-rate

housing; that the affordable housing will constitute not less than fifteen percent (15%) of the total

units proposed for the development; and that the units will remain affordable for a period of not

less than thirty (30) years from initial occupancy enforced through a land lease and/or deed

restriction enforceable by the municipality and the state of Rhode Island. A zoning ordinance that

requires the inclusion of affordable housing as part of a development shall specify the threshold in

which the inclusion of affordable housing is required, but in no event shall a minimum threshold

triggering the inclusion of affordable housing be higher than ten (10) dwelling units. The total

number of units for the development may include less than fifteen percent (15%) affordable units

after the density bonus described in subsection (c) of this section is determined.

     (b) A zoning ordinance that includes inclusionary zoning may provide that the affordable

housing must be built on-site or it may allow for one or more alternative methods of production,

including, but not limited to: off-site construction or rehabilitation; donation of land suitable for

development of the required affordable units; and/or the payment of a fee in lieu of the construction

or provision of affordable housing units.

     (c) Density bonus, zoning incentives, and municipal subsidies. For all projects subject

to inclusionary zoning, subject to applicable setback, lot width, or frontage requirements or the

granting of relief from the same, a municipality shall allow the addition of one market rate unit for

each affordable unit required and the minimum lot area per dwelling unit normally required in the

applicable zoning district shall be reduced by that amount necessary to accommodate the

development. Larger density bonuses for the provision of an increased percentage of affordable

housing in a development may be provided by a municipality in the zoning ordinance. The total

number of units for the development shall equal the number originally proposed, including the

required affordable units, plus the additional units that constitute the density bonus. Local

regulations shall provide for reasonable relief from dimensional requirements to accommodate the

bonus density under this section. A municipality shall provide, and an applicant may request,

additional zoning incentives and/or municipal government subsidies as defined in § 45-53-3 to

offset differential costs of affordable units. Available zoning incentives and municipal government

subsidies may be listed in the zoning ordinance, but shall not be an exclusive list.

     (d) Fee-in-lieu. To the extent a municipality provides an option for the payment of a fee-

in-lieu of the construction or provision of affordable housing, and an application seeks to utilize

fee-in-lieu, the use of such fee shall be the choice of the developer or builder applied on a per-unit

basis and may be used for new developments, purchasing property and/or homes, rehabilitating

properties, or any other manner that creates additional low- or moderate-income housing as defined

in § 45-53-3(9). Notwithstanding anything to the contrary in this section, when the size of a

development triggers a requirement in a zoning ordinance for one or more affordable housing units,

the unit(s) shall be created. Payment of a fee in lieu of the construction or provision of affordable

housing units is permissible only to pay for fractions of units (i.e. when only a fraction of one full

unit is required or for fractions of units beyond one or more full units).

     (1) Eligibility for density bonus. Notwithstanding any other provisions of this chapter, an

application that utilizes a fee-in-lieu, off-site construction or rehabilitation, or donation of land

suitable for development of the required affordable units shall not be eligible for the density bonus

outlined in this section.

     (2) An application that seeks to utilize a fee-in-lieu of the construction or provision of

affordable housing must be reviewed by the planning board or commission and is not eligible for

administrative review under the Rhode Island Land Development and Subdivision Review

Enabling Act of 1992, codified at §§ 45-23-25 — 45-23-74.

     (3) Amount of fee-in-lieu. For affordable single-family homes and condominium units, the

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per-unit fee shall be the difference between the maximum affordable sales price for a family of four

(4) earning eighty percent (80%) of the area median income as determined annually by the U.S.

Department of Housing and Urban Development and the average cost of developing a single unit

of affordable housing. The average cost of developing a single unit of affordable housing shall be

determined annually based on the average, per-unit development cost of affordable homes financed

by Rhode Island housing and mortgage finance corporation (RIHMFC) over the previous three (3)

years, excluding existing units that received preservation financing. In order to pay for a fraction

of an affordable single-family home or condominium unit, the fraction will be multiplied by the

per-unit fee for the development. The per-unit fee shall be the difference between the maximum

affordable sales price for a family of four (4) earning eighty percent (80%) of the area median

income as determined annually by the U.S. Department of Housing and Urban Development and

the average cost of developing a single unit of affordable housing. The average cost of developing

a single unit of affordable housing shall be determined annually based on the average, per-unit

development cost of affordable homes financed by Rhode Island housing over the previous three

(3) years, excluding units that received preservation financing.

     (i) Notwithstanding subsection (d)(3) of this section, in no case shall the per-unit fee for

affordable single family homes and condominium units be less than forty thousand dollars

($40,000).

     (4) Use of fee-in-lieu. The municipality shall deposit all in-lieu payments into restricted

accounts that shall be allocated and spent only for the creation and development of affordable

housing within the municipality serving individuals or families at or below eighty percent (80%)

of the area median income. The municipality shall maintain a local affordable housing board to

oversee the funds in the restricted accounts and shall allocate the funds within three (3) years of

collection. The municipality shall include in the housing element of their local comprehensive plan

and shall pass by ordinance, the process it will use to allocate the funds.

     (e) As an alternative to the provisions of subsection (d), the municipality may elect to

transfer in-lieu payments promptly upon receipt or within the three-year (3) period after receipt. A

municipality shall transfer all fee-in-lieu payments that are not allocated within three (3) years of

collection, including funds held as of July 1, 2024, to RIHMFC for the purpose of developing

affordable housing within that community.

     (f) Both the municipalities and RIHMFC shall report annually with the first report due

December 31, 2024, to the general assembly, the secretary of housing, and the housing resources

commission the amount of fees in lieu collected by community, the projects that were provided

funding with the fees, the dollar amounts allocated to the projects, and the number of units created.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES -- ZONING ORDINANCES

***

     This act would require that the inclusion of affordable housing as part of a development

shall provide that the affordable housing will be of comparable size and quality to the market rate

housing. If there is a requirement for one or more affordable housing units triggered by the size of

a development, the units shall be created. The average cost of developing a single unit of affordable

housing would be determined annually based on the average, per unit development cost of

affordable homes financed by Rhode Island housing over the previous three (3) years.

     This act would take effect upon passage.

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