2026 -- S 3159

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LC006053

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2026

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- RESIDENTIAL REUSE

INCENTIVE ACT

     Introduced By: Senators Bissaillon, LaMountain, and DiMario

     Date Introduced: March 27, 2026

     Referred To: Senate Housing & Municipal Government

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapter:

CHAPTER 64.35

RESIDENTIAL REUSE INCENTIVE ACT

     42-64.35-1. Short title.

     This chapter shall be known and may be cited as the “Residential Reuse Incentive Act.”

     42-64.35-2. Definitions.

     For purposes of this chapter:

     (1) “Adaptive reuse” means the conversion of an existing structure from the use for which

it was constructed to a new use by maintaining elements of the structure and adapting the elements

to a new use.

     (2) “Affordable housing” means “affordable housing” as defined by § 42-128-8.1.

     (3) “Applicant” means a developer, owner, or tenant, or both, applying for a residential

reuse incentive under this chapter.

     (4) “Construction worker” means any laborer, mechanic, or machine operator employed

by a contractor or subcontractor in connection with the construction, alteration, repair, demolition,

reconstruction, or other improvements to real property.

     (5) “Corporation” means the Rhode Island housing and mortgage finance corporation

established pursuant to chapter 55 of title 42.

     (6) “Developer” means a person, firm, business, partnership, association, political

subdivision, or other entity that proposes to divide, divides, or causes to be divided real property

into a subdivision or proposes to build or builds a building or buildings or otherwise improves land

or existing structures, which division, building, or improvement qualifies for benefits under this

chapter.

     (7) “Development” means the improvement of land through the carrying out of building,

engineering, or other operations in, on, over, or under land, or the making of any material change

in the use of any buildings or land for the purposes of accommodating land uses.

     (8) “Hard construction costs” means the direct contractor costs for labor, material,

equipment, and services associated with an approved project, contractor’s overhead and profit, and

other direct construction costs.

     (9) “Health or education worker” means an individual who is employed on a full-time or

part-time basis in the field of education or healthcare by a public or private employer located within

the State of Rhode Island including, but not limited to, employment as a teacher, instructional staff

member, school support staff member, nurse, or medical technician.

     (10) “Housing land bank” means the housing land bank program established at the

corporation pursuant to § 42-55.2-1.

     (11) “HUD” means the United States Department of Housing and Urban Development.

     (12) “Mixed use” means a development comprising both commercial and residential

components.

     (13) “Project” means qualified residential reuse project defined in subsection (15) of this

section.

     (14) “Project financing gap” means the part of the total project cost that remains to be

financed after all other sources of capital have been accounted for to include, but not be limited to,

developer-contributed capital, which shall be defined through rules and regulations promulgated

by the corporation.

     (15) “Qualified residential reuse project” means a specific construction project or

improvement, including lands, buildings, improvements, real and personal property or any interest

therein, including lands under water, riparian rights, space rights and air rights, acquired, owned,

leased, developed or redeveloped, constructed, reconstructed, rehabilitated or improved,

undertaken by a developer, owner or tenant, or both, within a specific geographic area, meeting the

requirements of this chapter, as set forth in an application made to the corporation.

     (16) “Residential” means a development of residential dwelling units.

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     42-64.35-3. Establishment of program – Uses – Eligibility.

     (a) The residential reuse incentive program is hereby established as a program under the

jurisdiction and administration of the corporation. The program may provide low-interest loans,

subordinate debt, equity investments, or competitive program grants consisting of support to

qualified residential reuse projects meeting the requirements of this chapter. On an annual basis,

the corporation shall confer with the executive office of housing and the department of

administration regarding the availability of funds for the program.

     (b) To be eligible as a qualified residential reuse project, an applicant’s chief executive

officer or equivalent officer shall demonstrate to the corporation that:

     (1) There is a project financing gap that, after taking into account all available private and

public funding sources, the project is not likely to be accomplished by private enterprise without

receiving support under this chapter; and

     (2) The project fulfills the state’s policy objectives and priorities as set forth in section (d)

of this section.

     (c) In awarding support under this chapter, the corporation shall give priority to:

     (1) A project that shall utilize a real estate asset held by the housing land bank; or

     (2) A project for which the applicant demonstrates a partnership with and between an

employer or association of employers of health or education workers in need of housing, and a

labor union or association of labor unions representing the health or education workers, to provide

health or education workers with rental or homeownership opportunities.

     (d) Qualified residential reuse projects shall conform to the following standards and

requirements:

     (1) The project shall be multi-family residential or mixed-use development.

     (2) For adaptive reuse, the structure to be repurposed consists of at least fifteen thousand

square feet (15,000 ft2) in gross floor area.

     (3) At least twenty percent (20%) of the dwelling units offered for rent or for sale shall be

affordable housing, as defined in § 42-128-8.1, or, in the case of dwelling units for rent, at least ten

percent (10%) of the dwelling units in the project shall be housing for which the rent, heat, and

utilities other than telephone constitute no more than thirty percent (30%) of gross annual

household income for a household with fifty percent (50%) or less of area median income, adjusted

for family size, all as determined and certified by an approved monitoring agent pursuant to § 45-

53-3.2.

     (4) Where the budget for the hard construction costs of a project is in excess of twenty-five

million dollars ($25,000,000), all construction workers on that project providing services in

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connection with the project shall be paid in accordance with the wages and benefits required

pursuant to chapter 13 of title 37 (“ labor and payment of debts by contractors”) and all contractors

and subcontractors shall file certified payrolls on a monthly basis for all work completed in the

preceding month on a uniform form prescribed by the director of labor and training.

     (5) Where the budget for the hard construction costs of a project is in excess ten million

dollars ($10,000,000), the applicant shall ensure that one hundred percent (100%) of the hours

worked on the project shall be performed by all trade construction contractors and subcontractors

who have or are affiliated with an apprenticeship program as defined in 29 C.F.R. § 29 et seq., for

the craft employed. Additionally, the applicant shall ensure that all bidding documents for the work

to be performed on the project includes express and conspicuous language evidencing the

requirement found in this subsection. As part of its contract with the construction manager and/or

general contractor, the applicant shall require that not less than ten percent (10%) of the total hours

worked by the contractors’ and subcontractors' employees on the project are completed by

apprentices registered in the aforementioned apprenticeship programs.

     (6) The applicant shall demonstrate senior debt co-investment from a union pension fund

or co-mingled fund of union pension fund investments with a track record of successful investment

in both new construction and substantial rehabilitation of affordable housing.

     (7) The applicant shall ensure that any contractor and/or subcontractors on this project

shall:

     (i) Have all valid and effective registrations and/or licenses required to carry out their

construction contracts.

     (ii) Ensure that all craft labor employed on the project have completed at least an OSHA

ten (10) hour training course for safety established by the U.S. Department of Labor, Occupational

Safety & Health Administration.

     (iii) Comply with all state, federal and local laws including, but not limited to, providing

workers’ compensation insurance, prompt payment of wages and benefits, and proper classification

of workers and employees as employees as opposed to independent contractors.

     (A) Any person that does not have a current registration with the State of Rhode Island

contractors’ registration and licensing board and a properly filed notice of designation as an

independent contractor pursuant to § 28-29-17.1 shall be presumed to be an employee.

     (B) A person shall only be considered an independent contractor if, when the person is

performing work at the site the person is free from direct control and direction in connection with

completing the person's scope of work, both pursuant to the person's contract, if applicable, and in

the actual performance of the work.

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     (iv) Not hire and/or utilize any contractor or subcontractor that has:

     (A) Been debarred or suspended by any federal, state or local government agency or

authority in the past three (3) years;

     (B) Had any type of business, contracting or trade license, registration, or other certification

revoked or suspended in the past three (3) years; or

     (C) Been found in violation of any tax laws, prompt payment laws, wage and hour laws,

prevailing wage laws, environmental laws or others, where the result of the violation was the

payment of a fine, back pay damages or any other type of penalty in the amount of one thousand

dollars ($1,000) or more within the last five (5) years.

     42-64.35-4. Establishment of the fund -- Composition.

     (a) There is hereby established at the corporation a restricted account known as the

residential reuse incentive fund (the “fund”) in which all amounts appropriated for the program

created under this chapter and any returns on investments from the fund shall be deposited. The

fund shall be exempt from attachment, levy, or any other process at law or in equity and the

corporation may pay, reserve, and/or pledge money from the fund to provide competitive program

grants or loan or equity investments in qualified residential reuse projects.

     (b) The fund shall consist of:

     (1) Money appropriated in the state budget to the fund;

     (2) Money made available to the fund through federal programs or private contributions;

     (3) Repayments of principal and interest from loans made from the fund;

     (4) Proceeds from the sale, disposition, lease, or rental of collateral related to financial

assistance provided under this chapter;

     (5) Application or other fees paid to the fund to process requests for financial assistance;

     (6) Recovery made by the corporation on the sale of an appreciated asset in which the

corporation has acquired an interest under this chapter; and

     (7) Any other money made available to the fund.

     42-64.35-5. Applications -- Powers of corporation -- Reports.

     (a) An applicant seeking support as provided in § 42-64.35-3 shall submit a request to the

corporation pursuant to an application procedure prescribed by the corporation.

     (b) Any approval for funding under this chapter shall only be granted by the corporation

and shall require the concurrence of the secretary of housing.

     (c) The corporation may set the terms and conditions for support provided pursuant to the

provisions of this chapter. Subject to the provisions as provided in subsection (b) of this section,

any decision to grant or deny support lies within the sole discretion of the corporation.

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     (d) The corporation shall publish a report on the fund at the end of each fiscal year. The

report shall contain information on the commitment, disbursement, and use of funds allocated under

the fund. The report shall also, to the extent practicable, track the economic impact of projects that

have been completed using the fund. The report is due no later than sixty (60) days after the end of

the fiscal year and shall be provided to the speaker of the house of representatives, the president of

the senate, and the secretary of housing.

     42-64.35-6. Implementation guidelines, directives, criteria, rules, regulations.

     The corporation shall adopt implementation guidelines, directives, criteria, rules, and

regulations pursuant to chapter 35 of this title ("administrative procedures") as are necessary for

the implementation of the corporation’s responsibilities under this chapter and impose such fees

and charges as are necessary to pay for the administration and implementation of this program.

Rules and regulations shall permit projects receiving support under this chapter to:

     (1) Apply for and receive support from any other local, state, or federal program; and

     (2) Receive investment through federally-insured or credit-enhanced mortgage financing,

mortgage-backed securities, taxable bond financing, and other financing structures.

     42-64.35-7. Program integrity.

     Program integrity being of paramount importance, the corporation shall establish

procedures to ensure ongoing compliance with the terms and conditions of the program established

herein, including procedures to safeguard the expenditure of public funds and to ensure that the

funds further the objectives of the program.

     42-64.35-8. Sunset.

     (a) The provisions of this chapter shall sunset and expire on December 31, 2035.

     (b) No funding, credits, or incentives shall be authorized or authorized to be reserved

pursuant to this chapter after December 31, 2035.

     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 STATE AFFAIRS AND GOVERNMENT -- RESIDENTIAL REUSE

INCENTIVE ACT

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     This act would create a state program to provide loans, grants, or investments to convert

existing buildings into multi-family or mixed-use housing, including adaptive reuse projects. It

requires a share of units to be affordable and sets labor, wage, and apprenticeship standards for

larger projects. It also establishes a dedicated fund, oversight, and reporting, and sunsets the

program after 2035.

     This act would take effect upon passage.

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