LMI Housing Act May Allow Density to Become Developers’ Destiny

It is no secret that housing has been a hot button issue lately, both in Rhode Island and across the country. In recent years, Rhode Island lawmakers have sought to address the state’s housing shortage. In 2023, the General Assembly passed a significant package of housing bills aimed at increasing housing availability and reforming key aspects of land use law. A thorough overview of this legislative package is available in our summary.

One particularly critical element of the housing dilemma that Rhode Island faces revolves around affordability. Consequently, the legislature decided to impose low- and moderate-income (“LMI”) housing threshold requirements. Most cities and towns in Rhode Island must ensure that 10% of their permanent, year-round housing stock qualifies as LMI housing. More recently, the General Assembly has redefined and expanded the types of housing units that count towards this goal to include mobile and manufactured homes, and rental properties “secured with a federal government rental assistance voucher.”[1] While this expansion has aided municipalities in their quest to meet the 10% LMI housing requirement, several cities and towns fell short of this goal through the end of 2024.[2]

Because many municipalities are still working towards meeting the 10% LMI housing goal, city and town leaders and elected officials are particularly cognizant of LMI designated units within land development projects. As developers advocate for their projects across Rhode Island, city and town planning boards and city and town councils are negotiating over the volume of LMI units contained within their proposals.  Often, the inclusion of a certain percentage of LMI units in a proposed development is a key factor to the overall approval of a project. This is an effective tool for municipalities to use in furthering their progress towards satisfying the 10% LMI requirement.

The LMI requirement is also a tool from developers’ perspectives—one they have been utilizing often. Developers have leveraged their ability to assist municipalities in increasing the number of LMI units within their jurisdiction, thereby moving them closer to fulfilling the 10% LMI requirement. This often proves to be a key component of developers’ plans upon which they base their negotiations and proposals throughout the process of seeking approval for their projects.

Incentives for Developers Under the LMI Housing Act

Rhode Island law also provides greater incentives for developers who include a higher number of LMI units in their projects. Effective January 1, 2026, the Rhode Island Low and Moderate Income Housing Act (the “Act”) will require cities and towns that have not met the 10% LMI housing stock requirement to offer certain minimum incentives to developers including at least 25% LMI units in their projects.[3] The first incentive is a density bonus to qualifying projects,[4] allowing developers to exceed the number of units per acre ordinarily permitted under municipal zoning. The higher the percentage of LMI units in each project, the larger the density bonus, which helps developers spread some of their costs across more units and offset the economic effects that LMI units have on a given project.

The second incentive that municipalities must provide to qualifying development projects is less stringent parking requirements.[5] Projects that fall under the LMI Housing Act parameters are required only to provide one off-street parking space for each housing unit of up to two bedrooms. Historically, parking space requirements for all projects varied by municipality, with some cities and towns requiring more parking spaces per unit than others. Now, projects that qualify under the LMI Housing Act enjoy this generally lower and less burdensome requirement.

Another incentive that cities and towns are required to provide for developments proposed according to the requirements of the LMI Housing Act is a loosened limitation on the number of bedrooms per unit.[6] Under the Act, municipalities cannot limit the number of bedrooms per unit to anything less than three. This essentially provides the benefits of another density bonus to developers.

The final incentive that the LMI Housing Act provides is a prohibition on municipalities’ use of floor area requirements to limit project applications.[7] While projects must still comply with the Housing Maintenance and Occupancy code, this incentive eliminates another barrier that municipalities could otherwise use to limit development.

Massachusetts’ Action to Create Affordable Housing

Housing issues are not confined to Rhode Island and are prevalent in many jurisdictions. As such, many states have enacted and amended laws to create more housing and develop LMI housing. Often, these laws also create incentives for developers. One such example can be found in Massachusetts, where the legislature took action to catalyze multifamily housing development in communities served by the Massachusetts Bay Transportation Authority (the “MBTA”). To do this, the Massachusetts General Court passed the Economic Development Bond Bill of 2021, which amended the commonwealth’s zoning laws. The new law required each MBTA serviced community to designate at least one district, comprising of at least 50 acres of land, in which multifamily housing is permitted as of right. A complete analysis of that particular legislation, and its effects, can be found here. Much like the LMI Housing Act in Rhode Island, this MBTA zoning law in Massachusetts provides benefits both to municipalities seeking to increase their housing supply, and to developers looking to create new housing projects.

Conclusion

Overall, the LMI Housing Act takes a balanced approach in the endeavor to increase the stock of LMI housing in the state. It requires most cities and towns to increase their proportion of LMI housing to meet the 10% goal while also providing significant incentives to developers who will, in turn, assist the municipalities in reaching or exceeding the required LMI housing goals. Meanwhile, momentum to build LMI housing elsewhere shows no signs of slowing. Developers and municipalities should consult legal counsel to ensure compliance and to fully leverage the incentives and requirements established by their state or local jurisdictions.

[1] 45 R.I. Gen. Laws Ann. § 45-53-3 (West).

[2] RI Housing, Low & Moderate Income Housing by Community – 2024,

Low & Moderate Income Housing

[3] 45 R.I. Gen. Laws Ann. § 45-53-4(a) (West).

[4] 45 R.I. Gen. Laws Ann. § 45-53-4(c)(1)(A) (West).

[5] 45 R.I. Gen. Laws Ann. § 45-53-4(c)(1)(B) (West).

[6] 45 R.I. Gen. Laws Ann. § 45-53-4(c)(1)(C) (West).

[7] 45 R.I. Gen. Laws Ann. § 45-53-4(c)(1)(D) (West).

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