Town Uses Eminent Domain To Stop Private Affordable Housing Project

Johnston, Rhode Island, Mayor Joseph Polisena promised to "use all the power of government" to stop the privately financed 252-unit project.

Happy Tuesday, and welcome to another edition of Rent Free. This week's stories include:

• The housing policy implications of President Donald Trump's (possible) trade war with Canada and Mexico.
• Whether state legislatures will kill the "build-to-rent" boom
• How the Fair Housing Act came to protect your right to an emotional support parrot

But first, a story about how Rhode Island's new law intended to increase new housing construction is running into a very old power used to stop it.

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Rhode Island Town Using Eminent Domain To Stop Affordable Housing Project

The town of Johnston, Rhode Island, is going to extreme measures to prevent a privately financed affordable housing project from being built under the state's newly revamped density bonus law.

At a special meeting last Thursday, the Town Council authorized the use of eminent domain to seize a 31-acre site currently owned by developer Waterman Chenango LLC. The eminent domain resolution calls for creating a "municipal campus" on the site to replace its aging town hall, police station, and fire station.

The seizure would have the very much intended side effect of stopping the exiting owner from going forward with its current plan of turning the land into a 252-unit housing development.

Johnston's existing zoning code allows for medium-density residential development on the site in question. The owner had proposed to make use of recent changes to the state's decades-old Low and Moderate Income Housing Act to build even more units.

In 2023, the Rhode Island Legislature passed amendments to that state law to allow developers to build up to 12 units per acre on water- and sewage-connected parcels if all the units are "low- and moderate-income housing"—meaning rents are capped by a formula that incorporates family-size and area median income.

Projects that meet those income limits also receive relief from local minimum parking requirements and density restrictions. Localities are limited in their ability to turn down these projects so long as less than 10 percent of their housing units don't qualify as "low- and moderate-income housing."

The state law's density bonus was generous enough (and rent caps high enough) that Waterman Chenango was able to propose a 100 percent "affordable" project that required no tax subsidies.

The number of units they were proposing proved to be a major sticking point with Johnston Mayor Joseph Polisena.

Shortly after Waterman Chenango filed its development application, Polisena issued a public letter in which he promised to use "all the power of government" to stop the project.

"No one expects this land to sit idle forever. We're more than willing to support reasonable development, and single-family homes," said Polisena in his letter. "If you pivot in that direction, I can assure you the town will roll out the red carpet."

But new apartments on the site would create a "trifecta of chaos" from new traffic, new students, and drainage problems, the mayor said.

In that letter, Polisena said that he would challenge the constitutionality of Rhode Island's Low and Moderate Income Housing Act to stop the project if necessary.

A few weeks later, he was saying the town needed to take the land to replace its dilapidated public facilities.

"[The mayor's] primary purpose is clearly to block this project," says Kelley Morris Salvatore, an attorney representing Waterman Chenango. Plans for a municipal campus had "literally never been discussed publicly ever before" her clients proposed their project, she says.

She says that while they are still in the early stages of the eminent domain process, she presumes her clients will accept an "appropriate" amount of money to sell their land and forgo their housing project.

The U.S. Constitution says that governments can only seize private property for "public use" and they have to pay "just compensation" when they do.

A new town hall and police station would pretty clearly satisfy that "public use" requirement.

State courts have reliably struck down "pretextual" takings of property, where the government's stated "public use" rationale for seizing some land was not its actual reason for doing so. The U.S. Supreme Court recently declined to hear a case that might have given victims of seeming pretextual takings more protections from eminent domain.

Provided the town of Johnston is willing to pay just compensation for the land, it'll likely be able to stop Waterman Chenango's project. The only losers are the people who'd have lived in the new units and the taxpayers forced to pay for a "municipal campus" that might or might not materialize.

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The Housing Implications of Trump's (Maybe) Trade War

Last week, President Donald Trump announced that he'd apply a blanket 25 percent tariff on all imports from Mexico and Canada.

Whether these tariffs will actually go into effect, and whether they'll be as comprehensive as the president initially said, remains to be seen. It appears that the implementation of these tariffs will be at least temporarily paused after Canada and Mexico agreed to increased border security activity.

Homebuilders are still sounding the alarm.

On Friday, the National Association of Home Builders sent Trump a letter highlighting the cost-increasing consequences of tariffs on home prices.

"Builders rely on components produced abroad, with Canada and Mexico representing nearly 25 [percent] of building materials imports," wrote NAHB Board Chairman Carl Harris. The association said that 70 percent of softwood lumber comes from Canada and 70 percent of gypsum (used for drywall) comes from Mexico.

The costs of imported building materials have increased substantially since the beginning of the pandemic.

"Imposing additional tariffs on these imports will lead to higher material costs, which will ultimately be passed on to home buyers in the form of increased housing prices," said the association.

The NAHB issued a statement praising Trump for delaying tariffs on Monday.

The federal government has little direct control over state and local land use rules that do so much to limit housing construction and drive up housing costs. It nevertheless controls a lot of other policy levers that can make housing more (or less) expensive to build.

On the campaign trail, Trump and the GOP offered a number of positive-sounding policy proposals related to housing affordability—including allowing home construction on federal lands and reducing federal environmental regulations that increase building costs.

The risk was always that those elements of his agenda would be undercut by protectionist trade policies that raise building costs and immigration policies that result in much of the country's construction work force being deported.

In the first couple weeks of his presidency, it appears those latter, cost-increasing parts of his agenda are winning out.

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The Build-To-Rent Boom Collides With the War on Corporate-Owned Housing

Last week, Point2Homes, a part of property management software company Yardi, released a report showing a boom in the construction of new, single-family rental housing units.

Per the report, some 110,000 single-family rental units are under constructions nationwide. Nearly one-fifth of these units are being built in Texas, with significant numbers also being built in Arizona and Florida.

Before the Great Recession, it was typical for most single-family homes to be built for sale to owner-occupiers. Built-to-rent single-family housing was a marginal percentage of new homes being built each year.

The number of new single-family rentals has been climbing quickly in recent years, according to Mercatus Center Senior Affiliated Scholar Kevin Erdmann's May 2024 research brief on the topic.

Per Erdmann's numbers, built-to-rent single-family housing has gone from 3 percent to 4 percent of new single-family housing to over 10 percent in the last couple of years. The Point2Homes numbers show this trend is only accelerating.

Erdmann argues the rise of corporate-owned built-to-rent single-family home communities is the natural consequence of decades of policy that restrict new housing construction.

Zoning and land use rules have stymied developers from building infill rental apartments in existing cities. Post–Great Recession restrictions on mortgage credit have prevented owner-occupiers from financing new single-family homes. Enter large institutional investors, who are buying made-to-order, built-to-rent single-family subdivisions.

But the rise of corporate-owned single-family rentals hasn't been without controversy.

Politicians on the right and left have criticized institutional investors like Blackstone for buying up existing homes and pricing out traditional owner-occupiers.

It's a rare issue that unites Alexandria Ocasio-Cortez, J.D. Vance, and Texas Gov. Greg Abbott.

At the federal, state, and local levels, politicians are proposing policies that would either heavily tax corporate-owned housing or ban it outright.

Erdmann notes in a recent Substack that bills targeting corporate-owned single-family homes have been introduced in nine states, including booming build-to-rent states like Arizona and Texas.

"Builders are just starting to ramp up single-family neighborhoods that they are selling as a whole to investors. As I read them, these bills will kill it in the cradle," he writes.

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How the Fair Housing Act Created Emotional Support Parrots

I wrote the cover story for Reason's latest print issue about how the Fair Housing Act has been interpreted over the decades to protect a tenant's right to emotional support parrots.

The parrots in question are from a high-profile 2024 case in New York City, in which the U.S. Justice Department successfully sued a building cooperative over its eviction of a longtime resident because she kept three (reportedly quite noisy) emotional support parrots in her apartment.

The resident had claimed that she needed the parrots to help with her depression and anxiety. Thus, she was entitled to a "reasonable accommodation" from her building's antiparrot policies, as required by the Fair Housing Act.

The U.S. Attorney for the Southern District of New York agreed and forced the building to cough up a settlement totaling some $770,000.

Federal requirements that landlords make reasonable accommodation to their housing policies to ensure the disabled have equal access to housing dates back to the late 1980s.

As I explain in the piece, the universe of things that could be considered a "reasonable accommodation" has been expanded by federal regulatory guidance and fair housing lawsuits to include tenants' right to keep an "emotional support animal" (ESA) that would otherwise be prohibited by pet restrictions or no-pet policies.

In a few of these early fair housing cases establishing this right to an emotional support pet, the landlord in question is a real jerk. In a few others, the tenant is insisting on a truly unreasonable accommodation for a dangerous or unusual animal no one would want to live next to.

The main impact of grouping emotional support animal protections into the Fair Housing Act is less severe but the rise of sketchy online ESA letter mills that openly advertise their services as a way of getting around landlords' pet policies.

It's not a state of affairs that well serves either landlords or people who might legitimately require an emotional support animal. You can read all about it here.

Quick Links

• A new report from the Niskanen Center and the Institute for Progress proposes depriving large cities of affordable housing tax credits if they don't liberalize zoning rules for all housing projects.
• Legislators in New Mexico introduced a bill to repeal the state's ban on local rent control policies.
• Grants Pass, Oregon—the town that gave its name to the Supreme Court decision allowing local governments more freedom to sweep homeless encampments—has been sued again for sweeping a homeless encampment. Street Roots has the details.
• Inside air used to be hot and dirty. At Asimov Press, Larissa Schiavo breaks down the technological changes that made it more comfortable.
• Slate gives advice to a person who very curiously decided to buy a house when it would have been about half as expensive to rent one, and now needs to move. The advice asker says that, in addition to rent not covering their mortgage, they feel "extremely morally ambivalent" about being a landlord. Their own financial situation—where local rents are half the cost of homeownership—would seem to highlight the productive value landlords can provide to society.