Advocates hope to see the ‘year of housing’ in the state house

The Penacook Landing Development Phase 2 is next to the original units that were built in 2020.

The Penacook Landing Development Phase 2 is next to the original units that were built in 2020. Monitor file

By MICHAELA TOWFIGHI

Monitor staff

Published: 02-24-2024 11:00 AM

When the Legislature reconvened in January, the new session was met with a record number of housing bills. But Elissa Margolin is holding off on crowning this session as the “year of housing” – until she sees what policy makes it to the governor’s desk.

In the 15 years she’s worked as an affordable housing advocate, Margolin, the director of Housing Action NH, sees a new energy driving the housing focus in the State House this year. A legislative housing caucus and a special House committee on housing meet regularly. Public sentiment has also backed this push – polling in recent months indicates that housing is a top concern and priority among voters.

“It’s an interesting year in the Legislature as well because I have found that the tone of the traditional hearing around housing issues has changed,” she said. “It’s no longer a question of if we should do something, the question is rather what we should do and what would be the most effective.”

With that, a dozen housing-related bills build on prior legislative work, according to Margolin. Two common themes summarize most of the proposals – dismantling regulatory barriers to increase development and providing financial incentives to support projects.

“We’re ready for toolbox 2.0,” she said. “In many ways, a number of those bills that we’re looking at this year would be providing those tools to developers, municipal leaders, policymakers and all of us who are really concerned with the impact of the housing crisis.”

Relieving regulations

Rob Dapice knows that two numbers in particular can be daunting when quantifying the state’s housing shortage – the need to build 60,000 units by 2030, and 90,000 by 2024.

But a new figure helps ease these estimates, he said. To build to these metrics, the number of building permits in the state must increase by 36 percent. And when looking to past development booms, that number is within reach.

“If you lived through the 90s or 80s or early 2000s in New Hampshire you know that that’s totally achievable,” he said. “We were building at much higher rates during those time periods.”

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In many cases, the ability to build housing is hindered by the local regulations that spell out where and how a development can be built.

That’s often what Karen LaMontange sees, as the vice president of LaMontage Builders, when proposals are brought in front of local planning boards.

“We’re also hit with a lot of roadblocks on a local level,” she said. “Local jurisdiction is challenging for developers. It’s harder and harder to work with them every year to be able to bring in any type of housing.”

With the cost of meeting engineering and infrastructure requirements, costs continue to grow for developers, said LaMontagne.

While many municipal leaders agree that more housing is needed across the state, local policy can be the first roadblock to building.

A handful of House bills this session would work to loosen regulations.

The first, House Bill 1065, would eliminate the sprinkler requirement for residential buildings with four or fewer units that are otherwise up to code. This policy would help entice more developers to build rental units, said LaMontagne.

Accessory dwelling units have long been a point of contention. Although a state law passed in 2017 allowing owners to have an additional unit on properties of half an acre or more, local restrictions still complicate the approval process.

The idea of these units was to expand the state’s housing supply without the need to develop on new land, however, regulations, like parking requirements, often make them difficult to build.

House Bill 1291 looks to increase the number and size of these accessory dwelling units. Property owners would be allowed to build two units on-site with a minimum size of 1,000 square feet for one unit and 850 square feet for the other. Current state law sets requirements at 750 square feet.

This approach – addressing the root cause of development shortages and easing regulations – will be a key solution to solving the state crisis, said Michael Skelton, the president of New Hampshire’s Business and Industry Association.

“Simply one of the challenges we need to overcome is that we need to be able to build more housing where it’s currently not allowed to be built,” he said. “That’s going to require changes at the local level, communities to come together and formulate plans on how to do that, and certainly political will at the state and local level.”

Financial incentives

Several funding tools would provide financial assistance to accelerate housing development.

The Affordable Housing Fund is a loan program that has helped finance low to moderate-income housing construction since 1988. In 2019, the biennial budget included an annual $5 million contribution to the fund, from the state’s real estate transfer tax.

Senate Bill 454, looks to increase that contribution to $10 million annually.

To receive a grant or loan from the fund, which is administered by New Hampshire Housing, developers must ensure that at least half of the units are designated for people who make up to 80 percent of an area’s median income. In Merrimack County, that is $88,650 for a family of four.

All housing development, though, can help address a “missing middle” of options. Today, many New Hampshire residents are priced out of entering the housing market and purchasing a starter home, but do not qualify for affordable housing options, said LaMontagne.

Instead, these residents are often stuck in rentals, depleting an already slim market where vacancy rates sit below 1 percent.

“They’re too poor to be rich and too rich to be poor,” said LaMontange. “If we can address the issues that are making housing so unattainable we’ll be able to ensure that those renters are able to move into their starter homes, which will free up units, bring down rents.”

Another solution to continue to add to the housing stock and to incentivize developers to build is a historic housing tax credit. In neighboring states, like Maine and Massachusetts, tax credits are available for projects that look to convert historic structures into housing.

Senate Bill 364 looks to create a similar program in New Hampshire.

The technical details of the tax credit would provide relief against the business profits tax or business enterprise tax. The maximum credit in a year cannot exceed 65 percent of the contribution, and unused credits can be rolled forward for five years.

With a state credit in place, developers could also better leverage the use of federal programs, said Dapice.

“There are federal credits that go unused that could be doing more for New Hampshire communities to not only create housing, whether it’s affordable or market rate, but also to sustain beautiful buildings,” he said.