New initiative could be a big step in bridging a widening gap in housing supply
Workforce growth requires housing expansion, but for many years housing production has failed to keep pace with job growth in New Hampshire, making recruiting and retaining new workers increasingly difficult. According to the latest housing needs assessment commissioned by NH Housing Finance Authority, the state needs over 60,000 units by 2030 to keep pace with population growth.
For over a decade, our state has had the Workforce Housing Law on the books, which prohibited municipalities from erecting unreasonable burdens to workforce housing developments in the land use process. Although the law has made some progress toward increasing housing stock in our state, the law relies on developers to enforce it. It does not solve drawn out approval procedures, uncertain waits on appeal and increased legal costs.
It’s no surprise that developers have shied away from this avenue. To help bridge a widening gap in supply, the NH Legislature recently adopted a new, positive approach to driving workforce housing development: The voluntary Housing Champion designation and grant program, which incentivizes communities to create housing-friendly regulations and infrastructure by providing new funding sources for compliance.
The new program could reduce costs to developers, encourage forward-thinking infrastructure development statewide and create new housing opportunities for workers.
Although the Housing Champion program encourages many forms of new housing, it prioritizes workforce housing development. Consistent with our existing workforce housing law, Housing Champions must promote and permit housing that is primarily two bedrooms or more and affordable based on a statutory formula.
For home ownership, that means annual mortgage payments, real estate taxes and insurance premiums are one-third of income for a family of four making 100 percent of area median income.
For renters, affordable means rent and utilities total a third of income for a family of three earning 60 percent of median income. Currently median incomes for a family of four in New Hampshire range from $78,000 (Coos County) to $137,000 (Rockingham County) for a family of four.
Explaining the program
The Housing Champion program has four elements intended to reward towns for promoting—and approving—affordable, workforce housing:
- Preapplication grants: Municipalities interested in earning Housing Champion designation may apply for small grants to help them meet the requirements of the program. The grants may be used for board member training and hiring consultants to develop master plans and revise land use regulations.
- Housing Champion designation: The designation is the centerpiece of the law. By earning the designation, municipalities that have committed to increasing housing development in their community become eligible for two additional sources of funds — infrastructure funding and per-unit production grants. To qualify for the designation, communities must adopt zoning, site plan and other land use regulations that promote workforce housing; train members of land use boards on appropriate procedures, and laws that apply to board members; implement sewer and water infrastructure improvements; and implement public transportation and walkability infrastructure like sidewalks
- Infrastructure funding: A common concern facing municipalities considering workforce housing is the overburdening of existing infrastructure. Likewise, lack of infrastructure may deter developers from even considering communities. The new program seeks to mitigate this problem by providing Housing Champion designees with grants or low interest loan programs to expand infrastructure and accommodate new housing.
- Housing production municipal grants: The program pays for actual production, awarding grants on a per-unit basis for certificates of occupancy that a town issues for workforce housing units.
There are still many open questions about the implementation of the Housing Champion Program. How should towns revise their regulations? How can per-unit grants be used? The NH Department of Business and Economic Affairs has been tasked with administering the designation program and must adopt rules by July 1, 2024.
An advisory committee, composed of representatives from the BEA, the Legislature, NH Housing, the Community Development Finance Authority and several municipal professional associations will weigh in on proposed rules. We won’t know the exact standards for earning designations and the distribution of the $5 million in grant funds for some time.
The program, however, is promising. The potential benefits include:
- Reducing legal and early development costs for new housing by adopting housing friendly land use regulations and educating board members on their role in the process
- Relieving the financial burden to municipalities (and developers who see costs passed through) by introducing new funding sources for necessary infrastructure improvements
- Rewarding results with per-unit grants for certificates of occupancy
- Encouraging healthy communities and accessibility by implementing public transportation and pedestrian infrastructure.
The success of the Housing Champion program, of course, depends on implementation. Stakeholders will have the opportunity to advocate for these outcomes in the upcoming rulemaking process.