New Hampshire Legislature passes important housing laws:

Workforce Housing
Seventeen years ago, the New Hampshire Supreme Court issued a resounding decision in favor of affordable housing. In the case Britton v. Town of Chester, the Court determined that the state’s planning and zoning statutes called for every municipality to provide a reasonable and realistic opportunity for the development of housing that is affordable to low- and moderate-income households, and particularly for the development of multi-family structures. Although that case generated great interest and discussion among local planning boards and in the development community, that interest was not accompanied by action at the local level to provide the sort of opportunity that Britton seemed to promise. Despite the economic and housing growth in the later 1990s, regulatory barriers remained in many municipalities making it difficult for developers to create the amount of affordable housing the market demanded.

Over the past eight years or so, the New Hampshire's legislature considered a number of bills that sought to codify the Court’s holding in Britton. None of these gathered enough support to pass both the House and the Senate, although the legislature did form a series of committees and commissions to study the problem of housing affordability in New Hampshire.

At the same time, there was the persistent grass roots advocacy work of a half dozen regional workforce housing coalitions throughout the state, all of which sought to directly involve the business community in the debates on this critical issue. Lending additional support to these efforts, addressing the state’s housing crisis became the top legislative priority of the New Hampshire Business and Industry Association in 2007-08.

In this past legislative year, three bills were introduced to address the impact of local land use regulations on the ability of developers to create affordable housing: HB 1472 sponsored by Rep. Fran Potter (Merrimack – District 10) and SB 342 and 421 sponsored by Sen. Martha Fuller Clark (Portsmouth – District 24). Weeks of negotiation among those with an interest in this legislation produced bill language in SB 342 that gained the support of housing advocates, the business community, and the specific endorsement of the New Hampshire Municipal Association, which had previously established as a policy statement that it sought to codify, but not to expand upon, the Court’s Britton decision. With leadership in the House by Speaker Terie Norelli (Rockingham – District 16) and Representatives Fran Potter, Robert Theberge (Coos – District 14) and Mary Cooney (Grafton – District 7) and in the Senate by President Sylvia Larson (Concord – District 15) and Senators Martha Fuller Clark and Maggie Hassan (Exeter – District 23) the amended SB 342 was passed by substantial majorities in both chambers. The bill was signed into law by Governor Lynch on June 30, although a ceremonial signing was conducted on July 17.

SB 342 (codified as Chapter 299, Laws of 2008) amends the planning and zoning statues of the state by including the Court’s holding from Britton that all municipalities must provide reasonable and realistic opportunities for the development of workforce housing, including rental and multi-family housing. To determine if such opportunities exist, the collective impact of all local land use regulations must be considered, and workforce housing of some type must be allowed in a majority of land area where residential uses are permitted (but not necessarily multi-family in a majority of such areas). Recognizing that some municipalities have already done what is necessary under this law, the existing housing stock of a community is to be accounted for to determine if a municipality is providing its “fair share” of current and reasonably foreseeable regional need for workforce housing. Importantly, reasonable restrictions may still be imposed for environmental protection, water supply, sanitary disposal, traffic safety, and fire and life safety protection.

This new law also significantly mitigates the cost of litigation by providing an accelerated appeals mechanism. If a developer proposes to create workforce housing that meets the statute's definitions and requirements and the local board reviewing the proposal either denies the application or imposes conditions on it that would have an unreasonable financial burden, the developer can petition the superior court for review. This is not new—what is changed is that for workforce housing proposals, the court must conduct a hearing on the merits within six months. As a means of addressing exclusionary municipal land use regulations, the court will be able to order the “builder’s remedy,” allowing the developer to proceed without further local review in situations that call for such an award.

SB 342 provides a series of definitions, including ones for “affordability” (30% cost burden), “workforce housing” (affordable for renters at 60% area median income or owners at 100% area median income), multi-family housing (five or more units per structure), and “reasonable and realistic opportunities” (addressing the economic viability of a proposal).

Although these changes have been signed into law, they do not go into effect until July 1, 2009. This extra year will give the state’s cities and towns the time they need to make careful assessments of their land use ordinance, determine the impacts of those regulations on the potential for developing affordable housing, and identify what changes might be necessary.

Local Housing Commissions
To help municipalities accomplish this work in the long run, during this session the Legislature also passed HB 1259, enabling the establishment of local housing commissions. Signed by Governor Lynch on July 17, this new law provides for the creation of an official local land use board that will serve as a local advocate for housing issues, and which will be able to advise other local boards and officials on issues of housing affordability. Additionally, local housing commissions will have the power to administer an “affordable housing fund,” a non-lapsing fund that could be used to facilitate transactions on affordable housing.

Sponsored by Representative Mary Cooney, this new law will provide an important new tool for municipalities to understand the nature of their own housing issues and to recommend appropriate courses of action.

Assessments of Tax Credit Properties
For many years, those involved in the creation and management of properties developed using the Federal Low Income Housing Tax Credit (LIHTC) program have recognized that there is no effective means under New Hampshire law by which to assess the value of the developments for the purpose of property taxation. This lack of a consistent methodology to appraise the properties resulted in wide variability, and from a developer’s or investor’s standpoint, unpredictability. A decision in 2005 by the New Hampshire Board of Tax and Land Appeals (BTLA) highlighted this problem, and in its order the BTLA said that a legislative solution was the only way to resolve this difficulty.

Provisions included in HB 1442 address this issue, and this bill was signed into law on July 17. HB 1442 establishes a uniform income-based method for assessing LIHTC-restricted properties. The property owner will be able to opt in to this method, or it can continue with the method currently used by the local assessor. This election period will be open for two years, after which the statutory income-based method sunsets. During this time, the state’s Assessing Standards Board is required to promulgate rules to identify an appraisal method to be used after the statutory income-based methodology sunsets.

Throughout the two years of work on the language that went into this law, the leading legislative force behind this was Senator Betsi DeVries (Manchester – District 18) whose SB 199 served as the original vehicle for getting this important legislation passed.