New Hampshire municipalities will have more tools to encourage affordable housing developments under a new law signed by Gov. Chris Sununu in June.
The law, passed through House Bill 154, allows towns to expand a special tax-break program for developers who build affordable housing.
Currently, municipalities are able to designate certain parts of town to be “community revitalization” areas, and set up tax breaks to incentivize construction around economic development, historical preservation or housing.
The tax breaks allow the town to provide property-tax relief for up to nine years for affordable housing projects, with the requirement that one-third of the housing units be designated for families with 80% or less of the median area income.
But for years, the tax break areas have been limited to downtown areas. HB 154 allows them to be extended to any development within the town borders.
Rep. Casey Conley, a Dover Democrat and sponsor of the bill, said the law should provide new flexibility for town select boards. And he said that it would help developers find plots for properties away from the center of town, which often have much lower property-tax valuations.
Without the incentives, developers are more likely to pursue more lucrative housing developments, he added.
“It’s not a rational economic decision for a developer to put in affordable housing when you can maximize your profit and you need to cover your costs,” Conley said. “So in the bigger picture, you say, ‘Well, where would we maybe have lower development costs?’ Places outside of downtowns. Places where this tax benefit would be much larger.”
The New Hampshire Municipal Association also supported the bill.
“It’s a modest step toward encouraging development of affordable housing,” said Cordell Johnston, the government affairs counsel for the association.
The number of towns and cities that take up the measure remains to be seen. Few had been asking for the change directly, proponents say. And some town officials aren’t fully aware of the original tax-relief program, Conley said, citing conversations with select board members.
But Conley and other supporters say the passage of the new law could help increase interest.
“I haven’t heard municipalities clamoring for this specific option, but there are certainly municipalities that are looking for ways to encourage affordable housing,” Johnston said.
Affordable housing efforts have had a mixed record in New Hampshire this year. Though the House passed HB 154 by a voice vote, it narrowly voted to table an ambitious affordable housing bill that had bipartisan support from lawmakers and the governor.
House Bill 586 would have allowed municipalities to create “tax increment financing” districts to help pay for affordable housing, expanded the community revitalization tax credit period to up to 13 years, and shortened the appeals process for zoning board decisions.
