Budget contains funds for affordable housing development, municipal infrastructure aid

The $15.2 billion state budget signed into law June 20 by Gov. Chris Sununu include $40 million dedicated to efforts to boost construction of new residential housing in the state amid severe shortages in available apartments and houses.

Statewide, the apartment vacancy rate averages just 0.5 percent and home prices have skyrocketed as demand outpaces supply, according to the NH Housing Finance Authority, a public corporation that promotes, finances and supports affordable housing for people in the state.

Businesses are facing trouble expanding due to a lack of places for new workers to live, while many people are encountering difficulty locating an apartment to rent or a home to buy.

NH Housing’s 2023 State Housing Needs Assessment shows that in Cheshire County, for example, average home sale prices increased from $216,000 in 2019 to $320,000 in 2022. The report suggests it would take an additional 23,500 residential units of all types statewide to stabilize the housing supply.

The $40 million lawmakers placed in a proposed two-year budget includes money to help finance or provide grants for affordable housing projects. There’s also money for a grant program to help municipalities with housing infrastructure costs such as sewer and water lines.

Last year, Sununu used $100 million in federal pandemic relief funding to spur residential construction. This included $40 million in grants to municipalities and $60 million in grants for developers.

Ben Frost, deputy director of NH Housing, gives the NH Legislature high marks for taking the housing shortage seriously.

Some local communities have done a good job of changing local regulations to accommodate and promote the development of more housing, Frost said.

Other towns have not been receptive to residential growth.

“This is particularly true of smaller communities, some of which don’t have professional planning staff,” Frost said.

‘Housing Champions’

Members of local land-use boards may face a room of neighbors who are dead set against a development, he said.

“Often, members of these boards will succumb to that pressure and say ‘no’ to applications that in fact meet the standards the town has adopted.”

However, Frost also stated that certain financial factors could make residential development unfeasible. Higher-density neighborhoods, for instance, require infrastructure such as municipal sewer systems, which can be very costly to build, he said.

Sen. Rebecca Perkins Kwoka, D-Portsmouth, was the prime sponsor of a bill this year to create a “Housing Champions” program to help municipalities cover housing infrastructure costs, provided they adopt land-use regulations necessary to promote the development of workforce housing. Workforce housing is permanent housing near places of employment.

The program, which got included in the budget bill, is intended to provide an incentive for municipalities to update their zoning ordinances in ways that make it easier for developers to build new houses and apartments, she said.

Sometimes local regulations on things like minimum lot sizes, required setbacks (distance from a structure to its property lines) and density restrictions make it hard for builders to get an adequate return on investment, she said.

Some restrictive zoning rules in New Hampshire grew out of a backlash to the “Massachusetts Miracle,” a period in the 1980s when the state’s economy took off and thousands of its residents bought homes in New Hampshire, Perkins Kwoka said. Requiring homes to have very large lots was one such rule.

Given the insufficient supply of affordable housing, young adults are often the ones who are hit the hardest, Perkins Kwoka said.

“I hear stories almost daily about young people trying to get started by buying a house,” she said. “It’s tough competition out there. There’s a lot of retirees that can make all-cash offers and can afford something like an additional $15,000, whereas the young people can’t.”

The result is that younger people often regard New Hampshire as a temporary location, not somewhere where they would settle and raise a family, Perkins Kwoka said.

“That’s not good for our state. We should be allowing people to put down roots, build their connections and get their kids enrolled in schools. It only benefits all of us.”

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