Meeting the Workforce Housing Challenge: A Guidebook for New Hampshire Municipalities
New Hampshire has long faced a housing shortage that threatens to constrict economic growth in the state and change the very character of the communities where we live. Many municipal employees and young adults can no longer afford to live in the communities where they work or grew up. To address this problem, in 2008 the New Hampshire Legislature passed a law that requires every community to provide “reasonable and realistic opportunities" for the development of affordable housing. But this obligation is not new law. In 1991 the New Hampshire Supreme Court said the same thing.
While there are a variety of champions for housing that is affordable to New Hampshire’s labor force, most of the actual decisions affecting housing at the local level fall to municipal land use board members. As volunteers, these board members face significant challenges in understanding the requirements of the law and in implementing solutions that are appropriate for their particular communities and their unique zoning ordinances and land use regulations. As they consider such solutions, board members also confront social pressures of resistance to change and common but misguided notions of what is meant by “affordable housing."
New Hampshire municipalities regulate land use independently and therefore are inclined to assess their housing supply with a local view, yet the workforce housing statute compels them to look at housing needs on a regional basis. Without local action, the opportunity to effectively address the imbalance in New Hampshire’s housing supply in a thoughtful manner may be lost, and communities may also lose control over the permitting process as developers take legal action against them.
In response to this need for assistance, in 2009 New Hampshire Housing assembled an advisory committee to develop written guidance for local action under the workforce housing statute. The resulting resource, Meeting the Workforce Housing Challenge: A Guidebook for New Hampshire Municipalities, is now available to help local land use boards to address the requirements of the statute and shape future growth consistent with their vision to create dynamic, healthy communities.
Recent History of Workforce Housing in New Hampshire
New Hampshire’s economic growth over the past two decades outpaced its housing growth and, as the economy boomed, housing developers found it difficult to work around the various barriers in place—including environmental and regulatory barriers, a labor shortage and simple timing—to keep pace with the growth. As the demand for housing outstripped supply, prices were driven up and made living in New Hampshire increasingly expensive for all, but especially difficult for young families.
In 1991, the New Hampshire Supreme Court decided Britton v. Town of Chester, 134 N.H. 434, which recognized that the state’s land use statutes contain an obligation of every municipality to provide a reasonable and realistic opportunity for the development of housing that is affordable to low- and moderate-income families. The Court also ruled that every municipality has an obligation to provide for its “fair share" of a region’s current and prospective need for affordable housing, but the Court didn’t define what the term “fair share" meant, and it specifically refused to establish “arbitrary mathematical quotas."
In the years following the Britton case, there were a number of efforts in the New Hampshire Legislature to study the state’s housing supply. In 2001, the Legislature created a commission (SB 21) to develop legislation to address the problem of workforce housing. The commission concluded that although there were other factors, the regulatory barriers created by towns had a significant impact on housing costs and were also within the Legislature’s capacity to influence. Subsequently, several efforts were made to pass legislation that recognized the relationship between local land use regulations and the cost of housing—and also to codify the Court’s rulings in Britton. These efforts culminated with the enactment of SB 342 in 2008 (Chapter 299), codified at RSA 674:58 – :61, which went into effect on January 1, 2010.
Even with the current recession, the variety of housing that exists in New Hampshire today does not satisfy the need for workforce housing in many areas of the state. Nor should short-term economic trends be regarded as a means by which a municipality might escape its obligations under the workforce housing statute. It is a law that was based on a decades-long problem that will take a sustained effort to resolve.
Requirements of the Statute
The workforce housing statute codified the Britton decision by requiring each community to provide a reasonable and realistic opportunity to develop workforce housing, while providing “maximum feasible flexibility" to meet the general legal obligation in a manner that is most appropriate to its circumstances. What will constitute a “reasonable and realistic opportunity" is determined by a few specific requirements: (1) the municipality’s land use ordinances and regulations cannot facially (openly) discriminate against housing for families or in certain income ranges; (2) the collective impact of those ordinances and regulations must allow for the economic viability of a project to develop workforce housing; (3) workforce housing of some type must be allowed on a majority of the residentially-zoned land in the community; and (4) multi-family housing with at least five units per structure must be allowed somewhere in this area.
“Workforce housing" and “affordability" both have been terms of art, but they now have specific statutory definitions. A home is considered “affordable" to a household if 30 percent or less of the household’s income is spent on housing costs. “Workforce housing" is ownership housing that is affordable to a family of four earning up to 100 percent of the median income for the area, or rental housing that is affordable to a family of three earning up to 60 percent of the median income for the area. Workforce housing is generally considered to include a broader range of incomes than traditional notions of affordable or “low-income" housing.
While municipalities cannot be expected to control many of the other costs associated with housing construction, they can control things such as lot sizes and densities, building setback and road frontage requirements, and road design standards, among others. For some communities, compliance with the workforce housing statute may be as simple as some technical adjustments to these standards. For other municipalities, however, compliance could also involve a more proactive approach that provides incentives for workforce housing development balanced against measures to preserve the landscape we all cherish. Innovative provisions such as dense village centers, conservation subdivision design, inclusionary zoning and form-based codes can accomplish these dual goals. For any municipality to meet the requirements of the statute should not threaten the appearance or composition of the community, including rural landscapes, if it engages in a thoughtful planning process.
Communities that do not promote opportunities for the development of workforce housing must demonstrate that they already have their regional “fair share" of affordable housing. Data from regional planning commissions may be useful in determining whether the “fair share" exists, but there is no standard methodology used to calculate it. Municipalities that determine they have satisfied the “fair share" requirement should carefully document that finding, as it is an assertion that might need to be defended if a developer takes legal action against the community under the workforce housing statute.
If a developer believes that the municipality’s regulations do not provide the opportunity to develop workforce housing, he or she can challenge either the local board’s denial of an application or the restrictions placed upon the application. Under the statute, the community can use as a defense that its housing stock contains its fair share of current and foreseeable regional need for workforce housing. If this defense fails or if the municipality otherwise does not comply with the statute, the court can then order the “builder’s remedy," in which the court allows a reasonable project to proceed without further review by local boards.
The Municipal Guidebook
The Meeting the Workforce Housing Challenge guidebook (the Guidebook) is designed to assist local land use boards in addressing the requirements of the workforce housing statute. Municipalities are likely to confront several challenges as they undertake this work, including understanding the statute, reviewing the town’s individual situation to determine the changes needed for compliance, and confronting the social and political pressures associated with these changes. The Guidebook can help directly with at least the first two challenges and, to a degree, the third, if those pressures can be eased through greater public understanding of the statute’s requirements and purpose.
Under the workforce housing statute, developers’ challenges to local land use regulations and ordinances and to the decisions made under them will be viewed by the court in light of a municipality’s efforts toward compliance with the statute’s requirements. An underlying purpose of the Guidebook is to serve as a standard to guide municipal actions, and against which a reviewing court may measure those actions. The steps outlined in the Guidebook will help a local land use board to create a record that demonstrates the municipality’s understanding of the statute and its efforts in meeting its legal requirements.
The Guidebook is divided into major substantive sections: after an introduction of the statute and the history behind it, Chapter 2 discusses and explains the terms used in the workforce housing statute.
Chapter 3 explains how local land use boards should approach the difficult question of “economic viability." This section reviews the complete costs of housing development, providing land use board members with an overview of the complex array of cost factors faced by developers to help board members distinguish those factors that they can influence from those they cannot. A developer’s “pro forma" is provided, along with illustrative examples.
In Chapter 4, the Guidebook outlines the steps involved in conducting a “self-audit" of a municipality’s housing stock, which may in turn lead to a “fair share" analysis. The purpose of the self-audit is simply to gain an understanding of the nature of the local housing market, both ownership and rental housing. A fair share analysis may have already been conducted by the regional planning commission, though this is not required, nor is it required for the municipality to conduct a fair share analysis. The chapter reviews changes that should be considered to zoning ordinances and land use regulations as a means of providing the opportunity for the development of workforce housing.
Chapter 5 concludes the Guidebook with a discussion of how local boards should deal with applications for workforce housing. The statute contains a variety of procedural provisions that must be observed, but there are additional steps that may be particularly useful to land use boards as they seek to provide an impartial review of proposals in a manner that is consistent with the statutory requirements.
Meeting the Challenge
The state’s new workforce housing statute presents a variety of challenges to municipalities. New concerns, such as economic viability, may require approaches that are unfamiliar to local land use boards. But, for the most part, municipalities need to address the various regulations that add costs and, above all, uncertainty and subjectivity to the housing development process. Realizing that the solution is some simple zoning and regulatory changes, and recognizing that these changes will not alter the character of the housing in a community or fundamentally change its residents, is an important step toward building the political will to meet the requirements of the workforce housing statute.
Rebecca Perkins is a third-year student at Cornell Law School and provided assistance in the development of Meeting the Workforce Housing Challenge. She is a native of Stratham, NH. Ben Frost is the director of public affairs at New Hampshire Housing Finance Authority.
Copies of Meeting the Workforce Housing Challenge will be distributed to all of the state’s planning boards. It is also available online at www.nhhfa.org, along with the newly-updated Housing Solutions handbook, which provides a broader range of suggestions for “housing-friendly" changes to local zoning ordinances and land use regulations as well as case studies from throughout the state.