New Laws Require Updates to Zoning Ordinances

By Cordell A. Johnston, Esq.

By Cordell A. Johnston, Esq.

November heralds the arrival of the most special time of the year: zoning amendment season! For most towns, the deadline to post notice of proposed zoning amendments is in early January, and the process of drafting the amendments necessarily begins a few months earlier.

This year should be a particularly active one, as a result of several laws enacted in 2008 that impose new limits (or clarify existing ones) on municipal zoning power. Every city and town should review its zoning ordinance in light of the new requirements, and in many cases amendments will be necessary. The legislature has delayed the effective dates of the new laws to give municipalities time to amend their zoning ordinances; but if they do not do so during the coming town meeting season, they could face problems.

Workforce Housing

After several years of failed efforts, the legislature this year passed a law codifying and clarifying the 1991 decision of the New Hampshire Supreme Court in Britton v. Chester. The court in that case had established the principle that every municipality that exercises zoning authority must allow “realistic opportunities" for the development of housing that is affordable to low- and moderate-income families.

Senate Bill 342, also known as Chapter 299 of the 2008 N.H. Laws, is codified at RSA 674:58 to :61. The basic requirement of the new law is contained in one sentence: “In every municipality that exercises the power to adopt land use ordinances and regulations, such ordinances and regulations shall provide reasonable and realistic opportunities for the development of workforce housing, including rental multi-family housing."

Several of the terms used in that sentence are defined in the new law. “Workforce housing" means (a) housing intended for sale that is “affordable" to a household with an income no more than 100 percent of the median income for a family of four within the metropolitan area or county in which the housing is located, or (b) rental housing that is affordable to a household with an income no more than 60 percent of the median income for a family of three in the same area. “Affordable," in turn, refers to housing “with combined rental and utility costs or combined mortgage loan debt service, property taxes, and required insurance that do not exceed 30 percent of a household’s gross annual income."

“Reasonable and realistic opportunities for the development of workforce housing" means “opportunities to develop economically viable workforce housing within the framework of a municipality’s ordinances and regulations." In short, the municipality’s ordinances and regulations must be flexible enough that someone can realistically develop housing that can be sold or rented to people at the specified income levels, at prices that meet the affordability standards and yet enable the developer to make a reasonable profit on the investment.

It is impossible to explain thoroughly in this short article what municipalities should do to comply with the law. There are, however, some more specific provisions in the law that help to clarify what is and is not required.

First, a municipality must allow workforce housing to be located in a majority of the land area—not a majority of the zoning districts, but a majority of the total land area—that is zoned to permit residential use. Second, as the first sentence quoted above indicates, rental multi-family housing—defined for these purposes as a structure with five or more dwelling units—must be permitted; but there is no obligation to allow rental housing in a majority of the residential area, as long as it is permitted somewhere that it could reasonably be developed. Further, if the municipality already has a sufficient amount of multi-family housing that satisfies the definition, it is not required to allow more.

The law specifically states that a municipality will not be held responsible for economic conditions beyond its control: if the municipality has done all it can reasonably do by implementing reasonable lot size and density requirements and allowing multi-family housing, it will not be deemed in violation of the law if land values are so high that it is still impossible for anyone to develop affordable housing. The municipality also is not responsible for natural features that may make development impossible, nor is it required to compromise on matters of health, safety or environmental protection to make housing affordable.

How, exactly, does a city or town go about allowing workforce housing? It is not, obviously, a simple matter of inserting a provision in the zoning ordinance stating that “workforce housing shall be permitted throughout the residential district." Rather, the restrictions imposed in the ordinance, such as lot sizes and number of units per lot, as well as in the subdivision regulations (and site plan regulations to the extent they address multi-family housing), need to be relaxed enough to make development affordable.

This, admittedly, is more an art than a science, as there is no formula dictating what confluence of factors is needed to make the development of affordable housing possible. A few things, however, are clear. As indicated previously, an ordinance that does not allow rental multi-family housing anywhere will be invalid on its face (unless a reasonable amount of such housing already exists). Further, an ordinance that sets a minimum lot size of, say, ten acres throughout the entire town is almost certain to violate the law.

Beyond that, it is up to the municipality to use its judgment to fashion an ordinance that meets the law’s requirements. Useful information on median incomes and what constitutes an “affordable" purchase price or rental is available on the Web site of the New Hampshire Housing Finance Authority. That, however, is only the beginning, as it is still necessary to determine how to zone to allow the development of housing that meets the affordability criteria. This cannot be done with mathematical certainty, but if the zoning and subdivision requirements demonstrate a serious effort to accommodate affordable housing, and if the planning board works with developers in good faith, the municipality is not likely to be found in violation of the law. A planning board would do well to consult with its regional planning commission, other professional planners, and/or the developers themselves to determine what it needs to do to make workforce housing feasible.

One of the best ways to provide for workforce housing is through the use of inclusionary zoning. This is an innovative land use control under RSA 674:21 that can be adopted as a zoning amendment. It provides an incentive to a developer—typically in the form of a density bonus—to induce the developer to create some housing units that are affordable to low- and moderate-income families. For example, if a given property could be subdivided into 20 lots under the zoning district’s standard lot size requirements, an inclusionary zoning provision might allow the developer to create 25 lots in exchange for a commitment that three of the additional units will qualify as workforce housing. Inclusionary zoning provisions can be used to satisfy the law’s requirement of allowing workforce housing in a majority of the residential land area.

There is a “safe harbor" in the statute for cities and towns that already have their fair share of affordable housing: “If a municipality’s existing housing stock is sufficient to accommodate its fair share of the current and reasonably foreseeable regional need for such housing, the municipality shall be deemed to be in compliance with [the law.]" Each regional planning commission compiles an assessment every five years of the regional housing needs for people of all income levels. This assessment will not directly address the question of what a given municipality’s “fair share" is, but if a planning board can determine what the regional need is, it should be able to make a rough determination of what its share of that need is.

The law provides an expedited appeal process when an application for a workforce housing development is rejected. In most cases, a hearing on the merits must be held within six months after the appeal is filed.

The law takes effect July 1, 2009.

Growth Management Ordinances and Temporary Moratoria

The legislature also revised the statutes on growth management ordinances, RSA 674:22 and :23. As with the workforce housing bill, the primary effect of HB 1260 (chapter 360 of the 2008 N.H. Laws) was to codify existing case law. The new laws contain restrictions that had been established by decisions of the New Hampshire Supreme Court, but that had not been apparent on the face of the statute.

Growth management ordinances.

Under the amended RSA 674:22, a growth management ordinance may be adopted “only if there is a demonstrated need to regulate the timing of development, based upon the municipality’s lack of capacity to accommodate anticipated growth in the absence of such an ordinance." This is important: the ordinance cannot be based simply on a belief that the municipality is growing too fast, or faster than surrounding towns. There must be a demonstrated lack of capacity to accommodate growth—typically meaning insufficient infrastructure or inadequate municipal services.

The need for the regulation must be demonstrated by a study performed by or for the planning board or the governing body, or submitted with a citizen petition under

There is no penalty in the statute for failure to carry out the development plan, or for the failure to devise a plan in the first place. However, if a municipality fails to follow these requirements and still seeks to apply its growth management ordinance, it is quite likely that a court would prohibit enforcement of the ordinance.

Temporary moratoria

The revised RSA 674:23 applies to “temporary moratoria," previously known as “interim growth management ordinances." As under the old law, a temporary moratorium may be adopted “in unusual circumstances that affect the ability of the municipality to provide adequate services and require prompt attention and to develop or alter a growth management process under RSA 674:22, a zoning ordinance, a master plan, or capital improvements program." Neither the old nor the new law defines “unusual circumstances," but the term clearly contemplates a more dire version of the circumstances justifying a growth management ordinance under RSA 674:22 -a large development proposal that would overwhelm the town is imminent, and the town needs to buy some time to begin planning.

A temporary moratorium must be recommended by the planning board based on written findings describing the unusual circumstances, and it must recommend a course of action to correct or alleviate those circumstances. The term of the ordinance may not be longer than one year (which was true under the old law as well).

Grace period for existing ordinances

Although HB 1260 took effect on July 11, any municipality that had a growth management ordinance in effect at that time is given until June 1, 2010, to amend its ordinance to conform with the new law. If a municipality had an interim growth management ordinance in effect on July 11, it may remain in effect until one year from its adoption or until the town’s next annual meeting, unless the ordinance prescribes an earlier termination date or unless a court rules that it is unenforceable.

Small Wind Energy Systems

House Bill 310 (chapter 357 of the 2008 laws) imposes new restrictions on municipalities’ regulation of small wind energy systems. The new law is codified at RSA 674:62 to :66.

A “small wind energy system" is, in essence, a small windmill on a tower with a peak generating capacity of 100 kilowatts or less, which is used primarily for on-site consumption. In most cases it will be used to generate electricity for a single-family residence, a farm, or a small business. The basic requirement of the new law is that “ordinances or regulations adopted by municipalities to regulate the installation and operation of small wind energy systems shall not unreasonably limit such installations or unreasonably hinder the performance of such installations."

Most municipal zoning ordinances do not specifically address small wind energy systems. In the absence of specific regulations, such a system ordinarily would be permitted as an accessory use because it merely produces electricity for on-site use. It would not be subject to any planning board or ZBA process (unless used as part of a business in a municipality that exercises site plan review), and it would be subject only to those restrictions that govern all structures, such as height limits and setback requirements.

The new law limits a municipality’s ability to apply such restrictions. For example, a municipality may not apply a “generic ordinance or regulation on height." Thus, if a town has a standard 40-foot height limit for all structures, it would be invalid as applied to a wind tower. Instead, the town must adopt a height limit specifically for wind towers—presumably one that does not “unreasonably hinder [the system’s] performance." Testimony at the legislative hearings indicated that wind towers need to be at least 100 feet tall to work, so any height limit lower than that would likely be deemed unreasonable.

The law also provides that setback requirements may not exceed 150 percent of the system height. Since local setback requirements for most structures are typically in the range of 15 to 60 feet, existing zoning ordinances are unlikely to violate the state law on this point. However, they are also unlikely to provide sufficient protection to abutters. For this reason, the law states that in the absence of a specific setback requirement adopted by the municipality, a small wind energy system must be set back a distance at least equal to 150 percent of the system height.

If a municipality does address small wind energy systems in its zoning ordinance, it may not prohibit such systems in all districts within the municipality. This implies that it may prohibit them in some districts; for example, it may be appropriate to prohibit them in a historic district.

The law contains several other requirements; again, space limitations make a full discussion in this article impossible. However, the state Office of Energy and Planning (OEP) has issued a technical bulletin on the subject, including a model ordinance that municipalities should consider. Visit the OEP Web site or call 603.271.2155.

The law takes effect July 11, 2009.

What to Do

Planning boards should be reviewing their zoning ordinances and consulting with their regional planning commissions and/or local planners to determine whether amendments are necessary before these laws begin to take effect next year. It is, of course, entirely possible that a given town or city may escape damage, even if its ordinance technically violates the new laws, since no ordinance will be invalidated until it is challenged. Given the slow pace of development in the state right now, it may be some time before the challenges arrive. Nevertheless, rather than rely on that possibility and do nothing, municipalities should use this time to consider their ordinances carefully and make appropriate amendments.

Cordell Johnston is Government Affairs Attorney with the New Hampshire Local Government Center’s Legal Services and Government Affairs Department.