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Bar News - April 17, 2009


Municipal Law: New Hampshire’s New Workforce Housing Statute

By:

Benjamin D. Frost

Eighteen years ago, the New Hampshire Supreme Court issued a resounding decision in favor of affordable housing. In the case Britton v. Town of Chester, 134 N.H. 434 (1991), 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. The Court also held that every municipality must provide for its "fair share" of the regional need for affordable housing.

Although Britton generated great interest and discussion among local planning boards and in the housing development community, that interest was not accompanied by significant and widespread action at the local level to provide the sort of opportunity that the case seemed to promise. The cost of litigation, both in time and money, apparently was still too much for most developers to consider pursuing claims against municipalities they considered to have exclusionary land use regulations.

Over the past ten years, the New Hampshire Legislature introduced 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 study committees and commissions to analyze the problem of housing affordability in New Hampshire. The reports of those committees and commissions consistently concluded that exclusionary land use regulation was an important contributing factor to the critical lack of a diverse and sufficient supply of housing in the state.


Grass Roots Advocacy Grows

At the same time, there was a persistent grass roots advocacy effort 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. As a result, addressing the state’s housing crisis became the top legislative priority of the NH Business and Industry Association.

Last year, several bills were introduced to address the impact of local land use regulations on the ability of developers to create affordable housing. Weeks of negotiation among those with an interest in this legislation produced the language in SB 342 that gained the support of housing advocates, the Business and Industry Association, and the NH Municipal Association (NHMA). NHMA had previously established as a policy statement that it sought to codify, but not to expand upon, the Court’s Britton decision. The amended SB 342 was passed by substantial majorities in both chambers. The bill was signed into law by Governor Lynch on June 30.


Workforce Housing Statute Examined

The workforce housing statute (enacted as Chapter 299, Laws of 2008) is codified as RSA 674:58-61. It amends the planning and zoning statutes of the state by including the Court’s holdings 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 (including growth management and impact fee ordinances). Workforce housing of some type must be allowed in a majority of land area where residential uses are permitted, but multi-family housing is not necessarily required to be permitted 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 may 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.


Statute Definitions— and Some Ambiguities

The workforce housing statute provides a series of definitions, including those for "affordability" (30 percent cost burden), "workforce housing" (affordable for a renter family of three making up to 60 percent area median income or and owner family of four making up to 100 percent area median income), multi-family housing (5 or more units per structure), and "reasonable and realistic opportunities" (addressing the economic viability of a proposal).

The statute specifically states that a zoning ordinance’s minimum lot sizes and density requirements must be reasonable. It identifies inclusionary zoning as means by which a municipality may meet the requirement of the statute. Inclusionary zoning is enabled by RSA 674:21, V as a regulatory mechanism through which municipalities may induce developers to voluntarily build affordable housing by offering such incentives as density bonuses.

As enacted, the law does not go into effect until July 1, 2009. In the current legislative session, however, a bill was introduced to delay the workforce housing statute. The House passed HB 321 to extend the effective date to January 1, 2010. This extra time would have the practical impact of allowing municipalities to post public notice of zoning changes for annual town meetings next year, effectively insulating them against legal action until voters have the opportunity to adopt such proposals.

Critics of the workforce housing statute have identified a number of aspects of the law that they feel are vague or ambiguous: the definition of "workforce housing" is a moving target, because it is based on income standards that are updated annually; it is difficult or impossible to fully assess the "collective impact" of a municipality’s existing land use regulations to determine what might need to be changed; "fair share" remains undefined and there is no standardized methodology to determine it; the notion of a development’s "economic viability" may shift the burden of proof from the developer to the municipality; and a number of others, both substantive and procedural.

To address these concerns, the NH Bar Association’s Municipal and Governmental Law Section will be forming a committee the purpose of which will be to recommend changes to the workforce housing statute to clarify it and to make municipal compliance with it easier. These recommendations are expected to be ready for consideration by the Legislature in its 2010 session.

Benjamin D. Frost is an attorney with the NH Housing Finance Authority in Manchester and Chair of the Municipal & Governmental Law Section. He may be reached at bfrost@nhhfa.org or at 603-472-8623.

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