Affordable Housing: Reality, Law, and Opportunity

2. Affordable Housing: Reality, Law, and Opportunity The IZIP Consultancy May 30, 2008 Bedford, New Hampshire Benjamin D. Frost, Esq., AICP Director of Public Affairs New Hampshire Housing

3. Workforce Housing in Your Community • A Play in Four Acts • Whatzit? • The King of Britton • Just Do It • Show Me the Money! • With a Little Help From My Friends The IZIP Consultancy

4. Act I Whatzit? Affordability Defined

5. What do you mean when you say “Affordable Housing”? Low Income Housing? Subsidized Housing? Public Housing? Workforce Housing? The IZIP Consultancy

6. Affordability Defined (or maybe explained) Affordability depends on price and the ability to pay. price ability to pay. Affordability - defined in the context of who has limited access to the market. Targeting Income is an indicator of a household’s ability to pay. The IZIP Consultancy

7. Buys House $478,000 Access to 92% of the Market Affordability Defined (or maybe explained) Purchase Market Income of $160,000 The IZIP Consultancy

8. State Median 80% State Median 120% State Median 120% State Median Buys House $244,000 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $120 $130 $140 $150 Access to 47% of Market Income in Thousands Income Targeting $81,600 The IZIP Consultancy

9. State Median State Median 80% State Median 120% State Median Buys House $203,000 $100 $120 $130 $140 $150 $10 $20 $30 $40 $50 $60 $70 $80 $90 Access to 32% of Market Income in Thousands Income Targeting $68,000 The IZIP Consultancy

10. State Median 80% State Median 80% State Median 120% State Median Buys House $163,000 $100 $120 $130 $140 $150 $10 $20 $30 $40 $50 $60 $70 $80 $90 Access to 16% of Market Income in Thousands Income Targeting $54,400 The IZIP Consultancy

11. Rental Market Access to 87% of the rental market Statewide Renter Household of 3 Purchase and Rental Markets are Very Different The IZIP Consultancy

12. New Hampshire Median Household Income by Tenure The IZIP Consultancy

13. Affordability Defined (or maybe explained) What is Subsidized Housing? Housing that is made affordable with a direct or indirect subsidy from a public body. Most public subsidies target low income households. Subsidized Housing = housing that is made affordable to low income households (low income housing). What is Public Housing? Subsidized Housing that is owned by a public entity. The IZIP Consultancy

14. Affordability Defined (or maybe explained) What is Workforce Housing? Housing that is affordable to households in the workforce without regard to subsidy. Typically targets households with incomes representing the local labor market (usually capped). Includes some Subsidized Housing. Does not include retirement or most age restricted housing. The IZIP Consultancy

15. Housing Affordability Prices have outpaced household incomes Sources: Median Purchase Price - NHHFA Purchase Price Database, Mortgage Interest Rates - Freddie Mac Survey Income - HUD Statewide Median Family Income for NH 2006 are preliminary numbers The IZIP Consultancy

16. Statewide Housing $300K All Homes, 1995-2007: 126% increase $244K Source: New Hampshire Housing The IZIP Consultancy

17. Statewide Housing $1,049 2 bdrm, 1995-2007: 67% increase $946 Source: New Hampshire Housing The IZIP Consultancy

18. Rockingham Hillsborough Cheshire $1,106 $1,058 $976 The IZIP Consultancy

19. 2.6% 2 Bedroom ’06-’07 ’06-’07 All Units 1.9% Change in CPI Shelter 4/06 to 4/07 Boston 2.78% US 2.92% Statewide $1,029 $946 The IZIP Consultancy

20. Statewide The IZIP Consultancy

21. 5% The IZIP Consultancy

22. The IZIP Consultancy

23. Statewide The IZIP Consultancy

24. Rental Market Issues • Statewide increases in gross rental costs reflect the increase in the cost of living… growth in the past year has been relatively flat • The variability of local market conditions probably influences rents more than overall economic change (for now). • Renter Incomes not climbing • Affordability still a problem • Conversion to condominiums limit the supply (approx. 3,500 since 2000) • Preservation of the assisted stock is becoming a significant issue The IZIP Consultancy

25. Median Price in 2006 $250,000 19% 3.4% Primary Home Purchase Price Frequency Statewide New Hampshire, 2003 2000 2002 2001 2004 2005 2006 Median Renter Income = $33,500 Estimated Median Renter Income = $34,300 Can Buy a $93,000 Home Can Buy a $102,000 Home Median Price in 2000 $143,000 The IZIP Consultancy

26. Residential real estate sales are down in each of the past two years The IZIP Consultancy Based on information from the Northern New England Real Estate Network for towns in New Hampshire

27. NH Real Estate Sales were down by • 19% in 2006 and another 11% in2007 Based on information from the Northern New England Real Estate Network for towns in New Hampshire The IZIP Consultancy

28. Increase of 100% Last summer residential listings reached an all time high Based on information from the Northern New England Real Estate Network for towns in New Hampshire The IZIP Consultancy

29. Increased Pressure to Reduce Prices Buyer’s Market Seller’s Market A declining pace of sales and an increase in listings means an increase in availableinventory Based on information from the Northern New England Real Estate Network for towns in New Hampshire The IZIP Consultancy

30. Highpoints $255,000 Has the increase in inventory resulted in a decline in median price ? 2005 Median $248,000 2007 Median $245,000 2006 Median $245,500 The IZIP Consultancy Based on information from the Northern New England Real Estate Network for towns in New Hampshire

31. Appreciating Market Market Transition Market Decline The year over year percent change in median monthly MLS Sale Price is down in 9 of the past 12 months Based on information from the Northern New England Real Estate Network for towns in New Hampshire The IZIP Consultancy

32. Prices may not be declining yet, but declining home price appreciation has been apparentfor a while. Source: NHHFA Purchase Price Market Data The IZIP Consultancy

33. Housing Affordability Prices have outpaced household incomes Sources: Median Purchase Price - NHHFA Purchase Price Database, Mortgage Interest Rates - Freddie Mac Survey Income - HUD Statewide Median Family Income for NH 2006 are preliminary numbers The IZIP Consultancy

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35. Subprime mortgages make up 63% of conventional loan foreclosures NH. The IZIP Consultancy

36. What’s the Big Deal? • Why should we care about affordability if the market is available for high end construction? • Why should we care about affordability if the new houses will only be filled with kids (and our taxes will go up!)? Perhaps it’s time to “reappraise” the conventional wisdom of the impact of housing development on our schools. The IZIP Consultancy

37. The All-American Family The Backdrop for Housing Growth Concerns… • Education typically represents 2/3 of local spending. • Conventional wisdom suggests that housing growth leads to school overcrowding The IZIP Consultancy

38. …and Their Costly Results • Growth Control Measures • Can prohibit projects by delaying completion and increasing the cost of capital • Zoning and Planning Requirements / Impact Fees • Can increase the “all in” cost of each lot • Regulatory Process Delays • Increase the cost of development capital • NIMBY (concern about “affordable” housing) • Can block a project by use of process The IZIP Consultancy

39. Reality Check: Students in New Houses • The Thibeault Study • Case Studies • Bedford, suburban in metropolitan setting • Hudson, southern NH bedroom community • Lebanon, small city not in metro area • Rochester, larger city with diversity of new housing types • Identify new units built in those communities (between 1998 – 2004) • Count the public school enrollees living in those units (match enrollment addresses) The IZIP Consultancy

40. Survey of 3,400 New Units The IZIP Consultancy

41. $57 - $121 $110 - $253 $27 - $128 $14 - $43 $158 - $412 $21 - $33 Economic Impact of a Constrained Housing Supply The Shapiro Study Indicator Range (million $ 2004) Personal Income Gross State Product Residential Investment Other Investment Sales State and Local Tax Revenues The Bottom Line: Jobs Lost 1,300 – 2,800 annually The IZIP Consultancy

42. Human and Social Impacts of a Constrained Housing Supply • Less housing choice • Overpayment for shelter • Doubling up / Substandard units • More demand on public subsidies • Displacement • Shift in the character of the homeless (more working families) • Longer commutes / Child care costs • Less community participation The IZIP Consultancy

43. Employer Impacts of a Constrained Housing Supply • Higher Absenteeism • Difficulty in Recruiting • Lower Retention Rate • Increased Training Costs • Upward Pressure on Wages • Reduced morale and productivity The IZIP Consultancy

44. Act II The King of Britton The Legal Obligation of Municipalities

45. The IZIP Consultancy

46. The Purpose of Regulation RSA 672:1, III-e (1990). All citizens of the state benefit from a balanced supply of housing which is affordable to persons and families of low and moderate income. Establishment of housing which is decent, safe, sanitary and affordable to low and moderate income persons and families is in the best interests of each community and the state of New Hampshire, and serves a vital public need. Opportunity for development of such housing, including so-called cluster development and the development of multi-family structures, should not be prohibited or discouraged by use of municipal planning and zoning powers or by unreasonable interpretation of such powers… The IZIP Consultancy

47. The Purpose of Zoning • RSA 674:16, I. For the purpose of promoting the health, safety, or the general welfare of the community, the local legislative body of any city, town, or county in which there are located unincorporated towns or unorganized places is authorized to adopt or amend a zoning ordinance The IZIP Consultancy

48. Britton v. Town of Chester (1991) 134 N.H. 434 • Zoning: • Multi-family strucures allowed in PRDs • PRDs allowed in R-2 districts • After deducing wetlands and steep slopes, only 1.73% of the town’s land area remained zoned and suitable • Planning board’s review criteria were “without reference to any objective criteria.” • Including the ability to hire an independent consultant (but see RSA 673:16 and 676:4,I(g)) The IZIP Consultancy

49. Britton (cont’d) • Action brought by a series of low- and moderate income families who lived in Chester, or who wanted to live in Chester; also brought by a builder committed to the construction of affordable housing. The IZIP Consultancy

50. Britton (cont’d) • What is “Community”? The Court said this: • “Municipalities are not isolated enclaves, far removed from the concerns of the area in which they are situated. As subdivisions of the State, they do not exist solely to serve their own residents, and their regulations should promote the general welfare, both within and without their boundaries. Therefore, we interpret the general welfare provision of the zoning enabling statute, RSA 674:14, to include the welfare of the ‘community,’ as defined in this case, in which a municipality is located and of which it is part.” The IZIP Consultancy