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Know the Law: Defining Workplace Housing

Written by: Christopher Swiniarski

Published in the Union Leader (12/3/2018)

Q: What exactly is workforce housing, and does my city or town have to provide it?

A. Several New Hampshire municipalities have faced recent proposals for “workforce housing” in their communities. Frequently these proposals face opposition from residents concerned about the negative impacts believed to be associated with workforce or affordable housing.

This article is not intended to discuss the pros and cons of workforce or low-income housing, but instead to shed light on what workforce housing actually is, and what each municipality’s obligations are to provide for it, under state law.

In New Hampshire, workforce housing must be affordable based on a percentage of the median income (determined by HUD, the federal Department of Housing and Urban Development) in a given area or county.

For a purchase, the debt service (i.e. mortgage payments, insurance, etc.) can be no more than approximately 30 percent of the area median income for a four-person family. For a rental, the rent and utilities can be no more than 30 percent of 60 percent of the median income of a three-person family.

For example, an affordable home purchase in the Manchester area can be no more than approximately $275,000. A rental can be no more than approximately $1,100 per month. In the Portsmouth area, those figures climb to approximately $330,000 and $1,300, respectively.

Many residents of these communities would think these prices are artificially low, and therefore have a negative impact on the value of the properties they own. The legislature limits this effect by expressly limiting the amount of mandated affordable housing required in any community.

RSA 674:59 simply requires that a municipality must provide “reasonable and realistic opportunities for the development of workforce housing.” RSA 674:59 further provides that “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.”

Municipalities and residents should then carefully evaluate existing housing stock and opportunities when considering any proposed development simply because it proposes “affordable” or “workforce” housing.

In further determining whether the opportunities provided in any given community are reasonable and realistic, municipalities should also consider the many tax credits and subsidies available to affordable housing developers. These incentives, combined with the increased density of affordable housing, frequently make affordable housing development more profitable than market-rate development.

Before adopting or amending an ordinance, or granting a variance therefrom, municipalities and residents should carefully examine the existing housing stock in their community combined with the profitability of any given proposal.

Chris Swiniarski can be reached at [email protected].

Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association.   We invite your questions of business law.  Questions and ideas for future columns should be addressed to:  McLane Middleton, 900 Elm Street, Manchester, NH 03101 or emailed to [email protected].  Know the Law provides general legal information, not legal advice.  We recommend that you consult a lawyer for guidance specific to your particular situation.

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