Filling the ‘missing middle’

By SCOTT MERRILL Monadnock Ledger-Transcript 

Published Dec. 11, 2022

Finding a new job in New Hampshire is often easier than finding an affordable place to live, and zoning ordinances, while not the only issue, are a big part of the problem, according to planning experts.

People in New Hampshire are paying the price for shortsighted planning, said former Peterborough Planning Board member Ivy Vann, who also served as a state representative before losing in this year’s primary. “We have made big houses out in the country really easy and infill compact design very difficult and often impossible.”

Vann, who said she has always had a love for the built environment, is a certified planner with the American Planning Association as well as the Congress for the New Urbanism. She focuses a lot of her attention these days on the relationship between residential density and patterns of socioeconomic diversity and isn’t afraid to express her passion – and at times her frustration – around land-use policies.

Fixing the shortage of homes isn’t going to be easy, Vann explained, because it is a problem more than 50 years in the making. She cited research done by planning experts in Massachusetts that served as the basis for the book “Neighborhood Defenders.” That book’s authors look at the ways people who oppose new housing projects often do so far more strongly than their broader communities.

The outcome of this, the authors found, influences zoning laws by diminishing housing stock and reproducing inequality. “The authors were able to determine that people who show up at land-use

meetings are richer, whiter, older, more likely to be homeowners and more opposed to housing than the town as a whole,” Vann said. “Every time a housing project goes before a land-use board, two things happen; it comes out smaller and more expensive.”

This is what happened with Sadie Halliday’s project, she explained, referring to the Peterborough Planning Board’s approval of a scaleddown version of a proposal from Halliday Properties, LLC, for 241 Union St. in Peterborough Oct. 12.

“[Halliday] didn’t get the density [she] needed to provide workforce housing units and in the end, they only got three units,” Vann said. The original proposal called for six units of affordable housing.

The cost of renting

The 2022 Residential Rental Cost Survey gathered responses from the owners of 21,385 market-rate (unsubsidized) rental housing units and found that the statewide median gross rent (including utilities) was $1,584 for two-bedroom units. This is up 5.7 percent over last year (and up 10 percent for all units). Rents statewide have increased annually over the past 14 years.

According to New Hampshire Housing Finance Authority (NHHFA), the state currently has a vacancy rate of 0.5 percent for all rentals, and “finding an apartment to rent in this market involves persistence, luck and networking.” NHHFA states that a vacancy rate of 5 percent is considered a balanced market for tenants and landlords. In comparison, the vacancy rate nationally is 5.8 percent and in the Northeast it is 4.9 percent, according to the U.S. Census Bureau.

Houses frozen in amber

Vann said that for the last 50 years, towns have constrained the construction of housing in general and made it harder for developers to build. New Hampshire, she said, has one of the highest constraints on the production of housing in the 50 states and this, she declared, is due in large part to restrictive zoning laws.

“We’ve privileged two kinds of housing: single-family homes on big lots and big apartment complexes out on the highway,” she said. “And nothing in between.”

This phenomenon, Vann said, is referred to as the missing middle – housing that spans the gap between single-family houses and large apartment buildings. This type of housing, according to the Incremental Development Authority, an organization that Vann has worked with, helps to strengthen local economies by allowing a broader diversity of housing types than most ordinances allow today.

Downzoning, which began in the 1970s in a lot of neighborhoods, Vann said, has left 75 percent to 80 percent of land zoned for residential single-family use only.

“Towns didn’t want to be Salem. It’s a problem all over the United States,” she said. “There’s a sense that everyone should be a homeowner, and everyone should be on a freestanding single-family lot. What we did was make illegal a lot of neighborhoods which have various types of missing-middle housing with triple-deckers and small apartment buildings. And now we can’t have any more of them.”

Vann said these neighborhoods, which were always single-family, are now “frozen in amber.”

“Suppose I bought a house in a subdivision and my kids are gone and my husband left me for his secretary. Now I’m living in a five-bedroom, four-bath house,” she said. “I can’t do anything with it but sell it as a single-family house. I can’t divide.”

Workforce housing

The term workforce housing refers to permanent housing intended as a primary year-round residence that is available to households regardless of age and is best provided near places of employment. Workforce housing can include, but is not limited to, subsidized and affordable housing, as well as market-rate and mixed-income housing.

According to NHHFA, New Hampshire law requires local land use regulations to allow “reasonable and realistic” opportunities for the development of workforce housing.

Residents eligible for workforce rental housing may earn up to 60 percent of the Area Median Income (AMI) for a family of three, or 100 percent of AMI for a family of four for those purchasing a home. Housing costs must be no more than 30 percent of income, inclusive of rent and utilities for apartments and mortgage, taxes and insurance for purchased homes. For rental housing, this means that a person with an annual income of up to $57,600 in New Hampshire would qualify for workforce housing, and rent would be no more than $1,440 per month, including utilities.

The National Association of Realtors (NAR) housing shortage tracker computes how many new housing permits are issued for every new job. In Manchester, where a housing shortage exists, a new single- family permit is issued for one in every six new jobs. In Cambridge, Mass., the ratio is one new permit for every 28 new jobs. Based on historical averages, one permit has been issued for every two new jobs. The NAR report states that there has been an “underbuilding gap” of 5.5 to 6.8 million housing units since 2001.

Inclusionary zoning

Inclusionary zoning refers to municipal ordinances that require a given share of new construction to be affordable by people with low to moderate incomes. Vann said she is not a fan of inclusionary zoning because it forces developers to spend money without knowing if they will be able to make a return on their investments.

“It’s a risky business and the way we manage land use makes it riskier,” she said, mentioning the Eco Village development plan that was recently granted approval by Peterborough’s Planning Board after three years. “Imagine if that developer had bought all of that land with nothing coming in and all of it going out. It’s a tactic opponents of housing use. They know if they drag it out long enough, the developer will have to fold because they can’t carry the cost any more.”

Vann works with the Incremental Development Alliance, a nonprofit organization that helps to promote small-scale real estate projects and to create incremental development in their towns.

“We talk about parcels polluted by oil but there are also parcels polluted by excessive waiting,” Vann said, citing Eco Village as an example. “If it’s too much, too long, we tell people to walk away from it. It was a shame [Eco Village] took so long to sort out. There was plenty of blame to go around.”

Vann said that when Eco Village developer Akhil Garland came to the Planning Board in 2019, the board was favorable for the quarter acre lot sizes being proposed.

“[The developer] came in using a piece of innovative land use code that allowed for smaller lot sizes so long as there wouldn’t be more than what would be on the big lot and the Planning Board was favorable,” she said. “The problem is that the board has changed and they have pushed for a change to the code that makes it impossible for us to grant quarter acre lot sizes for anyone else. Why would you want to use up land that could be left alone when you could use so much less?”

Zoning law changes

New Hampshire House Bill 1661 went into effect in August and makes the application process for development more transparent and potentially faster. The law requires final written decisions and detailed descriptions of all conditions necessary within 90 days unless the applicant agrees to an extension. If the zoning board doesn’t have enough information to make a decision, the board may deny that application.

Upon a board’s finding that an application is complete, the law states that boards must make a decision in 65 days. In cases where a board determines the application is a development of regional impact, planning boards have an additional 30 days. The law also eliminates the ability for planning boards to get a 90-day extension. Any extension is now possible only if the applicant agrees to waive the deadline.

If a court determines that the failure of the selectmen or the city council to act was not justified, the court may order the municipality to pay the applicant’s reasonable costs, including attorney’s fees, incurred in securing the order.

Natch Greyes, government affairs counsel for the New Hampshire Municipal Association (NHMA) – which trains municipal officials on land-use issues and engages in legislative advocacy – said one of the components of HB 1661 involves training to increase awareness of existing zoning laws among planning and zoning board members across the state. NHMA has been working with the Office of Planning and Development, he said, and recently did a presentation of the bill at the NHMA’s annual conference.

Another change includes relaxed conditions on the local level for older persons, those 55 and older. Under HB 1661, incentives in zoning laws already in place that apply to housing for older persons will now apply to workforce housing as well. That change will take effect July 1, 2023.

Greyes said NHMA is working on creating infrastructure incentives for the next legislative session to help create more funding for housing projects.

“That’s the next step that we’re working on, regarding incentives,” Greyes said, adding that there is no silver bullet when it comes to fixing the housing crisis in New Hampshire.

“[The problem] isn’t just rules at the local level but also finding developers who are willing to build,” he said, explaining that material supply and labor costs can lead to affordability gaps. “Towns want their economies to grow to and they know how hard it is when people can’t find housing.”

What makes a home affordable?

After speaking with developers this past summer about what makes a house affordable and what the cheapest way to build one is, Greyes said the consensus was to build with more density. But this is problematic because they only way to do that is on shared water and sewer, “and there isn’t a lot of that in New Hampshire.”

Greyes explained that over half of New Hampshire residents are on private wells, and municipal upgrades can run in the tens of millions of dollars.

“These things come together and it’s difficult at the local level because you’re not in charge of making decisions on who builds what and where but just whether the proposal matches what local ordinances require and that may end up with widely spaced houses and those are more expensive,” he said.

Greyes described the issue as a chicken-and-egg problem.

“If you build a water and sewer line out into the middle of nowhere, you have to pay for that but you can’t build at higher density in the middle of nowhere if there aren’t water and sewer lines,” he said.

“What we’re advocating for is more funding for these projects so when looking at their master plan they can look at it and say, ‘We want increased density in certain areas of town.’ We’re trying to figure out how to do these things in a cost-effective way because everyone needs workers and everyone needs houses.”

Promising changes, but work remains

Vann’s response to whether she has hope for creating more missing-middle housing is “yes and no.”

“No, because it’s very hard and yes because in the last year-and-a-half we’ve seen people become more aware that zoning is a problem,” she said.

In 2020 Vann proposed a bill that would allow any lot served by municipal water and sewer to serve four dwellings. It was proposed again in 2021 and it made it out of committee with a positive vote, she said, but was tabled at the last minute.

“We had the votes,” she said. “That was a positive change that happened. People are starting to understand that code is the problem. Single- family doesn’t work for everyone.”

One of Vann’s success stories is the recently completed Wilson Farm Village, a housing development off of Route 101 in Peterborough that came about because of a piece of code allowed infill in places that have water and sewer. On a recent walk through the development Vann said, “One of the things that makes this a great little neighborhood for the people who live here and for the town are the short frontages,” explaining that each lot is 50 feet from the road and that this creates an enclosed feeling for residents and costs the town much less to maintain than standard subdivisions.

In 2018, Vann, along with others from the Planning Board, proposed a rewrite of the town’s zoning code that would allow more projects similar to Willow Farm Village and more effective use of existing infrastructure, but this failed at Town Meeting.

“There was a lot of misinformation that was passed out about what the code would do,” she said, explaining that a petition was formed in 2019 that rescinded the code that allowed for projects like Willow Farm Village. “When I get depressed I come down here and look, and I think that if it wasn’t for the work we did in 2017 this wouldn’t exist.”

Vann said she would like to see towns that were once considered working-class become that again, but that continuing down the current path doesn’t work.

“This generation’s affordable housing is the last generation’s market-rate housing,” she said, explaining that when new places aren’t built, even at market rate, others further down the economic line can’t move. “We need all the market- rate housing we can get.”