affordable housing: reality, law, and opportunity the izip consultancy may 30, 2008 bedford, new...
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Affordable Housing: Reality, Law, and Opportunity
Affordable Housing: Reality, Law, and Opportunity
The IZIP Consultancy
May 30, 2008
Bedford, New Hampshire
The IZIP Consultancy
May 30, 2008
Bedford, New Hampshire
Benjamin D. Frost, Esq., AICP
Director of Public Affairs
New Hampshire Housing
Benjamin D. Frost, Esq., AICP
Director of Public Affairs
New Hampshire Housing
The IZIP ConsultancyThe IZIP Consultancy33
Workforce Housing in Your CommunityWorkforce 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
A Play in Four Acts
Whatzit?
The King of Britton
Just Do It
Show Me the Money!
With a Little Help From My Friends
Act IAct I
Whatzit?
Affordability Defined
Whatzit?
Affordability Defined
The IZIP ConsultancyThe IZIP Consultancy55
What do you mean when you say “Affordable What do you mean when you say “Affordable Housing”?Housing”?
Workforce Housing?
Workforce Housing?
Subsidized Housing?
Subsidized Housing?Low Income Housing?
Low Income Housing?
Public Housing?Public Housing?
The IZIP ConsultancyThe IZIP Consultancy66
Affordability Defined
(or maybe explained)
Affordability Defined
(or maybe explained)Affordability depends on price and the ability to pay.Affordability depends on price and the ability to pay.
Income is an indicator of a household’s ability to pay.Income is an indicator of a household’s ability to pay.
Affordability - defined in the context of who has limited access to the market. Targeting
price ability to pay.
The IZIP ConsultancyThe IZIP Consultancy77
Frequency of 2005 MLS Solds, Statewide, All Units
0
200
400
600
800
1,000
1,200
1,400
$3
0,0
00
$5
0,0
00
$7
0,0
00
$9
0,0
00
$1
10
,00
0
$1
30
,00
0
$1
50
,00
0
$1
70
,00
0
$1
90
,00
0
$2
10
,00
0
$2
30
,00
0
$2
50
,00
0
$2
70
,00
0
$2
90
,00
0
$3
10
,00
0
$3
30
,00
0
$3
50
,00
0
$3
70
,00
0
$3
90
,00
0
$4
10
,00
0
$4
30
,00
0
$4
50
,00
0
$4
70
,00
0
$4
90
,00
0
$5
10
,00
0
$5
30
,00
0
Nu
mb
er
of
Sa
les
Affordability Defined (or maybe explained)
Affordability Defined (or maybe explained)
Income of $160,000
Buys House $478,000
Access to 92% of the
Market
Purchase MarketPurchase Market
The IZIP ConsultancyThe IZIP Consultancy88
State Median
80% State Median
120% State
Median
$10
$20
$30
$40
$50
$60
$70
$80
$90
Income in Thousands
$10
0
$12
0
$13
0
$14
0
$15
0
Frequency of 2005 MLS Solds, Statewide, All Units
0
200
400
600
800
1,000
1,200
1,400
$3
0,0
00
$5
0,0
00
$7
0,0
00
$9
0,0
00
$1
10
,00
0
$1
30
,00
0
$1
50
,00
0
$1
70
,00
0
$1
90
,00
0
$2
10
,00
0
$2
30
,00
0
$2
50
,00
0
$2
70
,00
0
$2
90
,00
0
$3
10
,00
0
$3
30
,00
0
$3
50
,00
0
$3
70
,00
0
$3
90
,00
0
$4
10
,00
0
$4
30
,00
0
$4
50
,00
0
$4
70
,00
0
$4
90
,00
0
$5
10
,00
0
$5
30
,00
0
Nu
mb
er
of
Sa
les
Income TargetingIncome Targeting
120% State Median
$81,600Buys House
$244,000
Access to 47% of Market
The IZIP ConsultancyThe IZIP Consultancy99
State Median
80% State
Median
120% State
Median
$1
0
$2
0
$3
0
$4
0
$5
0
$6
0
$7
0
$8
0
$9
0
Income in Thousands
$1
00 $
12
0 $1
30 $
14
0 $1
50
Income TargetingIncome Targeting
Frequency of 2005 MLS Solds, Statewide, All Units
0
200
400
600
800
1,000
1,200
1,400
$3
0,0
00
$5
0,0
00
$7
0,0
00
$9
0,0
00
$1
10
,00
0
$1
30
,00
0
$1
50
,00
0
$1
70
,00
0
$1
90
,00
0
$2
10
,00
0
$2
30
,00
0
$2
50
,00
0
$2
70
,00
0
$2
90
,00
0
$3
10
,00
0
$3
30
,00
0
$3
50
,00
0
$3
70
,00
0
$3
90
,00
0
$4
10
,00
0
$4
30
,00
0
$4
50
,00
0
$4
70
,00
0
$4
90
,00
0
$5
10
,00
0
$5
30
,00
0
Nu
mb
er
of
Sa
les
State Median
$68,000
Buys House
$203,000
Access to 32% of Market
The IZIP ConsultancyThe IZIP Consultancy1010
State Median
80% State
Median
120% State
Median
$1
0
$2
0
$3
0
$4
0
$5
0
$6
0
$7
0
$8
0
$9
0
Income in Thousands
$1
00 $
12
0 $1
30 $
14
0 $1
50
Income TargetingIncome Targeting
Frequency of 2005 MLS Solds, Statewide, All Units
0
200
400
600
800
1,000
1,200
1,400
$3
0,0
00
$5
0,0
00
$7
0,0
00
$9
0,0
00
$1
10
,00
0
$1
30
,00
0
$1
50
,00
0
$1
70
,00
0
$1
90
,00
0
$2
10
,00
0
$2
30
,00
0
$2
50
,00
0
$2
70
,00
0
$2
90
,00
0
$3
10
,00
0
$3
30
,00
0
$3
50
,00
0
$3
70
,00
0
$3
90
,00
0
$4
10
,00
0
$4
30
,00
0
$4
50
,00
0
$4
70
,00
0
$4
90
,00
0
$5
10
,00
0
$5
30
,00
0
Nu
mb
er
of
Sa
les
$54,400
Buys House
$163,000
Access to 16% of Market
80% State
Median
The IZIP ConsultancyThe IZIP Consultancy1111
Purchase and Rental Markets are Very DifferentPurchase and Rental Markets are Very Different
Percent of 2-Bedroom Units in 2005 Rental Cost Survey
Affordable at Selected Household Incomes
0.2%
10.4%
86.6%
97.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$18,360 $30,600 $48,960 $61,200or
30%or
50%or
80%or
100%
of Statewide Median Income for 3 Person Household
Percent of 2-Bedroom Units in 2005 Rental Cost Survey
Affordable at Selected Household Incomes
0.2%
10.4%
86.6%
97.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$18,360 $30,600 $48,960 $61,200or
30%or
50%or
80%or
100%
of Statewide Median Income for 3 Person Household
Statewide
Rental MarketRental Market
Renter Household of 3
Access to 87% of the rental market
The IZIP ConsultancyThe IZIP Consultancy1212
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
2000 2001 2002 2003 2004 2005
All Households Owner Occupied Households Renter Occupied Households
New Hampshire Median Household Income by Tenure
The IZIP ConsultancyThe IZIP Consultancy1313
Affordability Defined (or maybe explained)
Affordability Defined (or maybe explained)What is Subsidized Housing?What is Subsidized Housing?
Housing that is made affordable with a direct or indirect subsidy from a public body.
Housing that is made affordable with a direct or indirect subsidy from a public body.
Subsidized Housing = housing that is made affordable to low income households (low
income housing).
Subsidized Housing = housing that is made affordable to low income households (low
income housing).
Most public subsidies target low income households.
Most public subsidies target low income households.
What is Public Housing?What is Public Housing?
Subsidized Housing that is owned by a public entity.
Subsidized Housing that is owned by a public entity.
The IZIP ConsultancyThe IZIP Consultancy1414
What is Workforce Housing?What is Workforce Housing?
Housing that is affordable to households in the workforce without regard to subsidy.
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).
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.
Includes some Subsidized Housing.
Does not include retirement or most age restricted housing.
Affordability Defined (or maybe explained)
Affordability Defined (or maybe explained)
The IZIP ConsultancyThe IZIP Consultancy1515
Housing AffordabilityHousing AffordabilityPrices have outpaced household
incomesPrices 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
Median Purchase Price, Median Family Income and Mortgage Interest Rates
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Price
and In
com
e
0%
2%
4%
6%
8%
10%
12%
Mort
gag
e R
ates
Median Purchase Price HUD Median Family Income Mortgage Interest Rates
The IZIP ConsultancyThe IZIP Consultancy1616
Median Purchase Price of Primary Homes
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
2007Jan-July
20062005200420032002200120001999199819971996199519941993199219911990
All Homes Existing Homes New Homes
All Homes, 1995-2007: 126% increase
Statewide Housing
Statewide Housing
Source: New Hampshire Housing
$300K
$244K
The IZIP ConsultancyThe IZIP Consultancy1717
Median Gross Rental Cost
$350
$450
$550
$650
$750
$850
$950
$1,050
$1,150
200720062005200420032002200120001999199819971996199519941993199219911990
Ren
t
All Units 2-Bedroom Units
Statewide HousingStatewide Housing
$946
$1,049
2 bdrm, 1995-2007: 67% increase
Source: New Hampshire Housing
The IZIP ConsultancyThe IZIP Consultancy1818
Coos$606
Grafton$855 Carroll
$845
Merrimack$1020
Cheshire$976
Hillsborough$1058
Rockingham$1106
Sullivan$893
Belknap$867
Strafford$956
.
Monthly Median Gross Rental Cost
2007 Median Monthly Gross Rent
For 2-Bedroom Units
Less than $750
$750 to $900
$900 to $1,000
More than $1,000
Hillsborough
$1,058
Rockingham
$1,106Cheshire
$976
Percent of State Renter Occupied Housing
2.8%
2.8%
3.2%
4.0%
5.7%
6.9%
10.5%
11.0%
17.7%
35.2%
Coos
Carroll
Sullivan
Belknap
Cheshire
Grafton
Strafford
Merrimack
Rockingham
Hillsborough
The IZIP ConsultancyThe IZIP Consultancy1919
Median Gross Rental Cost
$350
$450
$550
$650
$750
$850
$950
$1,050
$1,150
200720062005200420032002200120001999199819971996199519941993199219911990
Ren
t
All Units 2-Bedroom Units
$1,029
$946
Statewide
2.6%’06-’072 Bedroom
1.9%’06-’07All Units
Boston 2.78%
Change in CPI Shelter 4/06 to 4/07
US 2.92%
The IZIP ConsultancyThe IZIP Consultancy2020
Vacancy Rate of Rental Housing Units
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
200720062005200420032002200120001999199819971996199519941993199219911990
All Units 2-Bedroom Units
Statewide
All Units 2-Bedroom Units
YearVacancy
RateSample
SizeVacancy
RateSample
Size2007 4.2% 13,501 3.4% 6,8002006 3.7% 13,760 2.8% 6,9242005 3.1% 13,157 2.8% 6,7932004 2.6% 12,266 2.4% 6,5812003 1.9% 13,166 1.8% 7,1712002 1.1% 10,783 0.9% 5,7762001 1.0% 9,376 0.9% 5,0382000 1.0% 10,643 0.7% 5,815
The IZIP ConsultancyThe IZIP Consultancy2121
Vacancy Rate of Rental Housing Units
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
200720062005200420032002200120001999199819971996199519941993199219911990
All Units 2-Bedroom Units
Median Gross Rental Cost
$350
$450
$550
$650
$750
$850
$950
$1,050
$1,150
200720062005200420032002200120001999199819971996199519941993199219911990
Ren
t
All Units 2-Bedroom Units
5%
The IZIP ConsultancyThe IZIP Consultancy2222
New Hampshire Median Household Income By Tenure
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
$55,000
$60,000
$65,000
$70,000
2000 2001 2002 2003 2004 2005
All Households Owner Occupied Households Renter Occupied Households
The IZIP ConsultancyThe IZIP Consultancy2323
Percent of 2-Bedroom Units in 2007 Rental Cost Survey
Affordable at Selected Household Incomes
0.1%
9.5%
37.7%
84.1%
97.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$19,224 $32,040 $38,448 $51,264 $64,080or
30%or
50%or
80%or
100%
of Statewide Median Income for 3 Person Household
or 60%
Statewide
The IZIP ConsultancyThe IZIP Consultancy2424
Rental Market Issues
Statewide increases in gross rental costs reflect the increase in the cost of living… growth in the past year has been relatively flat
The variability of local market conditions probably influences rents more than overall economic change (for now).
Renter Incomes not climbing
Affordability still a problem
Conversion to condominiums limit the supply (approx. 3,500 since 2000)
Preservation of the assisted stock is becoming a significant issue
The IZIP ConsultancyThe IZIP Consultancy2525
0
200
400
600
800
1,000
1,200
1,400$
30
,00
0
$6
0,0
00
$9
0,0
00
$1
20
,00
0
$1
50
,00
0
$1
80
,00
0
$2
10
,00
0
$2
40
,00
0
$2
70
,00
0
$3
00
,00
0
$3
30
,00
0
$3
60
,00
0
$3
90
,00
0
$4
20
,00
0
$4
50
,00
0
$4
80
,00
0
$5
10
,00
0
Purchase Price
Nu
mb
er
of
Sa
les
Primary Home Purchase Price Frequency Statewide New Hampshire, 2000
0
200
400
600
800
1,000
1,200
1,400$
30
,00
0
$6
0,0
00
$9
0,0
00
$1
20
,00
0
$1
50
,00
0
$1
80
,00
0
$2
10
,00
0
$2
40
,00
0
$2
70
,00
0
$3
00
,00
0
$3
30
,00
0
$3
60
,00
0
$3
90
,00
0
$4
20
,00
0
$4
50
,00
0
$4
80
,00
0
$5
10
,00
0
Purchase Price
Nu
mb
er
of
Sa
les
200120022003200420052006
0
200
400
600
800
1,000
1,200
1,400$
30
,00
0
$6
0,0
00
$9
0,0
00
$1
20
,00
0
$1
50
,00
0
$1
80
,00
0
$2
10
,00
0
$2
40
,00
0
$2
70
,00
0
$3
00
,00
0
$3
30
,00
0
$3
60
,00
0
$3
90
,00
0
$4
20
,00
0
$4
50
,00
0
$4
80
,00
0
$5
10
,00
0
Purchase Price
Nu
mb
er
of
Sa
les
0
200
400
600
800
1,000
1,200
1,400$
30
,00
0
$6
0,0
00
$9
0,0
00
$1
20
,00
0
$1
50
,00
0
$1
80
,00
0
$2
10
,00
0
$2
40
,00
0
$2
70
,00
0
$3
00
,00
0
$3
30
,00
0
$3
60
,00
0
$3
90
,00
0
$4
20
,00
0
$4
50
,00
0
$4
80
,00
0
$5
10
,00
0
Purchase Price
Nu
mb
er
of
Sa
les
0
200
400
600
800
1,000
1,200
1,400$
30
,00
0
$6
0,0
00
$9
0,0
00
$1
20
,00
0
$1
50
,00
0
$1
80
,00
0
$2
10
,00
0
$2
40
,00
0
$2
70
,00
0
$3
00
,00
0
$3
30
,00
0
$3
60
,00
0
$3
90
,00
0
$4
20
,00
0
$4
50
,00
0
$4
80
,00
0
$5
10
,00
0
Purchase Price
Nu
mb
er
of
Sa
les
0
200
400
600
800
1,000
1,200
1,400$
30
,00
0
$6
0,0
00
$9
0,0
00
$1
20
,00
0
$1
50
,00
0
$1
80
,00
0
$2
10
,00
0
$2
40
,00
0
$2
70
,00
0
$3
00
,00
0
$3
30
,00
0
$3
60
,00
0
$3
90
,00
0
$4
20
,00
0
$4
50
,00
0
$4
80
,00
0
$5
10
,00
0
Purchase Price
Nu
mb
er
of
Sa
les
0
200
400
600
800
1,000
1,200
1,400$
30
,00
0
$6
0,0
00
$9
0,0
00
$1
20
,00
0
$1
50
,00
0
$1
80
,00
0
$2
10
,00
0
$2
40
,00
0
$2
70
,00
0
$3
00
,00
0
$3
30
,00
0
$3
60
,00
0
$3
90
,00
0
$4
20
,00
0
$4
50
,00
0
$4
80
,00
0
$5
10
,00
0
Purchase Price
Nu
mb
er
of
Sa
les
19%
3.4%
Median Renter Income = $33,500
Can Buy a $93,000 Home
Estimated Median Renter Income = $34,300
Can Buy a $102,000 Home
Median Price in 2000
$143,000
Median Price in 2006
$250,000
The IZIP ConsultancyThe IZIP Consultancy2626
Residential real estate sales are down in each of the past two years
New Hampshire MLS Closed Sales
0
500
1,000
1,500
2,000
2,500
3,000
Jan
-03
Mar
-03
May
-03
Jul-
03S
ep-0
3N
ov-
03Ja
n-0
4M
ar-0
4M
ay-0
4Ju
l-04
Sep
-04
No
v-04
Jan
-05
Mar
-05
May
-05
Jul-
05S
ep-0
5N
ov-
05Ja
n-0
6M
ar-0
6M
ay-0
6Ju
l-06
Sep
-06
No
v-06
Jan
-07
Mar
-07
May
-07
Jul-
07S
ep-0
7N
ov-
07
Based on information from the Northern New England Real Estate Network for towns in New Hampshire
The IZIP ConsultancyThe IZIP Consultancy2727
NH Real Estate Sales were down by 19% in 2006 and another 11% in 2007
Based on information from the Northern New England Real Estate Network for towns in New Hampshire
New Hampshire Cumulative MLS Sales
0
5,000
10,000
15,000
20,000
25,000
2005 2006 2007
The IZIP ConsultancyThe IZIP Consultancy2828
New Hampshire, MLS Current Listings
0
5,000
10,000
15,000
20,000
25,000
Ap
r-03
Jun
-03
Au
g-0
3O
ct-0
3D
ec-0
3F
eb-0
4A
pr-
04Ju
n-0
4A
ug
-04
Oct
-04
Dec
-04
Feb
-05
Ap
r-05
Jun
-05
Au
g-0
5O
ct-0
5D
ec-0
5F
eb-0
6A
pr-
06Ju
n-0
6A
ug
-06
Oct
-06
Dec
-06
Feb
-07
Ap
r-07
Jun
-07
Au
g-0
7O
ct-0
7D
ec-0
7
Last summer residential listings reached an all time high
Increase of 100%
Based on information from the Northern New England Real Estate Network for towns in New Hampshire
The IZIP ConsultancyThe IZIP Consultancy2929
MLS Housing InventoryMonths to Absorb Current Listings at Prior 12 months Sales Pace
0
2
4
6
8
10
12
14
16
Ap
r-03
Ju
n-0
3A
ug
-03
Oct-
03
Dec-0
3F
eb
-04
Ap
r-04
Ju
n-0
4A
ug
-04
Oct-
04
Dec-0
4F
eb
-05
Ap
r-05
Ju
n-0
5A
ug
-05
Oct-
05
Dec-0
5F
eb
-06
Ap
r-06
Ju
n-0
6A
ug
-06
Oct-
06
Dec-0
6F
eb
-07
Ap
r-07
Ju
n-0
7A
ug
-07
Oct-
07
Dec-0
7
Mo
nth
sA declining pace of sales and an increase in
listings means an increase in available
inventory
Based on information from the Northern New England Real Estate Network for towns in New Hampshire
Seller’s Market
Buyer’s Market
Increased Pressure to Reduce Prices
The IZIP ConsultancyThe IZIP Consultancy3030
MLS Median Sale Price
$120,000
$140,000
$160,000
$180,000
$200,000
$220,000
$240,000
$260,000
$280,000
Jan
-03
Mar-
03
May-0
3Ju
l-03
Sep
-03
No
v-0
3Jan
-04
Mar-
04
May-0
4Ju
l-04
Sep
-04
No
v-0
4Jan
-05
Mar-
05
May-0
5Ju
l-05
Sep
-05
No
v-0
5Jan
-06
Mar-
06
May-0
6Ju
l-06
Sep
-06
No
v-0
6Jan
-07
Mar-
07
May-0
7Ju
l-07
Sep
-07
No
v-0
7Jan
-08
Has the increase in inventory resulted in a decline in median
price ?
Based on information from the Northern New England Real Estate Network for towns in New Hampshire
Highpoints $255,000
2005 Median $248,0002006 Median $245,500
2007 Median $245,000
The IZIP ConsultancyThe IZIP Consultancy3131
Year Over Year Percent Change in Monthly Median MLS Sale Price - All Units
-10%
-5%
0%
5%
10%
15%
20%
Jan-0
3
Mar
-03
May
-03
Jul-03
Sep
-03
Nov-
03
Jan-0
4M
ar-0
4
May
-04
Jul-04
Sep
-04
Nov-
04Ja
n-0
5
Mar
-05
May
-05
Jul-05
Sep
-05
Nov-
05
Jan-0
6M
ar-0
6
May
-06
Jul-06
Sep
-06
Nov-
06Ja
n-0
7
Mar
-07
May
-07
Jul-07
Sep
-07
Nov-
07
Perc
ent C
hange
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
Market Transition
Appreciating Market
Market Decline
The IZIP ConsultancyThe IZIP Consultancy3232
Prices may not be declining yet, but declining home price
appreciation has been apparent
for a while.
Prices may not be declining yet, but declining home price
appreciation has been apparent
for a while.
Source: NHHFA Purchase Price Market Data
Percent Change In Median Purchase Price From Prior Year
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
All Homes Existing Homes New Homes
Percent Change In Median Purchase Price From Prior Year
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
All Homes Existing Homes New Homes
The IZIP ConsultancyThe IZIP Consultancy3333
Median Purchase Price, Median Family Income and Mortgage Interest Rates
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Pri
ce a
nd
In
co
me
0%
2%
4%
6%
8%
10%
12%
Mo
rtg
ag
e R
ate
s
Median Purchase Price HUD Median Family Income Mortgage Interest Rates
Median Purchase Price, Median Family Income and Mortgage Interest Rates
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
Pri
ce a
nd
In
co
me
0%
2%
4%
6%
8%
10%
12%
Mo
rtg
ag
e R
ate
s
Median Purchase Price HUD Median Family Income Mortgage Interest Rates
Housing AffordabilityHousing AffordabilityPrices 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 ConsultancyThe IZIP Consultancy3434Source: Mortgage Bankers Association, National Delinquency Survey
Prepared By: New Hampshire Housing Finance Authority, Office of Policy, Planning and Communication
Percent of New Hampshire Mortgage Loans With Foreclosure Initiation Started In Quarter
0%
1%
2%
3%
4%
5%
6%
7%
Q1-20
04
Q2-20
04
Q3-20
04
Q4-20
04
Q1-20
05
Q2-20
05
Q3-20
05
Q4-20
05
Q1-20
06
Q2-20
06
Q3-20
06
Q4-20
06
Q1-20
07
Q2-20
07
Q3-20
07
Q4-20
07
Prime Fixed Prime Adjustable Subprime Fixed Subprime Adjustable
The IZIP ConsultancyThe IZIP Consultancy3535
NH Mortgage Market and Foreclosure ShareMajor Conventional Loan Categories, Q4-2007
78.2%
10.2%6.4% 5.1%
21.6%14.8% 15.7%
47.9%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Prime Fixed Prime Adjustable Subprime Fixed SubprimeAdjustable
Percent of Market Percent of Foreclosures
Subprime mortgages make up 63% of conventional loan foreclosures NH.
Source: Mortgage Bankers Association, National Delinquency Survey
Prepared By: New Hampshire Housing Finance Authority, Office of Policy, Planning and Communication
The IZIP ConsultancyThe IZIP Consultancy3636
What’s the Big Deal?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!)?
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 Perhaps it’s time to “reappraise” the conventional wisdom of the impact of conventional wisdom of the impact of housing development on our schools.housing development on our schools.
The IZIP ConsultancyThe IZIP Consultancy3737
The Backdrop for Housing Growth Concerns…
The Backdrop for Housing Growth Concerns…
Education typically represents 2/3 of local spending.Conventional wisdom suggests that housing growth leads to school overcrowding
Education typically represents 2/3 of local spending.Conventional wisdom suggests that housing growth leads to school overcrowding
TheThe
All-AmericanAll-American
FamilyFamilyFamilyFamily
The IZIP ConsultancyThe IZIP Consultancy3838
…and Their Costly Results…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
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 lotRegulatory Process Delays
Increase the cost of development capital NIMBY (concern about “affordable” housing)
Can block a project by use of process
The IZIP ConsultancyThe IZIP Consultancy3939
Reality Check: Students in New Houses
Reality Check: Students in New Houses
The Thibeault StudyCase 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 typesIdentify new units built in those communities
(between 1998 – 2004)Count the public school enrollees living in those units
(match enrollment addresses)
The Thibeault StudyCase 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 typesIdentify new units built in those communities
(between 1998 – 2004)Count the public school enrollees living in those units
(match enrollment addresses)
The IZIP ConsultancyThe IZIP Consultancy4040
Survey of 3,400 New UnitsSurvey of 3,400 New Units
Case Study School Generation by Unit Type
0.55
0.12
0.330.42
-0.100.200.300.400.500.600.70
All
Sin
gle
Fa
mil
y
All
Co
nd
om
iniu
ms
All
Mo
bil
eH
om
es
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tal:
All
Co
mm
un
itie
s,
All
Ty
pe
sPu
bli
c E
nro
llm
en
t p
er
Un
itCase Study School Generation by Unit Type
0.55
0.12
0.330.42
-0.100.200.300.400.500.600.70
All
Sin
gle
Fa
mil
y
All
Co
nd
om
iniu
ms
All
Mo
bil
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om
es
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tal:
All
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un
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s,
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The IZIP ConsultancyThe IZIP Consultancy4141
The Shapiro StudyThe Shapiro StudyIndicatorIndicator Range (million $ 2004)Range (million $ 2004)
Personal IncomeGross State Product Residential InvestmentOther Investment Sales State and Local Tax Revenues
$57 - $121$57 - $121$57 - $121$57 - $121$110 - $253$110 - $253$110 - $253$110 - $253$27 - $128$27 - $128$27 - $128$27 - $128$14 - $43$14 - $43$14 - $43$14 - $43
$158 - $412$158 - $412$158 - $412$158 - $412$21 - $33$21 - $33$21 - $33$21 - $33
The Bottom Line: Jobs Lost 1,300 – 2,800 annually
The Bottom Line: Jobs Lost 1,300 – 2,800 annually
Economic Impact of a Constrained Housing Supply
Economic Impact of a Constrained Housing Supply
The IZIP ConsultancyThe IZIP Consultancy4242
Human and Social Impacts of a Constrained Housing Supply
Human and Social Impacts of a Constrained Housing Supply
Less housing choiceOverpayment for shelterDoubling up / Substandard unitsMore demand on public subsidiesDisplacementShift in the character of the homeless (more
working families)Longer commutes / Child care costsLess community participation
Less housing choiceOverpayment for shelterDoubling up / Substandard unitsMore demand on public subsidiesDisplacementShift in the character of the homeless (more
working families)Longer commutes / Child care costsLess community participation
The IZIP ConsultancyThe IZIP Consultancy4343
Employer Impacts of a Constrained Housing Supply
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
Higher Absenteeism
Difficulty in Recruiting
Lower Retention Rate Increased Training Costs
Upward Pressure on Wages
Reduced morale and productivity
Act IIAct II
The King of Britton
The Legal Obligation of Municipalities
The King of Britton
The Legal Obligation of Municipalities
The IZIP ConsultancyThe IZIP Consultancy4545
The IZIP ConsultancyThe IZIP Consultancy4646
The Purpose of RegulationThe 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…
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 ConsultancyThe IZIP Consultancy4747
The Purpose of ZoningThe 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
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 ConsultancyThe IZIP Consultancy4848
Britton v. Town of Chester (1991)
Britton v. Town of Chester (1991)
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))
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))
134 N.H. 434134 N.H. 434
The IZIP ConsultancyThe IZIP Consultancy4949
Britton (cont’d)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.
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 ConsultancyThe IZIP Consultancy5050
Britton (cont’d)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.”
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 ConsultancyThe IZIP Consultancy5151
Britton in ContextBritton in Context
Beck v. Town of Raymond, 118 N.H. 793 (1978)“…each municipality [should] bear its
fair share of the burden of increased growth.”“Towns may not refuse to confront the
future by building a moat around themselves and pulling up the drawbridge.”
Britton: “The town of Chester appears willing to lower that bridge only for people who can afford a single-family home on a two-acre lot or a duplex on a three acre lot. Others are realistically prohibited from crossing.”
Upshot of Britton:
Beck v. Town of Raymond, 118 N.H. 793 (1978)“…each municipality [should] bear its
fair share of the burden of increased growth.”“Towns may not refuse to confront the
future by building a moat around themselves and pulling up the drawbridge.”
Britton: “The town of Chester appears willing to lower that bridge only for people who can afford a single-family home on a two-acre lot or a duplex on a three acre lot. Others are realistically prohibited from crossing.”
Upshot of Britton: The Builder’s Remedy!The Builder’s Remedy!
The IZIP ConsultancyThe IZIP Consultancy5252
Britton’s Family TreeBritton’s Family Tree
Great Bridge Properties v. Town of Ossipee, (Strafford County 04-E-110) (2005)
Zoning: multi-family uses only in existing structures, and limited to four units per structure; only one principal structure per parcel; requires sewer hookup
Site: 3.5 of 9 acres to be developed; ready highway access, no wetlands
Development: six 4-unit structures
Great Bridge Properties v. Town of Ossipee, (Strafford County 04-E-110) (2005)
Zoning: multi-family uses only in existing structures, and limited to four units per structure; only one principal structure per parcel; requires sewer hookup
Site: 3.5 of 9 acres to be developed; ready highway access, no wetlands
Development: six 4-unit structures
The IZIP ConsultancyThe IZIP Consultancy5353
Britton’s Family TreeBritton’s Family Tree
Great Bridge Properties v. Ossipee
ZBA Chairman at Hearing on Variances:“…when this ordinance was written it was
known at the time that it was exclusionary. It was written exactly for that reason. … I believe the spirit of this ordinance was to deny the opportunity for multi-family housing to go forward in this town. I believe that’s the intent of the ordinance whether it’s right or wrong.”
Great Bridge Properties v. Ossipee
ZBA Chairman at Hearing on Variances:“…when this ordinance was written it was
known at the time that it was exclusionary. It was written exactly for that reason. … I believe the spirit of this ordinance was to deny the opportunity for multi-family housing to go forward in this town. I believe that’s the intent of the ordinance whether it’s right or wrong.”
The IZIP ConsultancyThe IZIP Consultancy5454
…and this is what they look like.…and this is what they look like.
The IZIP ConsultancyThe IZIP Consultancy5555
But wait, there’s more!But wait, there’s more!
In the past year, the NH Supreme Court has rewritten constitutional law
Boulders at Strafford v. Town of Strafford, 153 N.H. 633 (2006)
Community Resources for Justice, Inc. v. City of Manchester, 2006-609 (January 24, 2007)
In the past year, the NH Supreme Court has rewritten constitutional law
Boulders at Strafford v. Town of Strafford, 153 N.H. 633 (2006)
Community Resources for Justice, Inc. v. City of Manchester, 2006-609 (January 24, 2007)
The IZIP ConsultancyThe IZIP Consultancy5656
Substantive Due ProcessSubstantive Due ProcessBoulders: apply the new rational basis test, which
“requires that legislation be only rationally related to a legitimate governmental interest” and that there is “no inquiry into whether legislation unduly restricts individual rights.”
The impact on the individual is unimportantThe government need offer no evidence in
support of the reasons it has used—they only need to be reasonable and to support the legitimate interest of the government
Court invites future litigants to help it spell out other constitutional tests
Boulders: apply the new rational basis test, which “requires that legislation be only rationally related to a legitimate governmental interest” and that there is “no inquiry into whether legislation unduly restricts individual rights.”
The impact on the individual is unimportantThe government need offer no evidence in
support of the reasons it has used—they only need to be reasonable and to support the legitimate interest of the government
Court invites future litigants to help it spell out other constitutional tests
The IZIP ConsultancyThe IZIP Consultancy5757
Equal ProtectionEqual Protection
Community Resources for Justice
Fundamental rights or suspect classes (e.g., race), then strict scrutiny
Important substantive rights (federal inquiry limited to gender; NH is broader, and includes use and enjoyment of property), then intermediate scrutiny
All others, rational basis
Community Resources for Justice
Fundamental rights or suspect classes (e.g., race), then strict scrutiny
Important substantive rights (federal inquiry limited to gender; NH is broader, and includes use and enjoyment of property), then intermediate scrutiny
All others, rational basis
The IZIP ConsultancyThe IZIP Consultancy5858
Equal ProtectionEqual ProtectionCommunity Resources for Justice (cont’d)
Intermediate scrutiny’s new clothes: “…we now hold that intermediate scrutiny under the State Constitution requires that the challenged legislation be substantially related to an important governmental objective.
Burden of proof is on the government
Cannot rely on “invented post hoc” responses or “overbroad generalizations”
Community Resources for Justice (cont’d)
Intermediate scrutiny’s new clothes: “…we now hold that intermediate scrutiny under the State Constitution requires that the challenged legislation be substantially related to an important governmental objective.
Burden of proof is on the government
Cannot rely on “invented post hoc” responses or “overbroad generalizations”
Act IIIAct III
Just Do It
Tools You Can Use to Help Make Affordable Housing
Happen
Just Do It
Tools You Can Use to Help Make Affordable Housing
Happen
The IZIP ConsultancyThe IZIP Consultancy6060
Accessory Dwelling UnitsAccessory Dwelling Units
RSA 674:21,I Innovative Land Uses
Need not be restricted to “blood relatives.” Difficult to enforce
May be attached or detached (e.g., room above a garage, or backyard “servants’ quarters”)
Can be virtually undetectable
Permitted by right or by special exception Some level of control may be beneficial
RSA 674:21,I Innovative Land Uses
Need not be restricted to “blood relatives.” Difficult to enforce
May be attached or detached (e.g., room above a garage, or backyard “servants’ quarters”)
Can be virtually undetectable
Permitted by right or by special exception Some level of control may be beneficial
The IZIP ConsultancyThe IZIP Consultancy6161
Mixed UsesMixed Uses
Contrary to “Euclidean” zoning
RSA 674:21,I(h) “performance standards”
RSA 9-B:3 State’s definition of “smart growth” specifically identifies mixed use development
Combine with neighborhood planning as part of master plan (RSA 672:2(j)
Contrary to “Euclidean” zoning
RSA 674:21,I(h) “performance standards”
RSA 9-B:3 State’s definition of “smart growth” specifically identifies mixed use development
Combine with neighborhood planning as part of master plan (RSA 672:2(j)
The IZIP ConsultancyThe IZIP Consultancy6262
Community Revitalization Tax Relief Incentive
Community Revitalization Tax Relief Incentive
RSA 79-E (2006)
Allows for limited time relief from increases to taxes attributable to rehabilitation
Potential for additional relief for creation of affordable housing units
Requires initial town meeting action
RSA 79-E (2006)
Allows for limited time relief from increases to taxes attributable to rehabilitation
Potential for additional relief for creation of affordable housing units
Requires initial town meeting action
The IZIP ConsultancyThe IZIP Consultancy6363
Inclusionary ZoningInclusionary Zoning
RSA 674:21,IV(a): "Inclusionary zoning" means land use control regulations which provide a voluntary incentive or benefit to a
property owner to induce the property owner to produce housing units which are affordable to persons or
families of low and moderate income
RSA 674:21,IV(a): "Inclusionary zoning" means land use control regulations which provide a voluntary incentive or benefit to a
property owner to induce the property owner to produce housing units which are affordable to persons or
families of low and moderate income
The IZIP ConsultancyThe IZIP Consultancy6464
Inclusionary ApplicabilityInclusionary Applicability
Require Conditional Use Permit (RSA 674:21,I)
Permitted Location Specified Zones, All Residential Zones, or Town-wide
Permitted Uses
Planning Board decision appealed to Superior Court (RSA 676:5,III)—this applies to all “innovative land use controls”
Require Conditional Use Permit (RSA 674:21,I)
Permitted Location Specified Zones, All Residential Zones, or Town-wide
Permitted Uses
Planning Board decision appealed to Superior Court (RSA 676:5,III)—this applies to all “innovative land use controls”
The IZIP ConsultancyThe IZIP Consultancy6565
Important Inclusionary Definitions
Important Inclusionary Definitions
Income and Assets Those on fixed incomes are not necessarily
“poor”
Income Low < 50% AMI Moderate 50-80% AMI Moderate to Median 80-100% AMI REMEMBER: There is no single, formal
definition of “affordable housing”!
Housing Cost Burden – 30%
Income and Assets Those on fixed incomes are not necessarily
“poor”
Income Low < 50% AMI Moderate 50-80% AMI Moderate to Median 80-100% AMI REMEMBER: There is no single, formal
definition of “affordable housing”!
Housing Cost Burden – 30%
The IZIP ConsultancyThe IZIP Consultancy6666
Developer IncentivesDeveloper Incentives
Possibilities include:
Density Bonuses
Reduced lot sizes and other dimensions
Expedited Permit / Application Review
Financial Assistance
Exemption from Fees
Exemption from Phasing or Growth Management Ordinance
Possibilities include:
Density Bonuses
Reduced lot sizes and other dimensions
Expedited Permit / Application Review
Financial Assistance
Exemption from Fees
Exemption from Phasing or Growth Management Ordinance
The IZIP ConsultancyThe IZIP Consultancy6767
Developer IncentivesDeveloper IncentivesAffordable Housing Categories & IncentivesAffordable Housing Categories & Incentives
Housing Type Set Aside
Density Bonus/ Minimum Site
Frontage Reduction
Low Income Rental Housing 15 to 25% 15 to 25%Moderate Income Rental Housing 20 to 30% 15 to 25%Low Income Owner-occupied Housing 5 to 10% 15 to 25%Moderate Income Owner-occupied Housing 10 to 20% 15 to 25%Moderate to Median Income Owner-occupied Housing 15 to 25% 15 to 25%
These are just examples—you have to figure out what works in your community. What will induce the developers to do this?
These are just examples—you have to figure out what works in your community. What will induce the developers to do this? Follow the money!Follow the money!
The IZIP ConsultancyThe IZIP Consultancy6868
Inclusionary RequirementsInclusionary Requirements
Compatibility of Style (make the affordable units indistinguishable from the others)
Interspersed throughout the development (don’t “stigmatize”)
Project phasing (don’t allow all market-rate units to be built before the affordable ones)
Purchaser income and asset certification
Project affordability verification
Compatibility of Style (make the affordable units indistinguishable from the others)
Interspersed throughout the development (don’t “stigmatize”)
Project phasing (don’t allow all market-rate units to be built before the affordable ones)
Purchaser income and asset certification
Project affordability verification
The IZIP ConsultancyThe IZIP Consultancy6969
One town’s ordinance:
“Any Senior Housing development shall comply with standard definitions of affordability set forth by HUD or New Hampshire Housing Finance Authority regulations/guidelines for affordable housing in NH.”
One town’s ordinance:
“Any Senior Housing development shall comply with standard definitions of affordability set forth by HUD or New Hampshire Housing Finance Authority regulations/guidelines for affordable housing in NH.”
Inclusionary Zoning Pitfalls
Problem: there is no single “standard definition of affordability”
Definitions vary depending upon funding programs and administrative agencies
Problem: there is no single “standard definition of affordability”
Definitions vary depending upon funding programs and administrative agencies
The IZIP ConsultancyThe IZIP Consultancy7070
Inclusionary Zoning Pitfalls
Another town’s ordinance:
“Affordable Housing shall be a residential dwelling unit (or units) available for sale or lease to a household or family whose gross annual income is one hundred percent (100%) or less of the median area income as defined by the US Census and adjusted annually.”
Another town’s ordinance:
“Affordable Housing shall be a residential dwelling unit (or units) available for sale or lease to a household or family whose gross annual income is one hundred percent (100%) or less of the median area income as defined by the US Census and adjusted annually.”
Problem: the rental market is different from the ownership market
Generally, 80% of AMI is rental market rate!
Problem: the rental market is different from the ownership market
Generally, 80% of AMI is rental market rate!
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Exeter Mixed income
development In exchange for greater
density, 20% of the units must remain affordable
• Targeting: 80% (4 units) and 120% (16 units) median income, plus 8 unrestricted (and more units elsewhere)
30-year renewable resale restriction
Exeter Mixed income
development In exchange for greater
density, 20% of the units must remain affordable
• Targeting: 80% (4 units) and 120% (16 units) median income, plus 8 unrestricted (and more units elsewhere)
30-year renewable resale restriction
Watson Woods
28 units in 6 multi-family townhouse buildings
Some Signs of SuccessSome Signs of Success
Act IVAct IV
Show Me the Money!
Maintaining Affordability
Show Me the Money!
Maintaining Affordability
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Municipal Desire: Create Opportunity for Affordable Home
Ownership
Municipal Desire: Create Opportunity for Affordable Home
OwnershipUse incentives to create units having a lower
purchase price (RSA 674:21)
Match the long term effects of incentives with the term of affordability
Incent the creation of units having a lower purchase price
Don’t allow “cheap” units
Don’t allow instant equity
Impose long term affordability restrictions
Use incentives to create units having a lower purchase price (RSA 674:21)
Match the long term effects of incentives with the term of affordability
Incent the creation of units having a lower purchase price
Don’t allow “cheap” units
Don’t allow instant equity
Impose long term affordability restrictions
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Developer’s Desire: Maximize Profit and Minimize Risk
Produce units to sell at a profit
Maximize margin per unit Reduce Cost per Unit
Maximize the number of units
Minimize restrictions on sale
Have a predictable permitting and development process
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Assurance of Continued Affordability
Assurance of Continued Affordability
Binding Commitment
Maximum Resale Value
Maximum Rent Increase
Documentation of Restrictions Planning Board Records Registry of Deeds
Binding Commitment
Maximum Resale Value
Maximum Rent Increase
Documentation of Restrictions Planning Board Records Registry of Deeds
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High
Low
Degree of Municipal/3Degree of Municipal/3rdrd Party Control of Party Control of
PropertyProperty
Buyer’s RightsBuyer’s Rights
Administrative Administrative BurdenBurden
Duration of Affordability
Potential Wealth Building in Unit
Fee SimplePublic Housing
Choosing a Term of Affordability
Conventional Lender
Participation
Conventional Lender
Participation
First Buyer Only “Permanent”“Long Term”
Subsidy Retention
Model
Land Trust Model
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Affordability Retention Model: Basic Principles
Affordability Retention Model: Basic Principles
Long-term affordability Initial sale—80% area median income (AMI)
Subsequent sales—up to 120% (market based)
Fairness to all Municipality / Developer / Buyer
Little impact on conventional financing
No decrease in local tax revenues
Ease of administration
Suitable for use with inclusionary zoning ordinances
Long-term affordability Initial sale—80% area median income (AMI)
Subsequent sales—up to 120% (market based)
Fairness to all Municipality / Developer / Buyer
Little impact on conventional financing
No decrease in local tax revenues
Ease of administration
Suitable for use with inclusionary zoning ordinances
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Incentives: Inclusionary Zoning
Density bonus and others
The Regulatory Crux: Developer must receive something of value, which in turn allows the purchase price to be lower—a quid pro quo
Subsidy: There must be a measurable subsidy to future buyers that can stay with the property and be passed to the next buyer
Converting the incentive to the subsidy is the municipality’s role
Incentives: Inclusionary Zoning
Density bonus and others
The Regulatory Crux: Developer must receive something of value, which in turn allows the purchase price to be lower—a quid pro quo
Subsidy: There must be a measurable subsidy to future buyers that can stay with the property and be passed to the next buyer
Converting the incentive to the subsidy is the municipality’s role
Converting Incentives to SubsidiesConverting Incentives to Subsidies
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Model Municipal OrdinanceModel Municipal OrdinanceInclusionary zoning provides a density bonus in
exchange for some affordable units
Base value of all units must be similar in construction, appearance, and value to others
Affordable units must be sold at less than base value (creating the subsidy)
Lien: When affordable units are sold, a lien to the municipality is recorded (value of subsidy accrues to municipality) Lien value = FMV – affordable sale price
Restrictive covenant is filed, controlling future sale price and limiting future buyer’s income
Inclusionary zoning provides a density bonus in exchange for some affordable units
Base value of all units must be similar in construction, appearance, and value to others
Affordable units must be sold at less than base value (creating the subsidy)
Lien: When affordable units are sold, a lien to the municipality is recorded (value of subsidy accrues to municipality) Lien value = FMV – affordable sale price
Restrictive covenant is filed, controlling future sale price and limiting future buyer’s income
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Fair Market Value
Limited Selling Price
Subsidy
Initial SaleInitial Sale 1st Re-Sale1st Re-Sale
HO
US
ING
CO
ST
HO
US
ING
CO
ST
Sales Under the Subsidy Retention ModelSales Under the Subsidy Retention Model
AppreciationAdmin Fee
Seller’s Equity
Downpayment
1st Mortgage
2nd Mortgag
e+ CPI
Paid Principal and Downpayment
2nd Mortgage
Based on Income
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1st Re-Sale1st Re-Sale
Subsidy
Fair Market Value
HO
US
ING
CO
ST
HO
US
ING
CO
ST
2nd Re-Sale2nd Re-Sale
Subsidy
Downpayment
1st Mortgage
2nd Mortgage
Paid Principal and Downpayment
Appreciation
Admin Fee
Seller’s Equity
2nd Mortgage
+ CPI
Limited Selling Price
Based on Subsidy
Sales Under the Subsidy Retention ModelSales Under the Subsidy Retention Model
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Appraised Value of Unit = $152,400
Targeted Sales Price = - $132,000
Initial Subsidy with the Property = $20,400
Initial 2nd Mortgage
Example: Year 2000
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First Re-sale Target Income (Initial 5 Years)
First Re-sale Target Income (Initial 5 Years)
Beginning of: 2001 2002 2003 2004 2005
Appreciation Rate (prior Year) 13% 17% 13% 10% 3%
Re-Sale Price$151,200 $179,846 $205,390 $227,489 $234,314
Required Income$49,459 $57,054 $61,891 $68,600 $69,937
Buyer’s Income Cap
(Percent of Median)
86% 97% 94% 101% 103%
Subsidy increased by $2,560 to $22,960 If the income cap exceeds 120%, the lien can be paid off
(recaptured) and the funds can be reinvested in another affordable housing project.
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Income Testing
Calculations of Price and Income Caps
Verification of Home Buyer Training
Municipally Required Buyer Priorities
Procurement of Appraisals
Second Mortgage Issuance
Participation at Closings
Subordination Requests
Pay-offs, foreclosures
Reporting
Income Testing
Calculations of Price and Income Caps
Verification of Home Buyer Training
Municipally Required Buyer Priorities
Procurement of Appraisals
Second Mortgage Issuance
Participation at Closings
Subordination Requests
Pay-offs, foreclosures
Reporting
Administrative TasksAdministrative Tasks
Most occur at the time of property transfer
Most occur at the time of property transfer
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ConsiderationsConsiderations
Most municipalities don’t want to administer the long term covenants or qualify buyers
Other local or regional entities may lack the capacity, credibility, longevity, or desire to administer the requirements
The model is suitable for use with an inclusionary zoning ordinance
If local or regional entities are not available to administer the re-sales, New Hampshire Housing will do it (if you adopt our model unamended!)
Most municipalities don’t want to administer the long term covenants or qualify buyers
Other local or regional entities may lack the capacity, credibility, longevity, or desire to administer the requirements
The model is suitable for use with an inclusionary zoning ordinance
If local or regional entities are not available to administer the re-sales, New Hampshire Housing will do it (if you adopt our model unamended!)
The IZIP ConsultancyThe IZIP Consultancy8686
Another PossibilityAnother Possibility
Community Land TrustsSeparation of the value of the structure and
the value of the landEffective in certain circumstancesStrong local support (read: $$)High administrative burden—view as a
broad-based social service delivery organization
Community Land TrustsSeparation of the value of the structure and
the value of the landEffective in certain circumstancesStrong local support (read: $$)High administrative burden—view as a
broad-based social service delivery organization
Act VAct V
Legislative Pushes and Boosts
Obligations and Opportunities
Legislative Pushes and Boosts
Obligations and Opportunities
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SB 217 (Chapter 348, Laws of 2007)
Incentive-based approach
Technical support for municipalities
Treats housing development, economic planning, and conservation as part of a unified “growth and development” strategy
Separate budget appropriation of $400,000 for upcoming bienniem
SB 217 (Chapter 348, Laws of 2007)
Incentive-based approach
Technical support for municipalities
Treats housing development, economic planning, and conservation as part of a unified “growth and development” strategy
Separate budget appropriation of $400,000 for upcoming bienniem
Housing and Conservation Planning Program (HCPP)
Housing and Conservation Planning Program (HCPP)
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Four stages of matching funds
1. Housing and natural resource data collection
2. Creation of a municipal Growth and Development Strategy
3. Amendment of local master plan
4. Audit and amendment of local land use ordinances and regulations
Four stages of matching funds
1. Housing and natural resource data collection
2. Creation of a municipal Growth and Development Strategy
3. Amendment of local master plan
4. Audit and amendment of local land use ordinances and regulations
Housing and Conservation Planning Program (HCPP)
Housing and Conservation Planning Program (HCPP)
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Underlying principles (10 in all):Consider housing and conservation togetherAffordable housing, compact developmentNatural and historic resourcesMulti-scale planning (site, community,
region)—but done locallyCommunity input
Underlying principles (10 in all):Consider housing and conservation togetherAffordable housing, compact developmentNatural and historic resourcesMulti-scale planning (site, community,
region)—but done locallyCommunity input
Housing and Conservation Planning Program (HCPP)
Housing and Conservation Planning Program (HCPP)
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Administered by NH Office of Energy and Planning (OEP)
First grant round deadline complete, applications under review (i.e., funding under review)
www.nh.gov/oep/programs/hcpp
Administered by NH Office of Energy and Planning (OEP)
First grant round deadline complete, applications under review (i.e., funding under review)
www.nh.gov/oep/programs/hcpp
Housing and Conservation Planning Program (HCPP)
Housing and Conservation Planning Program (HCPP)
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Innovative Land Use Techniques:A Handbook for Sustainable Development
Innovative Land Use Techniques:A Handbook for Sustainable Development
Concept – Provide guidance on using 674:21
Handbook & Reference Tool
Collaborative Effort
Concept – Provide guidance on using 674:21
Handbook & Reference Tool
Collaborative Effort
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ILU Guide ContentsILU Guide Contents22 Topics
Each Chapter Includes:
22 Topics
Each Chapter Includes: Background and Purpose Appropriate Circumstances and
Context for Use Legal Basis and Considerations Examples Model Ordinance (chapter on
Inclusionary Zoning)
www.des.state.nh.us//repp
Background and Purpose Appropriate Circumstances and
Context for Use Legal Basis and Considerations Examples Model Ordinance (chapter on
Inclusionary Zoning)
www.des.state.nh.us//repp
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www.workforcehousingnh.comwww.workforcehousingnh.com
The IZIP ConsultancyThe IZIP Consultancy9595
Regional Workforce Housing Coalitions
2001
• Seacoast, Upper Valley
2004
• Monadnock
2005
• Nashua, Eastern Lakes
2007
• Manchester, Concord, Mt. Washington Valley
Regional Workforce Housing Coalitions
2001
• Seacoast, Upper Valley
2004
• Monadnock
2005
• Nashua, Eastern Lakes
2007
• Manchester, Concord, Mt. Washington Valley
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PushesPushes
SB 342—Workforce Housing
HB 1260—Growth Management Ordinances
SB 342—Workforce Housing
HB 1260—Growth Management Ordinances
BoostsBoosts
HB 1259—Municipal Housing Commissions
HB 1259—Municipal Housing Commissions
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Questions?
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Spørsmål?
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Domande?
Vragen?
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Finis
Ben Frost
(603) 310-9361
Finis
Ben Frost
(603) 310-9361