Legislation seeks to limit regulations to encourage more development
By Jon Decker, Granite State News Collaborative
The N.H. Legislature is weighing several bills that would strip local zoning obstacles in favor of state mandates to speed up and cheapen construction, particularly for multi-family homes like townhouses, duplexes or cottage courts — that is, the higher-density, so-called “missing middle” homes that advocates support to help address the state’s formidable shortage of housing.
However, many communities oppose stripping away local control in favor of developers’ ambitions. According to the National League of Cities, single-family zoning laws, which often require that homes be built on relatively large lots, have made construction of smaller multifamily structures difficult or outright illegal. New Hampshire, a state known for its strong local zoning laws, is no exception.
In fact, according to the New Hampshire Zoning Atlas — a comprehensive study conducted in 2021 — single-family homes are allowed on less than 1 acre on only 16% of New Hampshire's buildable land.
Builders and housing advocates have called for allowing denser housing projects, but critics of that approach, especially in small, more rural communities, worry about their impact on local infrastructure and character.
“Our position is that the Legislature gave zoning to municipalities because it empowered them,” said Margaret Byrnes, executive director of the N.H. Municipal Association. “What we’re seeing this session is close to, if not a complete, dismantling of local authority, government and resident input in decision-making in zoning in cities and towns.”
During the 1970s and 1980s, the Granite State went through a population boom, with growth rates of over 20 percent. Some towns began requiring large building lots to preserve the rural feel of their communities. Some communities required 1, 2 or 3-acre lots for single-family residences, driving up construction costs considerably.
“It was that sort of growth in population and building patterns that freaked people out,” recalled Rob Dapice, CEO of the N.H. Housing and Finance Authority, also known as New Hampshire Housing. “I don't want to say that everything about that was wrong. Some of it was sprawling and forced people to be more car-dependent than needed; it ate up more farmland than was maybe necessary.
“I’m not saying that everything about zoning is bad. I think conservation, agriculture and open space are really important.”
But, Dapice said, “What people fail to grasp is that the ordinances in response to that growth requiring larger lots have sort of produced the opposite of what they wanted in terms of open space. Now you have a house every 2 to 3 acres, and everyone wants to think their community is perfect the day they build their house, and nothing should change.”
But change is inevitable, Dapice said, and the choices communities make about construction will dictate the nature of that change, with prices rising if nothing new is built.
Moving the needle?
For Matt Mayberry, executive director of the N.H. Home Builders Association, the key to solving the housing shortage is modifying legislation to make it easier, faster and cheaper to build homes.
“There are nine bills the New Hampshire Home Builders association has drafted, is tracking, and lobbying, because we feel they will move the needle in a positive way to help housing,” Mayberry said.
One of the bills, Senate Bill 84, introduced by Sen. Keith Murphy, R-Manchester, is a “game changer,” Mayberry said, that “shifts power from communities to builders.”
Under the bill, he said, “if you have a building lot that has town water and sewer, the town cannot mandate that you build on more than half an acre. We have municipalities dictating 3- and 5-acre minimums. If you look at land at roughly $250,000 an acre and you have a town like Hanover, that's over 600k before you cut the grass.”
Under SB84, if the lot is linked to town water but not sewer, that minimum lot size goes up to 1 acre, instead of one-half, Mayberry said.
But New Hampshire has long been defined by a sense of “local control,” with individual towns setting many of their own rules. As a result, many of these bills are facing strong opposition from the N.H. Municipal Association and many of its member communities.
Byrnes, at the municipal association, said the causes of the housing crisis are both multifaceted and wide in scope, and the United States as whole, not just New Hampshire, is facing similar problems.
“The Legislature is taking a complete tunnel-vision approach of ‘focus on slash-and-burn of local zoning and regulations and that will be the answer to the housing crisis,’” Byrnes said. “I feel certain that the average person in New Hampshire doesn't understand the extent to which their decision-making and authority at the local level is being razed, for lack of a better term.”
Dapice, at New Hampshire Housing, said “the framing of this as a battle between towns and state has been a misperception that many have an interest in perpetuating. There are plenty of towns with exclusionary zoning that want to cast this as big government stamping down, but the reality is that there are some towns allowing construction of all kinds — affordable, market rate, townhouses — and there are other towns that are not.”
Dapice noted that, despite perceptions, New Hampshire is not a “home rule state.”
“We are a Dillon’s Rule state,” Dapice explained. “Municipalities do not have a right to do anything except when the state grants it. It’s in the (state) constitution.”
“That’s a convenient and easy argument to make,” Byrnes said of Dillon’s Rule, while citing the 1925 New Hampshire Zoning Enabling Act. ”We gave municipalities zoning, so it's disingenuous to use that as an argument to take over local decisions and commitments that have been made by communities who were granted authority to regulate zoning.”
Other development rules
Other pieces of legislation touted by Mayberry, at the builders association, include HB577, which would loosen restrictions on homeowners interested in building accessory dwelling units, or ADUs. The bill would allow ADUs to include “detached units, adds definitions related to accessory dwelling units, and increases the maximum square footage.”
“This says ADUs are allowed by right, so the town has to start with ‘yes, but let's see if we can make this work,’” Mayberry said, with “common sense” provisions such as acreage, septic and well capacity.
Byrnes expressed skepticism that expansion of ADU rights would translate to more affordable housing because of the costs of construction.
“I struggle to see how that’s going to make a dent in the housing need, especially since we’ve had the current ADU statue since 2017,” she said. “We really don’t have data to the extent that it mattered or even helped. It’s always unfortunate to extend a policy change without knowing how the first version worked.”
Byrnes also pointed to the state’s longstanding debate about short-term rental units, such as B&Bs, which have made housing much more scarce and expensive in tourism communities such as Conway and Laconia. HB577’s allowance of detached units could make the short-term rental issue a “more acute problem,” she said.
“With a separate structure, it’s even easier to treat it as a short-term rental because it’s detached,” Byrnes said. “If you have money and a house in a nice touristy area, you could afford to build a detached STR and profit off it.”
Byrnes also said many of the zoning overhaul bills are poorly written and messy, which will cost taxpayers in the form of legal fights and debates if they pass.
She focused on HB410, “relative to adding conditions to zoning boards of adjustment imposing restrictions on the building and development of residential properties,” as deeply problematic.
“It prohibits municipalities from passing zoning ordinance that restrict residential building unless the legislative body produces empirical evidence under a strict scrutiny standard that the regulation is needed,” Byrnes said. “Are we saying they (the voters) have to produce evidence? Where? At the town meeting? What qualifies as empirical? Why are we using a strict constitutional standard?”
She said another bill, HB92, that defines what a planning board is, differs from current state law.
“Even if you wanted to pass the zoning mandate, why would you create a second definition of a planning board?” Byrnes said. “They sound like such small things, but they will throw the building and planning process into chaos.”
As for what municipalities can do to alleviate the state’s housing shortage, Byrnes pointed to existing programs that, if funded properly, could provide some relief without limiting local regulation.
“What’s particularly interesting is that the Legislature has made it clear that they want to solve the housing situation, yet what we're seeing in the state budget is that they aren’t funding any of the programs created in the last few years to create partnerships in local governments,” Byrnes said. “No new funding in InvestNH or Housing Champions.”
InvestNH was funded in 2022 with $100 million from the American Rescue Plan Act “to accelerate the approval and construction of affordable workforce housing in New Hampshire.” Housing Champions is a voluntary funding and grant program created in 2023 that’s intended to help municipalities that take steps to create more housing.
Regardless of what the Legislature decides, it won’t change the costs of development anytime soon.
According to the analytics firm Altus Group, construction costs in the U.S. have risen 25 to 40 percent since 2020. That’s not just materials and labor, either, according to Moe Archambault, a Laconia-based real estate broker who also works on housing developments. So-called “soft costs,” such as obtaining permits and hiring lawyers, have also substantially increased, he said.
“Your first-time homebuyer or entry-level housing is almost impossible to produce at today’s elevated cost for building materials and labor to construct, plus the added value of cost and land and getting it developed,” Archambault said. “Town approvals can also take two to three years for a raw piece of land.”
And now, the Trump administration’s tariffs on a wide range of building materials could make costs rise even higher.
Relatively high interest rates on home loans are also freezing out many first-time buyers, but Archambault said those rates are well within the norm, and the ultra-low interest rates below 5 percent in the 2010s are unlikely to return.
“I’ve had some buyers that will say, ‘I’m gonna wait for the rates to back down to 3%,’” Archambault said. “I know a 100-year-old man, and you can ask him how many times he saw 3% rates, and he’ll tell you, ‘Only once.’”
