CONCORD, NH – A bill that addresses one of the biggest barriers to developing housing in New Hampshire that passed the House earlier this month breezed through a Senate Commerce Committee public hearing Tuesday.
HB 1588, which would allow cities and towns to create special assessment districts to help build public infrastructure to support housing, was referred to the New Hampshire Senate’s Housing Committee after Tuesday’s hearing with the Commerce Committee.
The special assessment districts would “finance public infrastructure improvements necessary for new development, including roads, sidewalks, water mains, and utility extensions,” for development that’s in the approval process.
Establishing the district would require a two-thirds vote of the city or town’s governing body.
“One of the biggest barriers to housing and development is not always the private project itself, it’s the cost to the public infrastructure needed to support it,” Rep. Joe Alexander, R-Goffstown, told the committee. He said that creation of the districts would allow municipalities to expand infrastructure, with the developers that benefit bearing the cost.
“It’s a practical local option,” he said. “A fair, targeted way to finance improvements.”
Alexander was introducing the bill for sponsor Rep. Joe Sweeney, R-Salem, who couldn’t attend the hearing. The House voted out to pass by voice vote on March 11.
Nick Taylor, of Housing Action NH, told the committee that the group supports the bill.
“Infrastructure challenges are a real and big barrier to building more housing,” Taylor said. Housing Action “is all for putting more tools in the toolbox for municipalities.”
He noted that the New Hampshire Zoning Atlas team found that only 5.6% of the state’s buildable land has adequate water and sewer infrastructure to support needed housing development, while only 12% has one or the other.
HB 1588 requires that assessments only be levied “against properties that receive a direct and ascertainable benefit from the improvements.”
The municipality’s governing body will determine the method of apportionment, which may include frontage, lot size, number of units, assessed value, or other reasonable metrics.
Municipalities would be able to issue bonds for up to 20 years to finance improvements within the district that would be repaid from assessments levied under the new law.
“This is not a state mandate, not a tax increase, not a blank check,” Alexander said, but rather it’s “a special assessment on a specific project that’s going to go forward,” and only the parcels in the assessment district that benefit from it will be paying for it.
He also said it’s different from a tax increment funding (TIF) district. “A TIF captures future growth,” Alexander said. “[HB 1588] makes growth possible in the first place.”
Like a TIF, a special assessment district charges those benefitting from improvements to help pay for them. But while TIF uses increased tax revenue generated by the development to fund improvements in the district, the special assessment district would front-load the payments with a bond, then have the developer pay it.
Taylor, of Housing Action, said his only concern about the bill is that municipalities don’t get the new special assessment district law confused with a similar one that’s initiated by property owners.
State law RSA 52-A allows property owners who provide a plan for infrastructure improvement to create a special assessment district that must be accepted by the municipality if it is signed by owners of at least 50% of the lots within the proposed district representing at least 65% of the assessed valuation.
HB 1588 is municipality-driven, to be used to support developers who are creating housing.
Taylor said legislators should “make sure the two chapters work together, so municipalities aren’t confused” about which one to use.
The bill calls for the New Hampshire Department of Business and Economic Affairs to expand its housing infrastructure municipal grant program to allow for sewer, water, and road upgrades for new housing units, and appropriates $1 for the fiscal year ending June 30, 2027, to establish the fund. The grant money helps municipalities pay administrative costs that would arise from establishing the districts.
The bill would take up some of the slack left in the wake of the unfunded Housing Champions program, which in the prior fiscal year awarded $5 million in grants to cities and towns that had done the work to incentivize housing development. Some $3.5 million of that grant money was awarded to eight municipalities that prioritized infrastructure upgrades and met certain metrics that made 2,280 more housing units possible, according to the program’s annual report.
The House voted 185-166 Feb. 5 that a repeal of the program ought to pass, but the Senate hasn’t acted on that bill, HB 1196, after the Senate Commerce Committee held a February hearing on the repeal, at which several housing-related organizations spoke in opposition. The Senate has “signaled” it opposes the repeal, according to Housing Action. Gov. Kelly Ayotte has also said she opposes repealing the program.