In Sununu’s proposed budget, housing funds are a new piece of the puzzle
Governor seeks added $50 million to spur development of affordable units
A piece of Gov. Chris Sununu’s proposed $14.9 billion budget plan reinforces the need to address the current housing shortage in New Hampshire.
The NH Housing Finance Authority estimates it will take 20,000 new units by 2030 to meet the state’s rental demands, and advocates say the budget allocations are a necessary investment.
“As you know we have a severe housing crisis in the state,” said Elissa Margolin, the director of Housing Action NH, a coalition focused on housing policy and homelessness. “We have record low supply and we appreciate that the governor’s proposal, handed over to the House, includes many key programs.”
In both his budget and trailer bill for 2024 and 2025, the governor suggests more than $50 million is needed to invest in the creation of more housing in the state – with investments in affordable housing development and historic home renovations.
Affordable housing development
The first aspect of Sununu’s proposed housing investments is a $25 million request to renew the Affordable Housing Fund.
It’s a longstanding tool in the state to promote the construction of affordable units. The legislature first created the fund in 1988. Over the last four decades, New Hampshire Housing has provided low-interest loans and grants for developers to construct affordable, income-restricted homes.
“This is one of the most important resources for affordable housing development in our state,” said Margolin, testifying Monday before the House Finance Committee.
Through 2023, the fund has helped finance just over 3,600 units statewide.
Since 2020, the fund has received $5 million annually through the real estate transfer tax. But prior to that yearly allocation, it operated as a revolving loan fund – with repayments, other tax fees or legislative funding determining how much money was available for these developments.
Each development is required to price at least half of its units at or below 80 percent of the median income level. Both for-profit and non-profit developers are eligible for financing.
The fund helps developers build at lower costs, but also ensures residents avoid market-rate rental prices, with a required affordability period for units, Margolin said.
The governor also is asking legislators to approve an additional $30 million for the InvestNH housing fund.
Sununu first launched InvestNH last summer, with $100 million from American Rescue Plan Act funds committed to accelerating affordable housing development.
The program is comprised of two components – a capital grant program for multi-family rental development, and municipal grants to promote the construction of affordable housing in towns and cities.
In November, the NH Department of Business and Economic Affairs, which oversees the fund, announced the Executive Council approved 30 projects across the state – which would result in almost 1,500 new units created.
Although these 30 projects will help add to the state’s housing stock, Business and Economic Affairs Commissioner Taylor Caswell told executive councilors that 113 developers applied for the funding.
The additional $30 million would open a second round of funding to help finance some of these initial applications that were previously denied.
The third component of Sununu’s housing proposals would establish a historic home tax credit to incentivize developers to repurpose existing historic infrastructure into housing.
Developers who are looking to remodel a historic property could be eligible for a tax credit up to 65 percent of their contribution to the project to lower their business taxes.
The credit is capped at $5 million annually.
“This is a great idea to convert our aged historic infrastructure into some useful affordable homes for New Hampshire residents,” said Margolin.
All three of the housing proposals – affordable housing allocations, InvestNH funds and a historic home tax credit – are currently proposed in Senate Bill 231. Sununu wrote to members of the Senate Finance Committee indicating his support for the bill, acknowledging that these items are also outlined in his budget proposal.
“The state’s strong fiscal position provides a unique opportunity to invest $55 million into one-time projects while also increasing potential ongoing incentives for housing projects,” he wrote.
A vote on the Senate floor for the bill is set for March 23.
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