InvestNH: a way to build ‘our way out of this crisis’
As state’s rental market remains red hot, need for affordable units grows
Real estate often involves imagination. For example, right now, a 6.5-acre lot sitting across from the Sam’s Club on Sheep Davis Road in Concord doesn’t look like much.
“It’s simply a raw piece of land that is heavily wooded,” Thomas Furtado, the CEO of CATCH Neighborhood Housing, a nonprofit that develops affordable housing units in Merrimack County, admitted.
But Furtado has vision: In a year and a half from now, he says, this lot will be home to 48 families. “And that’s something we are very proud of,” he said.
CATCH was recently awarded $750,000 through the InvestNH program, a $100 million initiative funded with federal Covid-19 stimulus money and championed by Gov. Chris Sununu as a means of chipping away at the state’s acute housing shortage. Half of the overall fund — $50 million — was recently awarded in the form of grants or no-interest loans to developers to fill in funding gaps as they develop projects that include affordable rental units.
The project on Sheep Davis Road, once complete, will rent out units starting at around $1,200 for a one-bedroom and around $1,600 for a two-bedroom, which is well below market rate. And a lot of people with in-demand jobs will be eligible.
“This is the new police officer, the new teacher in the school department, the new restaurant worker,” Furtado said of his future tenants. “There are a whole bunch of people who qualify for affordable housing, and I think that’s shocking to many people.”
Each of the 30 InvestNH grant winners includes at least some “affordable” units, but the price of rent for those units will vary across each project. The InvestNH program calculates affordable rents based on regional housing costs and area median incomes, and some projects might set rents lower in order to capitalize on other public-funding incentives.
And the one-time government subsidies from the InvestNH program come with some strings: Units must remain affordable for a minimum of five years, and they have to be ready for tenants to move in within 18 months.
Builders receiving this funding, which include some of the largest private developers in the state, said it is necessary given the hesitancy on the part of some banks to loan money for workforce housing projects, and soaring building costs due to inflation.
Historically, there have been other hurdles in building affordable renting housing as well. Local residents and town officials sometimes push back against proposed developments with concerns about school overcrowding, traffic or claims it will change the character of the town.
Big picture, this is part of why New Hampshire has dug itself into such a housing hole. Just ask Christopher Fokas, part of the team behind Wallace Farms, a 240-unit project in Londonderry where half of the apartments have capped rents based on affordability.
“The approval process took about four years and was immensely expensive,” Fokas said.
Wallace Farms just received an InvestNH grant to complete the final units, but Fokas said raising the rest of the money needed to pull it off while managing the preferences of local officials hasn’t been easy. “It’s complicated, it’s costly, and I think it deters developers from doing it, quite frankly,” he said.
Developers pursuing housing projects with affordable units can also struggle to secure bank funding, as financial institutions might be hesitant to commit to funding a project that’s predicated on lower rents. That’s another reason why those behind the InvestNH program say its subsidies are so helpful.
“Banks don’t get free money. They need a return on their investment,” said Rob Dapice, director of New Hampshire Housing, a quasigovernmental agency that’s helping to administer the InvestNH program. “As a result, there is just no way to make the numbers work for affordable rental housing without some subsidy.”
Elissa Margolin, director of the advocacy group Housing Action New Hampshire, said the InvestNH model of giving builders grants or cheap loans makes sense in the current environment. Ideally, she said, that helps developers pass along their savings to tenants in the form of lower rents, “and that’s a really important tool in the toolbox to try and claw our way out of this crisis.”
Developer Tom Monahan has been working to bring a new housing project in Exeter to life for years, and the InvestNH funding is helping him get closer to the finish line. Once completed, the Gateway at Exeter will have 224 rental units, including 56 that are price capped.
Monahan recently received $3 million in InvestNH funding, but that only covers a small portion of his ballooning costs. “Lumber, nails, concrete, sitework, went from $39 million to $52 million,” he said.
And soon, Monahan will be placing orders for 224 refrigerators. He hopes they’ll be delivered a year from now, just in time for the apartment doors to open up to working families.
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