It's no secret that New Hampshire and much of the nation has a housing crisis.

The state is projected to need nearly 60,000 additional homes by 2030.

That's tens of thousands of New Hampshire residents who are struggling to find affordable and inviting housing in their communities.

It's a slow process to create more housing.

Often made slower by a lack of understanding of how the process works at the local level.

This leads to resistance by some residents who often invoke myths and try to further delay new housing.

How do we address these issues and make it easier to create more housing?

Welcome.

In this program, we're going to focus on New Hampshire's cities and larger municipalities, where there's already significant development of many different types.

To better understand the process and the associated risks, challenges and opportunity needs to creating more housing.

We will address three key elements in that process.

Identifying and assessing a potential parcel of land or property.

Securing financing and navigating local land use boards whose regulations often differ from one city to another.

We have assembled some of the brightest minds and stakeholders working in New Hampshire cities to roll up our sleeves and work through the process.

Joining us is Eric Chinburg, president of Chinburg Properties.

For over 35 years, Eric has established a strong foundation in single family custom home building.

The company has expanded to include multifamily housing, an adaptive reuse of abandoned mill properties.

Eric has also been recognized as a leader in open space and conservation development.

Deb Flannery is vice president of Lending at Evernorth.

Deb brings over 25 years of professional experience in affordable housing, including leadership roles in private sector consulting, state and local housing finance agencies.

Donna Benton is the director of Planning and Community Development for the City of Dover and president of the New Hampshire Planners Association.

Donna previously worked in the towns of Merrimack and Newmarket.

She is a member of the American Institute of Certified Planners and Sarah Marchant serves as the chief of staff for the New Hampshire Community Loan Fund.

Previously, Sarah served the city of Nashua as the director of Community Development.

Sarah serves on the New Hampshire Housing Board of Directors and serves as a commissioner of the American Institute of Certified Planners.

Thank you all so much for joining us today.

Eric, we're going to start with you.

Will you take us briefly through how you assess an opportunity to create housing in a larger New Hampshire municipality?

What do you need to see?

The thing we look for first is whether they are open for business.

Do they have a pro development pro can do pro.

Problem solving nimble approach.

And we often do that by talking with the planner or the code enforcement officer or the fire chief or all the people just to sort of feel out whether they're going to be supportive of a project or generally finding ways to to be roadblocks.

That's the first thing we look at.

And then we look at market, whether there's an abandoned mill, whether there's infrastructure, water, sewer, gas.

But those are the high threshold things we look for.

Yeah.

What's next in that process for you?

Next in that process for us is a review of the zoning kind of what's allowed By Right.

What do they have for flexible zoning, whether it's like Dover or whether it's form based?

I believe that it's called what it's called.

Availability of uses by right is really important because we're we're sort of done I'm done in my career going in and fighting for things or having to bring lawyers to planning board meetings, which we just don't do.

So if the zoning is conducive or we feel that we could get special exceptions or waivers that we would need, then then we're really interested in moving forward.

Can you tell us about some specific communities that you like to work with for exactly that reason where you know you're not going to go in and have to fight?

We have a recent example in Rochester where there was two abandoned historic structures on Main Street adjacent to each other and connected the scenic theater and the Salinger building.

And the city had acquired them from back for back taxes.

They issued an RFP for developers and nobody responded except us.

We offered a dollar if they would help with selective demolition and some cleanup and the entire city staff, from planning to the the the mayor or to the the the code enforcement were totally supportive.

They found, I think, around $300,000.

So we bought it for -$300,000 and it was probably worth about -$1,000,000.

But it was very helpful and it gave us the kind of teamwork feeling to proceed with them.

It was almost like a partnership, and it was the first time we had a project where we could save the front part of historic buildings, and the back were one story structures that couldn't be saved.

So the scale of the remaining structures, though historic and looks great for Main Street, wasn't sufficient to support a project.

So the city supported us in adding a four story structure to the rear with underground parking.

So ended up being about 15 or 16 apartments in the historic structures and another 40 or so in the back.

And working with that city of Rochester and us created a really successful project.

Absolutely.

So, Donna, what's your perspective on that, that early conversation with developers before they've gotten very far in the process and that sort of collaborative approach to making a development happen?

So early conversations are extremely important and helpful so that you can understand the different pieces to each development and try to either understand the hurdles before you get to them so that you can plan ahead.

But I think also just getting the different departments and the different players in in the same room early on in the process is huge.

So, you know, if there's any fire in life safety code issues or anything in the land that you need to know about.

So certainly having those conversations early on is important and key and having the right players at the table is key.

Yeah, absolutely.

What are those other things that you have to have in place, Eric, before?

Like, I think we want to talk a little bit about pre-development risk.

So what are those other things that you have to have in place before you even get the Yes from the community?

Well, I look at four major areas of risk.

One is entitlements.

Can you get all the permissions and approvals that you need.

Two Is construction cost risk that's been really volatile lately.

Three is financing cost risk.

And then the one you never know until you're done is if you build it, will they come?

Right.

That's the market risk.

So we're dealing with the entitlement risk very early on.

Typically, we've been fairly fortunate knowing we can get the right capital stack, although that's become much more difficult with interest rates the way they are and construction costs.

But we're sort of navigating all three of those four things at the same time.

We're hoping and assuming there's a market at the end of all this and we all know the demand is very high for housing.

So it's only in sort of tertiary markets of creating housing where you're a little more nervous about if you build it, will they come?

But when you're in Dover, Rochester, Portsmouth, seacoast areas, you feel pretty confident.

Deb, I want to bring you into this conversation and talk a little bit about financing.

Eric already sort of started to open up that box.

What are some of the factors that you consider and what are you looking for from the developer to decide how and if to put financing together?

I think Eric touched on the key sort of credit analysis that goes on, the kinds of risks that are involved.

And so that's that's a really core part of it.

But I would even back up before that because it would be nice if that was the only question to ask.

But Evernorth is a nonprofit organization with a charitable purpose, and so we also have to assess kind of right out of the gate whether there is a mission alignment there.

And then beyond that, we have we were able to provide our financing and resources by bringing investors to the table.

And so we have to assess our investors appetites.

Some of them have geographic focuses, other kinds of income targeting and other priorities for our investor pool.

So we have to be a matchmaker and find projects that are a good alignment with all of those things.

Sarah, Do you want to jump in on the financing conversation?

I think one of the other actually, if I can jump in just a little bit earlier, one of the other really important things that I think costs a lot of time that people don't think about really early on in the process is sometimes it's working with the neighborhood, too.

Right.

And you guys do that and it's it's time consuming and it's expensive, but it's also a really important part of smoothing out the process for the long run and how it works together.

On the financing side, I think it's absolutely the same thing before you have invested in engineering and and put hard cash on the table, it's really hard to find pre-development money.

And I think that's one of our bigger challenges why we don't have new young developers joining in, because that money isn't readily available and it's the riskiest money.

It's the hardest to get lending on.

And so that's an area that I think we have a lot of room for growth in as well, is how do we help bridge that gap and provide more pre-development financing to evaluate those risks and to understand what's available to move forward.

If at the end, Eric, you get a no from the the community what'’’s sort of at stake.

We've already put money into getting to the point where you were able to to put a proposal together for a planning board.

Well, as it relates to pre-development costs, sometimes we pull out of a project after investing tens or even $100,000 just because, not because that's sort of the zoning issues, just because we can't make it work.

We can't build the infrastructure for what we thought and we don't can't find that out until we have enough engineering to see what the infrastructure would cost.

So that is pre-development money.

You know, we don't borrow pre-development money.

But I to the point about smaller, you know, younger developers, it would be great if they had a source of that sort of sort of debt or capital.

Right, right, right.

And certainly we know that everything is expensive right now.

Construction costs are very high.

And so is it more challenging right now than it was, say, a decade ago?

Very much so.

COVID costs increases.

Our construction costs went up by 30%.

Have not come down, which is just shocking to me.

It feels like it needs to and interest rates.

You know, a decade ago we were borrowing money at three and a half percent and now it's seven and a half percent.

So those two things combined, we've got a couple projects on the books like big mill conversions that we can't make work right now.

So we're doing designs and entitlements and hoping that things change enough that we could pull the trigger.

So keeping in mind that everything's expensive right now and interest rates are up, Eric, from your perspective and yours too, Deb, what can we do to help mitigate some of that pre-development risk but also support developers when they go into a community to make a project happen?

That's a good one for.

Deb Yeah, well, I would say Evernorth is working on this problem having to do with access to capital for this pre-development and early stage financing because it is such a barrier, some smaller developers really it's not available to them commercially and if it would be available, it would be a very high interest rate.

So it's driving up costs in an environment where we already have heard costs are very high.

So Evernorth has been assembling capital from Treasury Department grants and state agency funds and other mission impact oriented investors, philanthropic investors and others, even employers, in order to overcome some of these barriers and provide that capital and that helps share some of that risk and that burden.

And so I think the more we can bring to the table, we are seeing really huge needs, not just for pre-development but also at times for acquisition financing to lock down a site that where, you know, there's a seller that wants to meet a certain time frame and the funders, other funders maybe can't also accommodate that.

So creating those opportunities, being a catalyst for projects to keep moving along by these interim financing tools as well as bridge financing.

So a lot of times there's mismatches between the timing and when capital can come in.

Even if you have all the capital in the stack, it isn't going to time out the way you want.

So having a bridge loan available for short term, so those are the kinds of tools that I think are really useful that we could really expand on and see could put to good use here.

All right.

Thank you, Deb.

Donna, we're going to turn to you.

Dover has gained a reputation as a good municipality to work with on housing.

How do you go about engaging with the developer early on?

What's a key?

Very early in the process while balancing the wishes of the city?

So I think it comes back to trying to balance it all.

We need to commercial, we need employment, but we need places for people to live and play and enjoy the community as a whole.

So balancing it all and trying to figure out where density makes sense.

So in Dover, most of it is on public water and sewer, which is helpful.

But we do have areas that are on private well and septic systems.

So trying to make the density where it fits with utilities and walkability and where public transportation is, but then also make sure that we maintain kind of that rural character where it makes more sense to have the more open space and conservation land.

Right.

Absolutely.

What advice would you give to other cities in New Hampshire?

I would say start early with the conversations.

Don't be afraid to change your regulations and to hear from the community.

Certainly go back to the master plan and the visioning of the master plan, which hopefully you've brought in the public participation in.

And then you know what the community wants and how to kind of go about doing it.

So not being afraid to change the regulations and the amendments and certainly having those conversations early on with those key players.

Right.

Absolutely.

Eric, is there anything you would add to that advice for for particularly cities and large municipalities in New Hampshire?

I love that about being flexible about changing regulations and supporting waivers and being willing to take a risk.

You know, a lot of planning boards that a lot are volunteer, they're nervous about setting precedent.

And when you have a strong planner advising them that, hey, we can grant this waiver or variance or change this regulation without blowing up our master plan, that sort of leadership and ability to take a little risk, I think is really important as well.

Can you tell us a little bit more about the process at the local level going through the the various boards that you might have to go through?

You're going through planning board and most cases zoning board, sometimes maybe a historic district commission, other boards that you that you end up speaking to.

Well, it's sort of a labyrinth, but when you have the process well spelled out, which you get when there's professional planners at that community and we're talking about cities here, so it's generally quite well laid out and certain cities that were real obstructive obstructionists in this in the past eight or ten years really have heard the need to create more housing, and they're changing their ways of operating.

And to me, it's always just been about, Hey, are you here to help good development or are you here to just be a chief regulator?

And I think more and more they're there to help good development.

Sarah, will you talk a little bit more about how communities can make things more efficient?

I think an interesting way is to start, as Donna had said with the master plan, right?

As if you have a master plan and you have zoning and regulations that reflect that master plan.

So some communities have been pretty progressive recently by deciding that you've already decided you want this housing, you want this product, you want this form.

Why do you have to go through the planning board process?

And isn't there the ability to go By Right for this development through the building permit process, working with the fire chief, working with the administrative staff, keeping a project in line with the regulations, but but avoiding that month over month cost of planning, board, zoning board, all these processes.

And so we're seeing that both for accessory dwelling unit approvals on a small scale, but we're also seeing that in some cities for much larger projects.

And that is a huge step in the right direction as far as bringing down costs and moving forward with projects and taking some of that risk out that way.

So that is one way that we can look at this moving forward.

All right.

Fantastic.

So working together, collaboration, a little flexibility and creativity and also finding ways to make the process more efficient.

And that's also a great thing for the capital stack.

And what we mean by capital stack is that five or six different parties that come to the table to make any project happen.

Just did one with nine sources, nine sources, and that isn't necessarily affordable.

Some of these are right market rate housing.

I think it's hard for people to understand the depth and need for all the different types of capital to make this work.

And if there's a By Right process, it takes a lot less risk away from the lenders too, right?

So they can come to the table, they understand the process and what's going to happen and bring better interest rates or bring other pieces to this that help keep overall costs down.

that's fantastic.

Super helpful.

Deb, what would you add to that?

I would say that really time is of the essence and we know that in real estate, but we seem to forget that somehow and that this is really key to shortening the time frame from concept to completion and that's what will help us drive down those costs.

As we've seen in this inflationary period, we just they it slows things down.

And every time you hit a new wrinkle, you have it slow down further and then costs go up further.

So I think really speeding up the process is key to it too, and so pivotal to all these issues around the cost containment, right?

That's saying time is money is really true.

It's well known in New Hampshire that local control is a core value, but it's natural to explore what role the state can play in easing this housing crisis.

Joe Alexander is a Republican state representative serving Hillsborough who chairs the Special Committee on Housing.

And Senator Rebecca Perkins Kwoka is a Democrat from Portsmouth and former city councilor.

We asked them to talk about some ideas where legislative action by the states can help in creating more housing.

So we'd like to see the state get out of the way as much as possible.

Empower local municipalities.

So we want to streamline inspections, make sure there's a fair and honest code.

Reduce regulations such as the time it takes to sign permits by the state.

So empower municipalities, but allow individual property right owners to get these permits faster and easier.

And there are some solutions in cities that wouldn't necessarily work in towns.

Portsmouth has asked for a zoning ordinance where they can require some below market rate units as part of any new construction.

One thing that we've talked about is a tax credit at the in the city level for any downtown office conversion into residential units.

And then there's also policy solutions that are outside of the housing space, but that support multi-family density like sewer and water infrastructure that can be financed with low interest loans from the state.

And what works in one city might not work in the other.

So we give the tools again to those cities to do that.

But we also have, you know, we remove arbitrary parking minimums.

We make sure that these cities and towns are walkable.

I mean, if you go to a downtown, you want to be able to walk around and see housing and businesses and everything all together.

So, yeah, I think we need to remember that historically we didn't have any zoning when a place that we love like Portsmouth was built.

Zoning is a concept that's 50 or 60 years old, and so getting it right is really important.

But remembering that actually we like to see each other downtown in the city and we like to be together with our neighbors that are important concepts that will help us get this housing balance right.

So I'd love to have you respond to the comments that we heard from Representative Alexander and Senator Perkins Kwoka.

I think there's tremendous opportunities for the state as far as looking into who really qualifies as a direct abutter and us standing, because a lot of the delay in the process comes from, well concerned, important concerns being raised, but maybe not in a timely fashion or through that process.

I think that there's tremendous work to be done in streamlining of permitting in general and the Invest NH program and some of the programs that New Hampshire housing have come forward with the state level funding.

Other states across the country bring so much more support and help to the table.

It costs an incredible amount of money that I think people underestimate to build one single home and just to provide the basic infrastructure, never mind to provide the 20,000 missing homes that we're missing.

And so I think there's a great role for the state who has stepped up and done an amazing job.

But to continue down that way.

So closing out the program, let's hear from everyone.

From your experience, what's one idea for how to make this whole process and cities and larger communities more streamlined, more productive and less risky, while also alleviating the concerns of residents bring to the prospect of more housing in their communities.

Donna, let's start with you.

I would say don't be afraid to get creative.

So it could be an old Victorian home that you allow 3 to 4 units.

And in Dover we say, yes, you can do that in this beautiful historic street.

Just make it continue to look like a single family house.

So I think understanding that that density can be added in creative ways.

Yeah, absolutely.

Deb, I would just say that having the state really invest in housing and in the housing infrastructure in the way that it has is on the right path with invest NH and I think just continuing to double down on that effort and recognizing that this will be the catalyst to make a housing supply increase over time.

Sarah, it would be wonderful if people could imagine other types of housing being excellent than the type they like and live in.

I think that there's a lot of different types of housing out there and a lot of the fear that comes around our conversations around housing is fears of maybe housing that doesn't look like yours.

Manufactured housing are is an incredible option.

Apartments are really important option that we probably all lived in at one point in our lives, even if we have homes, traditional homes now.

So being creative and thinking about all of the different incredibly important parts and people in your community and the types of living spaces they need, if we could be a little bit more graceful, I guess in our conversations, that would be incredibly helpful.

Fantastic.

Yeah.

And Eric, last thoughts.

Some of the biggest impediments we're facing right now has to do with regulation at the state level.

A lot of great well-meaning people.

But when you're navigating DOT, DES and fish and game all with different agendas, different timelines, some with no timelines, it's really a difficult process.

And I have this dream of, you know, sort of one guru person that could guide all those three departments with reasonable timelines.

It would it would make a huge difference.

Thank you all so much for being here and sharing your expertise with us today.

Unfortunately, that's all the time that we have for today.

And a reminder, if creating more housing is important to you, you can play a vital role by becoming more informed, showing up for local meetings on housing and supporting this work for people in your community right now.

If you'd like to learn more, we encourage you to visit communities and consequences dot org.

Support for the production of working the housing problem in cities is provided by New Hampshire Housing.

Bangor Savings Bank.

Anagnost Realty and Development.

DTC Lawyers.

Heritage Home Service.

New Hampshire Realtors and viewers like you.

Thank you.

Studio support is provided by Proulx Oil and Propane.