Median home price hitting $500k signals urgent need for land-use reform

, , ,

New Hampshire’s median home price hit an unprecedented half-million dollars in March, just two years after passing $400,000 for the first time, underscoring the urgency of making changes to local land-use regulations. 

The change represents “a 16 percent drop in affordability from a year ago,” according to the New Hampshire Association of Realtors (NHAR) report.

For context, the state housing affordability index was 59 in March. In other words, the median household income in New Hampshire ($90,845) is a mere 59% of what one needs to qualify for the median-priced home at current interest rates.

Such poor affordability prospects haven’t always plagued Granite Staters. According to NHAR, the affordability index hit upwards of 150 in March 2017 and even reached a high of 200 in 2013. 

The culprit, as the NHAR concluded (and many Granite Staters know by now), is a “lack of New Hampshire housing inventory….” 

NHAR President Joanie McIntire emphasized the point. 

“The problem remains the shortage of available housing that is continuing to make homeownership more difficult than ever for those workers needed to help an economy thrive,” she said.

There is no doubt that New Hampshire’s supply of homes is nowhere close to meeting residents’ demand for homes. In a functioning market, when prices signal such huge demand builders would be expected to increase supply rapidly.

New Hampshire unfortunately doesn’t have a functioning market thanks to a thick layer of local government regulations. 

Exclusionary zoning—the use of zoning ordinances to exclude certain types of land uses from zoning districts—has run rampant in New Hampshire municipalities for decades, choking the supply of housing throughout the state.

Since our 2021 study identifying zoning as a major cause of the state’s housing shortage, there’s been a growing consensus that the current land-use landscape in the Granite State has to change. 

As if to emphasize our analysis of the New Hampshire market, the Fall/Winter 2023 edition of the Journal of Housing and Community Development last December published this summary of the link between restrictive zoning and housing affordability: 

Restrictive zoning codes contribute to socioeconomic divisions, worsen the housing affordability crisis, and artificially inflate housing prices. The insufficient housing supply further emphasizes the importance of exploring opportunities for increasing housing stock through land use reform.

The correlation between states’ median home prices and their land-use freedom is particularly damning. Among the 25 states with the lowest median home prices, according to Redfin and Bankrate 2023 data, 20 of them also rank in the top 25 for most land-use freedom, according to the Cato Institute’s Freedom in the 50 States 2023. 

Conversely, of the 25 states with the highest median home prices, 20 of them are found in the bottom 25 for the least amount of land-use freedom. 

In these rankings, New Hampshire has the 14th-highest median home price and is the 12th-most restrictive state when it comes to land-use freedom.

The relationship, reflected in numerous studies, is clear: Less land-use freedom shrinks the supply of housing, which leads to inflated home prices.

Another way to look at the problem is through building permits. New Hampshire publishes building permit approvals collected by the U.S. Census Bureau. These data show a sharp and sustained reduction in building permit approvals since the early 1980s, showing that the housing supply problem long predates the pandemic or the 2007–08 recession. 

From 1984–1988, more than 10,000 residential building permits (single-family and multifamily) were issued per year in the state, with the peak being 18,015 in 1986. The last time more than 5,000 residential building permits were issued in a single year was 2006—18 years ago.  

The median home price in New Hampshire cracked $200,000 for the first time in 2002. For the next two decades, home construction did not come close to meeting demand. By 2021, the median home price had doubled to $400,000. Now it’s $500,000. Despite astronomical demand for new homes, the number of residential building permits issued in 2023 was just 4,512, a decline of 271 from the year before. 

Builders make money by building and selling homes and apartments. They want to meet this demand. Too many local governments have made it too costly or difficult for them to do so. 

At this point it’s clear that relaxing local restrictions on land-use freedom in New Hampshire is critical to opening the market forces that will allow supply to meet demand. The more urgently policymakers act to lift regulatory obstacles to home construction, the more quickly builders will be able to respond to these flashing-red market signals and provide Granite Staters the housing they so desperately want. 

 

/by

As Manchester bus ridership collapsed in the last decade, city spending on bus service soared

, ,

In the last decade, ridership on Manchester Transit Authority (MTA) buses fell by 38.6%, yet city taxpayer spending on the MTA increased by 38.2% above the rate of inflation, an analysis by the Josiah Bartlett Center for Public Policy shows.

As Mayor Jay Ruais and city aldermen search for savings in a stressed city budget, the MTA offers an agency that could be scrutinized for possible spending reductions.

From 2013–2022, data from the MTA reported to the Federal Transit Administration show that city bus ridership peaked in 2015 at 500,575.

Ridership fell each subsequent year, with the exception of 2021–2022, to 279,948 in 2022—a drop of 44.1% in just seven years. While this includes a steep 13.5% decline during the pandemic (2020–2022), the drop of 18.2% before the pandemic (2015–2019) was even larger. The decline over the entire decade was 38.6%. 

While ridership fell, the amount of money spent on Manchester public transportation only increased. From 2013–2022, MTA’s total operating expenses rose from $3,613,280 in 2013 to $5,219,813 in 2022, an increase of more than $1.6 million, or 44.5%, in nominal dollars. After adjusting for inflation,* the increase is still $940,802, or 22%. 

(*The inflation calculation uses Personal Consumption Expenditure (PCE) Indices from January 2013 and January 2022.)

This steep rise in spending includes a 62.4% increase, or a 37.1% inflation-adjusted increase, in funds from the federal government and a 63.6% increase, or a 38.2% inflation-adjusted increase, in local government spending. 

Meanwhile, Manchester public transportation has become less profitable, as fare revenues have dropped 23.9% since 2013. 

In 2013, MTA’s cost per rider was $7.93. The lowest point it reached was $7.51 in 2016. Since then, the cost per rider has skyrocketed, hitting a peak of $25.96 in 2021 before falling to $18.65 in 2022, still more than $10 more per rider than a decade earlier. All told, the last 10 years saw a jump of 135.1% in Manchester’s cost per rider. 

The huge increase in costs per rider was not just a matter of falling passenger numbers. As ridership fell during the past decade, the MTA aggressively increased service. 

Since 2013, MTA’s total miles driven have increased by 52.3%, going from 536,627 total miles in 2013 to 817,081 in 2022. Total hours driven have seen a similar increase as well, jumping 59.3% from 46,159 total hours in 2013 to 73,521 total hours in 2022. 

The MTA’s service area population and total square miles covered have expanded too. 

From 2013–2019, MTA served 135,366 residents and covered 63 square miles. Since the 2020 census, MTA has been serving 248,263 residents and covering 235 square miles, increases of 83.4% and 273%, respectively. 

The official 2023 MTA ridership and expenditure numbers won’t be publicly available until later this year. Although the city has figures showing 328,976 riders and $5,420,475 in total operating expenses for FY 2023 (cost per rider of $16.48), that time frame of measurement is different from what the Federal Transit Administration uses. Therefore, an apples-to-apples comparison can’t be made now between 2013 and 2023. The 2023 numbers won’t be added to this database until the official figures are released. 

The MTA plans to return to upwards of 400,000 annual passengers. But the current numbers and trends show a public service that yields a poor return on taxpayer spending. 

And the poor financial picture is not due solely to the COVID-19 pandemic, as the problems began years earlier. The pre-pandemic years of 2013–2019 saw MTA ridership plummet too. 

The numbers strongly suggest that MTA is hauling more taxpayer dollars than what is required for public transportation in the region. City leaders could find some budget savings by paring back MTA services to pre-pandemic levels, eliminating or curtailing underused routes, and seeking ways to enhance revenues. 



/by

For Education Freedom Accounts, capping income at 400% of poverty would exclude these moderate-income families

, ,

As legislators consider making more Granite State families eligible for the popular Education Freedom Account (EFA) program, there appears to be some disagreement about what types of families would be able to use the program depending on where the income limits are set.

Currently, only families whose income does not exceed 350% of the federal poverty level can access an Education Freedom Account. The House has already passed a bill to expand eligibility to 500% of the federal poverty level. In the Senate, there’s been some discussion about setting the line at 400%.

Considering whether to expand eligibility for the EFA program to families earning no more than 400% versus 500% of the federal poverty level is not a trivial matter. 

To many New Hampshire families, the difference between 400% and 500% is the difference between finding the educational environment that meets their childrens’ needs or being stuck in a setting that doesn’t work for them.

Last week, we reported on Christine M.’s family of three. Christine and her husband work three jobs but can’t afford private school. They would qualify for an EFA with an income cap set at the 500% level, but not at the 400% threshold. 

Many other Granite State families find themselves in similar situations because 500% of the federal poverty level is hardly “rich.” 

The following chart shows what the eligible income caps would be under both the 400% and 500% expansions compared to the current eligibility standard of 350% of the federal poverty level.

 

Household/Family Size 350% of 2024 federal poverty level 400% of 2024 federal poverty level 500% of 2024 federal poverty level
2 $71,540 $81,760 $102,200
3 $90,370 $103,280 $129,100
4 $109,200 $124,800 $156,000
5 $128,030 $146,320 $182,900
6 $146,860 $167,840 $209,800
7 $165,690 $189,360 $236,700
8 $184,520 $210,880 $263,600

*For each additional person, add $18,830 at the 350% level, $21,520 at the 400% level, and $26,900 at the 500% level.

At these income thresholds, many families that few would consider affluent would be left out of the program. 

The following families would not be eligible for an EFA at the 400% level but would be eligible at the 500% level (according to the most recent data available of annual mean incomes in New Hampshire from the U.S. Bureau of Labor Statistics):

  • A single registered nurse with one school-age child earning $83,420 per year;
  • A single dental hygienist with one school-age child earning $86,570 per year;
  • A married waiter and secondary school teacher with one school-age child earning a combined $103,820 per year;
  • A married childcare worker and school psychologist with one school-age child earning a combined $104,000 per year;
  • A married real estate agent and housekeeping cleaner with two school-age children earning a combined $127,660 per year;
  • A married mental health/substance abuse social worker and journalist with two school-age children earning a combined $125,720 per year;
  • A married middle school teacher and accountant with three school-age children earning a combined $146,410 per year;
  • A married paramedic and physical therapist with three school-age children earning a combined $149,850 per year.

Each of these far-from-rich families would be excluded from EFA eligibility under a new cap of 400%. 

Under 500%, however, they would all qualify for the program. 

This raises the question, then: What’s the real purpose of an income cap when families like these are left out?



/by

How one licensing requirement limits patient access to PAs

, ,

New Hampshire’s health care provider shortage has been a major news story for years. The demand for health care is growing as New Hampshire’s population ages. Yet the supply of providers is not keeping pace with demand, as physicians retire and too few young people enter the field, particularly in the three primary care occupations: physicians, physician assistants (PAs) and advanced practice registered nurses (APRNs). 

To illustrate the problem, a nationwide review of health care industry job listings on Indeed.com last fall found that New Hampshire had more than 1,000 listings per 100,000 residents, the highest number of listings per-capita in the United States.

Every New Hampshire county but Rockingham has at least some area experiencing a shortage of primary care providers.

The state’s 2023 annual report on the health care workforce availability found a very low rate of PAs offering outpatient primary care in New Hampshire per 100,000 residents. 

Counting providers offering outpatient primary care, the state found that New Hampshire has 54 physicians and 30.5 APRNs per 100,000 residents. But the rate for PAs is only 9.2 per 100,000. 

That falls even lower in rural areas. The number of physicians and APRNs per resident who offer outpatient primary care actually increases in rural parts of the state (to 56.9 for physicians and 36.3 for APRNs). But the number of PAs per resident offering that care falls from an already low 9.2 to just 6.3.

One likely reason for the shortage of PAs offering outpatient primary care, particularly in rural areas, is that the state essentially treats PAs as apprentices rather than the advanced practice health care professionals—with master’s-level education credentials and national industry certification—that they are.

State law (RSA 328-D:3) mandates that all PAs must have completed a nationally accredited PA education program (these are master’s degree programs) and have passed a national proficiency exam. 

RSA 328-D:3-b VII states that PAs “may provide any legal medical service for which they have been prepared by their education, training, and experience and are competent to perform.”

And yet the law prohibits them from offering the very same medical services they’re trained and qualified to perform unless they first obtain “a written collaboration agreement with a sole practice physician or a physician representing a group or health system….” 

The collaboration agreement is not supervision. The physician signing the agreement does not supervise the PA’s work and is not liable for the quality of the PA’s work product (outside of any direct involvement in a specific case). “Collaboration” is defined in law (RSA 328:D-1) as merely consultation or referral. 

APRNs, who have similar training to PAs, do not have a similar requirement. The law rightly treats them like advanced-degree professionals. PAs, despite having master’s-level medical training and being required by law to practice only within their area of training and expertise, are treated like untrained apprentices.

House Bill 1222 would remove the requirement that PAs enter into a collaboration agreement before being allowed to practice what they’re educated and trained to do.  

HB 1222 does not change the scope of practice for PAs in any way. Every other legal restriction on their work would remain. The bill would simply allow them to offer the services they’re fully qualified to offer without first finding a doctor to sign a contract agreeing to talk to them from time to time.

Despite their title, PAs are not really “assistants.” Under state law, they are authorized to offer services including, but not limited to:

“a) Obtaining and performing comprehensive health histories and physical examinations; 

“(b) Evaluating, diagnosing, managing, and providing medical treatment; 

“(c) Ordering, performing, and interpreting diagnostic studies and therapeutic procedures; 

“(d) Educating patients on health promotion and disease prevention;

“(e) Providing consultation upon request; 

“(f) Writing medical orders….”

PAs function as primary care providers, at a level below physicians but on par with APRNs. The requirement for a collaboration agreement is an unnecessary regulation that reduces the supply of PAs while likely hurting Granite Staters.

Some might consider this requirement a harmless rule that adds an extra layer of protection for patients. But if the requirement reduces the supply of trained, educated and licensed primary care providers in the state, as appears to be the case, then it hurts patients. By reducing the supply of providers and increasing wait times, it could reduce Granite Staters’ access to care, causing worse health outcomes. 

A proposed floor amendment would remove the collaboration agreement requirement after PAs have completed at least 8,000 hours of clinical practice. That’s a high hours requirement, and an unnecessary one. It would still create a needless barrier to entry into a profession that New Hampshire should by trying to expand, not limit. 

But if the choice is between the status quo and lifting the requirement after 8,000 hours, the pro-patient answer is easy. Patients would be better off if the state encouraged more people to become PAs by giving them a path by which to escape the collaboration agreement eventually.  

When licensing denies people services they need in the name of protecting them from fully educated, trained and credentialed professionals, it winds up hurting the very people it’s designed to protect by prohibiting them from accessing the care they need. The collaboration agreement is a perfect example of this unintended consequence.

/by

Out of options, one Granite State family turned to EFAs only to find out they ‘made too much’

,

Editor’s note: To avoid social repercussions in a small community, the subject of this story requested that only her first name be used and that her son’s name not be used. We granted the request. 

Christine M. spent three years trying to find the right learning environment for her son. When he started at Stevens High School in Claremont, the city’s public high school, it was a bad fit.

“We really struggled with that kind of environment for him,” Christine recalled. “He was having a lot of issues going to school, wanting to go to school, getting in engaged in school, not getting in trouble in school, that sort of thing. Getting pretty much nowhere with academics.” 

It didn’t help that Stevens High School is not a high-performing academic setting. The school finishes in the bottom 25% in English language arts and math proficiency, at 38% and 26%, respectively. 

“Then we went into our sophomore year. Had many, many more struggles. He was being asked to leave all the time for behavior issues. He just couldn’t engage in the classroom…. Our next step this year was to enroll him in the new charter school that opened in Claremont, River View Public Charter School. We enrolled him in that. He was kind of doing okay for a while, and then it became very clear that that method of online learning was not for him.”

River View is a tuition-free public charter school that uses Edmentum, an online learning platform that allows each student to work at their own pace. This wasn’t the right fit for Christine’s son either.  

“And we were getting nowhere with that, so we took him out of there,” she said. “And currently I have him homeschooling, and he’s working on studying and preparing for his GED test, his HiSET test. That’s the route we’re doing now.” 

After three years and three different learning environments, Christine thought she had finally found the educational setting in which her almost 17-year-old son would thrive. Throughout her son’s high school journey, Christine has had only one goal.

“Try to exhaust all the possibilities to get him successful so that he could a) learn something and b) end up with a diploma at the end,” she said. 

Exhausting all the possibilities finally led to the perfect fit, she thought. Christine found Micah Studios, co-founded by Stacey Hammerlind, a former colleague from the Newport School District. (We documented Hammerlind’s story last September.)

“When I heard she was opening this center for homeschoolers, I thought, okay, finally, this may be an option that will be successful, because we had pretty much…exhausted everything else that I could think of. And, of course, now he’s a junior, so we were running out of time, basically.” 

When Christine discovered that Hammerlind’s learning center, with its emphasis on individualized education and support, was up and running, she immediately reached out. 

“I contacted her when I started seeing that her studio…was taking applications,” Christine said. “So I kind of reached out and was like, ‘I think this might be something that could benefit my son. Can we talk about it?’ And she explained how it worked and all that, and I thought, okay, finally, he could be a homeschooler but have a place to go to do his homeschooling, because my husband and I both work full-time, and I knew that leaving him alone at home was not going to be successful. He wasn’t going to do it; he wasn’t going to do the work. And so that’s when we started talking about tuition, and I quickly found out that there was no way that we could afford it.”

Though they couldn’t pay out of pocket for their son’s education, Christine and her husband learned that enrollment at Micah Studios could be fully funded through an Education Freedom Account (EFA), the state’s largest school choice program. They were very excited. 

Micah Studios was just what they’d sought. 

“That was what we thought would be the best fit for him after exhausting all the other options, basically,” Christine said. 

The environment at Micah Studios fit her son’s individual needs in ways that the public options in the area did not.

“In the past, a lot of the issues were behavioral,” she said. “I know he would work much better in a smaller group with one-on-one instruction versus a classroom, and that’s just something, of course, that couldn’t happen at high school, at Stevens. And the River View Charter it could happen more, but there the kids were kind of just given the format and told to go, and he really needs more direction than that. 

“So I think that that would have been a benefit. I know Stacey’s group is small. I think there would have been more time for one-on-one instruction, one-on-one help with his online learning, with his homeschool work. Not to mention, just the distractions of everyday high school life. I mean, he’s a very social kid—class clown, that sort of thing—and that was hampering his success, to say the least.”

Christine had spent three years trying to find the best fit for her son’s education. When she finally found Micah Studios, she thought it was the long-lost answer. Instead, it was the rules of the EFA program—the very entity designed to help families like Christine’s access alternative education programs—that kept their son out. 

Christine’s family is not eligible for an EFA.

“When I heard about this thing Stacey was doing,” Christine said, “I thought, oh my God, finally, this is going to be success for him, but then the money got in the way.”

Current law caps eligibility for the EFA program at 350% of the federal poverty level. That makes the maximum income for a family of three like Christine’s $90,370. Her family is just above the limit.

Christine works a full-time job and her husband works two jobs, one full-time and one part-time. 

“That’s what we need to do to survive daily,” she said.

Their combined household income is $105,000—too much for their son to qualify for an EFA.

If Christine’s family had another child, both children would be eligible for EFAs. The program’s eligibility requirements are tied to federal poverty guidelines, which are tied to family size. But with one son and three jobs, their family was just over the limit. Now they struggle to homeschool their only child, calculating that this is a better option than sending him back to the two public schools that didn’t work for him. 

​​“Yeah, it’s been stressful,” Christine said. “Luckily my mom, his grandmother, sits with him sometimes and tries to steer him in the right direction, so some work is getting done just not the quantity of work I think if he had been in a place like Stacey’s studio. She’s doing her best to help us out with this, but it’s a burden.”

Asked if she would describe her three-job family as rich, Christine responded emphatically. 

“Yeah, no. I would definitely not,” she said. “We’re definitely not a rich family…. We are a family doing our best to get our son educated in not really the most ideal settings for him.”

An Education Freedom Account would mean a lot to her family, Christine said.

​​“What would it mean to us? I think it would mean that we would not be as stressed all the time. This has been a stress trying to figure out what to do with our son, like how to get him where he needs to go between freshman year and age 18. It would have been a relief for sure. This has been incredibly stressful. We’ve had many, many emotional moments on this journey of high school with him.”

Expanding EFA eligibility from 350% to 500% of the federal poverty level would raise the income threshold for a three-person family from $90,370 to $129,100. This would make Christine’s family eligible. 

The same can’t be said about expanding eligibility to 400% of the federal poverty level, which would increase the income cap to $103,280. At that threshold, Christine’s family would still fall short. 

A cutoff at 500% of the federal poverty level would still exclude a lot of families, but it would cover more than 60% of school-age children in the state. Though universal eligibility is preferable, this increase would allow many more children to find the educational environments that fit their needs.  

“I think being able to qualify for some kind of program like that would have just taken so many stresses out of his high school life,” Christine said, “and I think that it would have made him feel successful at something because I don’t think he feels that way.” 

For now, Christine will continue trying to homeschool her son while she and her husband work three jobs to make ends meet. She said that it’s hard, but it’s better than sending him back to the schools that didn’t work for him.

 

/by

Legislators distributing random numbers is no basis for sound public policy

,

“This is not a world to live at random in as you do.… Everything in this world is matter of calculation.”

— Thomas Jefferson, Oct. 12, 1786

Random chance is a constant feature of life on Earth, and for centuries it was a feature of human government. Kings and councils ruled with “arbitrary power,” as John Locke phrased it, subjecting the people to the whims of man just as they had previously been subject to the whims of nature. 

Escaping the tyranny of randomness was, to Locke and the American Founders, a primary motivating factor of those who built republican governments. 

“This freedom from absolute, arbitrary power, is so necessary to, and closely joined with a man’s preservation, that he cannot part with it, but by what forfeits his preservation and life together,” Locke wrote in the Second Treatise on Government. 

By “absolute power,” Locke meant rule by whim, not by law. But the Founders feared that in a republican government majorities would write laws that codified their whims and impulses rather than the considered opinions of a broader coalition of lawmakers. Hamilton and Madison were particularly animated in warning against this.

In Federalist 9, Hamilton defined an “arbitrary” policy as that which is “supported neither by principle nor precedent.”

Laws, the Founders argued, should be the result of rational, careful consideration, not random or arbitrary decisions. And yet we see regularly, even in New Hampshire, the hasty passage of laws that codify rules chosen more or less at random rather than by principle or precedent, to use Hamilton’s metric, or calculation, to use Jefferson’s.

Some bills this session offer great examples of this illiberal practice. 

House Bill 462 would raise the cap on damages for wrongful death loss of consortium claims. HB 462 originally would have eliminated the caps on financial damages that survivors can make for loss of consortium (companionship) in the wrongful death of a loved one. Caps exist to prevent runaway jury verdicts based on emotional testimony, as there’s no standard way to measure a loved one’s companionship value in financial terms. After strong opposition from the Business and Industry Association, insurers and others, the bill was amended to raise the caps from $150,000 to $500,000 for a spouse and $50,000 to $300,000 for a child or parent. Whatever one’s emotional reaction to these numbers, they are essentially random. Adjusting for inflation since the caps were imposed in 1997, $150,000 would now be $292,000, and $50,000 would be $97,000. Other states’ caps are all over the place, indicating a general lack of consensus on what a reasonable figure would be. Rather than join other states by randomly settling on a number that sounds good to some legislators, this is a perfect example of a policy deserving of more careful study and extended deliberation. 

Senate Bill 308 would raise the state’s minimum wage from the federal $7.25 an hour to $15 an hour. Why $15 an hour? Why not $10, $20, or $17.93? The chosen number is not entirely random, as it’s the one settled upon by labor unions and national activists as sounding politically palatable. But it’s consistent with neither precedent nor principle nor rational calculation. A number chosen for political purposes is hardly a strong basis for choosing a wage floor that will eliminate job opportunities for lower-skilled Granite Staters. The overwhelming evidence from decades’ worth of national studies on minimum wage laws is that large increases that lift low-end wages above market rates eliminate employment opportunities for lower-skilled workers. New Hampshire’s own study of the impact of a $15 minimum wage found that it would make the state poorer and less populous. People shouldn’t lose job opportunities because politicians randomly picked their hourly pay rate. 

Nor should people lose their access to public records because lawmakers set an arbitrary trigger requiring payment to access those records. House Bill 1002 represents an effort to reduce public records requests by allowing government to charge for large requests. It’s gone through many variations. The latest amendment would allow government holders of public records to charge up to $1 “per electronic communication” for any records that total “in excess of 250 communications.” That is, if a records request results in a collection of more than 250 emails or text messages, government agencies can charge up to $1 per email or text for any communications after the 250 threshold is met. Multiple emails under a single subject line would count as a single communication. For the price-per-record portion of the bill, this represents an improvement over previous versions. But it still sets an arbitrary threshold at which government could charge citizens not for making copies of records, but simply for providing access to them. This line has never been crossed before. Once the line is crossed, future legislatures can reduce the arbitrary cutoff number of 250 or apply it to other types of records. Furthermore, the bill grants government blanket civil immunity for disclosing information that is not subject to public disclosure. On the whole, the amendment would tip the balance of power between citizens and government more toward government, which would weaken government accountability in New Hampshire.

Reversing randomness

Sometimes lawmakers seek to undo random or arbitrary policies that have been written into law or rule in the past. 

House Bill 1053 would forbid municipalities from banning new residential development in commercially zoned areas. Advocates of strict local zoning ordinances say they are needed to prevent commercial and industrial development from encroaching into residential neighborhoods. There is no public health or safety justification, however, for prohibiting mixed-use development in areas that already allow commercial activity. Such prohibitions are a perfect example of arbitrary power exercised democratically. Municipalities prohibit people from choosing to live above or beside stores and cafes purely for aesthetic or cultural reasons, not for legitimate public safety reasons. That’s clearly an arbitrary violation of people’s property rights.

House Bill 1281 would prohibit municipalities from banning unrelated individuals from sharing a home. Specifically, it would bar any ordinance that “restricts the number of occupants to less than 2 occupants per bedroom based upon the existence of unrelated or non-familial relationships between the occupants of such rental property.” Local officials in college towns are upset that the bill would undo ordinances that ban, say, more than three unrelated people per dwelling unit, as Durham does in some zones. Officials say that such ordinances are demanded by residents who want to control noise and disorder in their neighborhoods. But the ordinances discriminate against people based on relationship status, not behavior. Widowed senior citizens who are perfectly quiet and neighborly are barred from renting property together, or from renting to students whose behavior they could supervise. Rather than use noise and nuisance ordinances to police the illegal behavior of bad neighbors, such ordinances restrict property rights through an arbitrary cap on unrelated renters.

A certain amount of randomness is inevitable, even desirable, in life. But it shouldn’t guide policymaking. 

/by

A zoning fix for child care can apply to education too

, , ,

Child care in New Hampshire is often hard to find and, when you do, expensive. A bipartisan group of legislators has offered families some relief in a surprising way: zoning reform.

Child care offered to small groups of children in a caregiver’s home was once a popular option for many families. But professionalization and regulation of the industry produced a shift toward large (and expensive) commercial day care centers. A lot of families looking for cheaper alternatives today wonder where the old-fashioned, home-based child care providers went.

Many municipalities, it turns out, have passed zoning regulations prohibiting or restricting them.

“Many state and local governments have considered home daycares a ‘problem use’ and have therefore used zoning restrictions to ban them. Such restrictions reduce the availability of childcare in the affected neighborhoods and further increase the price of childcare services,” the Cato Institute’s Ryan Bourne has found.

House Bill 1567 would fix that in New Hampshire by requiring local zoning regulations to allow family child care programs as an accessory use (by right) to any primary residential use. 

Such home-base child care programs would be allowed “as long as all requirements for such programs adopted in rules of the department of health and human services (He-C 4002) are met,” the bill states.

Child care is expensive for many reasons, some of them regulatory. It is particularly expensive in New Hampshire. 

According to Child Care Aware, child care in New Hampshire costs an average of $10,140 per year for an infant in family child care and $10,400 for a toddler in family child care. For an infant and toddler in center-based child care, New Hampshire families are spending an average of $15,340 and $14,235 per year, respectively. 

On the “low end,” then, family child care for an infant accounts for 21% of per capita income in New Hampshire and 11.2% of medium household income in the state, while center-based child care for a toddler represents 29.5% of per capita income and 15.7% of medium household income in New Hampshire.

For context, the U.S. Department of Health and Human Services considers its benchmark for affordable child care to be 7% of income. 

HB 1567 would not solve this problem, but it would help lower costs by largely doing away with “problem use” restrictions in residential zoning districts. This change would open more of the state to home-based family child care, free up the supply of those services, and, in turn, help reduce prices. 

This is a smart and efficient way to help lower child care costs by removing an unnecessary regulatory barrier that prohibits the entry of low-cost competitors into the marketplace. 

Legislators could achieve similar results by applying this same approach to a similar service: education.

Since the COVID-19 school closures, interest in small-scale education alternatives has exploded. Many families would love to send their children to home-based education providers in their own neighborhoods. But as teachers and former teachers have begun offering these services, they’ve sometimes run into the same zoning problems troubling many would-be day care providers. 

Kerry McDonald, senior education fellow with the Foundation for Economic Education, wrote two years ago for the Josiah Bartlett Center about a New Hampshire educator who encountered this problem: 

For Becky Owens in Chester, trying to offer sporadic homeschool programs on her farm property turned into a regulatory headache that likely would have deterred many other aspiring education entrepreneurs from moving forward. Owens had been homeschooling her own five children for several years, after pulling her oldest son from the local public elementary school because it wasn’t a good fit for her shy, sensitive boy. She wanted a more personalized educational environment for him and her other children that would be responsive to their individual learning needs and styles.

A college professor for 15 years with a Ph.D. in education, Owens decided to create that personalized learning environment, and eventually expand her offerings to other children in her community. In 2020, she decided to host occasional nature hikes on her property for small groups of local homeschoolers. She had a handful of students register for one of her hikes, and she placed a chalkboard sign in front of her house with the words “Farm Rich Nature Hike” so families could find her.

This simple gesture set off a cascade of events involving the local building inspector, who issued her a “cease and desist” letter for her farm walks. Over the subsequent weeks, Owens had to prepare numerous documents for local officials, including an aerial view of her property, and appear before the planning board to ask for permission to operate as a home-based business. She also had a property inspection from the local fire chief, even though her program was held entirely outside. All of this was required just so Owens could welcome a few children to her property for a nature walk. Her walks never exceeded 10 kids.

And although these local regulatory roadblocks didn’t stop Owens (eventually she got approved to operate as a home-based business), she’s the exception that proves the rule. Who knows how many other aspiring education entrepreneurs seeking to offer alternative learning environments have either given up when faced with such prospects or haven’t even tried. 

As with child care, some municipalities don’t allow “education” services to be offered in residential zones even if all other regulations are followed and there’s no impact on the neighbors. The provision of the service itself is forbidden.

HB 1567 offers a blueprint for how the state can easily expand the marketplace for needed services simply by allowing home-based providers to offer them on a small scale, provided the service doesn’t violate other rules that offer legitimate protections for consumers and neighbors.

 

/by

House takes up two bills that would yank Education Freedom Accounts from kids

, ,

This week, two bills that would take Education Freedom Accounts (EFAs) away from children enrolled in the program will be considered in the state House of Representatives. 

We previously summarized a group of bills that would heavily regulate the EFA program to the point that its functionality and growth would be severely curtailed. The House will vote on two of those bills on Thursday. They are House Bills 1512 and 1594. 

HB 1512 would limit funding for the EFA program from the Education Trust Fund to so-called budgeted amounts. Specifically, the bill states that Education Trust Fund payments for EFAs “shall not exceed $19,800,000 for fiscal year 2024, and in subsequent fiscal years shall not exceed the amounts appropriated for such purpose in the biennial state operating budget.”

In other words, regardless of actual enrollment, the bill would limit EFA appropriations to the sums that legislators estimate would be needed to cover EFA enrollment. Critically, the bill misrepresents the program as one whose funding is intended to be fixed annually by a set annual appropriation. It is not. Just like public schools, the EFA program’s funding is based on enrollment. 

The “appropriated” amount to which HB 1512 refers is an estimate. Existing law directs the governor to draw a warrant to cover any costs that exceed the estimate, should program enrollment prove larger than budget writers guessed. The bill would simply forbid that warrant article from exceeding the estimate, effectively capping EFA enrollment.

While presented as a measure to protect the Education Trust Fund from unanticipated withdrawals, HB 1512 is in fact an effort to prohibit the organic growth of EFAs. The bill does not address anything other than EFAs that might result in a larger-than-budgeted state education expenditure. Public schools experience fluctuating enrollment every year, and thus also pose a risk of draining more from the trust fund than was previously estimated. The number of students who have special needs or come from disadvantaged backgrounds also fluctuates annually, and increases in those numbers cause larger withdrawals from the Education Trust Fund.

The truth is that enrollment in all educational options fluctuates from year to year, and budgeted amounts are merely projections (educated guesses). Assuming that actual spending on any form of public education should align with previous budgeted guesses would be a little like assuming that election results should align precisely with pre-election polling. The budgeted amount is the guess. The actual enrollment numbers are reality. It’s not the other way around.

Lawmakers accounted for those annual enrollment fluctuations when they designed the EFA program. That’s why the EFA statute lets its funding shrink or grow depending on actual program participation. 

As written, HB 1512 would change the EFA program to a set line item in the state’s biennial budget, though that’s not what it was intended to be. Funding for the EFA program is based on enrollment, just like public school spending is. This is the appropriate way to fund both.

The main argument for this legislation is the claim that the EFA program is “way over budget.” That’s not accurate, in that the statute funds the program based on enrollment, not a set line item in the budget. HB 1512, however, would bind the program to a set budget line while failing to hold the state’s spending formula for public education to the same standard. 

Taking EFAs away from kids while costing taxpayers more

This fundamental change in EFA funding would forcibly revoke EFAs from some children who currently have them because the program has already grown beyond the bill’s proposed spending limit. 

In the current fiscal year, appropriations for the EFA program are upwards of $22 million. Those appropriations are to meet the needs of the 4,933 enrolled students, a number that’s increased by 201.7% since the program’s inception and is expected to only keep growing, as the program is popular among families who seek an alternative to their children’s assigned public school. 

The bill also would increase, not cut, total education spending. The EFA program provides a publicly funded education at a fraction of the average per-pupil expenditure for New Hampshire public schools, which is currently $20,323 from all sources, state, local, and federal. The average per-pupil adequate education grant for an EFA is $5,255. Every student who moves from an EFA back to their assigned public school costs taxpayers more money, not less. 

Finally, HB 1512 seeks to solve a problem that doesn’t even exist. The Education Trust Fund is growing, not shrinking. Despite funding both public schools and EFAs, the Education Trust Fund ended the 2023 fiscal year with a surplus of $161 million and is projected to finish this fiscal year with a surplus of $232 million. 

Moreover, since public school enrollment has been falling for the last two decades and is expected to continue declining, the resulting extra money in the trust fund (even with the budgeted limit) would simply sit there unused as more and more students leave their government-assigned district public schools and enroll elsewhere. EFAs change that, allowing those students to take their per-pupil grants with them.

Another way to take EFAs away from kids

As HB 1512 attempts to cap the finances behind the EFA program, HB 1594 would further limit those who can participate in the program.

HB 1594 would establish “an annual review and qualification to determine eligibility to participate in the education freedom accounts program.” If a participant’s household income goes over the income cap (currently 350% of the federal poverty level) in any year, then that participant would cease to be eligible for the program and would lose the EFA.

Existing law requires that the income limit be met only when applying. That was done to provide continuity for families and prevent children from being sent back to an educational environment that didn’t work for them just because their family’s income grew during their time in school. 

But HB 1594 would effectively remove an EFA student from the program if, for example, his or her single parent making the average teacher’s salary in the state earned a raise of just $5,000. 

Cloaked under the guise of reigning in a “fiscally reckless” program, these regulations are specifically designed to force children back into their assigned public schools, even though their families have decided that those schools are not the best educational environments for them. 

These bills would remove students currently using EFAs from the program, which could be a jarring or even traumatic experience for some. 

They also would reduce competition in a growing educational marketplace by hamstringing the state’s largest school-choice program—one that saves taxpayers money. (See “Bartlett report shows that Education Freedom Accounts will save taxpayer money, improve student outcomes” and  “As NH public school district enrollment fell by 30,000 students in 19 years, spending rose by nearly $1 billion.”) 

Ultimately, each of these bills would not just restrict the growth of the EFA program but kick children out of it who are currently enrolled. They would do this in the name of protecting the Education Trust Fund, which enjoys a healthy surplus that is projected to exceed $200 million.   

The rest of the proposed measures to restrict EFAs—HB 1418, 1592, 1610, 1654, and SB 525—are due out of committee next week.



 

/by

Banning ‘scalping’ won’t fix the ticket resale market

, ,

Imagine you own a small entertainment venue in New Hampshire. What’s the value of an aisle seat in Row 37 on a Wednesday night in April?

Let’s say you printed the date, the time and a price of $100 on the ticket. Would that make the ticket worth $100? How about $200?

No idea, right?

You don’t have enough information to answer that question. You first have to know: 1.) Who’s playing that night, and 2.) How much are people willing to pay to sit in that seat in that venue at that time for that artist?

The number of people interested in renting that seat for two hours on a Wednesday night would vary along with the popularity of the artist. That number would be lower for a Dead Kennedy’s show than for a Dua Lipa show. (Yes, we know who Dua Lipa is. Kind of.)

Everybody understands that the value of sitting in that particular seat for any given two-hour period is not fixed. It depends on who is on the stage, when, where, for how long, etc. In other words, the value depends entirely on demand. It doesn’t matter what price you print on the ticket if that price doesn’t reflect the actual demand for that seat at that time. 

So why do so many lawmakers (and consumers) assume that ticket prices set by venue operators reflect actual market value?

Venues have a lot of information that helps them set ticket prices. But ticket prices are not the same as ticket values. And extensive research into ticket prices has shown that venues and artists routinely underprice tickets relative to their market value for many reasons, including the desire to encourage sellouts (which maximizes concessions revenue) and avoid annoying fans.

“To maximize profits a promoter wants a sell-out as this maximizes complementary revenues and introduce the ‘crowd effect,’ meaning that consumers who believe a concert will be a sell-out are more attracted to the event and demand for tickets will intensify,” Hofstra University music industry professor Terrance Tompkins wrote in the International Journal of Music Business Research in 2019.

Industry professionals confirm what researchers have found.

“Average secondary ticket prices remain close to double that of a primary ticket, continuing to show the extent to which concerts and other live events remain priced below market value,” Music Business World, an industry publication, quoted Joe Berchtold, Live Nation’s President and Chief Financial Officer, as saying in a recent earnings call.

That huge gap between the retail price of event tickets and their market value drives the growth in the secondary market. People and policymakers like to hate on “scalpers.” But there wouldn’t be much of a secondary market if retail prices better reflected market value.

Concert ticket prices have risen dramatically in recent decades, reflecting a rise in demand and a rise in disposable income among the concert-going public. But generally speaking, retail prices often remain below market value, particularly for the most popular shows.

Senate Bill 328 would try to address this gap between price and value by imposing a price cap on the secondary market. Deceptively presented as a bill to ban deceptive resale practices, its last section forbids the resell of event tickets above face value.   

That’s a price cap, and price controls are bad. Banning the resale of tickets for more than face value won’t change the actual market value of tickets for popular events. It will create shortages in legitimate secondary ticket markets and stimulate a separate black market for event tickets. 

The Federal Trade Commission looked into ticket reselling in 2019 and organized a presentation by University of Chicago economist Eric Budish, who concluded, as so many other researchers have, that this market was driven by low retail ticket prices. 

“The structural economic issue is artists/teams sometimes want to ‘underprice’ their tickets relative to what the market will bear,” Budish concluded. “This creates an incentive for rent-seeking behavior.” (That means it creates an incentive for people to buy tickets at their obviously low prices and make a profit by selling them at the market price.)

The FTC suggested that only three ticket-selling options exist:

1. Set a market-clearing price in the primary market.

2. Set a below-market price in the primary market. Much of the “real” allocation will happen in the secondary market.

3. Set a below-market price in the primary market + ban resale.

Option 2 describes the current market, which is obviously not ideal. 

Option 3 describes the market as imagined in SB 328. This is also not ideal, as it would not solve the underlying problem but would expand the unregulated black market for tickets. It also likely would do little to curtail high markups in the secondary market, as law enforcement agencies rarely waste valuable officer time pursuing ticket resellers, which resellers know. 

The best option is Option 1: setting a market-clearing price in the primary market. There’s research to show that this has highly positive effects.

Budish, the Chicago economist who presented to the FTC in 2019, later worked with Bank of America economist Aditya Bhave to study Ticketmaster’s short-lived experiment in auctioning a portion of tickets for concerts in the early 2000s. In a study published last year, they compared set prices and auction prices in the primary market to the prices for comparable tickets to the same shows in the secondary market. 

Not surprisingly, they found that auctioning tickets instead of selling them for a set, below-market price all but eliminated the gap between retail and secondary market prices. And instead of scalpers collecting the difference between the set price and the market price, the artists did. 

When fans paid the market price directly to the venue, rather than to a reseller, “artist revenues roughly doubled,” they found.

The auctions allowed fans to find the market-clearing price before resellers could, which “eliminated or at least substantially reduced potential resale profits for speculators.”

Unfortunately, Ticketmaster discontinued its auctions. Fans, unaccustomed to paying market prices at the retail level, didn’t like it. And so the secondary market continued to grow, and resellers, rather than artists, enjoyed the benefits of selling tickets for their true market value.

Auctions would be the most efficient way to find the true market value of an event ticket, but venues could get close to that value in other ways. They could raise prices for the most valuable seats at the most popular shows, charge significantly higher prices when tickets first go on sale to discourage mass reseller purchases, or delay sales until closer to the show date. 

Venues also could choose to ban resales and require purchasers to show a photo ID at the door. But this doesn’t go over well with fans. It’s much easier to demand that lawmakers prevent resellers from making a profit. 

Lawmakers certainly can pass laws making it illegal to sell tickets at market prices. But they can’t ban the laws of economics. People will find ways to sell tickets at market value. It’s better that venues do this in the primary market. If they choose not to do this, ticket purchasers will–even if legislators tell them not to. Moving market-priced tickets from the legal market to the black market isn’t good for anyone and would be the worst of all options.

/by

How building more luxury apartments helps the poor

, , , ,

As pressure builds for local and state policymakers to address New Hampshire’s severe housing shortage, some activists and lawmakers are again blaming developers rather than regulators for the state’s high rents. 

Developers are building “too many” apartments for higher-income renters, some claim. This raises rents, hurting the poor, so government must intervene to make builders reserve a certain percentage of new construction for lower-income households, the argument goes. Some also want the state to give subsidies to low-income renters. 

The idea that building more apartments raises rents has achieved the status of conventional wisdom in some activist circles. It’s done so despite it being untrue, and confirmed untrue by growing stacks of economic evidence. 

Even academics repeat the claim. A California political science professor, in a February opinion column for New Hampshire Bulletin, wrote that “construction in the high-end ‘luxury’ rental market, which drives up rents for everyone else, remains in an upward trend.”

In fact, building more market-rate apartments reduces rents for middle-and lower-income households. This has been well established in academic research for years. And recent studies have provided more detailed confirmation of the effect.

A review of recent research on the subject finds:

  • Researchers at the Upjohn Institute and Federal Reserve Bank of Philadelphia found in 2019 that new market-rate apartment buildings “decrease nearby rents by 5 to 7 percent relative to locations slightly farther away or developed later.” They made a point of stating that the evidence ran against common complaints about market-rate apartment construction. “Contrary to common concerns, new buildings slow local rent increases rather than initiate or accelerate them,” they wrote.
  • A 2020 study by the National Multifamily Housing Council Research Foundation found that a “substantial flow of new construction apartments, largely targeted to middle- and higher-income groups, has enabled the ‘filtering’ process to create affordable housing opportunities for low-income households,” as a summary of the report put it. 
  • NYU researchers in a 2018 paper sought to answer claims that building market-rate apartments raised rents. “We ultimately conclude, from both theory and empirical evidence, that adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families.” They also noted that housing shortages are caused by regulations, not new construction. “Despite the arguments raised by supply skeptics, there is a considerable body of empirical research showing that less restrictive land use regulation is associated with lower prices. The evidence takes many forms. A large number of cross-sectional studies show that stricter (less strict) local land use regulations are associated with less (more) new construction and higher (lower) prices.
  • A 2021 UCLA review of recent studies on the effects of building market-rate apartments found overwhelming evidence that new construction of market-rate units lowers rents. Referencing the NYU paper cited above, the authors wrote: “Since that article came out two years ago, at least six working papers have been released that examine the connections between market-rate housing production and affordability at the neighborhood level. Four of the papers conclude that market-rate development makes nearby housing more, not less, affordable. The fifth paper looks at rents across entire cities rather than at the  neighborhood level, but finds that new development causes rents to fall for units across the income distribution. Findings in the sixth paper are mixed, and offer some reason to think new development makes nearby housing more expensive. Although the papers await peer review, and readers should bear that in mind, the importance and near-unanimity of their findings makes discussing them worthwhile.”

Building luxury or higher-end apartments draws higher-income renters out of yesterday’s luxury apartments and into the new luxury apartments. Increased vacancies in yesterday’s luxury apartments attract higher-income residents who’ve been living in mid-level apartments. As new construction creates more vacancies, rents come down. That effect filters throughout the housing supply, lowering rents all the way down. Economists call this “filtering,” and it’s an effect thoroughly established in academic and industry studies of rental housing markets. 

There’s no doubt that filtering occurs when enough new apartments are built. It can’t occur, though, if government prevents developers from creating those new high-end apartments. The problem in recent years has not been the creation of too many high-end apartments, but too few.

Harvard’s Joint Center for Housing Studies pointed this out in 2020: 

“What is different about the recent dynamic is that new construction is accommodating a growing number of high-income households, but just barely. Indeed, despite the relatively high rents, the number of new apartment units being added each month is scarcely keeping up with growth in units rented out, or ‘absorbed’ by new renters. When new construction is only just meeting demand from new high-income renters, it means that, in effect, new high-end units are being rented out by new, high-income renters, rather than by current high-income renters trading up to a newer unit, and therefore fewer old units are left to ‘filter down’ to a lower-income renters.”

In other words, when developers are allowed to build more market-rate apartments, rents come down for everyone. When they aren’t, rents stay high. 

/by