How the big “HOMEnibus” housing bill would do more harm than good
By Jason Sorens
The New Hampshire House of Representatives recently passed a couple of bills to make certain types of housing easier to build: single-family conversions to duplexes on lots with adequate sewer capacity, and detached accessory dwelling units. A more ambitious Senate bill comes up for a vote of the full chamber this Thursday, but unlike the cleaner, smaller House bills, this one has both pro-housing and anti-housing elements.
As amended, this bill, dubbed the “HOMEnibus Act,” would do the following:
- Extend the existing Community Revitalization Tax Relief Incentive to cover conversions of office, industrial, and commercial uses to residential use. This is an optional program municipalities can choose to adopt. It makes it so that rehabilitation or conversion won’t incur additional property tax as a result of improvements that raise the value of a property. This incentive could result in more residential conversions, but it also reduces the property tax benefit a town receives from such conversions, which may make planning and zoning boards less likely to want to approve such developments in the first place. It’s hard to imagine that the incentive would make the housing shortage worse, but it also might not make it any better.
- Allow local governments that currently operate under direct democracy (towns without charters and village districts) plus Coos County to let their governing body–typically, the select board–adopt and amend zoning ordinances without a vote of the people. A vote of the people would be necessary to give the select board this power. The assumption seems to be that the people who show up on town election day are less pro-housing than select boards are. I’m unaware of direct evidence on this point. Based on evidence from Texas, Nolan Gray thinks voters are less pro-zoning than officials are. But my experience in New England suggests that the reverse might be true here, though it probably varies by town. Certainly, in places like Canaan and Dalton, the public vote requirement has stopped zoning from being adopted at all.
- Require planning boards to consider “alternative parking solutions” proposed by residential developers to meet on-site minimum parking requirements, and if the developer can demonstrate that these alternative solutions would meet parking demand, planning boards must accept them. Alternative solutions could include nearby off-site parking lots, agreements with ride-share companies, public transportation availability, or walkable infrastructure as designated in a master plan or zoning ordinance. This is a straightforwardly pro-housing, pro-property rights measure. It is also rather tepid, given that other states like Minnesota are proposing to abolish all on-site parking minimums statewide for all uses, but it’s better than nothing.
- Authorize mandatory inclusionary zoning (IZ) that would require up to 15 percent of new dwelling units be deed-restricted below-market housing provided the developer is granted a density bonus of at least 25% more units than what the base zoning allows. Unfortunately, this is an anti-housing measure, creating a type of rent control tax on new development, as Yale law professor Robert Ellickson pointed out more than 40 years ago. Research in the Baltimore-Washington area finds that mandatory inclusionary zoning increases the cost of market-rate housing. Other peer-reviewed studies have consistently found a similar result: adopting mandatory IZ increases housing costs and distorts the market away from single-family development toward multifamily development. (However, one non-peer-reviewed study finds that moving away from mandatory to voluntary IZ does not reduce housing costs.)
The original version of the bill also had a major reform to minimum lot sizes that would have been pro-housing, but that was amended out. There is good reason to believe that the net effect of the current version of this bill would be to make housing less abundant and more costly.
Jason Sorens of Amherst is a senior research fellow at the American Institute for Economic Research.
