Future of $100 million housing plan uncertain as Executive Council withholds approval

The future of a proposal to inject $100 million in federal money into New Hampshire's housing rental market is unclear after the New Hampshire Executive Council tabled Gov. Chris Sununu's plan.

In a 5-0 vote Wednesday, April 20, the Executive Council voted to hold off on approving the plan, which Sununu has said will be targeted to "low and middle income" rental housing units. Councilors have expressed concerns about a lack of concrete guarantees that the money will go toward affordable housing projects.

Now, Department of Business and Economic Affairs Commissioner Taylor Caswell – whose department would be responsible for overseeing the distribution of the funds – is seeking to overcome that skepticism by providing more details ahead of the council’s next meeting on May 4.

But as Caswell and Sununu try to win over councilors, they have indicated they have no desire to change the structure of the program to provide the guarantees councilors requested, arguing the state needs flexibility to distribute awards efficiently.

Sununu has said concrete definitions of affordability are not helpful for the program.

"We're not going to create our own guidelines – unique guidelines around what 'middle and low income' is, knowing that those guidelines are more locally driven, depending on the financing, and depending on, again, what the structure of that project might look like," Sununu said at a press conference following the vote. "We're doing everything we can to not create artificial guardrails that will exclude projects."

Caswell agreed. "There is no need to 'go back to the drawing board' or make any changes to the program structure," he said in a statement. "We will accelerate the process of program design to make decisions now on many of the program details and communicate that to the council prior to their next meeting."

Multiple executive councilors said they could not approve the funding without more restrictions in writing. Sununu administration officials say they will use the coming weeks to flesh out their vision and explain it to councilors – even if the underlying structure of the grant program doesn’t change.

"At almost every meeting, agencies across state government bring programs to (the) Executive Council and ask for their approval to 'accept and expend' a particular amount of funding to use for a particular purpose," Caswell said in a statement. "We seek to provide them enough detail to give their consent, but now and then they are just looking for more detail. Yesterday was one of those instances, and we will seek to get them what they need to make a decision on this critical workforce housing item."

One-time boost for NH housing

The proposed program has been pitched by Sununu as a one-time boost to the state's housing market, which has struggled with low levels of housing stock and increasingly high prices.

The plan would devote $60 million to matching grants for housing developments in the state and $40 million to grants to incentivize towns to speed up permitting processes and overhaul zoning laws.

The program would allow developers or housing organizations to apply for up to $3 million in matched funding for projects, provided those projects would be used for rental housing and include at least five units.

But a two-page explanation of the plan released by the department this month has come under criticism from some lawmakers for not including income limits for the types of housing projects that it would fund.

Those concerns first appeared at the April 15 Joint Legislative Fiscal Committee meeting, in which Democratic Sen. Cindy Rosenwald questioned the department’s decision to treat the federal recovery money financing the project as "revenue replacement," a designation that allows the state to use the money without necessarily targeting it to low-income residents.

That committee approved the program, 8-2. Some Democrats voted to approve the program even as they urged Caswell and Sununu to focus on affordable housing.

But by the time the proposal arrived at the Executive Council on Wednesday for a final sign-off, the concerns over the lack of specificity had spread to both parties.

"This is only two pages on $100 million," said Councilor Dave Wheeler, a Milford Republican, addressing Caswell and Sununu. "And with all due respect, if it's going to be affordable housing, before we hand out $100 million of taxpayer money we need to know the definition of affordable and what it's going to be spent on."

Councilor Cinde Warmington, a Concord Democrat, agreed, arguing that "nothing in these documents would prevent this money from going to market-rate housing or luxury housing."

Warmington's comments prompted a tense back-and-forth with Sununu.

"I have $100 million allocated to low- and middle-income housing," Sununu said. "If you don’t want to vote for it, you don't have to."

"You can say what it is, but then let's … see it in writing," Warmington replied. "Let's put some eligibility requirements in here."

Neither Wheeler nor Warmington were immediately available to comment Monday on the factors that could change their votes.

An opportunity too big to kill

As the funding program sits in limbo, some are pointing to the delay as an opportunity.

The state’s largest affordable housing organization, Housing Action NH, is embracing the tabling decision and advocating for state officials to use the additional time to add clear affordable housing targets into the program.

But Housing Action NH is still hoping councilors approve some version of the program, said Elissa Margolin, the organization’s director. The opportunity the $100 million provides for the state is too big for the council to kill the entire proposal, Margolin added.

"I would say, overall, we're pretty optimistic," Margolin said. "We have a checks-and-balances system, as the governor said, and this is an opportunity for (the councilors) to get more information, and that's part of the process. And we are all about affordable housing. So we appreciate the opportunity to have this brief moment of additional advocacy, but we should do this."

And Margolin said that while the organization is advocating for affordable housing projects to be prioritized, flexibility can be beneficial to get certain housing projects completed. It allows for mixed-income housing projects – in which affordable housing is included alongside market-rate housing – to move ahead, which can be easier to get approved. And it prevents some projects from being blocked by statewide caps tied to affordability metrics, she said.

"Flexibility is good for developers, too," she said. "And one of the reasons it's good is it allows our developers to respond to real local and regional needs and local markets so that they can move these shovel-ready projects ahead."

The key requirement for the program, Margolin says, is that the money does not go to luxury apartment rentals. Currently, there are no specific guardrails to prevent that, though Sununu and Caswell have pledged not to use the funding for high-income rental housing projects.

"There's no luxury apartments, there's no condos, there's no – this is all multifamily unit housing for low- and middle-income families," Sununu said.

Whether councilors do approve the plan will depend on how detailed the new plan is – and whether it sufficiently meets their affordability concerns. The Fiscal Committee already approved federal funds to support the hiring of three new staff members in the Department of Business and Economic Affairs to help the program get started; Caswell said those staff members will develop a more detailed plan for the program.

Should the council approve the $100 million "accept and expend" funding request, the Department of Business and Economic Affairs would still need to bring the specific projects it wants to fund back before the council for a final approval, New Hampshire Attorney General John Formella told councilors last week.