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Planning for Success
Accessory Dwelling Units

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Continue to Integrate Accessory Dwelling Units

Issues /Opportunities Addressed: C)

Timeframe for Action: Short Term

An accessory dwelling unit (ADU) is an independent residential living area
that is on the same property as a larger, primary dwelling unit. The term
“accessory” is purposely meant to describe the unit as secondary to the
primary unit, in the same way a garage is of secondary importance to the
home. These units cannot be sold separately and are typically limited in size
to help reduce impacts on neighbors and blend in with surrounding homes.
These units can help meet a wide range of living arrangements, provide an
affordable housing option to family or friends, or create an opportunity for
the primary homeowner to generate additional income through rent.

An accessory dwelling unit generally takes three forms:

1. Re-purposed space: e.g. above the garage or in the basement.
2. Stand-alone unit: separate from the primary home.

3. Attached: addition to the primary home.

ADUs in Nashua could play an important role in the City’s overall housing

stock based on what we know from the demographic and market data:

¢ ADUs offer an affordable housing option for smaller households

¢ ADUs could provide seniors, especially those living alone, with another
housing option and allows older owners to age in place

¢ ADUs could also provide a lower cost housing option for younger
residents

¢ ADUs more easily integrate multi-generational households to live together
in the same structure or on the same property

¢ ADUs offer a quick and easy way to boost housing production

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ADUs are allowed by law across the State of New Hampshire, therefore
Nashua must also allow them to comply with state statues. According to
City staff, the Planning Department sees on average one ADU application per
month and would likely see more but cost is the biggest hurdle for existing
homeowners. ADUs are allowed by Special Exception in Nashua, not by right,
which adds an additional layer of process, time, and money to getting your
approval.

In response, the City should consider the development of pre-approved ADU
plans that could more quickly and easily be permitted and constructed. This
would save time and money for the owner and City staff and boards. If
Nashua can establish pre-approved designs for ADUs, there could be an
opportunity to revisit the discussion around making ADUs by right instead of
through Special Exception. The City could make ADUs part of a city-wide
housing campaign to more widely introduce the concept, discuss the
benefits and drawbacks, show some local examples, and describe the
process for permitting and constructing an ADU.

The City might also consider reduced fees for ADUs compared to traditional
residential structures to encourage more units and reduce the cost barriers.

Planning for Success
Accessory Dwelling Units ASSOCIATES NC

Reducing Barriers to ADUs

pre-approved
Case Study - ADU Barrier Reduction, Seattle, WA plans for
Some states and municipalities across the country have taken additional
steps to make the approval and permitting of ADUs as streamlined as
possible while still considering the impacts on surrounding property
owners. For example, the City of Seattle has been working for several
years to streamline the ADU permitting system and reduce as many
barriers to cost and construction as possible. A report from the City’s
Planning Director in 2016 identified several barriers to address to improve
the delivery of ADUs. These included:
¢ Removal of off-street parking requirements for ADUs
¢ Reduce minimum lot sizes for detached ADUs
¢ Allow the same gross square foot limits for attached and detached
ADUs
¢ Allow flexibility for placing primary entrances
¢ Allow modified roof lines/features that create useable spaces The City notes pre-approved designs will offer a faster, easier, and more predictable
¢ Allow an ADU structure to be placed within the rear setback path to permitting and construction of ADUs. Homeowners choosing the pre-approved
plans will pay reduced permit fees and get their permit within 2-6 weeks for sites
In February 2020, the City put out a call for submissions of designs for without environmental issues, drainage, or protected trees. On a similar note, the State
detached ADUs that could be chosen for pre-approval making the of California has a similar process in many of its cities building on a statewide mandate
development of ADUs in the City faster and easier. The intention was for a to remove barriers to the permitting and construction of ADUs. Several cities across
selection committee to choose between 6-10 plans that City permitting California have created pre-approved plans for ADUs and some have even partnered
staff would pre-approve for compliance with structural codes. These with modular construction companies to build pre-approved ADUs for buyers.
plans would then be displayed online with the designers contact
information and property owners could contact the designer to have Sources: Barriers to ADUs
plans drawn up and begin the steps to permit the ADU on their site. ADU Pre-Approvals

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Planning for Success
Leveraging Public Land

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Leverage Public Land for Housing Production

Issues /Opportunities Addressed: C)

Timeframe for Action: Short and Mid Term

Disposing of available City-owned properties to support housing production,
particularly mixed-income or affordable housing, can be an effective way of
partnering with developers to address housing needs. Land is a cost borne by the
development, but when publicly owned, could be offered at a steeply discounted
rate to improve the financial viability of a proposal that includes an affordable
housing component. Based on conversations with City staff, publicly owned
buildings and land have been offered to the development community in the past to
support the creation of affordable housing.

One challenge in Nashua today is the cost of construction (labor and materials)
and the achievable rents may be making it more challenging to get these projects
off the ground. The City should continue to explore all options such as deferring
tax payments if affordable housing is included, selling the land at a significant
discount, or providing a grant or no interest rate loan for a portion of the cost. The
City may also want to consider hosting a developer tour and/or a roundtable to
showcase available sites (public and private) that are available for development.
As part of the roundtable, a discussion could be facilitated to identify potential
barriers to completing a project on a site.

One short term step the City could take is to identify the most appropriate
department(s) to oversee disposition and charge its staff with creating a
disposition strategy. This should also include the establishment of criteria for
identifying potential sites for disposition and the criteria used to rank those sites
for supporting housing.

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Considerations for Potential Properties

Minimum Lot Size: Over 5,000 square feet, but preference for larger
sites that could accommodate multi-family units.

Use of Property: Ensure there are no other competing public uses for
the property, and no plans by other city or school district departments
for future use of the property. The use/housing type should be
compatible or not conflict with existing neighborhood character.

Zoning: Property should be in an existing residential or mixed-use
district or overlay district.

Infrastructure Capacity: Property should be served by existing water,
sewer, and transportation infrastructure. Capacity should be available
to serve the development.

Property Location: Ideally, the property is located near amenities
residents could take advantage of such as parks and open space,
schools, childcare facilities, and shops and grocery options.

Environmental Considerations: Property should not be located within
a floodplain, have significant wetland encumbrances, or environmental
remediation issues.

Planning for Success
Public Education

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Educate the Public on the Need for and Benefits of Housing

Issues /Opportunities Addressed: C)

Timeframe for Action: Short and Mid Term

Housing, and particularly affordable housing, can be a challenging topic to discuss and
describe in most communities. There are often many misconceptions around affordable
housing, who it is for, how it is designed, the presumed issues that come with it, and why it
is needed. The topic of affordable housing tends to draw out negative comments and
misinformation which swirls on social media, websites, and in our daily community
conversations with friends and neighbors. Anti-housing advocates can quickly spread
misinformation and potentially derail needed housing investments.

To get out ahead of any potential communication issues around housing, the City should
consider a public education campaign to help educate residents, property owners, and
even elected officials on the concepts around affordable housing and the issues it can
help address. The campaign could include:

¢ A dedicated website to collect and distribute information on affordable housing

¢ Social media campaigns with regular posting or links to information

¢ Public meetings or pop-up events to talk about housing in Nashua

¢ Public service announcement on local cable access channels

¢ Informational flyer or mailer sent to households in Nashua

¢ Asemi-regular topic of discussion at Board of Aldermen meetings

The City of Salem, MA recently conducted a media campaign around affordable housing
in partnership with the Metropolitan Area Planning Council (MAPC). The “Homes for
Salem’ initiative is a video series highlighting the struggles Salem residents and workers
face in finding affordable housing. The four-part video series tackled topics on the
housing market, housing needs, meeting housing challenges, and spreading the word.

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Lower Cape Community Housing Partnership

Building public support for affordable housing.

Municipal Officials trained.on affordable Citizens participated in our Advocacy Training
housing Issues and strategies Program

Case Study — Public Support for Affordable Housing, Cape Cod, MA

The affordable housing crisis on Cape Cod due to the uptick in seasonal and
vacation rental units was driving the housing market out of reach for many
who live and work locally. The Lower Cape Community Housing Partnership
was started as a community-based strategy to build public awareness and
support for affordable housing. The Partnership equips low- to moderate-
income residents, business leaders, municipal staff, and elected officials with
the knowledge and skills to support the creation of more affordable housing.

The three-part strategy included the formation of the Lower Cape Housing
Institute which is a six-week workshop for municipal officials to equip them
with the tools and resources to boost affordable housing. The Lower Cape
Advocacy Training which is directed at residents to equip them with
information to be able to speak up at public meetings. Public Education which
sought to share information on the importance of affordable housing with the
public at-large.

Source: Lower Cape Partnership

Recommendations

RECOMMENDATIONS
ALIGNING POLICY AND HOUSING OUTCOMES

RKG

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Aligning Policy and Housing Outcomes

Affordable Housing Trust

Create an Affordable Housing Trust Fund

Issues/Opportunities Addressed: C)

Timeframe for Action: Short Term

Affordable Housing Trust (AHT) funds are a flexible
source of funding that can be used to support many
different affordable housing initiatives. The money that is
generated for the fund is typically created and
administered at the city level and are not subject to
restrictions like other state and federal housing funds. The
money in the fund can be designed to address local needs
and priorities, such as those noted throughout this
Housing Study.

The entity administering the fund, in this case the City of
Nashua, would work to define priorities and eligible
activities money in the fund could be used for. Examples
of funding areas might include:

« Emergency rental assistance

¢ Gap financing for new construction of affordable units
¢ Repairs/rehabilitation of older affordable homes/units
¢ Weatherization program to lower utility costs

¢ Down payment and closing assistance

* Foreclosure prevention

Once the AHT is established the City will need to
determine who will be administering the fund. Typically,
these funds are administered by existing public office that
have experience working in partnership with housing
developers, administering grants, and overseeing a

Nashua Housing Study - 64

competitive application process for funding. In Nashua,
this is likely the Community Development Division which
already handles the City's allocations of federal housing
funds through the Urban Programs Department. Placing
the oversight of the AHT within the Community
Development Division would also create synergy with
the City’s Consolidated Plan, Master Plan, development
permitting, and connections with other housing
partners.

The entity responsible for managing the housing trust
fund will need to make a variety of administrative
decisions about the fund’s operation:

1. How will awards be structured—as grants, low-
interest or forgivable loans, credit guarantees, or in
some other form? This decision will be guided in large
part by the activities to be funded.

2. How will the application process be

structured? Should it be on a rolling basis, annual, or
semi-annual? Should submission timelines be
coordinated with other funding programs?

3. How will applications be evaluated? Will priority be
given to any types of projects, or projects with certain
characteristics?

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4. How will long term monitoring be handled for
affordable units?

Nashua will also need to establish other rules and
guidelines regarding administration of the housing
trust fund, including establishing the agency or
department responsible for day-to-day management
of the fund and expectations for reporting on
housing trust fund activities. Many cities also
establish an advisory body composed of
stakeholders from diverse backgrounds to help guide
trust fund administration and provide program
oversight.

There are many possible funding sources to
capitalize the AHT which could include revenue from
payments in lieu of affordable housing, linkage fees,
real estate transfer taxes, taxes or fees on short-term
rentals, proceeds from the sale of City-owned
property, or even a dedicated revenue source from
an annual budget appropriation. The City should
strongly consider tying Inclusionary Zoning to the
AHT to generate funds from payments in-lieu.

Aligning Policy and Housing Outcomes

Affordable Housing Trust

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Create an Affordable Housing Trust Fund

Case Study — Affordable Housing Trust, Somerville, MA

The Affordable Housing Trust in Somerville, Massachusetts is focused on
preserving and creating affordable rental and homeownership units, as
well as providing direct assistance to renters and homeowners. Funds
may be used for a variety of activities that support these goals, including
site development for new construction; rehabilitation subsidies and arson
prevention for existing developments; and assistance with security
deposits or down payments and closing costs for renters and
homebuyers. Trust documents also allow for funds to be used to
research other appropriate activities or to provide seed money for new
programs or organizations.

Funding for the Trust comes from a variety of sources, including linkage
fees and in lieu payments from the city’s inclusionary zoning programs,
as well as allocations from the city and from the federal Emergency
Shelter Grant program. At least 20 percent of funds must be used to serve
households with incomes below 50 percent of AMI, although the Trust
“encourages deeper affordability” and the use of funds to serve people
experiencing homelessness. Another 20 percent is reserved for
households at 51 to 80 percent of AMI, and 10 percent must go towards
those with incomes between 81 and 100 percent of AMI.

The Trust is governed by a nine-member Board of Trustees that includes
the Mayor, President of the City Council, and Executive Director of the
Somerville Housing Authority (or their designees), as well as six members
appointed by the Mayor or approved by the City Council including
representatives from the housing or real estate and banking or finance
sectors and at least one Somerville resident who is eligible for state or
federal public housing programs.

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Best Practice Guide — Municipal Affordable Housing Trusts

In 2013, the Massachusetts Housing Partnership (MHP) created a best
practices manual for establishing Municipal Affordable Housing Trusts.
Although the guide references specific Massachusetts State Statutes,
information around how a trust can help, the vision and role of the board
of trustees, and gaining support locally are transferable to other states.

Source: MHP Guidebook

Local Example — Affordable Housing Trust, Manchester, NH

The City of Manchester's Affordable Housing Trust Fund provides funds to
affordable housing developers and non-profit organizations for operating
expenses, rental subsidies, rehabilitation work, and new construction of
affordable housing. The use of these funds are somewhat flexible in that
there are no federal strings attached. The City allocates all these funds on
an annual basis as a part of the Community Improvement Program
process and on a project specific basis through out the year. Developers
are encouraged to contact the Department to discuss potential proposals.
The fund typically allocates less than $100,000 per year for housing
projects and programs.

Aligning Policy and Housing Outcomes
Inclusionary Zoning

Update Inclusionary Zoning Regulations

Issues/Opportunities Addressed: C)

Timeframe for Action: Short Term

Inclusionary Zoning (IZ) is a policy used to create
affordable housing by requiring developers to include a
specific percentage set aside of below-market units as
part of a market-rate rental or ownership development.
The IZ policy effectively leverages private market
investment to create new affordable units with very little
(if any) public subsidy. IZ is also an effective way of
integrating affordable units across a community to provide
opportunities for housing choices in neighborhoods where
lower-income households may not have otherwise been
able to afford. Resource-rich areas/neighborhoods may
have access to better schools, healthcare options,
transportation choices, and open spaces. Diversifying the
locations of affordable housing may offer new
opportunities to households who previously had limited
choice.

Inclusionary zoning policies are typically classified as one
of two types: mandatory or voluntary. In mandatory
policies, affordable units must be included in all proposed
developments that fit within the parameters of the policy.
Voluntary policies rely on negotiations and offsets which
function as incentives to encourage developers to provide
affordable units.

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The City of Nashua has an IZ policy already in place
within the City’s Zoning Ordinance, Section 190-48.
The current IZ policy is only applicable to residential
development in the Downtown Zoning District or a
parcel that abuts the Downtown District and is in a
residential zoning district. Table 48-1 outlines the
affordable housing set-aside required by
development type and location. Those percentage
set asides range from 3% to 20%. The City has also
included incentives such as a density bonus offset,
expedited permitting, and allowing certain
development types to be as of right. It is worth
noting that the City’s IZ policy has never been used.

Given that the current IZ policy is only applicable to
development in the Downtown zoning district, it
limits the geographic distribution of new affordable
units and does little to spread housing choice to
other areas of Nashua. A recommendation the City
should consider is revising the current IZ policy to
apply to city-wide to any residential or mixed-use
development that exceeds a certain number of units
(e.g. any development containing 10 or more units).
This would help ensure new residential development
in other parts of the City are also contributing to
easing the affordable housing shortages over time.

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A key first step to updating the City’s IZ policy is to

conduct a financial feasibility analysis of the current policy

and scenario test any changes the City wishes to make.

Conducting a feasibility analysis will allow the City to

understand what changes could be supported by market-

rate residential development and which changes may slow

the pace of development. The financial modeling exercise

can help in the crafting of new IZ language and should

include the following considerations:

¢ What size development should IZ be applied to?

¢ Where should IZ be applied in the City?

¢ What percentage of units should be set aside?

¢ Should the policy cover both ownership and rental
projects?

¢ Should the City have a payment in-lieu option to collect
money for the Affordable Housing Trust?

¢ What income levels should the units target?

¢ Should there be a tiered system for affordable units
where fewer but more deeply affordable units are
required versus more units at a higher income level?

¢ What incentives or offsets should the City offer?

Concurrently, the City could work with the entity conducting
the feasibility analysis to craft an updated IZ policy that
responds to the feasibility findings. This can help ensure
changes to the IZ policy will not discourage private
investment thereby reducing affordable housing
production.

Aligning Policy and Housing Outcomes

Inclusionary Zoning

Update Inclusionary Zoning Regulations

Case Study — Inclusionary Zoning, Newton, MA

In 2018, the City of Newton, Massachusetts began a
process to revise their Inclusionary Zoning policy. Housing
affordability was worsening, and the City was experiencing
an influx of large residential and mixed-use projects which
provided ample opportunities to increase the overall
number of affordable housing units.

The existing IZ policy was both confusing in its language
and intention and was not leveraging private development
effectively to produce affordable units. The City hired a
consultant to create a financial feasibility model which
could test different residential development scenarios
(both owner and renter) to better understand the potential
impacts of the changes the City and housing advocates
were calling for.

The results of the financial feasibility model showed the
City could indeed update the IZ policy to create stronger
linkages between the size of the project and affordable
housing requirements. For example, larger rental projects
were required to set aside a higher percentage of
affordable units. The new policy also created income tiers
based on HUD area median income (AMI) thresholds
which ranged from 50% of AMI to 110% of AMI. The City
also included options for developers to provide fewer units
but make them more deeply affordable to households at
30% of AMI.

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The City’s new IZ policy has different calculations
and requirements for ownership projects and rental
projects requiring different levels of affordability.
Affordable ownership units are offered at 80% and
110% of AMI while rental units can go as low as
30% of AMI.

There are also calculations for cash payments and
specific circumstances defining when the cash
payment option may be considered favorable.
Smaller projects between 7 and 9 units have the
option of cash payments, the City Council can grant
a Special Permit to allow cash payment, and in
instances where the percentage set aside
calculation results in a fraction of a unit less than
0.5. The cash payment from the development is
deposited into the Inclusionary Zoning Fund which
is then distributed equally to the Newton Housing
Authority and the City of Newton. These funds can
only be applied to affordable housing supporting
households at or below 80% of AMI.

Sources: Newton IZ Policy
Newton IZ Guidebook

Newton IZ Information

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Newton IZ Requirements for Rental Projects

Renial Projects: Number of Inclusionary Units Required

Tier Level 7-20 UNITS 21+ UNITS
Tier 1: 50%-80% AMI 15% 15%
Tier 2: 110% AMI 0% 2.5%
Total 15% 175%

Rental Projects: Number of Inclusionary Units Required

EFFECTIVE January 1, 2021

- 20 21-99 100+
Tier Level
UNITS UNITS UNITS
Tier 1: 50%-809% AMI 15% 15% 15%
Tier 2: 110% AMI 0% 2.5% 5%
Total 15% 17.5% 20%

Newton IZ Requirements for Ownership Projects

Ownership Projects: Number of Inclusionary Units Required

Tier Level 7-16 17-20 21+
UNITS UNITS UNITS
Tier 1: 80% AMI 15% 10% 10%
Tier 2: 110% AMI 0% 5% 7.5%
Total 15% 15% 17.5%

Ownership Projects: Number of Inclusionary Units Required

EFFECTIVE January 1, 2021

7416 | 1720 | 2499 | 100+
Tele UNITS | UNITS | UNITS | UNITS
Tier 1: 80% AMI 15% | 10% | 10% | 10%
Tier 2: 110% AMI o% | 5% | 75% | 10%
Total 15% | 15% | 175% | 20%

Aligning Policy and Housing Outcomes

Rental Registry

Phase in Rental Registry and Inspection Process

Issues/Opportunities Addressed:

Timeframe for Action: Rental Registry Process - Mid Term

The creation of a rental registry is an important step in
identifying rental units and holding property owners
accountable for violations to city ordinances and codes.
Without a robust rental registry, the City may lack the
necessary information to identify owners and tenants,
quantify the number of rental units, track property

turnover, and ensure compliance with all residential codes.

A rental registry is, generally, a low-cost way for a city to
track and regulate rental units. The component pieces of
establishing a rental registry are enacting the local
ordinance, defining the registration parameters, delegating
responsibility to administer the program, establishing a
registration fee which covers administrative costs, and
determining the type and severity of penalties for non-
compliance.

Enacting a local rental registry will require working with all
community stakeholders to gain the requisite buy-in
including property owners and tenant rights groups. Since
landlords would be most impacted by this ordinance;
collaboration and consultation on the part of the City is
critical. The City should design the property registration
ordinance in a way which benefits all parties involved and
ensures it not too onerous. A vote by the Board of
Aldermen would be needed to enact the ordinance.

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The rental registry could be designed as a yearly
process whereby landlords register their property at
the start of the City’s fiscal year. This would give
landlords a deadline to comply with city regulations
and allow the City to establish the administrative
procedures to process annual registrations. The
registration process should be designed to be
completed either online or via paper. An online portal
could be linked to a database, while paper-based
registration forms could be processed by City staff
and entered in the database. The City should request
basic information about the property owner,
tenant(s), property location, property status
(rented/vacant), and contract rent.

The responsibility of administering the rental registry
could be given to the Code Enforcement Department
as this department actively monitors real estate
activity across the city for code violations. Currently,
the City Code Enforcement staff is made up of three
officers and one manager who investigate code
violations and issue tickets. Based on conversations
with City staff, capacity in the Code Enforcement
Department may need to be increased to meet the
added demands of a rental registry.

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The City should ensure the rental registry fee covers the
costs of administering the program, these include hiring
of any additional staff or investment in a rental registry
web portal. To determine the requisite fee, the City
should quantify the annual cost of providing services
related to the rental registry and compare that to the
number of rental units to determine a flat annual fee.
The City could also vary the fee based on unit type, for
instance charge a higher fee for single-family units, while
charging a lower fee for multi-family units.

The failure to abide by the property registration rules
would result in a fine determined by the City. Some
municipalities levy high fees for non-compliance, Boston
for example levies a fine of $300 per month for each
unregistered unit. Punitive fees can help encourage
compliance with the ordinance. The net fees collected,
after accounting for administrative costs, from both the
rental registry program and from non-compliance could
be placed into a city directed housing fund which helps
lower-income landlords address housing deficiencies
and addressing code violations.