A bill that could reduce upfront costs for housing developers by carving out the energy portion with special financing became the first one Gov. Kelly Ayotte signed into law Thursday.
New Hampshire will join 36 other states that legally allow developers to deploy Commercial Property Assessed Clean Energy and Resiliency agreements (C-PACER).
"Housing is our most critical economic issue, and this legislation is another tool in our toolbox to help bring even more housing development to New Hampshire. I was glad to sign SB-4 to create a C-PACER program in our state," Ayotte said in a statement.
"By making it easier for private sector partners to finance projects and removing the administrative burden on municipalities, we're taking an important step in the right direction to increase the supply of attainable housing for our growing workforce."
State Sen. Dan Innis, R-Bradford, who is chairman of the Senate Commerce Committee, was the lead sponsor of the bill (SB 4).
"(C-PACER) is designed to help new housing projects by reducing the upfront costs through financing developments and freeing up capital for other projects," Innis said.
Both House Speaker Sherman Packard and Senate President Sharon Carson, both R-Londonderry, joined in on celebrating the legislation becoming law.
"This bill is not just about building housing, it's about strengthening our economy and providing long-term solutions that benefit all Granite Staters," Packard said.
Eligible spending includes energy-efficient upgrades, building insulation, cost-effective renewable energy and water conservation measures, officials said.
While housing is the primary focus, any commercial property can use C-PACER, including manufacturing plants, office buildings, retail buildings and multifamily housing projects.
The legislation had universal bipartisan support. It cleared the state Senate, 24-0. The House passed it on a voice vote.
Sen. Tara Reardon, D-Concord, a retired executive with the New Hampshire Community Loan Fund, joined Innis in writing the bill.
"Innovation and creativity in financing is crucial for housing development, particularly in a housing crisis," Reardon said.
Starting Jan. 1, C-PACER will replace a law on energy efficiency and clean energy districts that state officials said proved to be unworkable.
Energy spending becomes
similar to a tax lien
James Key-Wallace, executive director of the Business Finance Authority, said the existing law requires every participating town to write its own documents, run its own programs and do its own billing.
Under the new reform, the BFA will serve as the central administrator to allow municipalities to take advantage of the voluntary option at no cost.
Each city and town must decide to opt in to the program.
The existing law required the provider to file a mortgage, Key-Wallace explained.
Under thes plan, the financing for the energy part of the project is part of the developer's tax bill that is repaid over time.
Currently, 22 states have active programs converting hundreds of millions a year in energy spending into capital investments to make projects more affordable, Key-Wallace said.
Steve Duprey, a former Republican state chairman and Concord developer, said during a recent hearing that this will make projects more feasible for builders.
With a $10 million project, Duprey said a lender might ask the developer to come up with $3 million as a down payment and finance the other $7 million in a first mortgage.
With a $2 million energy portion of the project separated out, this would lower that mortgage to $5 million and make the energy spending like a tax lien, Duprey said.
"As a result, a builder may only need to put down 15 to 20 percent," Duprey told Innis's committee.
Duprey called it the "best tool to increase the amount of housing" and both profit and non-profit developers could make good use of it.
A broad coalition of groups backed the bill, including the New Hampshire Homebuilders, New Hampshire Realtors, Clean Energy N.H., the N.H. Lodging & Restaurant Association, the N.H. Municipal Association and the New Hampshire Business and Industry Association (BIA).
BIA officials announced a press conference for Tuesday to unveil the Housing Supply Coalition of 20 member groups that will outline their issue agenda for the 2025 legislative session.