The 2023 New Hampshire Statewide Housing Needs Assessment predicted the state needs roughly 60,000 additional housing units by 2030 to keep up with its growing population.
The assessment identifies zoning regulations encouraging housing development as one of the essential pieces to address the shortage.
The NH 2025 legislative session includes many proposed bills aimed at responding to the crisis.
One focuses on commercial-use properties as a potential solution. House Bill 631 (HB 631) was introduced on Jan. 16, at which time it was referred to the Housing Committee.
The proposed bill requires municipalities classified as urban areas by the U.S. Census Bureau to permit the construction of multifamily or mixed-used developments on commercially zoned properties as a matter of right.
A similar bill proposed last year failed; however, it did not limit the areas to which it would apply nor the type of residential structures permitted.
Under HB 631, those seeking to construct or rehabilitate existing infrastructure into multifamily or mixed-use structures in designated urban areas can do so on parcels that are zoned for commercial, office, retail or parking uses, and serviced by municipal water and sewer systems.
Other than the ability to require site plan approval for residential use on those lots, HB 631 strips municipal authorities of the ability to employ traditional guardrails meant to preserve and maintain compliance with their zoning ordinances and land-use plans. (Public hearings, variances, conditional use permits, special permits. and special exceptions are expressly off the table.)
HB 631 further limits the powers of municipal authorities by prohibiting the imposition of regulations impeding the development of qualifying projects, such as limiting building heights to less than 65 feet.
HB 631 does leave some room for municipal authorities to weigh in on qualifying developments by allowing them to require developers to dedicate up to 20% of ground floor space to retail uses, require on-site vehicle parking, and regulate the siting and design of these projects as long as they do not discourage residential development through unreasonable costs or delay.
The NH Municipal Association asserted its opposition to HB 631 on its website, presumably because of the limitations it would impose on the powers of municipal authorities.
Testimony at a public hearing held by the House Housing Committee on Feb. 4, weighed in favor of the bill. At the hearing, six members of the public testified in support of HB 631, one member opposed the bill, and one member asked the committee to take pause with respect to its broad applicability to commercial use lots.
Questions from the committee suggest we can expect potential amendments to the bill with respect to the communities it would impact, the definition of “commercial,” and the requirements relating to ground-floor usage. While the fate of HB 631 is unclear, this article shares some potential consequences of targeting commercial-use properties with the aim of addressing the housing crisis.
Use restrictions in zoning regulations are generally used to preserve the character of and ensure compatibility between different land uses in an area.
If passed, HB 631 could have a positive impact on the state, including the repurposing of underused properties and encouraging walkable communities, which may further the state’s efforts to attract and retain younger residents.
The bill would stop municipal authorities from blocking qualifying projects on the basis of incompatibility, and it would expedite the process of residential development, potentially closing the housing gap. However, there are a few potential negative impacts HB 631 could have on our communities.
Commercial zones generally cluster major commercial activities to allow for better land use, stimulate economic growth, and manage the impact commercial uses can have on surrounding properties.
HB 631 certainly aligns with modern zoning trends geared toward encouraging “mixed-use zoning,” where residential and commercial uses cohabitate. But because HB 631 would permit qualifying residential developments on commercial-use properties as of right, it could potentially render “exclusively” commercial zones obsolete and arguably interfere with local planning.
Should HB 631 pass, there could be an increase in land-use disputes between those making commercial and residential use of their properties.
For example, a property owner seeking to use their commercially zoned property for a use that likely would not have raised the interests of abutters operating commercial businesses prior to HB 631 might face opposition from their new residential neighbors whose concerns are different than a business operating at the same location.
Thus, HB 631 may not only limit the availability of properties for commercial development, but it could also impede existing commercial uses from expanding their operations.
Caroline is an associate in McLane Middleton’s Corporate Department and Real Estate Practice Group. She can be reached at caroline.palucha@mclane.com.
