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Panel broadly supports ADU incentives; sponsors seek forgivable loans and technical assistance in HB 604
Summary
Supporters told the committee that accessory dwelling units (ADUs) could add lower-cost housing quickly, and House Bill 604 would create loan forgiveness or forgivable loans for homeowners who agree to rent ADUs at affordable rates; witnesses debated costs, loan structure and program administration.
Representative Jody Newell introduced HB 604, a bill to create a state program offering loans and forgivable loan assistance to homeowners who create accessory dwelling units (ADUs) and agree to rent them at affordable rates. “We are at a crisis point. We need 23,000 housing units immediately,” Newell said in opening testimony, and she described ADUs as a practical, often lower‑cost way to add housing in rural and small‑town New Hampshire.
Under the sponsor’s proposal, eligible homeowners who commit to renting an ADU at or below 80 percent of area median income (AMI) — and charging an affordable rent (roughly 30 percent of household income) — could receive up to $50,000 in a forgivable loan, with forgiveness conditioned on continued affordability for a defined term. Newell told the committee the program is intended to make “projects like this feasible” for lower‑income homeowners who otherwise can’t afford high upfront construction costs.
Witnesses urged clearer definitions and pointed to wide cost variation. Jack Reuterman of New Hampshire Housing told the committee his agency estimated new detached ADUs or new construction ADUs typically cost $275,000–$300,000, while many conversions (e.g., garage-to-unit) could cost $100,000. Planners and small‑developer advocates argued that construction costs depend on design choices and proximity to existing plumbing and infrastructure.
Committee members pressed the sponsor about loan terms, forgiveness mechanics and whether the program should be a revolving loan fund rather than fully forgivable grants. Representative Hallam asked whether a sliding scale could reward deeper affordability; Newell said the current draft ties eligibility to HUD definitions (80 percent AMI) with a 30 percent rent‑to‑income cap, and that program mechanics — including the option to defer payments or forgive loans after a 10‑year compliance period — are open to negotiation.
Opponents and stakeholders raised implementation concerns. Nick Norman and representatives of housing providers said the bill’s reporting and affordability‑verification requirements could be complex. Several witnesses suggested an alternative: a state loss‑mitigation or reimbursement fund to offset landlord or owner costs when using federal voucher programs rather than mandatory requirements on all owners. New Hampshire Housing and other witnesses expressed openness to a revolving loan model; Jack Reuterman noted that a revolving fund has been used in Vermont (Montpelier) to support ADU creation.
The testimony underscored two tensions: (1) program scale vs. per‑unit cost (a $10 million loan pool produces far fewer units at high per‑unit construction costs), and (2) guaranteeing long‑term affordability versus ensuring homeowner benefit and feasible paybacks for owners who carry debt. Several witnesses recommended program design work that includes staged pilot funding, a mix of forgivable and repayable loans, and technical assistance to reduce per‑unit costs.
No committee vote was taken on HB 604 at this hearing; the bill was discussed at length and the committee recessed for other business. Sponsors and stakeholders indicated they plan further technical drafting and to coordinate with New Hampshire Housing on program design.
