New measure allows residential projects on commercially zoned land
By Peter Miller-Granite State News Collaborative
Yet another set of tools to help the state address its chronic housing shortage is almost fully in place , but it remains to be seen whether the legislation actually helps make a dent.
The most-watched of the measures — House Bill 631 — was approved in 2025, but didn’t take effect until this month. The measure requires municipalities classified as urban areas by the U.S. Census Bureau to permit construction of multifamily or mixed-used developments on commercially zoned land as a matter of right, if adequate infrastructure is available.
That essentially means that a project would need only site plan approval and forgo the usual zoning process, in many cases. Municipalities would still be able to restrict development where industry and manufacturing can cause incompatible impacts. They also will be allowed to require retail or similar uses on the ground floor of new developments and require exemptions for setbacks, height or building frontage.
How effective the measure will be may depend on the success of related bills and the unique circumstances of individual cities and towns.
One bill, HB 1010, also took effect on July 1. It clarifies the role of local planning boards in multifamily building projects, and permits municipalities to allow waivers of requirements and to restrict some residential development under certain circumstances.
Two other related bills have made it through the House and Senate and await Gov. Kelly Ayotte’s signature.
HB 1588 would grant municipalities more power over parking space requirements, clarify site plan review requirements and establish special assessment districts to finance infrastructure improvements. Another, Senate Bill 564, has to do with road length, building on dead-end roads and placement of utilities in buffer areas.
A March 2026 report by the N.H. Fiscal Policy Institute illustrates the magnitude of the problem. The statewide median price of a single-family home has been at or above $500,000 since 2024, and it was $576,000 in May, according to the N.H. Association of Realtors. Housing costs are outpacing income growth, and housing inventory hasn’t kept up with demand. Renters have few options, due to low vacancy rates, and are more likely to be cost-burdened, the Fiscal Policy Institute said.
HB 631’s proponents include Nick Taylor, director of Housing Action NH, a Concord-based coalition of business and nonprofit organizations that advocates for changes in state and federal policy affecting housing construction.
“HB 631 is one of the most significant housing reforms New Hampshire has enacted in recent years because it hits on so many key components of New Hampshire's economic future,” said Taylor. “It helps turn underutilized office space and aging strip malls into housing. It drives development towards areas of land already served by roads, water, sewer and other infrastructure. It also helps conserve open space by encouraging development within existing built areas rather than sprawling into it.”
Likewise, George Reagan, director of community engagement at New Hampshire Housing — the quasi-governmental agency that promotes and finances affordable housing in the state — views HB 631 as a flexible step forward.
The bill, he said, “recognizes that many commercial areas — especially office space — aren’t being used the same way they were 10 or 20 years ago. Allowing residential use can breathe new life into those areas. At the same time, communities need a healthy mix of commercial and residential uses.”
But others believe the measure misses the mark and may become yet one more impediment to addressing the crisis.
HB 631 is not only unnecessary but may also result in additional financial challenges, according to Margaret Byrnes, executive director of the N.H. Municipal Association.
“Municipalities already had the power to do this. They didn’t need a state law to allow multifamily in commercial zones,” Byrnes said. “I think that the vagueness of the law is going to lead to litigation, and litigation costs money — and that’s a major concern I think we should all have.”
A crucial shortcoming, Byrnes said, is that while HB 631 may expand development, it does not have requirements or ties to housing affordability. “I don't think people are crying out for more high-end or expensive housing,” she said.
Byrnes said her organization would prefer that the state employ different strategies to address the housing crisis.
“The state can invest in infrastructure to ensure that our communities can actually support increases in development and population, and the state can also empower municipalities with more flexibility when it comes to housing, especially when it comes to incentivizing affordable housing,” she said. “It’s kind of the flip side of a statewide zoning mandate: more authority for municipalities to consider different types of incentives locally or different planning tools locally to find ways to increase affordable housing in their communities.”
Limited effect seen
Meanwhile, the city of Somersworth’s director of planning and community development, Michelle Mears, said HB 631 isn’t even applicable to her city.
“Our zoning is commercial/industrial, and that makes it so that we don’t have to allow housing in the commercial zone,” she said. “We’re trying to incentivize housing within certain areas where the infrastructure is already available, and there are places along our commercial/industrial zones that don’t have sewer and water.”
Both Byrnes and Mears support refunding the Housing Champions Program, administered by the Department of Business and Economic Affairs. In 2023, the state created and provided $5 million in funding for the voluntary designation and grant initiative. Cities and towns receiving the “Housing Champion” designation in 2024 and 2025 were eligible to apply for grants to help them develop solutions and advance infrastructure to help alleviate the state’s housing shortage.
The program, while still active, has not been given additional funding since it was passed.
In January, the BEA reported that the 28 cities and towns receiving the designation over the two-year period were responsible for approving 45% of housing units that were built in 2025.
Planning Manager Sam Durfee of Nashua anticipates that HB 631 will likely open the door for development in relatively small areas of smaller communities, but fears that this type of legislation can disrupt long-range planning efforts for targeted housing growth.
Local control is at the heart of Durfee’s issues with both HB 631 and HB 1588. “They broadly take planning out of the hands of local municipalities,” he said. “We are very close to the end of a comprehensive land code update. Manchester just completed a similar effort, and we’re being very deliberate about a new approach that will incentivize residential development in commercial areas.”
Construction of more affordable housing is among several of Nashua’s housing goals, which also include environmental sustainability and how it handles stormwater, he said. “We are very sensitive about how achieving these goals affect the math equation that developers are always faced with when they try to make a project pencil (be financially viable).”
Durfee added: “We've been very deliberate in our testing of these regulations and making sure they're well-calibrated to current market conditions.”
These articles are being shared by partners in the Granite State News Collaborative. For more information, visit collaborativenh.org.