Wednesday, April 03, 2019

How Proposed Legislation Could Affect Commercial Real Estate In New Hampshire


Do you hear that? The sound of pencils scrawling new bills, Democrats and Republicans bickering, it must be a new legislative session!
And a new legislative session brings with it, well, new legislation. Some of which, if passed, will impact the commercial real estate sector in both positive and negative ways. Let’s take a look at some of the proposed bills that could affect the world of CRE.
But, before we get into the proposed bills and their effects, a little primer on the New Hampshire State Legislature.
New Hampshire, by far, has the largest legislative body in the United States at 400 State Representatives and 24 State Senators for a whopping total of 424 legislators. The next closest state is Pennsylvania with 253 legislators. New Hampshire’s legislative body is bigger than the legislative bodies of Canada, South Korea, and Australia. Yeah, chew on that for a bit.
Done chewing? Let’s continue, then.
An interesting part of New Hampshire’s legislative process, though not unique to the Granite State, is that all proposed bills get a public hearing. At the federal level the Speaker of the House or the President of the Senate has the power to table proposed bills, denying them from going to committee. While the leadership has authority in New Hampshire, every bill, no matter how odd, must get a public hearing. Though, most will inevitably fail.
Let’s move on from this Civics lesson and take a look at some of the proposed bills that could affect New Hampshire’s commercial real estate sector should they become laws.
The first bill we’re going to take a look at is House Bill 667(HB 667) which proposes that any property that has a well with new construction should have that well tested to ensure well water meets quality standards before a certificate of occupancy will be issued.
HB 667 is one of many proposed bills that deal with ground water, but one of the few that are focused on private wells. The bill comes as we continue to learn more about what PFOAs, PFASs and other contaminants mean to us as humans.
Presently, the state of New Hampshire has no authority to regulate a private well. So, for example, if I was selling my office building that had a well, and there were high nitrates in that well, and you were fine with that, we could go through with the sale and not have to worry about any governing body getting involved. Whereas if a public system was found to have high nitrates the city would have the owner shut the system down and cure it.
The way the proposed legislation would be enforced is through new construction upon certificate of occupancy. Meaning, if you were to build a new commercial property and the city came to inspect said property, and found that the well water did not meet state standards, the city would deny you a certificate of occupancy.
The issues with the bill don’t come from what it is trying to do, protect our drinking water, but from how the bill is currently written, as it introduces a whole new standard that didn’t exist before.
The more specific concern for commercial practitioners is that HB 667 is agnostic to property type. For properties zoned for daycares and restaurants it may make sense to have well water regulated. But for properties zoned industrial, which tend to have barely any water consumption, it may be unnecessary.
The next proposed legislation that we are going to look at is House Bill 561(HB 561) which would allow towns to create their own laws and zoning regulations that would prohibit formula businesses in certain zones. For those not familiar with the term, the bill describes a formula business as a food based franchise, like McDonald's or Starbucks.
The concern with HB 561 is that it allows the Planning Board or Zoning Board, whose main goal is the regulation of land use, to regulate a person’s business, branding, vendor chain and so forth.
While the intent behind the bill is to protect local, community-based businesses, what it fails to take into consideration is that a lot of these corporate, formula-based businesses are owned by local business owners who are just franchisees. So, while HB 561 would protect the mom and pop shops that we usually associate with local business, it would hurt non-traditional local business owners as well. For the moment HB 561 has been tabled, but it could be revived in another legislative session.
Access to affordable housing is very important to New Hampshire employers and their employees, and we consider it a commercial real estate issue. There are two bills concerning housing that we’ll look at. One, Senate Bill 15(SB 15), would require that on an annual basis, $5,000,000 in revenue derived from the Real Estate Transfer Tax (RETT) is allocated to the NH affordable housing fund. New Hampshire spends far fewer dollars than our neighboring states on affordable housing programs and has one of the highest costs of living in the country. Anything to bring that cost down and help retain workers is welcome.
The next is Senate Bill 306(SB 306). SB 306 would create a Housing Appeals Board to hear appeals of decisions of municipal land use boards. Currently, if a property owner wanted to appeal a decision made by a land use board they would have to appeal to the Superior Court which can be an expensive and time-consuming process.
SB 306 would create a three-member board made up of a lawyer, an engineer and another member of the public, appointed by the Supreme Court, all of whom would be required to have expertise in land use law or housing development. The board would be required to hear appeals within 90 days of filing and rule within 60 days after hearing the appeal.
This is fantastic for developers and homeowners as what currently can cost thousands of dollars in legal fees and wasted time can, if SB 306 is passed, be reduced to a $250 dollar filing fee and a roughly 180 day turnaround time for appeals. Time, as the old adage goes, is money, and money that could be used to create more housing opportunities for New Hampshire’s workforce. SB 306 is currently tabled in the Senate, so we will have to wait and see when it is brought back-up.
These are just a few of the proposed bills that could affect those in the commercial real estate sector. What are your opinions on the bills we talked about? We’d love to hear your opinions in the comments. And don’t forget to let your State Rep and State Senator know your opinions as well. There is still time to make your voice heard.


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