UNDERSTANDING THE NEW ACCESSORY DWELLING UNIT LAW

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1 This was prepared by Benjamin D. Frost as part of the 2016 New Hampshire Municipal Association s Municipal Law Lecture on Developments in the Law: Accessory Dwelling Units, Agritourism, and Signs UNDERSTANDING THE NEW ACCESSORY DWELLING UNIT LAW Introduction. In early 2016 the New Hampshire Legislature passed, and the Governor signed, a new law that requires all of the state s municipalities that have adopted a zoning ordinance to allow the establishment of accessory dwelling units (ADUs). When the ADU Law (Chapter 6, Laws of 2016 (SB 146)) becomes effective on June 1, 2017, it will have a significant impact on how New Hampshire s municipalities respond to housing market concerns relating to affordability, availability of supply, the needs of both an aging population, and the perennial question how do we attract and keep young people here in the Granite State? These materials will provide background to the ADU Law and seek to explain its terms what it requires, what it allows, and what it prohibits. As with many new laws there remain some unanswered questions, but the law is clear in its central requirement: all municipalities with zoning must allow at least one attached ADU in any zoning district where single-family residences are permitted. Why Did the Legislature Do This? New Hampshire citizens treasure the tenets of local control, so many have asked why the Legislature enacted a law that limits how the state s municipalities can regulate ADUs. It is important to remember first that New Hampshire is not a home rule state, meaning that for any city or town to take an action, it must find basis for that action in a delegation of authority from the Legislature. The ability to adopt a zoning ordinance is one such delegation, and in a number of ways over the past 90 years since the zoning enabling statute was originally adopted, the Legislature has imposed standards and limitations on how municipalities may exercise their zoning power. The ADU Law is just the latest in this long line of limiting laws. An important part of the answer to the question why did they do this? can be found in the uncodified preamble to the ADU Law ( uncodified means that it doesn t become part of the RSAs, but is nonetheless law). The preamble focuses particularly on the housing needs of our state s aging population and the increasing demand for in-home care. Yet it also observes that providing ADUs is a good way to expand the diversity and supply of housing without increased development of land and new infrastructure. Finally, the preamble cites the benefits of ADUs

2 for recent college graduates who are saddled with significant student loan debt out of recognition that the average debt of New Hampshire s college graduates is among the highest in the country. These findings by the Legislature reflect similar conclusions in a series of three research reports done in 2014 by the NH Center for Public Policy Studies on behalf of the New Hampshire Housing Finance Authority. 1 Conducted by the late Dennis Delay of the Center in collaboration with Russ Thibeault of Applied Economic Research, these studies quantitatively and qualitatively analyzed the housing needs and preferences of New Hampshire s population from different viewpoints. Focus groups included seniors, Millennials (people born between the early 1980s and the early 2000s), builders and realtors, local and regional planners, and others. Those groups spoke of an increasing preference for small housing units, and they universally identified local land use regulations as one of the significant barriers to meeting the housing needs of the state s population. These analyses also revealed a fundamental mismatch between the housing needs and preferences of the population and the housing supply that exists in the state. New Hampshire s housing supply is dominated by large single-family homes. Increasingly, these are occupied by smaller, older families. This is a trend that will continue as the Baby Boom generation ages over the next couple decades, and as that cohort shifts from a families group to an elders group. These studies concluded with a series of recommendations, including increasing the use of ADUs as a means of more efficiently utilizing the state s existing stock of large single-family homes. Although most people prefer to remain in place once they reach middle age, many will ultimately experience sight and hearing disabilities and loss of mobility that limit their ability to age in place and to maintain their properties. In short, age will force them to move to a more accommodating physical environment. The Legislature recognized that this housing supply mismatch was an unmet need, but they also saw that it was not just older people who were facing problems. Younger people who either are not ready or are unable to buy a home find that there is a very short supply of rental housing in the state, with resulting high (and increasing) rental 1 These three studies are available at Law: Accessory Dwelling Units, Agritourism, and Signs 2

3 costs. 2 As a result, the ADU Law is broad in its application not limited just to benefitting family members, senior citizens, or people with disabilities. Rather, its intention is to benefit as many people as possible throughout the state, including cash-strapped homeowners and debtsaddled college graduates. The ADU Law s path to passage was long and uncertain. Although it was originally passed with relative ease by the Senate in 2015, SB 146 faced a greater challenge in the House. The House Municipal and County Government Committee came close to killing the bill, but instead the Committee retained it and devoted considerable effort to refining the bill s language through the summer and fall of Ultimately, a strong Committee vote in favor of the amended bill yielded House passage of the bill by a 2 to 1 margin. The Senate unanimously concurred with the House amendments, and Governor Hassan signed the bill into law on March 16, The law will take effect on June 1, THE ADU LAW The ADU Law adds a new subdivision to RSA Chapter 674, and is codified as RSA 674:71 through 73. It also amends RSA 674:21 innovative land use controls by eliminating ADUs as an optional land use regulation. The ADU Law s Basic Requirements. The law requires that every New Hampshire municipality that adopts zoning must allow at least one attached ADU in any single-family dwelling in districts that permit single-family residences. ADUs may be allowed by right (meaning that no permits will be necessary, other than perhaps a building permit), by special exception granted by the ZBA, or by conditional use permit. 3 Conditional use permits are similar to special exceptions, but the power to grant them may be conferred on any local board or official, as the local ordinance may designate. 4 If a local zoning ordinance does not address ADUs, then they will be deemed permitted by right in any single-family home, regardless of the zoning district. This means that even if a single-family dwelling were a non-conforming use, for example if it were located in an industrial 2 See New Hampshire Housing s 2016 Annual Residential Rental Cost Survey at (checked 7/31/16). 3 RSA 674:72, I. 4 See more detail on conditional use permits in RSA 674:21, II. Law: Accessory Dwelling Units, Agritourism, and Signs 3

4 district, it might be possible for the owner to establish an ADU, irrespective of the nonconformity. This possibility strongly suggests that municipalities should be proactive by amending their zoning ordinances to address the ADU Law s requirements and to limit ADUs to districts that are appropriate to accommodate them. Also note, however, that if a municipality wants to allow ADUs more expansively than the law requires, it may do so. That is a matter of local discretion. While the zoning ordinances of many municipalities already allow ADUs, some of those ordinances have additional dimensional requirements for ADUs, such as increased lot size, road frontage, setbacks, and more. The ADU Law expressly prohibits such requirements, 5 and these ordinances must be amended to conform to the statute. What is an Accessory Dwelling Unit? The law defines an ADU as a residential living unit that is within or attached to a single-family dwelling, and that provides independent living facilities for one or more persons, including provisions for sleeping, eating, cooking, and sanitation on the same parcel of land as the principal dwelling unit it accompanies. 6 Each of these four elements sleeping, eating, cooking, and sanitation must be provided for the unit to be considered an ADU. The implications of this are two-fold: first, a property owner cannot insist on the establishment of a unit that does not contain all four elements, unless otherwise permitted by local zoning; and second, a municipality must allow ADUs that contain all four elements (subject to other requirements). The phrase within or attached to indicates that an ADU may be either created from an existing portion of a single-family home, or it may be an addition to such a home; and the phrase independent living facilities requires that the ADU must functionally operate as a dwelling unit separate from the principal dwelling unit with which it is associated. This means that to access the ADU, you should not have to walk through someone else s living room. There should be independent exterior access to the ADU, or access through a common space such as a hallway to an exterior door. One of the law s ambiguities is the word attached, which the statute does not define. Various interpretations have been offered to this, but it seems that there should be a common 5 RSA 674:72, I. 6 RSA 674:71. Law: Accessory Dwelling Units, Agritourism, and Signs 4

5 wall between the principal dwelling unit and the ADU. 7 Another approach may be to ask whether both units could have been constructed based on a single building permit if they had been built at the same time. The conclusion that attached implies a requirement for a common wall between the principal dwelling unit and the ADU is supported by the law s requirement for an interior door between the primary unit and the ADU. 8 This requirement stems from the idea that at some time in the future, the property s owner may want to integrate the ADU into the primary unit to create a larger single-family home. An ADU cannot be established without the property owner first demonstrating the adequacy of water supply and sanitary disposal capacity. The ADU Law specifically cites the requirements of RSA 485-A:38, which addresses how increased load to existing septic systems is to be accommodated. It requires demonstration that the increased load attributable to such expansion will meet either DES or local standards, whichever is more stringent. 9 Finally, what is meant by accessory? This is another of the statute s undefined terms and it is ambiguous. While the ADU law does allow municipalities to establish minimum and maximum size limits for ADUs (provided that a municipality cannot require an ADU to be less than 750 square feet), 10 it provides no guidance on how the ADU should relate in size to the principal dwelling unit. As you will learn from the other materials in this lecture dealing with agritourism, the NH Supreme Court has addressed the question of accessory uses in many cases. In last year s agritourism case, Forster v. Town of Henniker, 11 the Court said that [a]n accessory use is not the principal use of the property, but rather a use occasioned by the 7 One commenter asked if a 300-foot-long breezeway constituted attachment between the units. This may not seem reasonable, but the law does not clearly provide an answer. 8 RSA 674:72, III. 9 At the time of this writing, the Department of Environmental Services is engaged in a rulemaking process that proposes revisions to the administrative rules for permitting of septic systems. Some of the proposed standards may impact the design of septic systems for houses with ADUs. See Proposed Water Quality/Quantity Rules, Env- Wq 1000 Subdivisions; Individual Sewage Disposal Systems at (checked on 7/30/2016). 10 RSA 674:72, VII N.H. 745 (2015) Law: Accessory Dwelling Units, Agritourism, and Signs 5

6 principal use and subordinate to it. 12 The Court has also said that accessory uses should be allowed when they are incidental to a permitted principal use. 13 Thus, the common law suggests that an accessory use generally is one that is secondary or subordinate to a principal use and is also related to it. As for ADUs, this indicates that they should be smaller than the principal dwelling unit. This standard distinguishes an ADU from a duplex, where the two units generally are equivalent. The question remains, though, how much smaller must the ADU be? The original form of SB 146 may provide some guidance. As first passed by the Senate, SB 146 said that municipalities could not require ADUs to be smaller than 40 percent of the size of the principal dwelling unit. Given that the ADU Law as enacted allow municipalities to establish maximum sizes for ADUs and also recognizing the law s prohibition against municipal standards requiring ADUs to be less than 750 square feet in size, perhaps a reasonable size standard for ADUs would limit them to being 40% of the size of the principal dwelling unit or 750 square feet, whichever is greater. Regardless, the ADU should be demonstrably smaller than or secondary to the principal dwelling unit. Municipal Flexibility in Regulating ADUs. While some may regard the ADU Law as a heavy-handed exercise of statewide zoning, the law does provide municipalities with considerable regulatory leeway. This flexibility includes regulating for aesthetics, occupancy standards, and size of units. Aesthetics. The ADU Law states [a] municipality may establish standards for accessory dwelling units for the purpose of maintaining the aesthetic continuity with the principal dwelling unit as a single-family dwelling. 14 Other than historic district regulations, this is the only circumstance in which a municipality is empowered to impose architectural standards on a single-family dwelling, allowing a municipality to require the maintenance of a single-family look and feel. Such standards might include a limitation to a single exterior door on the front plane of the dwelling, limitation on visibility of exterior fire escapes (for second story ADUs with direct exterior access), and limitation to a single driveway, among others. These standards 12 Id., at (quoting Fox v. Town of Greenland, 151 N.H. 600, 606 (2004)) 13 Id. 14 RSA 674:72, VII Law: Accessory Dwelling Units, Agritourism, and Signs 6

7 are probably best administered in most communities through the use of a special exception or conditional use permit. Occupancy. A municipality may also require owner occupancy of one of dwelling units, but it may not specify which one must be occupied by the owner. While this might seem difficult to enforce, a municipality that wants to require owner occupancy could require annual certification by the owner as part of a regular permit process for ADUs. In addition to owner occupancy, a municipality may also require the owner to demonstrate that the dwelling is to be the owner s principal place of residence. Again, such a requirement could be administered through a regular permitting process. Perhaps the simplest test for this is to inquire where the owner is registered to vote, and to require annual recertification of the same. The ADU Law does not interfere with a municipality s ability to limit the number of unrelated individuals occupying either the principal dwelling unit or the ADU. This was an issue expressed in particular by some communities that host colleges, and language was adopted that satisfied their concerns. 15 The law also recognizes a municipality s ability to regulate the number of occupants that may be allowed per bedroom, based on existing policy of the U.S. Department of Housing and Urban Development. The HUD policy seeks to balance a municipality s interest in preventing unsafe overcrowding of units against the possibility that a municipality might use such a standard in a discriminatory manner in violation of the Federal Fair Housing Act. 16 Size of ADUs. As discussed above the ADU Law permits a municipality to establish minimum and maximum sizes for ADUs, provided that they cannot be required to be smaller than 750 square feet. In the absence of a local minimum size standard, the statute s restriction on minimum size does not limit what an owner might do so in such a situation an owner could create an ADU of less than 750 square feet. 15 Note that such occupancy restrictions may be challenged under other laws, such as the Federal Fair Housing Act. Consult with your legal counsel before adopting this type of restriction. 16 See Fair Housing Enforcement Occupancy Standards; Notice of Statement of Policy, Federal Register, Vol. 63, No. 245, page 70982, Tuesday, December 22, 1998 at (checked on 7/30/2016). Law: Accessory Dwelling Units, Agritourism, and Signs 7

8 Parking. As SB 146 progressed through the legislative process, some communities expressed significant concerns about parking problems. As a result, the ADU Law contains this statement: A municipality may require adequate parking to accommodate an accessory dwelling unit. 17 This means that a municipality may require adequate off-street on-site parking to accommodate the ADU use in combination with the principal dwelling. Together with the aesthetic continuity language in the law (discussed above), this likely also means that a municipality could limit where on a lot such parking could be allowed (for example, restricting parking to side and rear yards). Limitations on Municipal Regulation of ADUs. At the same time that the ADU Law provides municipalities with significant flexibility, it also limits in some respects how they may regulate ADUs. These limitations deal with minimum sizes of ADUs, number of bedrooms, occupancy, and zoning standards for lot dimensions. ADU Size and Bedrooms. As discussed above, while a municipality may establish minimum and maximum sizes for ADUs, it cannot require an ADU to be smaller than 750 square feet. 18 In the absence of a local minimum, however, an owner may establish an ADU of smaller size than 750 square feet. In addition, a municipality cannot limit an ADU to one bedroom, 19 but it may limit ADUs to no more than two (or any greater number) bedrooms. Occupancy Not Limited to Relatives. Although ADUs have historically been called inlaw apartments, the ADU Law prohibits a municipality from requiring a familial relationship between the occupants of the principal dwelling unit and the ADU. 20 Interior Doors May Be Locked. While the ADU Law requires an interior door between the units, it also prohibits municipalities from requiring that such doors must remain unlocked. 21 The zoning ordinances of some municipalities that have allowed ADUs have included such a requirement, with the result that homeowners would be likely to rent ADUs only to family members. 17 RSA 674:72, IV. 18 RSA 674:72, VII. 19 RSA 674:72, IX. 20 RSA 674:72, VIII. 21 RSA 674:72, III. Law: Accessory Dwelling Units, Agritourism, and Signs 8

9 Zoning Lot Dimensions and Other Standards. Among the most important provisions of the ADU Law is that which prohibits a municipality from imposing greater dimensional standards for properties with ADUs. The law states One accessory dwelling unit shall be allowed without additional requirements for lot size, frontage, space limitations, or other controls beyond what would be required for a single-family dwelling without an accessory dwelling unit. 22 This statutory limitation is a response to the standards in some communities that have allowed ADUs only for lots that are twice the size of a minimum lot without an ADU. A concern expressed by some communities during legislative hearings for SB 146 is that this would double the density of dwelling units. As a hypothetical exercise, that may be mathematically accurate in terms of a possible increase in the total number of dwelling units, it does not necessarily follow that there will also be double the number of people occupying a property where there is an ADU, or that the resulting use of a property will be more intense with an ADU than without. Remember that household sizes are shrinking, so many existing homes have space within them that is used inefficiently specifically, these houses are not being used for the number of people for which they were originally designed. If intensity of use of property is the true concern that is being expressed, there are means to address that problem. For example, a municipality could adopt lot coverage standards that limit the proportion of a lot that may be covered by impervious surfaces (including pavement). Such standards will do more to protect water quality than any dimensional requirements targeting ADUs, because they would apply to all properties, not just those with ADUs. Detached ADUs. The basic requirement of the ADU Law is that a municipality must allow at least one attached ADU in any single-family home. The law also states that a municipality may, in its discretion, allow detached ADUs. 23 The law states that if a municipality allows detached ADUs, it must treat them the same as attached ADUs except that it may require a larger lot size and, of course, an interior door connecting the units would not be required. ADUs as Workforce Housing. One of the more curious provisions of the ADU Law is the section on workforce housing. 24 It reads: An accessory dwelling unit may be deemed a unit 22 RSA 674:72, I. 23 RSA 674: RSA 674:72, X. Law: Accessory Dwelling Units, Agritourism, and Signs 9

10 of workforce housing for purposes of satisfying the municipality s obligation under RSA 674:59 if the unit meets the criteria in RSA 674:58, IV for rental units. RSA 674:59 contains the obligation faced by every municipality to provide reasonable and realistic opportunities for the development of workforce housing (housing that is affordable to low- and moderate-income households). In essence, this part of the ADU Law could be read to say an ADU will count as workforce housing if it is workforce housing. The circularity of that language is undeniable, so one might ask why the Legislature chose to include it. The House Municipal and County Government Committee deliberated this section at length, and decided to retain it because committee members felt it was important to remind municipalities of their obligation to provide the opportunity for workforce housing development. It otherwise has little meaning. If a municipality is attempting to demonstrate that it has met its obligation to provide its fair share of workforce housing, which is a standard of that law, then it would analyze the affordability of its existing housing stock. The fact that some of those units might be ADUs is immaterial; the relevant question is the affordability of the units, not what type of housing they are. Some readers of the ADU Law have suggested that by providing the opportunity to create ADUs, a municipality may be deemed to have fulfilled its obligation to provide the opportunity for workforce housing development. Such an interpretation is probably a serious misinterpretation of the ADU law, for several reasons. The ADU Law imposes requirements on all communities, as does the Workforce Housing Law. For the former to be read as satisfying the latter would render the Workforce Housing Law irrelevant, a nullity. The Supreme Court, when looking for the purpose of statutes, has repeatedly stated that it will not read laws has having no purpose. Therefore, the ADU Law should be read to have a purpose independent of and separate from the Workforce Housing Law. The Workforce Housing Law requires the opportunity to develop both ownership and rental housing, including multi-family rental housing. The ADU Law only addresses single rental units associated with a single-family home; it is devoid of consideration of affordable ownership and multi-family rental housing. Finally, the Workforce Housing Law permits municipalities to impose affordability restrictions on housing units approved under that law. The ADU Law offers no similar authority. While an ADU might be affordable as a unit of workforce housing in one year, changes in Law: Accessory Dwelling Units, Agritourism, and Signs 10

11 market conditions, rents charged, or median incomes in an area may render the same unit unaffordable in subsequent years meaning that it would no longer be counted as workforce housing. What Should You Do? If your zoning ordinance does not address ADUs, your planning board should prepare zoning amendments to conform to the law s requirements. If your zoning ordinance does contain ADU provisions, your planning board should evaluate those terms for consistency with the ADU Law. Any zoning provisions that are inconsistent with the law s requirements are likely to be held invalid by a reviewing court and may subject the municipality to awards for damages including attorneys fees. Zoning amendments should be prepared for adoption before the law s effective date of June 1, In addition to these materials and their accompanying presentation, there are several good reference sources. In September 2016, the New Hampshire Housing Finance Authority will release guidance materials on the ADU Law specifically tailored to local land use boards. The Office of Energy and Planning has released a technical bulletin on the law, 25 and the NH Municipal Association has published an excellent article on the subject in the July/August 2016 edition of its Town & City magazine, Make Room for Daddy: The New Law on Accessory Dwelling Units. 26 Consult both your regional planning commission and your legal counsel for advice in developing zoning amendments to conform with the ADU Law. 25 See (checked on 7/30/16). 26 Available at (checked on 7/30/16). Law: Accessory Dwelling Units, Agritourism, and Signs 11