Harmony Place in Durham, housing for employees of Harmony Homes. (Courtesy of Harmony Homes)
An innovative new loan fund of nearly $9 million is being brought to bear to help develop workforce housing in the Upper Valley. With investments from eight major local employers, the Upper Valley Loan Fund is a new approach to the state’s housing crisis that has employers and housing advocates statewide taking notice.
While the shortage of affordable housing is recognized as a statewide issue, the Upper Valley has been experiencing its own crisis for decades. A report by Vital Communities, a regional civic engagement organization, says the Upper Valley needs 10,000 new homes by 2030 to meet demand, which would require tripling the current annual rate of housing production.
(Pictured Left: Vital Communities housing breakfast. Courtesy of Vital Comminities)
Tucked under the umbrella of Vital Communities is a corporate council made-up of the top executives of major employers in the Upper Valley who put their heads together on a regular basis to consider the issues facing the region, says Allan Reetz, director of public and government affairs for Hanover Co-op Food Stores.
“Through lending our voice, our muscle and our insights, we can move some needles,” says Reetz. “It was a few years ago that we really centered on housing, not for the first time but to a brand-new level. Housing in the Upper Valley has been an issue for well over 20 years. I think the first housing breakfast might date back to 2004.”
A Collaborative Approach
Clay Adams, president of Mascoma Bank and chair of the corporate council, says the lack of housing is a barrier to economic vibrancy. “We are all so pained by this that we wanted to try to be part of the solution.”
The eight employers in the Upper Valley Loan Fund include: Dartmouth Health, Bar Harbor Bank and Trust, Citizens Bank, Dartmouth College, Hanover Co-op Food Stores, Hypertherm, King Arthur Baking, and Mascoma Bank.
The Upper Valley Fund will be managed by Evernorth, a nonprofit that provides affordable housing and community investments in Maine, NH and Vermont. Deb Flannery, vice president of lending at Evernorth, says the fund will allow them to build or preserve apartments for people who can afford rents of $1,200 to $1,600 per month. By comparison, the current market rate for apartments in Grafton and Windsor counties is between $1,500 to $2,200 per month, she says. “One of the things that is different about this collaborative is its cross-sector approach,” says Flannery. “It’s not just one employer doing it on their own but a collaboration of employers and affordable housing partners to leverage the full capacity the system has to deal with this problem.”
Currently in the Upper Valley area, there are about 250 units in the direct pipeline. With the money these business have put into the fund, another 250 units are targeted for development. While some contributors to the fund put forth as much as $2.5 million, for the Hanover Co-op, Reetz says, “Its donation of $100,000 may seem small but its a lot for a grocery cooperative. It would take 25 Hanover Co-ops to equal one Mascoma Bank.”
The partners will earn 1.5% on their investment, which is a small return with a big community impact, Reetz says. “I tip my hat to those who were able to put forth funds. They had to also convince their boards to commit to the long haul.”
More Flexible Capital Needed
Harrison Kanzler, executive director of AHEAD in Littleton, which completed Lloyd’s Hills Apartments (Pictured Right, Courtesy of AHEAD), a 28-unit project in Bethlehem in 2022 and is now working on 58 units in Woodstock, says the financing is always a complex and challenging process.
“The work that Evernorth and Mascoma Bank did in the Upper Valley, working with businesses to get together low interest funding and financing options for developers of workforce housing is pretty incredible,” says Kanzler. “Seeing something like that in every region of the state would be huge.”
Kanzler says people may not realize how much money is involved in these developments. “If we have to carry (even for a year or two) a 7% line of credit, that can be hugely detrimental to the development and our ability to do it. Having a fund that’s largely pooled resources from businesses investing in housing to bring that line of credit down to 2% or 3% can make a huge difference.”
Adams of Mascoma Bank agrees. He says projects simply cannot get built without some flexible capital. “There are all kinds of sources, and this is just one of those. But it shows that the businesses and institutions in this are willing to put their money where their mouth is,” he says.
Patrick Hess, director of real estate development for Avesta Housing, a nonprofit that develops and advocates for affordable housing in NH and Maine, says the housing crisis is so acute that anyone who has an interest in addressing it in any shape or form needs to be thinking as creatively as possible about partnerships. “The Upper Valley fund really speaks to the commitment of those employers and the deep need,” Hess says.
Avesta, with a NH office in Exeter, broke ground on its first of four affordable housing developments in the Mount Washington Valley, River Turn Woods, in September 2022. The development will provide 156 new homes in the Conway area.
“While Conway hasn’t got a funding consortium, they were very supportive of recent zoning changes in the town of Conway that allowed for increased density for developments that include affordable housing,” says Hess. “Local businesses came out and spoke in favor of our current project when it was going through the public approval process.”
The city of Rochester has been looking at many avenues to increase workforce housing, says Mayor Paul Callaghan. The city updated zoning regulations around density in different areas of the city and plans to evaluate additional changes in 2023.
River Turn Woods, an Avesta Housing project. (Courtesy of Avesta Housing)
“We hosted meetings with local manufacturers facing worker shortages driven by the affordable housing shortage,” he says. “A long commute just doesn’t serve a company well when it comes to retaining workers.”
Apple Ridge, a workforce housing apartment complex in Rochester, now has 102 apartments as the project enters phase 3, with 68 units leased (a ribbon cutting for the second phase was held in August). “These contribute to an overall citywide total of about 900 subsidized or workforce units,” Callaghan says.
He says Rochester is fortunate to host many manufacturers including Sig Sauer. “They expected to bring 300 jobs and they’re approaching 500. The city needs to maintain the housing supply to support these businesses. We want folks to be able to live here and work here; when that happens, the whole community benefits because they spend their money here,” Callaghan says.
Businesses Tackle Housing Crisis
The Hanover Co-op Food Stores employ about 350 people, Reetz says, many of whom travel 45 to 50 minutes to work. Parents often struggle to get to a teacher conference, band concert or sports practice.
Pictured Right: Allan Reetz, director of public and government affairs for Hanover Co-op Food Stores. (Courtesy of Hanover Co-op Food Stores)
“We understand the impact these issues can have on our community and the neighborly relations we all value in a rural setting,” says Reetz. “I’m not in a position to go out and try to find apartments. What I am in a position to do is to show up to local and state meetings, put my shoulder behind a lot of important efforts and do whatever I can to move the needle.”
Dave Duncan, vice president of facilities management at Dartmouth Health, says with job openings numbering in the hundreds, they considered building housing and even conducted some design and planning work. “But we quickly learned that’s not our expertise,” says Duncan. “Our expertise is running a hospital, so we pivoted because there were several extremely well organized and qualified developers that were opening up new apartments.”
Duncan says they worked with local landlords and set up lease agreements and have developed some successful partnerships. “It has become a good recruiting tool for us,” says Duncan. “In the past, nurses would accept a job and then decline it the end. Now people interested in working at Dartmouth know that at least a portion of their transition to the area would be less stressful.”
Dartmouth Health created resource guides and a website with local listings of rentals. “We also have someone on our team who manages the housing program,” says Carolyn Isabelle, director of workforce development. “She supports the candidates one-on-one as they make that transition to the Upper Valley and has worked with about 1,200 people in the first 18 months.”
Pictured Left: Workforce Housing in Dover being constructed by Harmony Homes. (Courtesy of Harmony Homes)
John and Maggie Randolph, the owners of Harmony Homes at Hickory Pond and Harmony Homes By the Bay, two large assisted living facilities in Durham, saw the effect of a lack of affordable housing on their workforce and decided to build their own. They constructed seven one-bedroom apartments, as well as a child care center in Durham and are now in the process of framing out 44 cottages in a development in Dover.
John says he expects they’ll have occupancy by spring. The units will be available for employees but also to the general public at the fair market HUD rental rate of about $1,100 for a one bedroom.
“Working with the city of Dover, however, has been amazing,” says Maggie. “Their approval process is streamlined; everyone who needs to be there—from the fire department to the city engineer—is at the table. It’s not easy and they are stringent, but they’re very fair and straightforward.”
Maggie says she heard about the Upper Valley fund and would love to partner with more organizations, but she recognizes it’s hard for businesses to get involved in housing, to be a landlord and an employer at the same time. “We have a special team to handle it, and we’d be happy to help other businesses if they want to own rental housing but don’t want to manage it themselves.”
John says they are always looking at other potential housing sites. “We continue to fight the good fight,” says John. “Building affordable housing, it’s not something you’ll make money at. It has to be a passion; the costs grow and everywhere you turn there are obstacles, but it’s the right thing to do.”