Why can’t we just build more affordable housing?
It’s a fair question. Portsmouth has land. Developers build here all the time. So why isn’t someone building apartments that working families can afford?
The core problem is simple: affordable housing costs just as much to build as market-rate housing — but it can only charge a fraction of the rent. The gap between what the building costs and what affordable rents can support has to be filled by grants, tax credits, and subsidies. Assembling that financing is the real challenge — it requires years of applications, multiple funding sources, and every piece arriving in the right order.
This is what Rodger Brown of POAH — the nonprofit developer behind Portsmouth’s most ambitious affordable projects — explained to Progress Portsmouth. Everything in this guide traces back to that conversation.
Cost to build
The full tab to acquire land, construct the building, and get to opening day — typically $200,000–$500,000+ per unit in NH today.
Affordable rents
Rents are capped at a fraction of AMI (Area Median Income). A 2-bedroom at 60% AMI in Portsmouth might rent for ~$1,400/mo instead of $2,800+ at market rate.
The gap
Low rents can’t service the debt that would fully pay for construction. The difference must be filled by grants, tax credits, and subsidies — not profit.
The capital stack
The layered combination of money sources — some debt, some equity, some free money — that covers the full cost. Assembling it is the real work.
A capital stack is simply the list of everyone who puts money into a project, ordered from safest to riskiest. Think of it like a building’s floors — the bottom layer (the bank loan) gets paid back first if something goes wrong; the top layer (the developer’s own money) loses first. In affordable housing, the stack is unusually tall because no single source can cover the whole cost.
A typical POAH-style affordable project is financed from multiple sources. Click any layer to learn what it is and where it comes from.
Even after a building is fully financed and constructed, affordable rents generate less income than it costs to run the building well. This is the problem Rodger Brown described most vividly.
The bottom line, in plain English
Only ~$9,000/month is left to repay the loan. At current interest rates, that supports a mortgage of roughly $1.5 million. But the building cost $15 million. The other $13.5 million has to come from grants, tax credits, and subsidies — none of which come automatically, and all of which require years of competitive applications.
This is why Brown said: “You really need that deeply subsidized or free money from the state to cover the cost.” Without it, the math simply doesn’t work — regardless of how much density a city allows, or how cooperative the Planning Board is.
When state funding is scarce, developers like POAH look to cities to fill part of the gap. Brown named four mechanisms on our call. Click each to expand.
Real Estate Tax Abatement
The city agrees to assess the property at pre-improvement value, or reduce taxes during the affordability period — lowering ongoing operating costs without spending cash.
TIF — Tax Increment Financing
The city captures the increase in property tax revenue that a new development generates and redirects it back to help finance that development.
Section 108 — CDBG Loan Guarantee
Allows cities to borrow against future federal Community Development Block Grant funds — leveraging a small annual grant into a larger loan for affordable housing.
Real Estate Transfer Tax (RETT)
A small fee charged when a property is sold — proceeds fund affordable housing production.
Surplus City Land
When the city contributes land at below-market value or zero cost, it eliminates land acquisition from the capital stack entirely — often the single biggest lever available locally.
Section 8 Project-Based Vouchers
Federal rental subsidies permanently attached to specific units — enabling housing for the lowest-income households that workforce rents alone can never serve.
Permit & Impact Fee Waivers
Waiving building permit fees and infrastructure connection fees for qualifying affordable projects — a small but real reduction in development costs.
Based on the Brown call and the financing landscape he described, here is where Portsmouth stands right now — the constraints, the levers, and the open questions.
Portsmouth’s Affordable Housing Finance Map
State funding is the binding problem. NH’s cuts to the Affordable Housing Fund have crippled the ability to produce deeply affordable units regardless of what Portsmouth does locally.
The operating math is tight at workforce rents. $1,200–$1,500/month barely covers expenses, let alone debt service — especially with rising insurance and maintenance costs.
Section 108 is constrained at current scale. Portsmouth’s $522K/year CDBG is fully committed; Section 108 also hits the city’s debt limit.
NH CDFA state tax credits are an immediate tool. Christ Church needs ~$195K; Sherburne School needs $625K — no state legislation required, and local businesses can contribute.
Surplus land is Portsmouth’s strongest tool. The Sherburne School 99-year ground lease model is replicable across other city-owned sites.
Tax abatement reduces the operating cost problem. Lower property taxes directly improve debt capacity on affordable projects — and the mechanism already exists in NH law.
Land value capture — what’s actually feasible under NH law? The toolkit is narrower than it looks. Mandatory inclusionary zoning is not currently authorized.
AHF restoration at the state level. NH’s RETT already feeds the Affordable Housing Fund — the problem is that the legislature has chronically underfunded it.