Housing Action Plan — Module 11 · Production Strategy

What Would It Take?
Conditions for Production

For each housing type Portsmouth needs, what conditions — city-side and developer-side — would actually have to exist for it to get built here? Work backwards from that question to find where the HAP has the most leverage.

DESIRED OUTCOME 50 units of affordable housing in Portsmouth reverse engineer CITY-SIDE CONDITIONS ✓ By-right zoning ✓ Parking reform ✓ HTF gap funding ✓ Public land RFP ✓ Fast permitting DEVELOPER CONDITIONS ✓ LIHTC allocation ✓ Viable proforma ✓ 30-yr covenant ✓ Mgmt capacity ✓ Environmental OK HAP ITEMS THAT ADDRESS THIS Z-26, Z-4, HTF-1, PL-2, I-3... city cannot control → defines the ceiling

The conventional approach to triage asks: which HAP items should we prioritize? This module asks a prior question: under what circumstances would the housing we want actually get built in Portsmouth? Work backwards from that answer, and the HAP items that address those conditions become the ones that matter most.

The method was field-tested in two Portsmouth conversations. A nonprofit developer inquiry in spring 2026 surfaced the specific conditions under which a mission-driven affordable housing organization would consider a project here — site control, subsidy availability, zoning certainty, and a willing city partner. A Planning Board presentation several years earlier laid out, item by item, what a developer would need from the city and what he was willing to self-impose to make a micro-unit project work. Both produced the same artifact: a two-column list of city-side and developer-side conditions.

Triage decisions that address the city-side column have the most direct leverage over production. The developer-side column defines the ceiling of what city action can achieve — if the math doesn't work on that side, no amount of regulatory reform unlocks production. Items that address no column in any housing type's profile deserve scrutiny about what they're actually for.

Real example · Spring 2026
A nonprofit affordable housing developer was asked: "Under what circumstances would your organization pursue a project in Portsmouth?" The answer was a specific list — 50+ unit site, subsidy-eligible zoning, city land disposition willingness, committed local funding partner. Every item mapped to the HAP.
Real example · ~2020
A developer presented to the Planning Board a bulleted list of what he needed from the city (parking standard relief, administrative approval pathway, design flexibility) and what he was willing to self-impose (unit size floors, management protocol, noise mitigation) to make a micro-unit development viable. That list is a conditions-for-production profile.
Select housing type
HAP item status
Complete
In progress
Not started
Compliance deadline
Permanently affordable housing
LIHTC-financed, mission-driven nonprofit developer. Targeting 30–60% AMI with long-term income restrictions. Requires complex multi-source capital stack.
📌 Field-tested: nonprofit developer inquiry, spring 2026
🏙 City-side conditions
Site with 50+ unit potential in subsidy-eligible zone
Nonprofits can't assemble land the way private developers can. They need a site already configured for scale — public land disposition or a willing seller at below-market terms. The GNOD land transfer mechanism (Section 10.686.30) creates a second pathway: privately-owned parcels conveyed to the City by GNOD developers at no city cost, then made available for below-market housing development. Free land cuts a meaningful sliver from project costs but does not resolve the operating gap — state AHF funding remains the binding constraint regardless of land source.
PL-2 Public land RFPs PL-3 Sherburne School PL-1 Land inventory Z-1 GNOD — Section 10.686.30
Zoning certainty — no discretionary approval risk
LIHTC applications require confirmed approvals before tax credit allocation. Any ZBA or Planning Board uncertainty kills the financing timeline.
Z-26 Reduce CUPs Z-12 Affordable overlay Z-22 Zone for diverse housing
Local soft money or gap financing
LIHTC alone doesn't close the gap. A city contribution — HTF funds, fee waivers, or a subordinate loan — is often what tips a project into feasibility for state allocation.
HTF-1 Housing Trust Fund I-2 Fee waivers I-7 Tax credits utilization
Parking relief — maximums, not minimums
A 50-unit affordable project with structured parking makes the proforma unviable. Statewide cap (SB 284) helps, but city must amend its own ordinance.
Z-4 Parking reform
Committed city partner relationship
Nonprofit developers choose markets where the city actively partners — not just permits. Staff capacity, clear point of contact, and political consistency matter.
PC-2 Nonprofit engagement P-10 Housing Navigator PC-4 Developer listening
Expedited permitting for affordable projects
Every month of delay costs carrying costs that compound against the proforma. Affordable projects need faster lanes, not slower ones.
I-3 Expedited review P-12 Permit timeline audit
📊 Developer-side conditions
NH Housing tax credit allocation
LIHTC is a competitive state allocation. Portsmouth projects compete statewide. Strong local support letters and a committed city partner improve competitiveness.
Long-term affordability covenant (30–40 years)
LIHTC requires 30-year minimum. Mission-driven developers often extend voluntarily. City can negotiate longer terms through land disposition agreements.
Operating reserve and management capacity
Developer must demonstrate long-term management capacity to funders. Smaller NH nonprofits may need a larger co-developer or managing partner.
Acceptance of income-targeting restrictions
Units restricted to 30–60% AMI. In Portsmouth's market, this means rents well below what private developers expect. Only mission-driven developers self-impose this.
Environmental and site due diligence
Phase I/II environmental, geotech, and utility assessments before committing. Public land dispositions should clear these before RFP release where possible.
Workforce & missing middle housing
Duplexes through 4-plexes affordable to 80–120% AMI households. Produced by small builders or individual investors. Currently blocked in 85.8% of Portsmouth's residential land.
🏙 City-side conditions
By-right permission in residential zones
The single most important condition. No small builder absorbs the cost and timeline risk of a ZBA variance or Planning Board CUP for a 3- or 4-unit building.
Z-5 Missing middle allowances Z-33 SF zone reform Z-26 Reduce CUPs
Lot size and dimensional reform — must move with Z-5
Missing middle allowances without dimensional reform produce almost nothing. A 3-unit building on a 15,000 sf minimum lot doesn't pencil. Z-5 and Z-8 are a package.
Z-8 Dimensional updates Z-5 Missing middle
Parking maximum of 1 space per unit
Each additional parking space adds $15,000–$40,000 in cost on a small infill lot. SB 284 statewide cap is in effect — Portsmouth must amend its ordinance.
Z-4 Parking reform
Clear, predictable design standards
Small builders won't invest in drawings before knowing the rules. Objective standards replace subjective board review and eliminate approval uncertainty.
P-5 Design guideline clarity P-14 Pre-approved templates
Anti-speculation safeguards before upzoning
Upzoning without land value capture allows speculation to absorb the benefit. Z-33's own sequencing note flags this — I-20 must be in motion first.
I-20 Land value capture Z-33 SF zone reform
📊 Developer/owner-side conditions
Construction cost that yields positive return at market rents
In Portsmouth's market, a 3-unit building needs rents north of $2,000/unit to cover construction and financing. Current land costs pressure this further. The math works in Gateway zones; it doesn't yet work in most residential zones.
Access to construction financing for small projects
Banks are reluctant lenders on 2–4 unit non-owner-occupied residential. Many small builders need owner-occupancy or personal guarantee structures to get financing.
Contractor availability
NH's construction labor market is tight. Small infill projects compete with larger commercial work. Delays erode margins quickly.
Tolerance for neighbor friction
Even with by-right permission, small builders face informal pressure. The psychological cost of neighborhood conflict deters risk-averse builders even when the legal path is clear.
Accessory Dwelling Units (ADUs)
Homeowner-produced secondary units. By-right since February 2026. The production bottleneck has shifted from permission to awareness and financing.
✅ Most regulatory conditions complete
🏙 City-side conditions
By-right approval — already achieved
February 2026 ordinance eliminates CUP requirement citywide, consistent with RSA 674:71–73. The regulatory barrier is resolved. Production bottleneck is now elsewhere.
Z-2 ADU enhancements Z-36 Monitor 2026 legislation
Streamlined permitting and inspection
Homeowners are not developers. A complicated permit process and unclear timelines deter the homeowners most likely to add units.
P-2 Admin approval P-3 Online permitting portal
Public education and homeowner outreach
Most homeowners who could build an ADU don't know they now can. Awareness is the current constraint, not permission.
P-10 Housing Navigator
ADU-specific financing programs
Construction loans for ADUs are a niche product. Programs helping homeowners access below-market financing dramatically increase production rates.
I-1 ADU tax incentive I-14 Rehab loan/grant program
📊 Homeowner-side conditions
Owner-occupancy of primary residence
Portsmouth's ordinance retains the owner-occupancy requirement. This limits ADU production to homeowners who live on site — not investor-owned properties, which are a significant share of Portsmouth's housing stock.
Access to $150,000–$250,000 construction financing
A detached ADU in Portsmouth's construction market costs $150–250K. Most homeowners can't cash-fund this. HELOC availability depends on existing equity — relatively strong in Portsmouth.
Willingness to be a landlord
Many homeowners who have the lot, the equity, and the permission still don't build because they don't want tenant management responsibility. No policy addresses this directly.
Adequate lot size and setback compliance
Not every lot can accommodate a detached ADU. Tight setbacks, large main structures, or complex topography reduce feasibility even with by-right permission.
Micro-unit housing
Studios under 400 sq ft for single-person households. No dedicated regulatory pathway in Portsmouth. No examples in the current pipeline.
📌 Based on Planning Board presentation, ~2020
🏙 City-side conditions
Explicit micro-unit definition and by-right allowance
Currently allowed in some zones but no dedicated standards. Without a clear definition, each project requires individual interpretation — a deal-killer for small-margin projects.
Z-20 Micro-unit allowances Z-26 Reduce CUPs
Parking maximum well below 1 per unit
Micro-unit tenants are car-light by design. A requirement of 0.5 or less — or none for downtown locations — is a hard condition. The Planning Board presentation flagged this explicitly.
Z-4 Parking reform Z-20 Micro-unit allowances
Density by floor area, not unit count
Micro-unit buildings require more units per square foot to achieve comparable revenue. Unit-count density limits create artificial ceilings that make the typology unviable.
Z-7 Height limit modernization Z-8 Dimensional updates
Building code flexibility for small rooms
Code minimum room sizes can conflict with purpose-designed micro-unit layouts. A code affordability review is needed to identify which standards create unnecessary friction.
P-13 Building code review
📊 Developer-side conditions
Self-imposed unit size floor (~250–300 sf minimum)
The Planning Board presentation committed to minimum unit sizes — not as a regulatory requirement but as a quality standard the developer imposed on himself to manage neighbor concerns about "shoebox" housing.
Management protocol for higher unit density
The developer committed to on-site management presence and noise mitigation standards beyond what the ordinance requires — a self-imposed condition in exchange for density tolerance.
Premium sq ft rents with high occupancy
Micro-units charge $4–6/sf vs $2.50–3.50/sf for conventional units, but total rent is lower. The proforma only works with high occupancy and minimal vacancy. Requires risk-tolerant capital.
Design investment to signal intent
Micro-units succeed when design makes small feel intentional — natural light, high ceilings, built-in storage. Budget cuts here produce units that feel deficient rather than efficient.
Co-living facilities
Private sleeping rooms with shared common spaces. CUP required in B and Gateway zones. First Portsmouth approval obtained 2025–26. Parking standard is the primary barrier outside downtown.
📌 First Portsmouth approval: Tracy Kozak, 2025–26
🏙 City-side conditions
CUP pathway — in place, but creates uncertainty
Co-living requires Planning Board CUP in B, G1, G2 zones. Achievable, but CUP introduces timeline and opposition risk. By-right with objective standards would unlock more projects.
Z-35 Revise co-living standards Z-26 Reduce CUPs
Parking standard relief — the actual barrier
1 space per 4 rooms (unless within 600 ft of a public garage) makes co-living unviable outside downtown. This single standard explains why only one project has been approved.
Z-35 Revise co-living standards Z-4 Parking reform
Zone expansion beyond B and Gateway
Expanding co-living CUP eligibility to MRB, OR, and WB zones opens additional sites without requiring residential rezoning.
Z-35 Revise co-living standards
Simplified management requirements
Current ordinance: 24/7 on-site management, posted contact signage, annual city reporting. These requirements favor institutional operators and deter smaller local ones.
Z-35 Revise co-living standards
📊 Operator-side conditions
Site within 600 ft of parking or transit
Operators self-select sites satisfying the parking standard — concentrating co-living in downtown where land is most expensive, the opposite of where co-living can deliver affordability.
24/7 management capacity
The on-site management requirement is a real operating cost that favors institutional co-living operators over smaller local ones.
Tenant screening for community fit
Successful co-living depends on compatible housemates. Operators self-impose screening beyond standard rental criteria — employment, lifestyle, and community compatibility.
Below-market revenue per room accepted
Co-living rooms are priced below comparable studio apartments. Revenue model depends on shared space efficiency and high occupancy — not higher rents per unit.
Senior housing
Age-targeted housing for 55+/62+ households. Many seniors have equity but need appropriately configured units. Portsmouth's aging population is a primary driver of housing mismatch.
🏙 City-side conditions
Density bonus and reduced parking for age-restricted projects
Senior housing receives no specific incentives in Portsmouth's current ordinance. Density bonuses and reduced parking minimums (seniors drive less) would lower cost and signal market priority.
Z-31 Senior housing incentives Z-6 Density bonus Z-4 Parking reform
Property tax bridge for seniors who downsize
Seniors in large single-family homes would move to appropriate housing — freeing those homes for families — but face tax increases their fixed income can't absorb.
I-8 Senior property tax deferral
Accessibility incentives
Incentivizing accessible unit production — density bonuses, fee waivers — reduces the cost premium of building universal design features in from the start.
I-17 Density bonus for accessible units I-19 Accessibility retrofit incentive
📊 Developer/operator-side conditions
Demonstrated demand at target price point
Developers require market studies showing absorption. Portsmouth's senior population has purchasing power, but little comparable product exists locally to benchmark pricing.
Proximity to services, medical care, walkable amenities
Senior residents self-select for walkability and service proximity — concentrating demand on the same limited downtown-adjacent land every other housing type competes for.
Sufficient scale for amenity viability (40+ units)
Community programming and on-site services require unit count to be financially sustainable. Under 40 units typically can't support the amenity package that distinguishes senior housing from generic apartments.
HOPA compliance for 55+ designation
At least 80% of units must be occupied by a person 55+, with age-verification policies in place. Legal compliance adds administrative overhead that smaller operators find burdensome.
Market-rate multifamily
6+ unit buildings at market rents, for-profit developers. Already broadly permitted in Gateway and Character Districts. Key remaining constraints: commercial/O/R zones (HB 631 deadline), permitting timelines, construction economics.
🏙 City-side conditions
Zone expansion into commercial and O/R districts
HB 631 (eff. July 1, 2026) mandates multifamily allowance on commercially zoned land where infrastructure exists. Portsmouth must amend before the deadline — the clock is running.
Z-3 Residential conversion ordinance Z-25 Multifamily in O/R zones Z-29 Adaptive reuse streamlining
Height and density allowances
Market-rate multifamily economics require sufficient unit count to spread land cost. Height limit reform in Gateway and downtown-adjacent zones directly affects feasibility thresholds.
Z-7 Height limit modernization Z-6 Density bonus
Predictable, timely permitting
An 18-month site plan review adds $500K–$1M in carrying cost to a typical project. Timeline certainty is as valuable as timeline speed — developers underwrite schedules, not best-case scenarios.
P-1 Streamline site plan review P-12 Permit timeline audit P-4 Concurrent review
Impact fee calibration by unit type
Flat impact fees that don't distinguish unit types are a blunt instrument. Smaller units generating less school-age population demand shouldn't carry the same fee as larger family units.
P-15 Impact fee calibration
📊 Developer-side conditions
Land cost that supports the proforma
Portsmouth's land values are high and rising. Market-rate multifamily pencils in Gateway zones today but only barely. Any additional cost — fees, parking, delays — pushes projects below return thresholds.
Construction financing availability
Construction lenders require strong borrower track records. First-time Portsmouth developers and smaller projects face tighter scrutiny than established regional developers.
Investor return threshold (5–7% yield on cost)
The spread between stabilized net operating income and total development cost must hit investor hurdles. In Portsmouth's high-cost environment, this requires either premium rents, reduced costs, or both.
Rent absorption confidence at delivery
Developers require confidence that sufficient rental demand exists at underwritten rents 18–24 months into the future. Portsmouth's strong market supports this — but only in genuinely walkable locations.
Entry-level ownership housing
Cottage housing, townhouses, small-lot single-family for first-time buyers. The hardest type to produce in Portsmouth's current environment. Requires dimensional reform, shared equity tools, and anti-speculation safeguards to function at accessible price points.
🏙 City-side conditions
Small-lot and cottage zoning reform
Portsmouth's minimum lot sizes make small-lot fee-simple ownership nearly impossible in most zones. Even GRC's 3,500 sf minimum is too large for cottage-court configurations that work in other NH markets.
Z-9 Cottage housing provisions Z-8 Dimensional updates Z-38 Entry-level ownership strategy
Land value capture before upzoning — critical sequencing
Upzoning without price controls allows speculation to absorb the value gain — land prices rise to capture new density, and resulting units are no longer entry-level. I-20 must be in motion before Z-33 or Z-9 proceed.
I-20 Land value capture Z-33 SF zone reform
Shared equity / resale covenant mechanism
Without a resale covenant, any below-market ownership unit becomes market-rate at first sale. RSA 674:60 enables resale covenants on assisted projects — the legal tool exists, the policy hasn't been activated.
I-22 Shared equity homeownership I-12 First-time homebuyer expansion
Public land disposition prioritizing ownership
City RFPs that score entry-level ownership with resale covenants create a pipeline that doesn't depend on private land at market prices — the only near-term route to accessible ownership.
PL-2 Public land RFPs I-20 Land value capture
📊 Developer/buyer-side conditions
Construction cost that allows sale below $350–400K
Building a new unit in Portsmouth costs $250–350/sf all-in. A 1,000 sf cottage at $300/sf costs $300K before land, financing, and margin. Without subsidy or donated land, it cannot reach entry-level price points.
Buyer qualification at target income levels
A household at 80% AMI (~$82K for a family of three) can safely afford a mortgage of ~$275–300K. At Portsmouth's land prices, this gap requires subsidy, shared equity, or a resale covenant.
Acceptance of resale restriction if subsidized
Buyers receiving below-market pricing must accept a covenant keeping the unit affordable at next sale. They forgo appreciation in exchange for access — a real tradeoff not all buyers will accept.
Viable shared ownership governance
Cottage court and clustered ownership requires a shared ownership structure (HOA or condo association). Poorly structured HOAs deter buyers — governance design is a real project risk.
NOAH preservation — small multifamily rehab
Acquisition and value-add rehab of existing 2–20 unit properties. The developer goal: add units or bedrooms, reduce deferred maintenance, and cash-flow at workforce rents. Willingness to income-restrict exists — but only if the math works. This is the most accessible entry point for the city: smaller scale, faster timeline, and no new construction required.
📌 Field-tested: small developer inquiry, spring 2026
🏙 City-side conditions
Grant or low-interest loan program for property improvements
The most direct lever. A city grant program covering safety-related improvements — lead abatement, knob-and-tube rewiring, heating systems — allows acquisition with less permanent debt. Less debt means cash flow is achievable at lower rents. CDBG rehab funds are the nearest existing mechanism; a dedicated small-landlord grant program tied to affordability commitments doesn't yet exist.
I-14 CDBG rehab I-2 Fee waivers HTF-1 Housing Trust Fund
By-right permission to add units to existing structures
If the city allows unit addition by right — not via ZBA variance — small developers can underwrite the project before acquisition. Discretionary review makes rehab projects unfinanceable: lenders won't commit to a project whose approval is uncertain.
Z-26 Reduce CUPs Z-2 ADU enhancements Z-8 Dimensional updates
RSA 79-E tax abatement during income-restriction period
Property tax is one of the largest operating expenses on small multifamily. Abating the tax on improved value during an affordability covenant period directly improves cash flow — potentially the difference between market-rate and workforce rents being viable. RSA 79-E work session held March 2026; no program adopted yet. Adoption requires City Council vote.
I-7 Tax credits utilization
Project-based vouchers for income-restricted units
If Portsmouth Housing Authority can attach project-based vouchers to income-restricted units during the affordability period, the developer receives market-equivalent revenue on those units while tenants pay income-appropriate rents. This is the revenue-side solution that makes income restriction viable without a grant. Currently no formal mechanism exists for PHA to attach vouchers to privately-owned small multifamily.
PC-2 Nonprofit engagement PC-8 PHA coordination
📊 Developer/owner-side conditions
Acquisition cost manageable with 25% down
Portsmouth small multifamily prices require substantial down payments. A 6-unit property at current market values may require $300–500K down — beyond reach for early-stage investors without seller financing or city gap assistance. This is the primary entry barrier, not zoning.
Seller financing or deferred capital gains structure
When sellers are willing to finance the sale — accepting installment payments rather than a lump sum — buyers avoid the 25% conventional down payment requirement and sellers defer capital gains tax. This is a genuine workaround for Portsmouth's acquisition cost problem. City cannot mandate this, but can facilitate introductions between motivated sellers and qualified buyers.
Deferred maintenance priced into acquisition
Older Portsmouth small multifamily often carries significant deferred maintenance — lead paint, aging electrical, outdated heating. If this isn't accurately priced into acquisition, the developer absorbs unexpected costs post-closing that eliminate cash flow. Due diligence capacity is a real constraint for first-time investors.
Cash flow at workforce rents post-improvement
The developer model only works if operating expenses plus debt service are coverable at rents below market. The math requires: low acquisition cost (seller finance or city gap), reduced operating cost (79-E abatement, grant-funded improvements), and/or revenue support (project-based vouchers). All three levers together may make income restriction viable; any one alone likely doesn't.
Willingness to income-restrict if financially viable
Field testing confirms: small investors are willing to income-restrict units if the pro forma supports it. This is not a values problem — it's a math problem. The city's job is to make the math work, not to mandate an outcome the economics can't support.

What this tells you about triage

Several HAP items appear across multiple housing type profiles — meaning they address conditions that block many types of production simultaneously. These have the broadest leverage.

Z-4 (parking reform) appears in six of eight profiles. It is the single most cross-cutting city-side condition. Z-26 (reduce CUPs) appears in five. P-1 and P-12 (permitting process) appear in four. These are not the most visible items in the HAP — but they may be the most consequential for production volume.

Items appearing in only one profile serve a real purpose but have narrower leverage. They may still warrant Year 1 action if the committee believes that type is a specific priority — but they shouldn't be ranked ahead of cross-cutting items on leverage grounds alone.

The developer/owner-side column defines the ceiling of what city action can achieve. If the math doesn't work on that side, regulatory reform alone won't unlock production. Read this module alongside the pro forma module.