From homes to classrooms

The relationship between new housing and school enrollment in New Hampshire is often misconstrued. Sarah Wrightsman of New Hampshire Housing spoke with the Foundation’s Lois Shea about “From Homes to Classrooms,” a report prepared by Urbanomics for NH Housing.

Why is it important to understand the relationship between housing and school enrollment?

There are a lot of misperceptions when it comes to housing development in New Hampshire, and I approach this with a lot of empathy and compassion because people are worried about their tax bill and property values. Our schools are largely funded on local property taxes, and so there has been this concern: ‘If we build more housing, will there be more schoolkids and will our taxes go up?’ Our most recent study found that across housing types, the fiscal impact of housing was positive to school districts — new housing is bringing in more in tax revenue than would be spent on new students in the district.

This study showed that many findings have remained consistent over time — but you also looked at some different questions.

We have done similar studies in the past, but this time we wanted to look at not just the relationship between ‘if we build housing units, how many school kids will come?’ but also: ‘What does that mean for school funding and local taxation?’

This is where what you call a ‘three-part myth’ comes into play.

Yes. First, people tend to overestimate how many kids are going to live in housing when it’s built. If we build 100 units of housing, it is not going to be two kids per unit, which is what we often hear. It is more like .29 kids per unit averaged across housing type — so 29 kids for 100 units of housing. Second, folks confuse marginal and average costs. So: ‘If we add 29 kids to our school district and it costs $15,000 per kid it’s going to increase our taxes by that much, right?’ But that’s actually not how it works. The average cost per kid will go down when we add kids, because most costs associated with schools are fixed — salaries, heat, utilities, maintenance costs do not change. So the marginal cost is usually pretty low to zero, assuming there is capacity in the school district. Third, we forget that new housing adds to the tax revenue in our community.

How does this vary across different housing types?

The report showed that new, single-family housing is going to bring in a lot more kids to a district than multifamily housing or manufactured housing or town houses. For every 100 units of single-family housing, we’re looking at about 40 schoolkids. For multi-family rentals, condos, townhouses, it is more like six kids per 100 and for manufactured housing there is about one kid for every 100 units.

If a New Hampshire town wants to add housing and increase tax revenue, what is the best thing to do?

Lean into the most dense area of the community — your downtown or your village district — and increase density there and embrace mixed-use (commercial and residential). A lot of communities will say ‘we need more commercial base to support our property taxes,’ which is totally valid – commercial is a great way to increase revenue without adding expenses. But you need people to be able to support those commercial ventures. People who work there need somewhere to live. The next best thing is to allow for gentler housing types — allow old single-family homes to be converted into duplexes or triplexes, allow accessory dwelling units. You are increasing property values and revenue without damaging the character of that community.

Read the full study on the New Hampshire Housing website.