A New Hampshire company that kept losing staffers because they couldn’t afford to live nearby is tackling the problem in an unusual way – using a special zoning program in Dover to build 44 tiny homes on less than 4 acres.

The project, a modern twist on the old model of companies building housing for workers, was born of desperation, but its developers say it can be copied elsewhere, offering a partial solution to the region’s severe housing crunch.

“We’re already in discussion in two, three other locations to do this again. Our goal is that when we’re done building in Dover, people will drive through and say, ‘I’m OK with this being in our town,’ ” said John Randolph.

Randolph, a contractor, and his wife Maggie, an architect, own Harmony Homes Assisted Living Center in Durham. They’ve previously responded to the housing crunch that makes it hard for them to hire and keep staff by building an apartment building in Durham, but apartments aren’t allowed on this 7-acre parcel in Dover.

“We could have fit just nine single-family homes on the property. That wouldn’t have helped much,” said Maggie Randolph.

Enter Dover’s “transfer of development rights” program.

More density

The program, usually called TDR, allows property owners to buy the right to build more units than is allowed under zoning. The original program put that money into a conservation fund used to buy and protect property from development, but it has been expanded.

“A few years ago a determination was made that in addition to wanting to conserve land, there was value in promoting affordability of housing,” said Christopher Parker, deputy city manager for Dover. In 2020 the city council expanded the TDR program so that developers of rent-restricted units under 600 square feet could obtain the density without paying extra. Units between 600 and 1,400 square feet get a discount on the fee.

Those size limits were chosen, Parker said, because they tend to correlate with lower housing costs.

Without this change to the TDR program, the Randolphs would have had to pay Dover roughly $13,000 per unit, making the project far too expensive.

“A lot of affordable housing projects are killed because of overhead,” said Maggie Randolph. “It wouldn’t have worked.”

In return, the Randolphs have agreed to keep rent at or below the fair-market rate as determined by the New Hampshire Housing Finance Authority. That figure was $1,090 a month last year and will probably be above $1,200 when the first units open in late spring.

Dover’s interest in creating affordable housing was key.

“You’ve got to find a municipality that doesn’t want to fight you. If they want to fight on affordable housing, just move on,” said John Randolph. “If we had a Chris Parker in every municipality, it would be a very different place.”

Controlling costs

Affordable housing is difficult to build without government assistance because of basic economics. The cost of buying land and paying for help and supplies is so high these days that developers usually need to build expensive houses to include any profit.

“There are five L’s that contribute to the cost of housing,” said Parker, ticking them off as land, labor, lumber, lending and legislative. “The only thing that communities really have control over is legislative – zoning, land use regulations, codes.”

But the density change wasn’t the only factor, the Randolphs said.

“The other way we make it financially feasible is by doing as much of the work with our own company as possible,” said Maggie Randolph.

She is the architect for the project and has done such things as having most building dimensions be multiples of the standard 8-foot plywood sheets to reduce waste. When they built the Durham apartment building, they bought their own excavator and developed site construction and framing capabilities and are basically acting as their own builder in Dover.

“We couldn’t go out and contract a for-profit (developer) to do this,” said John Randolph.

And then there’s the indirect benefit of making it a little easier for staff of Harmony Homes Assisted Living Center to live nearby.

“It’s a different way of looking at the project. It will pay for itself in the long term, looking at the stabilization of our business,” Maggie Randolph said.

‘Cottage homes’

The 44-home project, costing $5.2 million in total, is called Cottages at Back River Road. The Randolphs prefer the term “cottage home” to “tiny home” because the latter are often built on trailers and are moveable, whereas these will be permanently affixed to slabs. It is an all-electric development with heat pumps rather than furnaces and is less than two miles from Dover’s downtown. It is connected to city water and sewer, which makes dense developments much more feasible. They cannot be turned into AirBnb’s or other short-term rentals.

The footprint of each house is 384 square feet, plus they have a 160-square-foot loft that can be turned into a second bedroom.

This smaller-sized house is drawing interest not just from young adults seeking a starter home but from other groups, too, such as seniors who are downsizing after the children grow up.

“They don’t need the 3,000-square-foot house they raised their kids in, and this is an opportunity,” Parker said.

The Randolphs say they’ve been swamped with interest since news of the development got out, with everybody from veterans groups to homeless advocates to people looking for housing for their grown children.

“They’re saying, ‘We’ll take any available units you have,’ ” said John Randolph. The units will be rented to anybody, not just the Randolphs’ staff, which raises questions about how renters will be selected. “We haven’t completely figured it out,” he said. They have not yet taken any deposits.

Company housing

Another intriguing aspect of the development is that the incentive was to provide worker housing, not just to make a profit on building something. There’s a strong historical precedent for that, Parker noted.

“Dover’s a mill town, and the mills built and controlled a lot of the housing during their heyday,” he said. If Dover wants to grow, it needs to embrace that model, among others.

“The No. 1 thing I hear from employers is we can’t find a workforce, or the workforce is driving 25 miles to get to work and we can’t afford to pay them the level they might need to live a shorter commute distance,” he said. “I look at it as this: They (the Randolphs) are being smart about wanting to attract and retain employees.”

The Randolphs hope that other companies that are desperate for help will take notice.

“The thing that could make this scalable – if a developer partnered with other companies that had the same mindset and they could bring money to the table,” said Maggie Randolph. 

And while they realize that an employer-owned development of tiny homes is not the solution to the housing crunch – “It’s not appropriate everywhere; you wouldn’t want cottage homes as infill in downtown Portsmouth,” said Maggie Randolph –  it could be part of a solution.

“The only way we’re going to make housing more affordable is to be creative, to stop being exclusionary,” said John Randolph.