Lebanon council approves $2.05 million for Barrow Street housing project after debate over eligibility and protections

The Lebanon City Council voted 8–1 on July 15 to appropriate up to $2,050,000 for a five‑unit housing development on city‑owned Barrow Street and authorized the city manager to seek short‑term construction loans of up to $1.7 million to supplement existing grants.

The project will use pattern‑zoned, factory‑built homes. Councilor McNamara, who led the presentation to the council, said staff and consultants had revised the modular design to improve upstairs ceiling height, increase storage and add a full bathroom upstairs — changes intended to make the homes more marketable at lower cost. Staff provided preliminary bid estimates that put per‑unit gross costs in the upper $390,000s to low $400,000s.

“We're comfortable moving forward with at least talking with lenders and getting prices on the cost of a construction loan,” Councilor McNamara said. He added that the project relies on a mix of a construction loan, about $600,000 in grants already secured, and other housing funds to reach the appropriation amount.

Why the project matters: Lebanon has a constrained housing supply and rising costs. Supporters told the council the project converts a long‑vacant parcel into taxable property and tests whether pattern zoning and modular construction can expand the local pipeline for modest single‑family ownership opportunities.

Key council safeguards: Councilors debated multiple protections before approving the appropriation. The resolution requires that contractors carry performance bonds in keeping with standard city practice; it also added staged, nonrefundable deposits for buyers (an initial $1,000 upon selection in the lottery and a second $9,000 deposit prior to construction, both to be applied to the final purchase price). Candidates must be prequalified by a lending institution before joining the lottery.

Eligibility and anti‑speculation measures: The council established a phased eligibility pool. Candidates will first be drawn from city staff, SAU staff and Lebanon Housing Authority staff. If there are insufficient qualified applicants (no fewer than 10 applicants within 30 days of the announced lottery), current Lebanon residents as of July 15, 2026, will be considered for any remaining homes. Deed restrictions and other contractual language were discussed as tools to limit short‑term rentals or flips; councilors also asked staff to include a right‑of‑first‑refusal/buyback option in early drafts should a stricter anti‑speculation mechanism be needed.

Public concerns and responses: During the public hearing, multiple residents urged protections against speculation and asked the council to keep the project affordable. Residents and councilors pressed staff on whether the $400,000 price point is truly affordable for many households and requested clarity on foreclosure and resale consequences. City staff said the project is intended to be a demonstration to inform larger-scale efforts and promised transparency on budgets and grants that enabled the lower landed cost.

Project financing and fiscal notes: Staff reported roughly $440,000 from an Invest New Hampshire grant had been used for planning and design work; additional infrastructure grants could contribute about $158,000 more; the council will borrow the remainder as a short‑term construction loan. City staff said no general property tax dollars are being used up front and that, once sold, proceeds will return to the redevelopment properties revolving fund for future projects after loan repayment and required reimbursements.

Next steps: The manager is authorized to negotiate and execute application documents for loans and to finalize purchase and sale agreements consistent with the council’s stipulations. Staff will return with purchase and sale documents, final loan terms and the detailed deed language before homes are conveyed to buyers.

Outcome: The motion passed 8–1; Councilor Key recorded the dissent. The vote instructs the manager to proceed under the council’s added conditions and to report progress back to the council.