State Rep. Matthew McQueenBy SARAH HALASZ GRAHAM
Can a 16-word edit to a state statute resolve one of Santa Fe’s most vexing property tax questions?
State Rep. Matthew McQueen, D-Galisteo, hopes so.
McQueen last week introduced a bill that proposes to amend an 18-year-old law that critics say has allowed corporate owners of apartment complexes and nursing homes plus some wealthy homeowners to receive thousands of dollars in property tax breaks each year.
The bill, McQueen said, came in response to a Feb. 10 story in The New Mexican outlining inequities in the tax law, which limits increases in property valuations for tax purposes in hopes of protecting longtime homeowners from being priced out of historic neighborhoods.
For some observers, the law has protected those residents, but critics contend it also has allowed some owners to reap up to five-digit benefits.
McQueen — who represents Eldorado, most of southern Santa Fe County and parts of Torrance, Bernalillo and Valencia counties — aims to change that.
He said his bill, House Bill 647, would stipulate that the valuation caps don’t apply to “residential property that is not occupied by the owner as the owner’s principal place of residence.”
By exempting all but owner-occupied residents from the caps, McQueen said his bill would continue longtime residents’ protections while “restoring some fairness to the system.”
“I do think it better aligns the statute with the original intent — that being, let’s protect our residents, let’s protect our homeowners from being forced out of their homes because of property taxes,” he said.
Corporate owners of apartments, owners of second homes and owners who rent their properties to short- or long-term tenants stand to lose.
In 2018, for example, California-based NALS Apartment Homes, a real estate investment firm that owns Talavera Apartment Homes on the city’s south side, received a $42,000 tax break. If McQueen’s measure succeeds, the apartment complex will be taxed on its market value of $18 million instead of its capped value of $12.8 million, and that $42,000 savings would vanish.
“You have million-dollar vacation homes paying essentially a lower tax percentage than someone who bought a $200,000 home a year ago,” said Mike Loftin, CEO of HomeWise, a housing nonprofit. “It’s just an absurd tax structure. … This bill should be a no-brainer for the legislature — a complete no-brainer.”
Still, legislators have tried — and failed — on multiple occasions to amend the law. In an interview a few weeks ago, Santa Fe County Manager Katherine Miller said it’s hard to drum up support when so many property owners — 25,662 in 2018 — benefit from the valuation cap.
State Senate Majority Leader Peter Wirth, a Santa Fe Democrat who has acknowledged both the existing law’s benefits and inequities, declined through a spokesman to comment on McQueen’s bill, saying he’ll wait to see how it morphs in the lower chamber.
Even the bill’s author admitted it’s not a perfect fix.
Exempting non-owner occupied properties won’t remedy the fact that some wealthy homeowners in Santa Fe will pay significantly lower property taxes than their neighbors.
A cap limiting valuation increases to 3 percent is applied every year until a home is sold, at which point valuation is realigned with the market. So homeowners who have lived in the city’s wealthier east side for 20 years, say, might pay significantly less in property tax than their neighbors who bought a similarly valued home last year.
“I’m a little troubled by that,” McQueen said.
Simon Brackley, president and CEO of the Santa Fe Chamber of Commerce, said he fears the bill could have other negative consequences.
“Those landlords [who no longer receiver tax breaks] will simply pass on the increase to their tenants, which is going to increase the cost of housing in Santa Fe,” he said. “We have an affordable housing crisis, and this whole thing is about unintended consequences. That’s how we got into this situation.”
City officials have said Santa Fe is short as many as 2,500 affordable housing units.
McQueen said he anticipates landlords will levy such threats, but he hopes the market will prevent them from following through.
And to the extent it does increase rents? “It certainly encourages homeownership, which I think is a good thing,” he said.
Loftin said even if McQueen’s proposal isn’t perfect, it’s still a big step toward fixing a broken system.
“This just makes really good sense,” he said. “Rep. McQueen cut to the crux of the issue really quickly. So hopefully what the rest of the legislature and the governor are going to do is say, ‘Hey, thank you for figuring this out. Let’s all get behind it.'”
The bill is set to be heard by the House Local Government, Land Grants & Cultural Affairs Committee and Taxation and Revenue Committee before it would reach the full House.