The Roundhouse in Santa Fe. Post file photo
By MIKE EASTERLING
The Santa Fe New Mexican
It took nearly every minute of the New Mexico Legislature’s 30-day session to get it done, but a measure that will make zero-interest loans available for qualified, first-time buyers of starter homes earned legislative approval Thursday morning.
The Senate’s last-minute passage of House Bill 200 gave affordable housing advocates a late victory at the Roundhouse in Santa Fe just before lawmakers adjourned and headed home.
HB 200, designed to create the New Homes for New Mexico Program, was championed by Santa Fe nonprofit developer Homewise Inc. If the measure is signed by Gov. Michelle Lujan Grisham, the program will be allocated $10 million to provide deferred loans — up to $75,000 for residents of the high-cost counties Santa Fe, Los Alamos and Taos, and $50,000 for the rest of the state.
The Senate approved the measure 22-13 Thursday morning, after it had passed the House 52-15 last week.
Veronica Toledo, the director of policy and advocacy for Homewise, said the passage of HB 200 helped make up for her disappointment over the failure earlier in the session of another bill Homewise had crafted. That housing transparency bill would have required some local governments to publish quarterly reports on approval rates and building permit processing times, an effort aimed at increasing efficiency in the permit process.
The measures were among a handful of bills introduced during the session to address New Mexico’s housing crisis. Several failed — including key zoning reforms that saw pushback from local government leaders — but affordable housing advocates found reasons for optimism in the victories they secured.
“We are incredibly thrilled and know this program will make a really big impact,” Toledo said of HB 200 just minutes after the Senate’s vote of approval.
“This bill will help build the new starter homes that New Mexico so desperately needs,” said sponsor Heather Berghmans, D-Albuquerque.
Senate Republicans, plus Democrats George Muñoz of Gallup and Joseph Cervantes of Las Cruces, opposed the bill.
Cervantes expressed concern a buyer in the program could default, leading to a home foreclosure and the loss of state funds.
“This could turn into a lot of challenges that I think have maybe not been thought all the way through,” he said.
Roger Valdez, the director of the Center for Housing Economics, an Albuquerque nonprofit that advocates for more housing construction and better policies, was celebrating the passage of Senate Bill 151, an omnibus tax package that included a gross receipts tax deduction for affordable housing builders and developers.
Miles Conway, the CEO of the New Mexico Home Builders Association, said his organization was pleased by the inclusion of a budget allocation for his group’s proposal to put together a three-year “attainable housing” program through which qualified, first-time homebuyers would receive $10,000 to assist with the purchase.
The program will be administered by the New Mexico Mortgage Finance Authority, also known as Housing New Mexico, which would receive $50 million in the state budget, though Conway said it was unclear how much of that would go to the program.
Even so, he believes the initiative will have the funding it needs to be successful.
“It’s a very robust amount of money to achieve what a lot of the partners in this sought,” he said.
‘Time to invest’
Toledo said the lack of starter homes in New Mexico is a significant part of the state’s housing crisis, pointing to the fact that only 4% of new home production in Albuquerque is categorized as starter homes — much lower than the national figure of 12%.
“This is an area of the market that needs production,” she said. “It’s time to invest in starter homes for folks.”
HB 200 would take effect May 20, she said, with the loan money becoming available July 1.
Homewise is grateful to legislators in both parties who recognized “the urgent need to expand starter home production and create meaningful pathways to homeownership for low- and moderate-income New Mexicans,” she added.
The initiative is a pilot program that will involve only about 200 homes, Conway said, but it will be a difference maker for the families who take advantage of it.
As for the housing attainability program, Conway said he thinks it also will prove beneficial to first-time, low- to moderate-income homebuyers, especially through its ability to help those folks buy down their mortgage rates.
He also said he’s excited about his association’s new partnership with the Mortgage Finance Authority, especially after the agency’s leaders expressed an interest in becoming more involved in promoting homeownership and new home construction.
In the meantime, Conway said his organization will see to it that the housing attainability funding reaches those who need it.
“Our association’s going to work really hard to see that money deployed,” he said, noting the frustration many state lawmakers have expressed about programs that get bogged down in red tape, leaving tens of millions of state dollars sitting idle for years at a time.
‘It’s up to us to show them they’ve made a good investment here,” he said.
‘A huge thing’
While the GRT deduction is only a small part of a much larger tax bill, Valdez said it would be a mistake to underestimate its importance.
“I think that’s a huge thing,” he said, noting it was a challenge for the program to survive the legislative gauntlet in a year when state revenue forecasts began to dry up.
The provision survived only because its supporters agreed to push its start date back to July 1, 2027, Valdez said, a decision that allowed for the inclusion of a proposed 1% raise for state workers in the tax bill.
The new start date will allow developers who wish to take advantage of the deduction more of a runway to plan and finance their projects. The incentive will allow developers to save 5% to 10% on the cost of a project, money they can use to build more affordable housing or reduce the cost of rent.
“They’re going to work changes into the project budget because they know they’re going to benefit from that deduction,” he said.
Valdez expects to see the benefits within six months, even before the program goes into effect. He described it as an “efficient, compassionate way to create more affordable housing without running it through a bureaucratic process.”
He also acknowledged his organization’s success during the session in partnering with Habitat for Humanity chapters around the state in requesting capital outlay for affordable housing projects. Lawmakers allocated $5.1 million across the state, including more than $1.5 million for a 58-home affordable housing subdivision in Santa Fe.
Cathy Collins, the executive director of Santa Fe Habitat for Humanity, said she was thrilled with the allocation, which galvanized her chapter’s network of supporters.
“We made a big ask,” she said, referring to the $3 million her chapter originally sought from lawmakers. The smaller allocation won’t have a big impact on the project’s timeline, she added.
“It may slow it just a bit, but the $1.5 million puts us on a good trajectory to get the first phase of the infrastructure started with just a few hundred thousand more,” she said. “This is a good position to be in.”
Looking ahead
With the 2026 legislative session in the rear-view mirror Thursday afternoon, Valdez and Conway both found themselves assessing how much progress housing advocates had made during the session and how they could improve their batting average next year.
Valdez was distressed about the failure of House Bill 77, which would have created a tax credit for the development of affordable housing on vacant or abandoned land. The bill attracted support across the board, he said, noting it was popular with both rural and urban developers.
The bill stalled in the House Taxation and Revenue Committee, he said, essentially because there just wasn’t room for it in the tax bill. But chances are good it will be resurrected next year in a more modest form.
Valdez said the bill’s reception shows lawmakers seem willing to consider new approaches to taking on the state’s housing crisis.
“I think the conversation is shifting, and people are looking at a wider range of solutions,” he said.
One of Conway’s disappointments was the failure of zoning reform to advance during the session. Advocates said the proposed changes would have made it easier and less expensive for developers to build more badly needed housing all over the state.
But the New Mexico Municipal League and local government leaders from around the state sent a clear message to lawmakers they were strongly opposed to a “one-size-fits-all” approach to that issue, arguing such changes are better left for individual cities or counties, he said.
That argument was put to the test Wednesday night, Conway said, when the Albuquerque City Council considered a number of zoning changes that included a proposal to allow the construction of multiple forms of housing on single-family lots.
“Lo and behold, the council killed the ideas one by one,” Conway said, even though the changes had been recommended by the city staff.
The failure of those measures left him frustrated Thursday.
Such zoning reform by municipalities is necessary to complement the capital investment the state is making to address the housing crisis, he said. “We’ll be back next year, and, hopefully by then, city councils around the state will have taken a look at this and said, ‘We’ve got to do our part.’”