Affordable housing to get $3M
City officials again injecting money into trust fund as 3% excise tax starts May 28
Santa Fe will continue to put
$3 million from the general fund into the Affordable Housing Trust Fund for the upcoming fiscal year, a move several city councilors have called to continue as the excise tax on high end home sales starts to accrue money.
The excise tax, scheduled to take effect May 28 pending a legal challenge, will impose a 3% tax on the value of home sales over $1 million within Santa Fe. All of the money, which advocates estimated could be up to $6 million a year, will go to the trust fund.
For the past several years, the city has placed $3 million into the Affordable Housing Trust Fund, something budget officer Andy Hopkins said will continue at least for the 2025 fiscal year at Tuesday’s City Council Finance Committee budget hearing.
The Affordable Housing Department’s budget for the upcoming year is $6 million, with $4.6 million going to affordable housing initiatives and programs, according to the city budget book.
Of that, Finance Department Director Emily Oster said last week $3.7 million will go into the Affordable Housing Trust Fund.
City Councilor Michael Garcia, who has advocated to support the trust fund with general fund money, said he was happy to hear the funding would continue in the upcoming fiscal year but added he wished councilors and the public received more specific information about the budget.
“I would love to see the details,” he said.
The department’s overall budget is a decrease from the $9.9 million it had in the 2024 midyear budget, but an increase of about $600,000 from the $5.4 million budgeted at the start of the 2024 fiscal year, Hopkins said Tuesday.
He said for the past several years the department has had an influx of onetime money in the middle of the fiscal year from the CARES Act, the American Rescue Plan Act and grant money from the U.S. Department of Housing and Urban Development that is allocated on a different schedule from the city’s fiscal year.
“That midyear budget number looks huge and then it looks like we have a significant reduction,” but the budget is slightly above the 2024 fiscal year budget, Office of Affordable Housing Director Alexandra Ladd said during the budget hearing.
The city is not including projections for any money from the excise tax in its proposed budget, Oster said in an interview last week. She noted potential revenue from the excise tax is not being
included in next year’s budget because “we don’t know exactly how much that’s going to generate.”
That’s typically how the city handles new programs, she added, including the cannabis excise tax when it went into effect. If the city starts to receive projections, she said it can include those in the adjusted midyear budget.
The worries over affordable housing in Santa Fe led to a vote on the excise tax last year, and the mechanics of home prices and development arose once again in budget discussions.
In the past fiscal year, Ladd said about 60 price-restricted homes were built and sold to qualifying homebuyers through nonprofits, and 30 more were created by for-profit developers.
One of the biggest bottlenecks for getting more affordable housing rentals and homes constructed is the financial constraints it imposes on developers, Ladd said, who must be able to prove to lenders they can recoup the costs it takes to get projects built.
“The issue is affordable housing is affordable to live in,” she said. “It’s not affordable to build, and it’s definitely not any more affordable to operate than market rate housing.”
In response to a question from Councilor Signe Lindell, Ladd said one of the most complicated parts of the department’s work is to make understandable to the public what goes into getting affordable housing projects off the ground.
“There’s a lot of feeling that any market-rate developer is greedy and evil and just out to line their pockets,” Ladd said. “And maybe that’s true of some of them, but in general I’ve had very positive interactions with the private market.”
Miles Conway, executive director of the Santa Fe Area Homebuilders Association, echoed Ladd’s comments about the cost pressures of affordable housing development.
“Affordable housing is expensive,” he said. “A 2-by-4, a bag of stucco — it all costs the same no matter if you’re building a market-rate home or capital A affordable housing.”