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WTF?

The unjustified escalation in affordable assessments

June 23, 2010, 12:00 am

In Santa Fe, an assortment of city and county ordinances and state laws govern the world of affordable housing.

First and farthest-reaching among them is the 2005 city ordinance that established the Santa Fe Homes Program. The ordinance requires that 30 percent of all homes in a given development be “affordable”—a definition that, in turn, depends on several different factors (area median income, buyer’s income, etc.).

Basically, it boils down to a promise that people who earn less than the area median income—$48,498 for the city as a whole—won’t have to spend more than 33 percent of their income on housing costs.

The ordinance also requires that affordable homes be scattered throughout even the highest-end subdivisions. Accomplishing this type of mixed-housing requires making, for example, a $300,000 condo affordable for someone salaried at $30,000 a year.

The solution comes in the form of a temporary loan from a public entity or nonprofit. The City of Santa Fe and affordable housing providers like Homewise and the Santa Fe Community Housing Trust all offer this form of affordable housing assistance, and Santa Fe County also has a newer, but similarly structured, program.

So suppose the “affordable” price for that $300,000 condo is $150,000. The city pays the difference but attaches a condition: Whenever the home buyer sells the condo, the city’s loan must be repaid, plus a share of appreciation.

Assessing property tax on home buyers who take advantage of these programs has been handled in different ways. When former County Assessor Benito Martinez Jr. departed office in 2007, he left behind hundreds of such homeowners who had been paying property taxes assessed on the price they had paid—not on the actual value.

But when recently re-elected County Assessor Domingo Martinez (no relation) took office, he made it clear that his predecessor’s informal tax break for affordable home buyers was on its way out.

Affordable homes, he told the Santa Fe New Mexican in May 2007, “are going to be put on the books at full value…[as] they should have been all along.”

The state Taxation and Revenue Department agreed that Benito Martinez’ informal tax breaks hadn’t been legit. But affordable housing advocates—and homeowners—were riled.

The debate eventually reached the state Legislature, where, in 2008, House Speaker Ben Luján, D-Santa Fe, carried a bill that required county assessors to calculate affordable housing property taxes only on what the homeowner had actually paid.

When affordable homes sell, “You don’t get the full value of [your] house,” Loftin explains, “because it’s restricted.” (In other words, you have to pay back the loan.) The logic of the 2008 law, then, is that an affordable home owner should only have to pay taxes on the part of the home he or she actually owns.

Subsequent news coverage characterized Domingo Martinez as reluctant to implement the new law. Today, he tells SFR that the notion that he’s anti-affordable housing is “absolutely false,” although he notes that the myriad of programs are difficult to implement. And, he says, they cost the county revenue.

“[The affordable housing programs] decrease the amount of taxes the county, the school districts, the city, the community college [receive]—all those entities that get a piece of the property tax, they get to collect less because the base goes down,” he says.

But, he adds, “…overall, I think it’s a good program…I’m for affordable housing. But I’m for making sure that each affordable house, like every other house, is valued correctly so that they pay the correct amount of tax.”

When it comes to recent assessments, however, affordable houses weren’t valued in line with “every other house.” They were valued higher.
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