Affordable Housing Firsts

Airport Road development that will include affordable units may be changing the conversation on housing

A three-story apartment complex that earned approval last week from the Planning Commission represents a number of firsts for the corner of Airport and South Meadows roads. If approved by City Council, the proposed development will include the first drive-through coffee shop on the busy thoroughfare, a medical center, a pool and 233 apartments.

It would also be the first rental development in Santa Fe to include 15% affordable units onsite in accordance with the city's development rules, rather than simply paying a fee-in-lieu.

The project comes on the heels of changes to the city code that aim to make onsite affordable units a more attractive option for developers, while incrementally increasing the amount they would have to pay for fee-in lieu over the next few years.

Housing advocates say the proposed Airport Road development might signal a change in direction for affordable housing in a city that is growing increasingly less livable for the average New Mexican.

The Santa Fe Housing Action Coalition estimates that the city is at 100% functional occupancy—meaning that rental units are being turned over as soon as they become available—and says more than 1,000 families earning less than $35,000 left between 2016 and 2018. According to data from the US Census Bureau's ongoing American Community Survey, in 2018, 86% of Santa Fe households earning less than $50,000 a year were spending more than 30% of their income on housing, up from 73% two years prior.

An affordable housing task force convened by Mayor Alan Webber when he took office determined about $3 million is needed annually to fund the city's affordable housing trust, which is used to build affordable developments and pay for other housing programs.

The coalition, which won a grant last month that will be used to identify sources for that money, includes the Chamber of Commerce, both hospitals, real estate industry groups, Santa Fe Public Schools and most of the city's homeless shelters and affordable housing providers.

Daniel Werwath, executive director of New Mexico Inter-Faith Housing and one of the coalition's founders, tells SFR the diverse set of groups is involved to address negative impacts that come when working families are priced out of areas, such as lost tax revenue, purchasing power and per-pupil school funding.

The new Airport Road development, the change to the fee-in-lieu structure and the housing trust fund are each a different piece of the puzzle. Werwath says that together they are building toward what he hopes will be a significant change in Santa Fe's housing dynamic.

The new project off Airport Road will be the first to take advantage of the new incentives included in the development rule changes last fall.

One of the three partners behind the project, Raul Ramirez, spent years working for an affordable developer in Florida. He says the change in the law played a role, but the partners were committed to affordability either way, and are already considering how to take advantage of a federal tax credit to include 20% affordable units in the next Santa Fe project.

Ramirez says commercial zoning, which will allow the project to build at a much higher density than in residential zones, is a key factor.

Neighbors, however, raised concerns that the density will lead to traffic congestion on South Meadows Road. Marnie Johnson, whose backyard would be adjacent to the development, also worried about decreasing water pressure in the neighborhood, "which already is sluggish in the mornings and evenings," she told the commission.

Alexandra Ladd, director of the city's Office of Affordable Housing, says Ramirez' background and the project's proximity to public transportation and walking distance from Sweeney Elementary School make it the perfect "guinea pig" to test the new rules.

She hopes other developers will follow suit, creating more options for people who have good jobs but still can't afford market-rate rents.

But if fewer developers are paying the fee-in-lieu, less money will be delivered to the city's housing fund projects for the lowest income bracket, creating an even less consistent revenue source.

Already, inconsistent funding makes it hard for Ladd to secure long-term projects or partner with developers, she says. Because the fund relies on the whims of the real estate market, the city can't guarantee its funding into the future or its ability to pay for the upkeep of projects years down the line.

"It's not just the cost of the initial housing or building it that's the problem. It's keeping it going, maintenance, program costs, et cetera," she says. "That's part of why a consistent revenue stream would just make things so much easier."

Last year, the fund gave around $460,000 to groups that help youth and adults struggling with homelessness such as The Life Link, sober living facilities and transition programs, and mortgage payment assistance and first-home buyers' programs.

The city also donated a piece of land worth $1.3 million to Inter-Faith Housing for the Siler Yards affordable housing project.

Ladd tells SFR this year there's about $1 million in the fund from an uptick in development across the city, but that number could tank if the economy slows.

Werwath tells SFR the $330,000 grant from a group of local entities that includes the Santa Fe Community Foundation and Nusenda Credit Union will pay for a two-year policy project to determine "a laundry list" of funding sources and build community support.

Voters rejected an attempt in 2009 to secure funding for affordable housing by charging an extra tax on the sales of luxury homes. A majority of voters in City Council Districts 1 and 2 were against the measure, while a majority of voters in Districts 3 and 4 were in favor.

Werwath says that kind of tax could be on the table but is far from the only option. Others include the "previously uncollected [gross receipts tax] on short-term rentals," for instance.

What makes this different from the last time, he says, is that so many different interests are working together to find a common solution.

"It's the right time—there's the will and collaboration to do it, and we have to take that momentum and go as far as we can with it," he says.

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