Trusting the Trust Fund

Advocates estimate a proposal to tax high-end homes in Santa Fe would put about $4.5 million per year into the city coffers, specifically the Affordable Housing Trust Fund.

If backers want to convince voters to approve the tax, they’ll need to make sure people understand what they’re voting for. SFR talked with insiders about the history of the city’s fund and its impact on the community.

The roots of the fund date back to 2004, when New Mexico passed the Affordable Housing Act. The law added an affordable housing exemption to the state’s anti-donation clause, which prohibits public resources from being used for private benefit. Enabled by state law, the city replaced an earlier program with the trust fund in 2007.

Director of the Office of Affordable Housing Alexandra Ladd says over the years the program has supported renters, the unhoused, and those seeking homeownership at affordable rates.

“What gives me joy is to feel like we are changing lives and helping people and creating a difference for the long haul,” she tells SFR.

The New Mexico Mortgage Finance Authority established a set of rules under the law to ensure proper use of funding. Every city that wants MFA help must create an affordable housing plan and fund. This plan must include a community and housing profile, a housing needs assessment and a land use policy review, among other elements.

Dollars from the Affordable Housing Trust Fund can only be used for the purpose of affordable housing, meaning they cannot contribute to salaries. This funding can then be amplified through leveraging the local funds to compete for and access federal funding. For example, through city-donated land and $400,000 (with half originating from the trust fund,) New Mexico Inter-Faith Housing was able to secure a $10.5 million allocation of tax credits for its Siler Yard project, according to Executive Director Daniel Werwath.

In fact, according to fund expenditure information provided to SFR by the Office of Affordable Housing, a balance of a little over $6 million sits in the fund as of now ($3.6 million for new projects, $2.5 million from prior year contracts,) but it wasn’t always this way. While the fund awarded over $5 million for programs in 2023, the fund only awarded $1.2 million as recently as 2021, pointing to a fluctuation in available funds that Councilor Jamie Cassutt told SFR the tax proposal she’s co-sponsoring would help solve.

Down payment assistance programs administered by local nonprofits have been one of the primary uses of the fund since the start. In the last three fiscal years, the city awarded more than $1 million for this purpose. The Santa Fe Suites and the Lamplighter Inn Hotel conversion projects, with a combined contribution of $1.71 million, serve as two examples the fund helped support.

The Santa Fe Community Housing Trust credits its success to the trust fund. Its Arroyo Oeste project, under construction in Tierra Contenta north of Swan Park, aims to provide 40% of its 20 homes to clients who qualify under the affordable housing requirements. After an 18-month pause to the plan due to the cost of materials, the organization hopes to break ground on the first houses in the next two to three weeks.

“We went back to the city and fortunately we were able to use the Affordable Housing Trust Fund to help fill that gap between the subsidized sales price and the cost of producing the home, and that made it a reality,” Executive Director Roman Abeyta says.

Likewise, Homewise’s Desert Sage project located off I-25 and Richards Avenue is using trust fund cash to help with 32 affordable homes, as is its nine-unit Los Canales project located off West Alameda Street. Chief Executive Officer Michael Loftin says the fund makes it possible to bring projects to parts of town where there’s “no such thing as affordable housing.”

“The only reason we can do all this is because of the Affordable Housing Trust Fund because what we paid for the property we couldn’t make it affordable without that,” Loftin says.

Chief External Affairs Officer of Homewise Johanna Gilligan echoed similar sentiments on the fund and endorsed the ordinance making its way through City Council, saying some version of this tax exists in 33 states across the country.

In Aspen, Colorado, for example, buyers pay a 1.5% real estate transfer tax with most of the money going toward funding affordable housing.

Under the ordinance making its way through the City Council process, voters would decide during the Nov. 7 election whether to impose a 3% excise tax on the portion of a home sale that exceeds $1 million, which would be used to support the trust fund.

The Santa Fe Association of Realtors already oppose the tax, arguing the city has not been transparent with spending. Abeyta described the worries of the realtor’s association as “misinformed.”

“I’ll invite the realtors to the groundbreaking [for Arroyo Oeste] we have in a couple weeks so they can see that this is for real and it does actually put people in homes, and we couldn’t do it without it,” he says, endorsing the proposal.

While Ladd acknowledges the city hasn’t always been great at communication, she explains the annual process requires extensive review from the Community Development Commission and approval from the governing body. As part of the process, applicants must have a financial accounting system and must produce a database narrative demonstrating need within the community. Developers must have the financial ability and organizational capacity to complete the proposed project.

“The application process is public, the presentation of the applications is public, the approval of all the contracts is public…we have been public,” Ladd says. “This is not a backroom situation where me and my minions are doling out money behind the scenes.”

The bill seeking to put the question to voters is set for two committee hearings this month before a potential City Council vote Aug. 9. The last day for the city to submit ballot language for the Nov. 7 election is Aug. 29, according to County Clerk Katharine E. Clark.