Building Up or Tearing Down?

Solving Santa Fe’s housing crisis starts with rentals as community advocates also call for quality of life

(Anson Stevens-Bollen)

This is a frustrating time for most people to find a place to live in Santa Fe. It's been a seller's market for home ownership for at least a couple years, and a landlord's market for rentals for a decade. For those with no place to call home, it's a daily battle with little in the way of transitional housing to get them on their feet.

Depending on who's doing the math, estimates of the shortage in housing stock can run to 8,000 or more.

About 1,500 multifamily homes—from duplexes to apartment developments—are in the city's pipeline for new construction with another 1,200 in early planning stages.

It's grim.

Today, just about any new home options will help. Getting new development wrong, though, threatens to yank at the cultural fabric of Santa Fe for future generations by exacerbating inequity. Community groups, developers and elected officials all seem to want to avoid that, but without a plan, Santa Fe could further splinter into a less recognizable city.

By the time the doors of the Railyard Flats apartments opened in May, the complex with 58 units had just four for rent. (Matt Grubs)

The tip of the iceberg is multifamily housing. Generally speaking, that's anything that is not a single-family home. Those properties are the most likely to be rented, and there are almost none available.

The shortage of both affordable and market-rate apartments crystallized this spring, when a local man offered a storage shed in his backyard for rent on Craigslist. The $575-a-month structure lacked running water or a toilet and the listing included requirements for prospective renters such as needing to regularly engage in "contemplative daily practice." After SFR published a story about it, the city told the owner it was likely illegal. He took down the ad.

According to CBRE Group, the commercial real estate giant that monitors Santa Fe's multifamily housing market, the city's occupancy rate has been at 95 percent or above since May 2014.

"I think it all begins with quality of life. People want to live there," David Eagle tells SFR. He writes the CBRE reports on Santa Fe.

That only sounds like a nice problem to have if you already have a place to live.

It's not useful to think of occupancies above 95 percent as a 5 percent vacancy rate, he says, because it doesn't really indicate a vacancy. People move out, they move in and there's always a little lag time that does not translate to availability.

The CBRE survey measures large apartment complexes, so there's an ungauged segment of the market for casitas and compounds. But those homes don't make for a hidden glut of places for rent that would push the actual occupancy rate down to something sane.

The fact is, very few people or companies are building multifamily housing. Even in a city with a demonstrated need and a desire to issue a permit in a matter of months, getting a multifamily project built takes years. Today, added time means added cost.

"We've been averaging a 4-5 percent increase on construction costs annually," says Josh Rogers, who oversees multifamily projects for Titan Development.

Aside from the cost of raw construction material, subcontractors are hard to find, and many are based in Albuquerque.

"There's about a 10 percent premium for construction in Santa Fe. You're asking those subcontractors to commute. And when they're commuting, they're not working," he explains.

Still, Titan is building the Broadstone Rodeo development off St. Francis Drive on the southeast end of town. It's the biggest new project in Santa Fe, and is a "class A" development that promises 188 apartment homes with one or two bedrooms. They'll have a resort-style pool, an entertainment room, patios and covered parking. Rogers expects rent to begin at $1,050 for a one-bedroom apartment.

Broadstone Rodeo off St. Francis Drive is the city’s biggest pending rental project. (Matt Grubs)

"It's gotten nutty up there," he says. "There are places with popcorn ceilings that rent for $1,250 a month. I don't even know how to justify that. Are there really people who walk in and see a popcorn ceiling from the '70s and say, 'I want this?'"

The industry groups apartments into class A, B or C based on age, condition, rent and amenities. Class A is in good repair, has professional management and goes for market-rate rent or above. Class B is maybe 15 years old and due for an update; rent reflects that. Class C apartments are the oldest and in need of repair.

With hardly any class A apartments in Santa Fe, rent is out of whack. That dynamic costs the city both residents and money. People who live here spend money here. Around 80 percent of the city's budget comes from gross receipts tax. Most estimates are that at least half the city's workforce doesn't live in Santa Fe. Many people commute from Albuquerque—where they pay most of their taxes.

"You'd be blown away at the difference in quality between Albuquerque and Santa Fe," Rogers says. "The consumer looks at that and says, 'I get so much less for my money. I'll just make the commute.'"

He says Titan spoke to Presbyterian Medical Group, which has structured shifts at its soon-to-open hospital so nurses can work longer hours and commute fewer days; an indication that the company anticipates many new employees will live outside the city.

If Titan can stick to the $1,050 price point for its one-bedroom apartments, it has the potential to put pressure on notoriously rigid rental rates, which sat at $952 for January, according to CBRE. That rate might be conservative, because it measures large complexes, which tend to be on the city's lower-priced Southside.

If new apartments aren't much more expensive than older ones, those landlords will be forced to drop rates. They could also spend money on repairs or new appliances to make their property more competitive.

In an ultra-tight market like Santa Fe, though, it's often just the lucky few who snag a new place and settle in. That's the case at the Railyard Flats development off Cerrillos and Paseo de Peralta, which is in its first leasing cycle.

"I don't think we expected our apartments to go as fast as they did," offers Rupert Ortiz, the property manager for the Greystar-owned development. "We probably could have asked more."

The 58-unit property, which focuses on scaled-down, convenient urban living, began renting in February. By the time the doors opened in May, the complex had four units left.

"It's a pretty competitive rate," he tells SFR of the units, which start at $890 for a studio and top out at $2,200 for two-bedroom rental. "I've seen some of the older developments around town and we're pretty close on pricing."

Though Railyard Flats is competitive with smaller downtown apartments, it commands a rather high price per square foot.

"We call around [to apartments] all the time," Titan's Rogers says. "When people pick up the phone and you tell them you're looking for an apartment, they don't say, 'Let us tell you about our community,' they say, 'Yeah, when are you looking?' It's that full."

It's a hot Thursday evening in late June. In a gallery space at the Santa Fe Art Institute, 100 or so people plop down on metal folding chairs to consider the future of housing in the city.

They're interested not just in houses, but in homes—safe places to play and pray, to cry, laugh and grow.

As far as Santa Fe meetings go, it's a diverse crowd. There seem to be as many 20-somethings as there are people in their 60s. A few heads of green and pink hair are scattered among the gray.

In many ways, the room around them is a simulacrum of Santa Fe's housing market: It's a beautiful space, but inefficient. By the time organizers move the gathering outside after the sun sets, more than a few people will call it quits. The building can house the people, but it can't really accommodate them. They can't thrive.

The evening's exercise is to look at housing through the lens of science fiction; to imagine Santa Fe in the year 2068 as a city where housing is plentiful and affordable. Free of some of the normal constraints of problem-solving, organizers hope to bring new voices to the conversation, and to connect the individual efforts around the community.

"A lot of the books, a lot of the movies that thought about solutions, came about years and decades before [those solutions] came to fruition," Creative Santa Fe's Cyndi Conn says as things get underway.

It's the first dialogue in Creative Santa Fe's Disruptive Futures series. The arts-centric group has brought in urbanist and designer Liz Ogbu to talk about how housing equity can lead to sustainable communities.

There's a temptation in addressing affordable housing, Ogbu says, to think of the fix in terms of "units" rather than "homes." Successful projects don't just stop at a roof and four walls; they build those thriving spaces that can sustain a historically diverse city like Santa Fe.

Urbanist Liz Ogbu says that in housing, the people closest to a problem are often closest to the solution. (Courtesy Katrina Mendoza)

Success also means seeking voices from the communities that will be impacted. Ogbu recalls meetings she's held for affordable home projects where residents stand with arms folded, exuding doubt and distrust, waiting for what's next. For people who typically aren't represented at the table, there's a fear of being run out of a neighborhood or a home that has been in a family for generations. In housing, Ogbu says, the people closest to a problem are often closest to the solution.

"The lack of affordable housing, the increase in community gentrification, the concerns about community displacement, the loss of cultural memory, places constraints on a lot of people to imagine possibilities," says Creative Santa Fe's Pascal Emmer.

The consensus at Disruptive Futures is that those things need to be acknowledged to move forward, not ignored in favor of something that only looks like progress.

"I was really nervous to talk about it, because it's an emotional topic," City Councilor Renee Villarreal tells the crowd that evening. "Especially in Santa Fe."

For Santa Fe's Native population, says Beata Tsosie-Peña of Tewa Women United, a lot of development carries the ugly whiff of colonialism; a stink that's hard to get rid of.

"Only rich settlers can afford our traditional homes. Passive solar adobe homes. Who doesn't want that?" she asks a chuckling group. It's funny, but there's genuine hurt in those words.

A slapdash approach to any housing development threatens to worsen those injuries and drive a wedge deeper into a community that is already divided. Santa Fe has grown for wealthier, older second-home buyers, but it's failed to provide enough housing options for the next generation of locals and new workers.

"How do you honor the traditions that have always made Santa Fe special and unique … while still keeping the door open to change and to innovation and to increased diversity?" Conn muses to SFR a week earlier. "Collaboration moves at the speed of trust."

Sometimes, that's slow.

"Trust has to be built," says Tomás Rivera, who heads the Chainbreaker Collective, an economic and environmental justice group. He says, as Ogbu does, that it's difficult to convince people you're listening. He points to the city's effort to find the next use for the former Santa Fe University of Art and Design, which could include a housing component. "It's really hard to have a trust-building session in three months. We've been doing this for 14 years. That's why people open their doors when we knock."

He's doesn't think the city is acting in bad faith, rather that solutions take serious commitment.

"How we build our city reflects our values," Rivera says. Slowing the process, eating a bigger chunk of the $2.3 million annual mortgage payment the city makes on the property, would be a value statement that might convince skeptics that the city is serious.

"There's absolutely a risk of doing it wrong. That's kind of what's gotten us into this mess in the first place," he says of the housing crisis.

It's a point not lost on Villarreal, who represents District 1, a hodgepodge of wealthy new-to-town residents and old Santa Fe families on the north and northwest side of Santa Fe.

"People need to understand the complexities of our housing situation. When people get to share their story about what they've experienced, it helps us understand what we need to do better," she says.

The history of displacement—pushing out traditional uses of place in the name of progress—breeds resentment. Villarreal says it's not a problem City Hall is likely to solve on its own.

"I don't think government is equipped to [handle conversations about cultural loss]," she tells SFR. "Groups that are community-based and address social and racial inequities in the city, not just healing, but difficult policy decisions and choices" can better inform the government.

Rivera, Conn and others are anxious to have those conversations.

"If you want to talk about cultural harmony in our city, you don't necessarily need to have a panel discussion on cultural harmony," Conn tells SFR in the organization's office in an old house on Read Street. "We have events, we have activities, we bring people together in play, in joy. And that's where the arts also come in."

It's an off-the-beaten path approach, but it's not as though conventional methods are working. Creative Santa Fe would know. It's working with New Mexico Inter-Faith Housing to develop the Siler Yard Arts + Creativity Center on city land off Siler Road.

The Siler Yard project aims to provide 65 live-work homes for artists with lower incomes who are part of Santa Fe's creative economy. It would help those both inside and outside the project.

It's slated to include performance, exhibition and "micro-retail" space, a shared workshop and a classroom with programs such as entrepreneurship training to help residents transition to sustainable living and find connections to social services.

It's not cheap. The $14-$15 million price tag for those 65 units is roughly $35,000-$50,000 more per home than Titan's Broadstone Rodeo project. That's with some costs covered by a grant from the National Endowment for the Arts, land donated by the city, $400,000 promised for things like water and sewer lines, and funding from the partnership with Creative Santa Fe.

The majority of the homes would rent to artists who earn less than 50 percent of the area median income—no more than $34,650 a year for a family of four. Some homes will rent for as little as $300 a month.

For all its ambition, the project has yet to win a federal Low Income Housing Tax Credit that would cover 60 percent of its construction cost. Developers found out this month that Siler Yard came painfully close to getting the credit for a second straight year. The group is considering a third try. Its $9 million ask would double the total award for all six projects in the state that got money this year.

Backers are adamant that Siler Yard is the right way to provide affordable housing: Tie it in to the local economy. Provide a common space for the community, not just residents. Include robust social and economic programming. It's not just the kind of development lower-income Santa Feans need, they say, it's the kind of development that neighbors will want—if they can build it and if the city will continue to support it.

Santa Fe Mayor Alan Webber has spent a lot of time lately thinking about Robert F Kennedy. Last month was the 50th anniversary of the death of a man many thought had the vision, power and will to change America even more than his brother who became president. Webber says Kennedy's vision of an inclusive America provided hope for progress and gave a voice to the voiceless: "He got away from the theory of change, that it was a zero-sum game; that for me to succeed, you have to fail."

The mayor thinks that's prescriptive.

"We have to find solutions that don't require somebody else to lose. … We have to not just build housing for the sake of housing but livable, attractive neighborhoods where people want to put down roots," he says. He will need to try to do it without tearing up the roots that are already there.

His housing advisory group says there needs to be a plan: Find a sustainable funding source and use city land for affordable housing. The group will keep meeting.

"It's not easy," Webber offers. "This is the hard stuff. This has been the hard stuff of America for as long as I've been alive."

There are success stories. Both the Soleras Station multifamily project near the new Presbyterian Hospital and the Villa Consuelo rehabilitation project for senior housing off Cerrillos Road won federal low-income housing credits the past two years.

The Civic Housing Authority plans to rehab roughly 10 apartments at a time for the Villa Consuelo project. The result will be 100 up-to-date, affordable apartment homes for older Santa Feans.

The Soleras Stations project is being developed by The Housing Trust. Zach Thomas, who directs land use for the group, says the 87-home project will feature one-, two-, and three-bedroom apartments. Of those, 73 will be what are called income-verified, where a resident has to prove they earn less than 60 percent of the area median income, or $43,200 for a family of four.

The homes will be available to applicants who earn "all the way from 120 percent of AMI down to 30 percent," Thomas tells SFR. Planning 14 apartments to be affordable even for people who earn above the median income for Santa Fe indicates how expensive it can be to live in the city.

Like the Broadstone Rodeo project, Soleras Station plans to come online in late summer or early fall 2019.

From developer to home hunter, it's hard to find someone who is seriously looking at the problem who isn't passionate about it. Builders want reliable funding streams for affordable projects, and market-rate developers crave predictability from the city. Residents who fear being shoved out of their traditional neighborhood in favor of redevelopment are crying to be heard. Santa Fe is becoming more financially and racially segregated with each passing year.

There's certainly the will to solve Santa Fe's housing crisis. What the city needs next is the way.

  • $952  – Average market-rate monthly rent for a 1-bedroom, 1-bath apartment citywide in Janaury 2018
  • 48  – Number of months market-rate and affordable apartments have been at 95 percent occupancy or more (considered effectively full by the industry)
  • $55,450  – Income maximum at which a family of four in Santa Fe qualifies as “Low Income” according to HUD ($38,850 for a single person)
  • $1,006 – Maximum rent covered by HUD vouchers for a two-bedroom apartment
  • Occupancy in Santa Fe, January 2018 – 97% Market-rate; 98% Affordable
    Source: CBRE Group, HUD
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