Tax break bill for multifamily housing stalls in Senate

Despite a cry that the effort would help address New Mexico’s dire housing shortage, Senate Bill 186 has failed to move past the Senate. The legislation would result in lower property taxes for multifamily housing units.

The chamber blocked the bill from advancing Tuesday, voting 16-23 on the bill’s floor passage. The end goal of the legislation, said bill sponsor Senate Majority Leader Peter Wirth, D-Santa Fe, is to spur new multifamily housing construction, update old units and raise “grossly undervalued” property valuations.

Wirth faced nearly two hours of debate before the vote, including some senators grilling him with questions and explaining their lack of support for the bill.

SB186 would change the value of multifamily property units, defined as residential units with more than five different units leased for at least 30 days.

Currently, value is capped by the amount equal to the total property value divided by the number of units. SB186 would switch that up so it’s capped by the amount equal to the total property value multiplied by 40%.

Additionally, newly constructed multifamily housing could be valued at either its lower current market value or on the costs of construction and land acquisition.

Wirth’s argument was that the subsequently cheaper property taxes would result in more housing development.

“Right now, multifamily housing is stuck. Basically, the older units are not getting rehabilitated and newer units are not being built,” Wirth said. “This bill will allow things to move forward and provide affordable housing and multifamily housing in all of our districts.”

He also passed a floor amendment to clarify the bill wouldn’t change valuations of properties that are current and correct, which he said was worked out with counties and assessors, though still not everyone is fully on board.

Sen. Antoinette Sedillo Lopez, D-Albuquerque, who voted against the bill, said she was concerned it would attract out-of-state investors who exploit renters with high prices and no amenity installations.

“We’ve been experiencing a perfect storm of factors that have gone into really high rents, especially in Albuquerque,” she said.

In response, Wirth said assessors have been “feeding folks information” about the damage SB186 would cause.

“I just don’t see it that way,” he said. “I really think this is going to encourage the construction of new units, which means more supply, which, again, should help for those that are looking for apartments.”

Sen. Nicole Tobiassen, R-Albuquerque, who has a background in real estate, voted for the bill’s passage.

“If we’re in a deficit of 50,000 doors just in Bernalillo County, we owe it to the citizens, the renters of Bernalillo County, to somehow put forward this legislation or something similar,” she said, “so that we get industry working here, we get development happening in the state of New Mexico.”

The failure of SB186 to move forward will only exacerbate the state’s housing crisis, said Adam Silverman, president of NAIOP New Mexico, a commercial real estate organization. He told the Journal after the floor vote that the bill would’ve protected tenants while also allowing for new developments and investments into existing properties.

“It’s unfortunate that the bill did not move forward as most developments and reinvestments will be on an indefinite hold until this problem gets corrected,” Silverman said.