Could a tax bill boost affordable housing projects, even in New Mexico's most expensive city?

On a chilly morning in Santa Fe, developers and state officials broke ground on a large-scale affordable housing project that will put 312 apartments on the market in a city long known for its high cost of living.

The project could be buoyed, however, by a proposed bill that would eliminate gross receipts taxes, or GRT, on affordable housing projects. The bill was pre-filed in early January by Democratic state Sens. Michael Padilla of Albuquerque and Cindy Nava of Bernalillo in advance of the 30-day legislative session that starts Tuesday. 

“This is a long-term investment in the future of our state that is long overdue,” Nava said.

Officials from Dominium, a national affordable housing developer headquartered in Dallas, said the bill would save $7 million on this project alone and persuade more developers to start projects in New Mexico.

“It’s so needed,” said Ron Mehl, a project partner and developer with Dominium.

There is a big demand for affordable housing, Mehl said, but many developers don’t invest in it because of all the moving parts. Projects often need to secure grants, tax credits and other discounts from federal, state and local governments to offset costs and offer rents below market value, Mehl said.

Projects secure millions more in outside funding only to pay a portion of it back in GRT, Mehl said.

“The state is essentially taxing itself,” said Roger Valdez, the director of the Center for Housing Economics.

Valdez said the bill would bring more developers to New Mexico and improve the affordable housing stock, which is currently short 13,000 to 28,000 units in Albuquerque. With more projects underway, people who make 80% and below of the area’s median income of $69,700 could expect lower rents and more options.

Additionally, Valdez said that removing GRT on these projects would minimally impact municipalities revenue streams and that there are many exceptions already carved out of the tax law.

“It’s just a matter of what do we want to prioritize,” Valdez said. “And I think affordable housing is one of those things that’s worth it.”

For this project in particular, removing GRT is equal to the cost of building 26 additional units, said Austin VanDerHayden, Dominium’s government relations manager.

The nearly 18-acre complex, Turquoise Trail Apartments, is scheduled to open for residents in spring 2028. There will be two, three and four bedroom apartments starting at $1,033 a month, VanDerHayden said. To be eligible, people need to make 80% of the area’s median income or less.

For a family of three in Santa Fe that maximum income is $65,700 a year, according to the city of Santa Fe.

What’s Next

Nava has high hopes that the bill will make it to the finish line, though only time will tell if it becomes a priority during the upcoming legislative session.

Because the bill concerns tax and revenue, it should pass the test for germaneness — the standard legislators use to decide whether a bill is relevant for consideration during a shorter session. 

Gov. Michelle Lujan Grisham has historically promoted affordable housing projects, the most well-known of which is her push to relocate the State Fairgrounds to build affordable housing and other amenities at the sprawling property in southeast Albuquerque. Written support from the governor automatically places a bill on the agenda.

Once the session begins the bill will be placed in several committees for consideration.