By Alexandra G. Ladd

For decades, Santa Fe’s sunny climate, mountain vistas, world class cultural amenities, and its diversity of people have drawn visitors to our city. At best, we’ve benefited from this economic activity and influx of investment. At worst, our city has lost generations of residents who can no longer afford to live here. Those who stay, particularly the poor, the disabled, the elderly, and even many in our workforce often are not able to afford housing that adequately meets their needs.

Unfortunately, there are several factors at play that have amplified Santa Fe’s lack of affordability. Some of it is classic supply and demand forces—inventory is low so prices are reset to the highest capacity to pay. We are experiencing ongoing ripple effects from the COVID pandemic (disrupted labor market, supply chain issues, income loss or inconsistent incomes). Like many other desirable Western cities, Santa Fe has also experienced some “Zoom Boom” impact where imported incomes outcompete those relying on the local economy. Sadly, displacement is not a new phenomenon here, and has been experienced by many generations prior to this one.

Soleras Station, funding primarily through the Low Income Housing Tax Credit (LIHTC) program, offers 87 affordable rental homes in Santa Fe's newly developing Las Soleras neighborhood and was supported by a donation of land from the City, as well as local trust funds.

Early on, the City recognized that experiencing “housing cost burden” (housing costs that are greater than 30% of monthly income) directly impacts one’s ability to build wealth, participate in civic activities, enjoy leisure time and most of all, to have a decent and safe place to live. In turn, the vibrancy, diversity, culture and overall health of a community suffer directly when its residents aren’t housed adequately.

As a young planner, fresh out of UNM’s Community and Regional Planning program, I was hired by the City of Santa Fe to work as a housing planner. I knew almost nothing about the technicalities of housing—in school, I had focused on natural resources and environmental planning—but I was immediately awed by what seemed to be a very un-bureaucratic approach to solving a really big civic problem.

Rather than managing services or housing units directly, the City actively built the capacity of a robust network of nonprofit services providers and affordable housing builders. This approach ensured that every need on the housing continuum from the person experiencing homelessness to the homeowner could be addressed. Bureaucratic systems did not have to be expanded, nor did program effectiveness need to be subject to public budgeting processes or political will. Importantly, because they were provided through community-based partners, housing services could be timely, nimble, accessible (particularly to populations wary of government) and responsive to emerging needs.

The interior of a Siler Yard apartment, the first Low Income
Housing Tax Credit (LIHTC) to be 100% solar powered in NM, designed to facilitate live work space for creative entrepreneurs with high ceilings, reinforced wall boards, open floorplans and utility sinks.

In my current role, as the Director of the City’s Office of Affordable Housing, I have built upon this model through a combination of financial investment, policy development, the application of “promising practices” and community engagement. Affordable housing is not an issue addressed through a one-size fits all approach. One of the City’s greatest innovations is its “inclusionary zoning” regulation adopted in 1998. The nexus of this requirement is that the construction of high end homes creates a demand for more moderately priced homes to house the workforce needed to support those homes. The City was one of the first (and remains one of few) jurisdictions in the country to adopt such a regulation.

Since its inception, hundreds of Santa Fe families—some earning as little as 50% of the area median income (AMI) and almost all earning less than 100% AMI—have bought homes at prices affordable to their income range. Additional subsidy deepens the affordability of the home, customizing the assistance to the individual homebuyer’s income. The construction market in Santa Fe is strong right now and almost 100 affordable homes are in the construction pipeline, with an additional 143 homes in the land use approval process. Within the next few years, this means that at least 500 Santa Feans will be housed in a home that their families own.

The City used CARES Act funds to partially finance the acquisition of the Santa Fe Suites, an extended stay motel to house people transitioning out of homelessness, as well as workforce renters unable to afford Santa Fe market rents during the early days of the COVID pandemic.

If regulation is the “stick”, the City also employs “carrots” through incentives to developers who build affordable housing. These include fee waivers (including application, permit, and capital impact fees), prioritizing water bank supplies for affordable homes and density bonuses for zoning.

Another way the City supports housing supply is through the donation of City-owned land parcels to low income housing tax credit (LIHTC) developers. LIHTC renters earn no more than 60% of the area median income (AMI) and rents are set so that the renter household pays no more than 30% of their monthly income. Over the last five years, 197 tax credit apartments were built on City-donated lots or received direct funding from the City. Each of these projects has units set aside for extremely low-income renters, many of whom have recently experienced homelessness. One of the projects is the first 100% solar tax credit project in the State of New Mexico and will serve as a model for others to follow.

In our community, we are lucky to be served by two housing authorities, the Santa Fe Civic Housing Authority and the Santa Fe County Authority. Between the two of them, every single public housing authority unit in our city has been substantially renovated, rebuilt or upgraded over the last 15 years. Over 3,000 renters are directly supported with HUD-funded housing choice vouchers (formerly Section 8). Unfortunately, federal resources can only meet about 20% of the need for price-restricted housing in any given community, leaving 80% of the burden to municipal governments, philanthropic funders, the private market and impact investors.

The application of inclusionary zoning rules has been challenging in Santa Fe when it comes to rental projects. Research shows that it is financially prohibitive to include rent-restricted units unless it’s in a very high value market with high urban densities. The true cost of rental property is not in its construction but in the ongoing operations and maintenance. When rents are restricted, lenders are reluctant to provide financing, and developers look for less restrictive development opportunities. In Santa Fe, where a 3-story building is almost considered a “high rise”, it is virtually impossible to cross-subsidize the affordable units with increased revenue from the market rate units.

Within days of public health orders in March of 2020 to reduce the population at local shelters to 25%, the City repurposed dormitory rooms into a non-congregate shelter named 'Consuelo's Place' that provides safe, supported homes for people transitioning out of homelessness, correctional facilities, and recovery programs.

As a result, after a decade of inclusionary zoning rules, there was a dearth of market rate housing rental projects built in Santa Fe. This squeezed inventory, leading to double digit rent increases and functionally zero vacancy rates. Property owners of older, less desirable properties could charge top market rates because there weren’t any better choices. Another unintended impact was that renters with higher incomes out-competed those with lower incomes for the few available market units.

In 2016, the City Council approved amending the ordinance to allow market rate rental developers to pay “fee-in-lieu” of providing rent-restricted units. While there was, and continues to be, community pushback to allowing developers to “buy their way out” of providing units on site, the revenues into the Affordable Housing Trust Fund have been transformative. Additionally, we know that many low-income renters have much better housing outcomes when support services are provided in conjunction with affordable rents. This is not something that a market rate property owner is situated for doing.

After amending the ordinance, we amassed over $1.5 million within short order which was an unprecedented amount. Once we had a decent balance, we worked with a local provider to innovate a locally-funded rental assistance program. Unlike federal funds which have onerous eligibility requirements, local funds can be flexible to meet individual needs and are often the first step to ending housing instability. Currently, the program, through five nonprofit partners, assists about 200 renters per year with rent, utilities, deposits, and arrears or to get re-housed quickly if they’ve lost their home.

And then came March of 2020 and our world was upended.

Quite literally, being able to do this work effectively became a matter of life and death. State health orders required shelters to operate at 25% capacity and we feared a massive outbreak in our unsheltered populations. Powering through its typical bureaucratic barriers, the City responded almost overnight by converting dormitory rooms in a defunct college campus into non-congregate shelter. Librarians and recreation center workers whose normal work sites were closed leapt into service and staffed the shelter until the City was able to organize another social services provider to run it.

Once CARES Act funds were made available, the City leveraged them to assist with the purchase of an extended stay motel which was converted into 122 studio apartments. One-third of the rooms were set aside for people coming out of shelter or off the streets. Other recovery funds were used to pay for extended stays in local hotels which undoubtedly helped prevent major COVID outbreaks among the city’s housing insecure population.

All of this work was done remotely, or masked up at a distance, or by Zoom. It was utterly exhausting.

As we realized that pandemic conditions were here to stay, the burgeoning issue of housing instability was further amplified. In 2021, the City Council committed to funding the Affordable Housing Trust Fund $3m annually. Having the funds is great but what’s even more transformative is the power of leverage. For every dollar the City makes available to income-qualified homebuyers as mortgage assistance, about $14 comes from other resources. For every $1 spent on rental assistance, $4 is leveraged and affordable housing construction raises about $10 for every $1. Ending housing instability is actually a great investment!

As I reflect back on the last few years, we’ve learned a lot. When government coordinates its response to a complex problem and commits adequate resources, we can move mountains. No more “scarcity mindset”—preventing homelessness can be solved with cash and rental assistance, plain and simple. Non-congregate shelter is a more effective off ramp for un-housed people who previously avoided shelter or were not yet ready for permanent housing. And data is key. Otherwise, tracking outcomes and gauging the effectiveness of interventions across agencies is quite literally impossible.

Next up for Santa Fe is the redevelopment of a campus property into a mixed use, mixed income urban center that welcomes all of our residents. We also will initiate the final phase of a planned community called Tierra Contenta where we are piloting a new approach to zoning – an established minimum that allows for a variety of housing types and densities within a single tract.

If I were share Santa Fe’s “secret sauce” to solving our affordability challenge, I would say celebrating the voices in our community and our collective effort toward “place-keeping” is the main ingredient. I hope that all of the groundwork laid by the City before my time and further strengthened during my tenure inspires other communities to act decisively when it comes to affordable housing.

ABOUT THE AUTHOR

Alexandra worked as a certified planner with the American Planning Association in the field of affordable housing since she completed UNM’s graduate program in Community and Regional Planning in 1998. She was hired as a housing planner at the City in 1999 and served in that capacity for six years. In 2006, she started her own consulting company, conducting housing needs assessments and writing affordable housing plans for different communities across New Mexico. Some of her clients included: the City of Santa Rosa, the Town of Taos, Lea County, the City of Las Vegas and the City of Belen. She was re-hired in October of 2012 as the Housing Special Projects Manager to implement the City’s inclusionary zoning program and as the Director, oversees all activities and staff of the Affordable Housing Division.

Moving Mountains — Santa Fe's Journey with Affordable Housing