Affordable Housing Brief: So Many Options for Santa Fe & NM to Achieve Equity

Issue Brief:  Affordable Housing.  Affordable Housing: Platform for Health and Economic Justice, May 2017     Martha Burt

Between 1960 and 2014, “inflation-adjusted rents have risen by 64%, but real household incomes only increased by 18%. The situation was particularly challenging from 2000 – 2010: household incomes actually fell by 7%, while rents rose by 12%. As a result, the share of cost-burdened renters nationwide more than doubled, from 24% in 1960 to 49% in 2014.”[i]

Abstract: All over the United States, half of renter households are being priced out of housing. Almost 54,000 working households in New Mexico were severely cost burdened in 2014—meaning they spent over 50% of their income on rent. This is about 1 in 5 working households in the state. Another 1 in 5 working households spent between 30% and 50% of their income for rent.[2] The average renter household makes $12.53 an hour; someone making minimum wage makes $7.50 an hour in most of the state. Unfortunately, a renter household would have to make $16.06 an hour to afford a 2-bedroom apartment at the Fair Market Rent of $835 a month.[3] Upshot—far too many New Mexico households have very little left over to pay for everything else in their lives, and are very vulnerable to losing housing. This brief shows how a state could greatly increase its supply of affordable housing through two mechanisms—creating more affordable housing, and subsidizing low income renters to assure they spend no more than 30% of their income for rent.

What Happens When You Can’t Afford Housing?

Low income households paying too much for housing are vulnerable to several unhappy situations. They may lose their housing altogether, and have to move in with family or friends; the overcrowding that results often increases tensions and mental health problems, and sometimes promotes family violence. Homelessness may be the ultimate outcome. Once families become homeless, they face many financial barriers to getting back into housing. Further, they themselves will not be in a position to help other family and friends in times of crisis. Even more, children’s health and well-being suffer. About 1 in 4 New Mexico children go to bed hungry every night, in part because their parents cannot afford food after paying for housing. Children’s health also suffers. Children who have been homeless before they reach four years of age are also significantly more likely to experience conditions that require hospitalization.[4]

What New Mexico Does Now Is Not Enough

  • New Mexico uses federal resources, mostly Section 8/Housing Choice Vouchers, to subsidize rents for about 5,300 low income renter households every year—or about 10 percent of households that need this assistance.[5]
  • New Mexico uses its own (state general fund) money to support five small rental assistance programs that are mostly (1) short term, (2) targeted to people with mental illness or homeless people, and (3) that all together serve fewer than 1,000 annually.[6]
  • New Mexico has four affordable housing construction/production subsidy programs, and Albuquerque has one of its own. These programs help developers acquire properties and amass enough money to create new housing or fix up existing properties for occupancy by low income renters.[7]
    • These programs work, but (1) don’t produce enough units, and (2) are cumbersome to use.

What Some Other States Do, What New Mexico Could Do Also—and Should

Other states have programs that we could do in New Mexico.[8] These include:

  • Developing a statewide plan that (a) establishes a “fair share” of housing for every municipality in the state, (b) is enforceable, and (c), uses collaboration in all aspects, planning and production—as is done in New Jersey, Pennsylvania, Maine, Illinois, Minnesota, and Arizona
  • Reducing regulatory barriers created by zoning, construction and other codes to expedite creation of new units that revitalize deteriorating neighborhoods and communities; these allow smoother processing, one-stop applications even though multiple jurisdictions are affected, expedited approval processes—these practices have cut housing development costs by 10 to 40 percent in New Jersey; other states using these practices include Connecticut, Florida, Georgia, Maine, Maryland, Michigan, New York, Rhode Island, and Texas.
  • Incentivizing housing development that follows transportation lines, jobs creation (New Jersey, Massachusetts, others).
  • Pursuing multiple goals simultaneously (e.g., economic development plus housing—Oregon, New Jersey) and partnering with overlapping interests—special needs, elderly, rural, child welfare—Minnesota, Michigan, Rhode Island.
  • Using state funds to support Housing Trust Funds and affordable housing tax credits that parallel federal programs—to finance general affordable housing and special needs housing—as uisdone in numerous states.
  • Creating a Housing Levy—Seattle/King County voters recently chose to raise their property tax mil rate for the sixth time and devote the proceeds to rental assistance, loans to first-time homebuyers, and affordable housing development.   Over the 25 years that previous levies were in place, they generated over 13,000 affordable apartments and helped 900 low-income families buy their first house. This city-county initiative is progressive taxation, and we could do it here.
  • Establishing a special tax on luxury development, with collections going into a Housing Trust Fund or other mechanism that then funds new unit construction in areas of high need—Santa Fe tried to establish such a tax in 2015—called the Workforce Housing Funding Initiative—but it didn’t pass. Nevertheless, Santa Fe does have an “impact fee” imposed on development that is used for a variety of activities that make it less expensive for developers to produce reasonably-priced housing, such as roads and other infrastructure in areas being developed.
  • Establishing a Deep Subsidy Program, to invest more state funds in projects that aim to serve households with incomes below 30 percent of area median income (about the federal poverty level)—New Jersey.
  • Creating programs to acquire land in high priority areas, including brownfields and other contaminated land, and make it available to developers to clean up and create affordable housing—New Jersey, Pennsylvania.
  • A loan program specifically for small rental projects (5-25 units) suitable for “in-fill” in already-developed neighborhoods—New Jersey
  • Housing preservation program to assure that housing units that are currently affordable stay that way—many states.
  • A loan program for housing for youth aging out of foster care—New Jersey

Getting to “Yes” on Affordable Housing

The National Housing Conference has analyzed the positive messages that work best to promote investment in more affordable housing. These include:[9]

  • Focus on specific beneficiaries.
  • Describe programs with terms that affirm that the beneficiaries deserve assistance.
  • Make it clear that the whole community benefits.
  • Appeal to core values such as choice, hard work, balance, fairness, and opportunity.

[i][i] Woo, Andrew. 2016. How Have Rents Changed Since 1960? ApartmentList.com, Rentonomics. https://www.apartmentlist.com/rentonomics/rent-growth-since-1960. Based on analysis of 1960-2014 Census data.

[2] Alt, Mindy. 2016. Housing Landscape 2016. National Housing Conference, Center for Housing Policy. http://media.wix.com/ugd/19cfbe_5eb6819b54454941ac58ce5b6aa38b9d.pdf.

[3] National Low Income Housing Coalition. 2016. Out of Reach, 2016. National Low Income Housing Coalition, Washington, DC. http://nlihc.org/sites/default/files/oor/files/reports/state/OOR_2016_NM.pdf.

[4] Sandel, M, J. Cook, A.c Poblacion, et al. 2016. Housing as a Health Care Investment. Washington, DC: National Housing Conference, Children’s Health Watch. http://www.childrenshealthwatch.org/wp-content/uploads/Housing-as-a-Health-Care-Investment.pdf.

[5] About $28-29 million a year. MFA website

[6] Altogether, these programs have had about $1.3 million of state funds to spend in recent fiscal years, and do not begin to meet the need. MFA website.

[7] MFA website.

[8] Houstoun, Feather O. Integrating Affordable Housing with State Development Policy. 2004. Washington, DC: National Governors Association, Center for Best Practices. www.nga.org/files/live/sites/NGA/files/pdf/0411affordablehousing.pdf.

[9] Viveiros, Janet and Rebecca Cohen. 2013. Building Support for Affordable Homeownership and Rental Choices: A Summary of Research Findings on Public Opinion and Messaging on Affordable Housing, p. 2. Washington, DC: National Housing Conference, Center for Housing Policy. http://www.mayorsinnovation.org/images/uploads/pdf/2_-_Insights_center_for_housting_policy.pdf.