Affordable housing incentives proposed in land use code update

Sep. 20—A proposed rewrite of Santa Fe's land use code would create additional incentives for affordable housing immediately rather than waiting for a later stage of the update.

The city has been working for more than a year and a half with consultants from Denver-based Clarion Associates on the update, which will take place in three phases and last through at least 2026. Although city officials had said previously that more in-depth updates would wait for the second phase, a phase one draft released this week includes some major additions to the city's affordable housing incentive structure.

Dubbed "Creating Affordability Now," the proposed incentives would offer a density bonus — that is, allowing developers to build more units — for developments that offer at least 30% of their units at an affordable rate. The size of the bonus would vary, from 1.5 additional units per affordable unit for developers with 30-39% affordable units to two extra units per affordable unit for developments that are more than 50% affordable.

The new bonuses would only be available to developers that actually build the units, unlike the current program under which developers can still receive a 15% density bonus if they pay a set fee into the city Affordable Housing Trust Fund in lieu of building the units.

Daniel Werwath, housing policy advisor to Gov. Michelle Lujan Grisham, said at an informational session Wednesday the new incentives are designed to encourage developers to build affordable units in what is a very challenging construction environment.

"An affordable unit right now in Santa Fe costs more to build than you can sell it for," he said.

Other incentives would include faster administrative review for affordable housing projects and reduced parking and dimensional standards, all focused on decreasing the costs of development.

The city's land use code was last comprehensively updated in 1987. More substantive updates will take place in phase two, which could include changes to city zoning districts, parking requirements and the approval process for new development. The third phase will align the code with a new general plan, which was last implemented in 1999.

Because the proposed density bonus is scalable, Werwath said the hope is it will make it easier for smaller affordable housing developments to get built, something which is currently financially challenging.

"Right now one of the problems we have is that affordable projects done by market-rate developers require really big economies of scale, and what happens is those all have to happen on the south side right now, because that's where the big, developable pieces of land are," he said.

Werwath pointed to Casa Pacifica, a recent Homewise project which converted short-term rental units into five condos on Paseo de Peralta, as an example of the kind of development that could become possible under the proposed incentives.

"That's an example of something that you couldn't do on a lot right now that was empty," he said. "But this is a type of development that is at traditional scales in many of our existing neighborhoods."

Werwath is part of the Citizen Advisory Working Group, one of a number of advisory groups which consulted on the land use code update. It's the group that initially proposed the incentives that became the Creating Affordability Now proposal.

Johanna Gilligan, another member of the working group and the chief external affairs officer at Homewise, said it pushed for the incentives to be included in phase one because of the critical need for affordable housing in Santa Fe.

"Since we know that the general plan and the full update to the land use code is going to take, likely, a minimum of three to four more years ... it felt right to include this in the first phase," she said.

Members of the city's development community said this week they were supportive of the proposal.

"Builders, developers, they work on very tight margins, especially in this Santa Fe environment," said Miles Conway, executive director of the Santa Fe Area Home Builders Association. "That's why you see a lot of developers doing high-end development and you see so few developments for working people. ... It's really hard to make it pencil out economically."

He said the incentives are just one piece of the puzzle and that quicker administrative review would also help.

"It's going to open the door to some good things," he said of the proposed changes.

Tom Spray, executive director of the Santa Fe chapter of the American Institute of Architects, said he thought including the affordable housing incentives in the phase one update is "great and very appropriate."

"I think we're seeing a lot of things coming together, and that's tremendous," he said.

The draft is available online for citizens to comment on and is expected to go to City Council for final approved by the end of the year, said city Planning Manager Maggie Moore. Based on public input, it may be amended before the final version is presented to the council.

At two informational sessions last week, participants seemed largely supportive of the proposed incentives.

During Thursday's at the New Mexico History Museum, The Life Link caseworker John Bacon spoke about his experience trying to get homeless clients with housing vouchers a place to live. While he said some of his clients struggle with challenges such as substance abuse or serious mental illness, "Overall what I'm seeing now more and more, re clients who have income, who have jobs, and who have nowhere to live."

"I fully support this program to incentivize because homelessness is a housing problem," he said.