It was on October 18, 2022, Mayor Tim Keller announced his “Housing Forward ABQ Plan.” It is a “multifaceted initiative” where Mayor Keller set the goal of the City of Albuquerque being involved with adding 5,000 new housing units across the city by 2025 above and beyond what private industry normally creates each year. According to Mayor  Keller  the city is in a major “housing crisis shortqage” and the city needs as many as 33,000 new housing units immediately. However, Keller has never fully identified how the inflated statistics were arrived at and he simply declares a crisis.

KELLER’S “HOUSING FORWARD ABQ PLAN.”

To add 5,000 new housing, Keller proposed that the City of Albuquerque fund and be involved with the construction of new low-income housing. The strategy included a zoning code “rebalance” to increase population density in established neighborhoods. It included allowing “casitas” which under the zoning code are known as “accessory dwelling” units and “duplex development” on existing housing. Keller’s “Housing Forward ABQ Plan” includes “motel conversions”. 

According to Keller’ “Housing Forward ABQ” plan, the city also  wanted  to convert commercial office space into to residential use. The Keller administration initially  proposed $5 million to offset developer costs with the aim of transitioning 10 commercial  properties  and creating 1,000 new housing units. However, the Keller Administration announced early on that the conversion office space plan was a heavy lift for the city and the city at the time backed off on its efforts to acquire commercial office buildings to be converted into residential use.

CASITA’S IN, DUPLEX DEVELOPMENT OUT

Mayor Keller called for “transformative” updates to Albuquerque’s Integrated Development Ordinance (IDO) to carry out his “Housing Forward ABQ”.  Keller wanted to allow different forms of multi-unit housing developmenton existing residential properties. The legislation was to allow the construction of 750 square foot casitas and 750 square foot duplex additions on every single existing R-1 residential lot that already has single family house built on it to increase density and to create more “affordable housing” for acquisition or renting. 

City officials said that 68% of the city’s existing housing is single-family detached homes with 120,000 existing residential lots with already built residences.  Keller argued that allowing casita and duplex development on existing housing would double or triple density to 360,000 in established neighborhoods and thereby create more affordable housing for sale or rent. It was pure Keller nonsense ignoring the high cost of construction to private homeowners and the effect of market forcea. Keller’s plan was clearly “overkill” that would destroy the character of established neighborhoods and lead to gentrification. Developers would no doubt purchase existing homes for development of casitas and duplexes.

The zoning code amendments would have made both casitas and duplex additions “permissive uses”.  Historically, they have always been “conditional uses”.  A “conditional use” requires an application process with the city Planning Department, notice to surrounding property owners and affected neighborhood associations and provides for appeal rights.  A “permissive use” would give the Planning Department exclusive authority to issue permits for construction without notices and hearings and with no appeal process to surrounding property owners. Objecting property owners and neighborhood associations to the permissive casita and duplex uses would be relegated to filing lawsuits to enforce covenants and restrictions.

On June 23, 2023,  The Albuquerque City Council voted 5-4 to approve the zoning code changes with amendments made to the Integrated Development Ordinance (IDO).  The version of the bill that ultimately passed on a 5-4 vote was amended extensively. The city council voted to allow casita construction as a “permissive use” in all single-family R–1 zone. The city council voted to strike the amendment and to not allow duplexes to be permissively zoned in R–1 zone areas, which make up about two-thirds of the city.

Confidential sources within city hall have confirmed that since enactment of the amendment to the Integrated Development Ordinance in June 2023 that allows construction of accessory  dwelling units known as “casitas”, only 14 have actually been approved. This is clear evidence that demonstrates the Council Council and Mayor Keller’s’ Housing Forward Plan to increase density has been a failure.

THE CITY’S AFFORDABLE HOUSING SHORTAGE

Albuquerque is struggling with being able to provide sufficient “affordable housing” which is a major contributor to homelessness. A 2024 Denver-based Root Policy Research report, entitled “Albuquerque Region Housing Needs Assessment” found a significant shortage of units for low-income renters. The report found that residents are spending more than a third of their monthly income on housing and that occupied units, such as apartments and single-family homes, often had more residents than rooms available.

The link to a quoted or relied upon news source is here:

https://www.abqjournal.com/news/article_84d10e4c-b9a9-4c5c-8929-39740d6c09d7.html#tncms-source=home-featured-7-block

STATISTICS PRESENTED

Over the past 5 years, the city has supported the construction of 2,224 housing units, 1,021 of which are subsidized for low to moderate income tenants. On average, the city has been producing between 200 and 250 affordable units per year, for about 450 units total. The city now has a goal of producing 1,000 affordable housing units per year. To reach that goal, the current housing output will have to at least quadruple.

Joseph Montoya, the city’s Deputy Director of Housing, reported the following statistics to the city council:

• Nearly half of renters are rent-burdened.
• Rents have increased 20% since 2021.
• The median house price is $360,000.
• The city’s current waiting list for help with housing is about 800 people long. The city needs to produce 1,500 new units a year to keep up however only 200-250 units are being produced.

In addition to the initiatives already in place, Montoya outlined additional strategies the city would like to use. Those strategies include:

• Expediting planning approvals for affordable housing developments,
• Opening request for proposals, known as RFPs, to “for-profit” as well as nonprofit developers.
• Creating a loan fund for homeowners building affordable accessory dwelling units.
• Align the city’s RFP process with the Metropolitan Redevelopment Agency and to create funding packages for developers.

NEW MEXICO MORTGAGE FINANCE AUTHORITY REPORT ON HOUSING NEEDS

On July 24, 2024 the New Mexico Mortgage Finance Authority (NMFA) officials reported on the findings of the state’s most recent housing needs assessment. It outlined how $84.6 million in state funding will be allocated to address those needs. The New Mexico Housing Needs Assessment is a comprehensive annual report produced by New Mexico Mortgage Finance Authority. It comprises an array of housing indicators describing affordable housing needs in the state.

MAJOR FINDINGS OF REPORT

Following is an edited version of the major findings of the 2024 MFA Housing Needs Report deleting graphs and figures:

NEW MEXICO’S DEMOGRAPHIC PROFILE

 “There are 2,112,463 people residing in New Mexico and 812,852 households in the state. New Mexico’s population grew 1.3% over the last five years, a rate which lags its neighboring states: Utah (9.7%), Nevada (7.5%), Texas (6.6%), Colorado (6.2%), and Arizona (5.3%).

New Mexico’s working population, defined as persons 16 years and older, is primarily employed in education and healthcare, at a rate of 25.7%. This rate is consistent with national trends.”

NEW MEXICO’S ECONOMIC PROFILE

• The poverty rate in New Mexico’s poverty is 18.3%, higher than the national rate of 12.5%.
• New Mexico’s median household income is $58,722, which is lower than the national median household income of $75,149.
• The percentage of the population living with a disability in New Mexico totals 34.4%, which is higher than the national rate of 26.4%.
• The rate of households with seniors, which are defined as households with one or more people 65 years of age or older, in New Mexico is 33.8%. Nationwide, the rate of households with seniors is 11.5%.
• Many New Mexico senior households are low or moderate income with 41.8% earning less than $40,000 annually. The national rate is 37.7%.
• The Homeownership rate in New Mexico is 70.9%, which is higher than the national rate of 64.8%.
• 43.2% of New Mexican households earn less than $50,000 annually. This rate for the country is 33.8%.
• Renters in New Mexico, like the rest of the nation, are more likely to be low-income compared to homeowners.
• The state’s median household income increased from $48,059 to $58,722, or 22.2%. from 2018 to 2022.
• The median home price increased by a whopping 50% from $200,000 to $306,000.”

HOMEOWNERSHIP MARKET AND DEMOGRAPHICS

“In New Mexico, the median sale price of a home in 2023 was $323,230 which increased 5.6% from the prior year. As home price increases outpace wage growth, the ability to achieve homeownership becomes more difficult.

Inequities in homeownership persist with respect to race:

White households comprise 37.8% of homeowners but 35.6% of the population.

• Hispanic households account for 35.2% of homeowners but 49.8% of the population.
• The relative rates for Native American households is 5.2% of homeowners and 8.5% of the population.
• Black or African American, Asian and households of two or more races are underrepresented among homeowners.”

RENTAL MARKET DISPARITY

“In New Mexico, the median monthly gross rent in 2022 was $966, which increased 7.7% from the previous year and 16.7% from 2018.

The state’s renter median income increased from $34,837 to $37,408 or 7.4% from 2021 to 2022, which lagged behind rent price increases.”

DECLINE IN HOUSING PERMITS

“Single-family detached homes comprise the majority of New Mexico’s housing stock, followed by a high percentage of mobile or manufactured homes. The number of building permits for residential construction issued in 2023 decreased by 2.2% from the prior year. Despite this dip in the pace of construction, the decades-long trend of depressed building has abated in recent years, with a 71.7% increase from 2019 to 2023.”

DECLINE IN AFFORDABLE HOUSING

“Cost-burden among renters (43.9%) is higher than homeowners (28.4%), largely due to lower income levels among renters. A decreasing supply of affordable housing options, for both renters and homeowners, coupled with increasing demand as the state’s population grows, threatens to worsen cost burden rates.”

PRESERVATION AND REDEVELOPMENT NEEDS

2% of houses in New Mexico were built prior to 1980, which indicates a high need to preserve the stock of existing homes.

• 3% of homes are mobile or manufactured housing units. Mobile homes built before 1976 do not meet HUD’s Manufactured Home Construction and Safety Standards, which are federal standards for the design and construction of manufactured homes to assure quality, durability, safety, and affordability. Thus, HUD only allows for the replacement of these units rather than rehabilitation.
• 3% of households are overcrowded.
• 0% of households do not have sufficient plumbing facilities and 1.0% lack complete kitchen facilities.

FUNDING APPROVED

At its May and June, 2024  meetings, the New Mexico Mortgage Finance Authority Board of Directors approved a $50 million allocation, along with the $34.6 million in state fiscal year 2025 severance tax bond funding. The breakdown includes:

• $26.6 million to create more housing.
• $20 million for down payment assistance.
• $10 million to preserve existing affordable housing.
• $1 million to create stable housing environments.
• $27 million in reserve to use based on particular demands.

MFA Executive Director Hernandez said this about the allocations:

“Whether it’s building homeownership and wealth, creating more housing, preserving existing affordable housing or creating stable housing environments, our efforts and programs directly align with the key findings in the housing needs assessment report. … I appreciate our board of directors, the governor and legislators for their support and funding for these much-needed programs in our state.”

The full housing needs assessment and links to quoted or relied upon news sources are here:

https://housingnm.org/…/new-mexico-mortgage-finance…

https://www.koat.com/…/monday-breaks-record…/61688417

https://citydesk.org/…/homelessness-has-increased-by…/

MOTEL CONVERSIONS

Keller’s “Housing Forward ABQ” places great emphasis on “motel conversions”.  “Motel conversions” is where the acquires and renovates existing motels to develop low-income affordable housing options. Keller’s original plan called for hotel or motel conversions to house 1,000 people by 2025.

The Keller Administration has proclaimed that motel conversions are a critical strategy for addressing the city’s housing shortage. The city proclaims motels conversions are a simpler, lower-cost alternative to ground-up construction. It will require city social services to regularly assist residents. The homeless or the near homeless would be offered the housing likely on a first come first served basis and with rules and regulations they will have to agree to.

On February 11, 2023 it was reported that the City of Albuquerque executed a purchase agreement for the purchase of the Sure Stay Hotel located at 10330 Hotel NE for $5.7 million to convert the 104-room hotel into 100 efficiency units. The $5.7 million purchase price for the 104-unit complex translates into $53,807.69 per unit ($5.7 Million ÷ 104 = $53,807.69 per unit).

At a December 6, 2022 meeting on motel conversions, city officials said that the city’s estimated cost is $100,000 per unit to fix up or remodel existing motels. Using the city’s own estimated remodeling costs for the Sure Stay Motel, an additional $10 Million will be needed to remodel the motel for low income housing. ($100,000 per unit X 100 efficiency apartments = $10 Million). Therefore, the entire Sure Stay conversion project will have an estimated cost of $15,700,000.  ($5.7 purchase cost + $10 Million remodeling cost = $15,700,000)

HOUSING FORWARD FUND

In 2022, in response to Keller’s Housing Forward Plan and the enactment of changes to the Integrated Development Ordinance, the City Council created the Housing Forward Fund. The City Council appropriated $20 million of gross receipts taxes for the fund.  In 2023, the City Council added another $3 million to the fund.

In late April 2025 a funding review was presented to the Albuquerque City Council on how the Housing Forward Fund has been spent. It was reported that in recent years the city has spent most of $23 million on affordable housing projects, which included motel conversions and money for commercial-to-housing transformations of the Albuquerque towers.

It was reported that the Housing Forward Fund was used to convert SureStay Motel into the Los Altos Lofts located at  10330 Hotel Ave NE. The report noted that the property near Los Altos Park was acquired in 2023 for $5.7 million, funded by a combination of state and federal grants. The city then contributed about $6.1 million from the Housing Forward Fund for construction.

The Los Altos Lofts now has  90 affordable housing units with kitchenettes and a swimming pool. Joseph Montoya, Deputy Director for Health, Housing and Homelessness told councilors the Los Altos Lofts project has no debt and operates from  revenue generated from tenants. As of February 2024, the report found that 95% of the units have been leased.

It was reported that the conversion of the former Quality Suites in the 1500 block of Gibson SE failed after the city spent $6,600 on its inspection. In 2024, the city planned to purchase the property for $5.3 million from the Housing Forward Fund and sent an offer letter to the property owners. The report stated the property was attractive to the city due to its large units and kitchenettes. Joseph Montoya, Deputy Director for Health, Housing and Homelessness said the Quality Suites purchase failed and said this:

“… [D]uring its inspections, there were considerable environmental, structural and system concerns that made the project cost-prohibitive to move forward.”

The Housing Forward Fund was also used for the West Mesa Ridge in the 700 block of Coors NW. Once complete, this mixed-use development will have 128 affordable housing units.  It was reported to the City Council that approximately $3 million was allocated to redevelopment efforts aimed at converting iconic commercial buildings, such as the Lomas Tower and the Two Park Central Tower, into rental units.

Earlier this year, the City Council allocated $1.5 million to improve the energy efficiency of the city’s 594 units across eight apartment communities. The city used $776,638 for overhead costs.

Housing Forward Fund spending included a costly staircase repair of $3.3 million to renovate a stairway at the Beach Apartments. Republican City Councilor Renée Grout said during the meeting  she thought the costly repair should’ve been avoided. Grout said this:

“Three-point-three million is a lot of money to fix stairs.”

The Beach Apartments, in the 2500 block of Tingley Drive SW, were built in 1984 and acquired by the city in 1991. The apartments contain 74 units. Residents in 23 units were removed so that construction could occur. A report by the city’s Health, Housing and Homelessness Department found that the affected residents were “given proper notification and relocation benefits.”

Joseph Montoya, deputy director for Health, Housing and Homelessness, said the staircase repairs were necessary because it played a foundational role in the building’s structure. Montoya said this:

“The particular architect, although a famous architect and really good in terms of designs, created some structural issues. … So what they did is they created a stairway case that was actually attached to the structure itself and then covered everything up.”

CONVERTING COMMERCIAL OFFICE SPACE INTO HOUSING

Three of the city’s tallest commercial office buildings will be converted into affordable housing. Those commercial office buildings are:

THE WELLS FARGO TOWER

On June 24,  the Bernalillo County Commission by a unanimous vote approved a $35 million project revenue bond (PRB) for the Wells Fargo Tower also known as the Lomas Tower, located Downtown at 200 Lomas Boulevard. The passage of the PRB will  help the developer to receive affordable housing federal and state tax credits, which are critical  for pricing the apartment units below market value. It also exempts the development from property taxes for 30 years.

The PRB plan presented to the County Commission reported that the Wells Fargo Tower will have 60 one-bedroom apartments and 40 two-bedroom apartments. The residential section will occupy twelve floors and feature access to community amenities, including a fitness room. The tower will also have retail and office space on the two lower levels.

Economic Development Director Marcos Gonzales said this of the project:

“Over 140 residents will be able to be housed in this facility.”

The presentation made to the County Commission showed that the Lomas Tower developer, California-based Lincoln Avenue Communities, is working with the New Mexico Environment Department to remove asbestos from the property. Construction on Lincoln Avenue Communities is expected to break ground in October 2025.

The link to the relied upon or quoted news source is here:

https://www.abqjournal.com/news/article_565b2553-d2c0-49d4-8a9d-025448b603c4.html

TWO PARK CENTRAL TOWER

A Houston-based developer plans to turn the vacant office building known as the Two Park Central Tower at 300 San Mateo into housing. The 10-story, 101,000-square-foot Two Park Central Tower sold in August 2023 for just under $2 million. The development project will create 101 units in the old office building and is being undertaken by Route 66 Multifamily, LLC, according to a summary from Albuquerque’s Metro Redevelopment Department staff.

The Two Park Central Tower property tax bill is currently $87,090, but is expected to increase to $205,238 after the apartments are developed. On  September 4, the City Council  approved a seven-year tax abatement will save the developer a total of $744,332 on its property tax bills.

BANK OF THE WEST TOWER

Another affordable  housing development project is the old Bank of the West Tower located at Central and San Mateo. At one time it was also a branch of the First National Bank, It is a 17 story a high-rise office building completed in 1963.  When it was built it was the tallest building in the city. It is now the fifth tallest building in the state, and the tallest outside of Downtown Albuquerque. Developer Route 66 plans to turn the commercial building into apartments.

Route 66 Multifamily, LLC, the same company plans to convert the neighboring Two Park Central Tower into apartments, intends to convert the 17-story Bank of the West tower into 160 apartments with “high-end” features like a roof deck, a pool and pickleball court.

TAX ABATEMENTS FOR MAJOR HOUSING DEVELOPMENT PROJECTS

The City of Albuquerque offers tax abatements for projects in the city’s 22 Metropolitan Redevelopment Areas (MRA’s). The majority of MRA’s in the city are in older parts of the city including the  Downtown area or on Broadway.

The way tax abatement works is that for seven years the city  suspends or “freezes” the developer’s taxes at the amount they paid before the property gets any new buildings or upgrades. A  developer might be transforming a vacant lot into new housing, for example, which dramatically increases the value of the property. Without the tax abatement, the property tax would have a corresponding increase.

Technically, the city takes the title of the property and leases it back to the developer, exempting the property from property taxes, and the developer makes a payment in lieu of taxes to Bernalillo County that is equivalent to the pre-development property tax.  The city’s tax abatement program is relatively new, and about 10 properties have been approved for it.

After the seven years are up, the property taxes will be based on the property’s value at that moment and presumably go up. In the long term, the tax abatement program can increase city revenue because it can incentivize developers to build when they might otherwise leave the property vacant. Developers are required to get the tax abatement approved by city council before securing city building permits.

TAX ABATMENT PROJECTS OUTLINED

There are five major tax abatement projects approved by the city council in the last year. Those projects are as follows:

1. The 10-story Two-Park Central Tower near the corner of San Mateo and Central has been approved for a tax abatement by the City and it will now be converted into housing. Developer Route 66 Multifamily plans to turn the vacant office building into 101 apartments. Some of the apartments will be market value, and some might become affordable housing. The Two Park Central Tower property tax bill is currently $87,090, but is expected to increase to $205,238 after the apartments are developed. On September 4, 2024 the city council approved a seven-year tax abatement that could save the developer a total of $744,332 on its property tax bills.
2. The old Bank of the West Tower located at Central and San Mateo has also been approved for a tax abatement. The 17 story a high-rise office building is the fifth tallest building in the state, and the tallest outside of Downtown Albuquerque. Developer Route 66 plans to turn the commercial building into apartments.
3. A third and only project dedicated to affordable housing that has been approved for a tax abatement will be built at the corner of Central and Alcazar SE. The land has been vacant for almost 20 years. The 70-unit Somos Affordable Housing complex is being developed by Sol Housing. The nonprofit plans to set aside 84% of the units for income-restricted affordable housing. The tax abatement on this project will save the developer an estimated $514,376. The city already owns the land that the Somos project is being built on and will transfer ownership to Sol Housing after the abatement period ends.  Felipe Rael, the executive director of Sol Housing, said this in a statement: “With the construction of 70 apartment homes and commercial space to support local small businesses, SOMOS can achieve the vision of the international marketplace, providing much needed housing and economic benefits to the International District. … The city’s support furthers this vision as we work to stabilize housing for 70 senior households.”
4. Another housing development project slated for a tax abatement will be undertaken by Titan Development. Titan Development.  Titan is planning for a new long-term resident inn and food hall at the corner of Central and Cedar NE across from the Presbyterian Hospital complex. It is being proposed that the 126-unit residential development could be used by traveling nurses working across the street at Presbyterian Hospital. The tax abatement should save the developers an estimated $998,128 over seven years.
5. Sunlight Properties and Garfield Townhomes has also received council approval for a tax abatement for a townhome project in the University Heights neighborhood. The developers plan to build 16 townhomes on a vacant lot on Garfield.  The current property tax bill of $1,509 would increase to an estimated $25,511 after development, so approval of the abatement will save the developer $151,209 over seven years.

MAYOR TIM KELLER ISSUES STATEMENT

Mayor Tim Keller issued the following statement in response to the council’s tax abatement actions:

“We’re short up to 30,000 housing units in our city. There’s no question about it; we need to build more houses so everyone can find a place to live that they can actually afford … The city can’t build it all alone, but we can provide incentives to support developers who want to invest here and help us build the future of Albuquerque.”

https://www.abqjournal.com/business/article_1892e476-63f0-11ef-bad2-13a4dcb8997f.html

COMMENTARY AND ANALYSIS

Bluntly put, the term “affordable housing” is very misleading. It is a term way too often used by elected officials and politicians to simply declare a crisis with inflated numbers that shows there is not enough housing that allows the poor or low income people to rent or buy a home and call their own.

The housing shortage crisis  declared is related to economics, the development community’s inability to keep up with supply and demand and the public’s inability to purchase housing or qualify for housing mortgage loans. The shortage of rental properties has resulted in dramatic increases in rents. It is clear that the City of Albuquerque and the state of New Mexico are suffering from a shortage of housing, but that does not mean it is all affordable housing.

The blunt reality is that it is not at all realistic for the City nor the State to try and attempt to solve the housing shortage  on their own with nothing but government financing and construction. Government’s responsibility is to provide essential services, such as police protection, fire protection and utilities and not to directly compete with the housing industry.  It’s the market forces that must be relied upon to get the job done when it comes to  housing of all kinds.

The approach that the City and the State has taken in the form of tax deferrals, subsidies and low interest loans to the private sector as incentives to construct housing are the reasonable and responsible approach to help solve the current housing shortage in the city and the state.

City and State government can further help the private sector to build more  housing by eliminating policies and zoning restrictions that unnecessarily drive-up housing costs so long as there is a preservation and respect for adjoining property owners rights and remedies. One area of reform to help the housing industry would be to address and reduce the states gross receipts tax on construction materials in order to bring down construction costs.