Council approves new affordable housing strategy, $6 million GO Bond

The Las Cruces City Council approved a $6 million affordable housing general obligation bond and a strategy for how to spend it.

Across two votes during a council meeting on March 4, councilors issued the affordable housing bond that voters approved in 2022. The votes passed 5-0. Councilor Bill Mattiace and Mayor Eric Enriquez were absent from the meeting. City officials said $4 million would develop more subsidized rental units, while $2 million would go to land acquisition and development for affordable single-family housing.

City Housing and Neighborhood Revitalization Manager Natalie Green said the original goal of the bond was to help build 300 units and leverage about $36 million in other grants and programs. However, she said Monday that the city expects to leverage $142,182,000 and build about 800 units.

Most of the housing units in these projects will be to support potential renters and first-time home buyers – not people who are homeless.

“Affordable housing is such a broad spectrum and helps so many people in the community in many income levels,” said Councilor Becki Graham.

The bond has been promised as a vital source of funding to address the city’s lack of affordable housing, something low-income residents depend on for stable shelter and the creation of generational wealth. A University of California Irvine study looking at affordable housing in Orange County, Calif., found that affordable housing can reduce crime.

“What’s happening right now isn’t happening in a vacuum,” said councilor Johana Bencomo, referring to crime rates and homelessness in Las Cruces. “And the context in which we’re operating is that there has been a decades-long disinvestment from the federal government.”

The bond was one of four GO bond-funded projects worth $23 million voters in Las Cruces approved in 2022. $6 million for affordable housing was joined by $10 million for a new fire station in Sonoma Ranch, $2 million for park improvements across the city and $5 million for the East Mesa Recreation Complex.

The council issued the other bonds shortly after voters approved them in 2022. The council held off on issuing the affordable housing GO bond, fearing the interest rates and taxes would gobble up too much of the bond. Later, after a former Las Cruces councilor criticized news coverage of the council’s declination to issue the bond, the city said they also wanted to understand better how to use the bond money to maximize its effectiveness.

Ultimately, they chose to issue the bond now, expecting an interest rate of 5.2 percent.

“Maybe a year or two ago, if you’d have told me 5.2 percent, I would’ve thrown up,” City Manager Ifo Pili said. “But right now, that’s what the market is.”

That’s where the report comes in.

The report was written by Colorado-based consultant Project Moxie and cost the city about $98,000, according to Green.

The report outlined strategies to address needs in the rental market, housing market, land development, preserving the city’s supply of affordable housing and other approaches to support implementation.

“We wanted to do things that were actionable,” Green said.

Those strategies included increasing tax credit developments, a significant tool for affordable housing development across the U.S. The report also called for growing subsidies to make more land in Las Cruces suitable for housing construction, installing a decision matrix to select locations for development, and prioritizing efforts in the city's two redevelopment areas in West Picacho and El Paseo/South Solano.

The full report can be viewed here.

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Understanding the need

The federal government defines affordable housing as rent or mortgage that costs less than 30 percent of the combined income of everyone living in the unit.

The report said that the average cost of rent in Las Cruces is $1,400, according to rental property websites and aggregators. That means to afford the average rental unit in Las Cruces, the Las Cruces family would need to make about $56,000 annually.

Less than half of all Las Cruces households meet that number. The U.S. Census Bureau estimates the median household income in Las Cruces to be about $51,000.

The Project Moxie report said the rental problem is compounded further by two major institutions in the area: New Mexico State University and the various U.S. military installations. Students at NMSU and workers at the bases are more likely to rent than buy since their time in Las Cruces will be temporary. Those groups increase the demand for rentals.

The report also found that just 20 percent of units in Las Cruces were suited to be easily rentable as a single-family attached unit (commonly known as a “mother-in-law casitas”) or multifamily housing such as apartment complexes.

The report expected the problem to grow over the next decade as the population grows.

Home-buying issues stem from a lack of supply and cost combined with national and global context.

“One of the major market factors impacting for-sale opportunities is mortgage interest rates,” the report said. “Unfortunately, interest rates have been climbing steadily since autumn of 2022.”

Rising interest rates are saddled with a booming housing market. The report recited market statistics from New Mexico MLS.

The statistics stated that the median housing cost has grown 63 percent in five years from about $180,000 to $295,000. New Mexico MLS also said the active supply of homes has dropped from 741 in 2018 to 472 in 2023, a 36 percent decrease.

“While typical home values in Las Cruces increased… affordability gaps continue to grow,” the report said, adding that only Santa Fe had a greater affordability gap.