Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Rodriguez

ORIGINAL DATE

LAST UPDATED

2/6/06

2/6/06 HB

SHORT TITLE Santa Fe Teacher Affordable Housing Program

SB 738

ANALYST Kehoe

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$1,000.0

Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

New Mexico Mortgage Finance Authority (MFA)

SUMMARY

Synopsis of Bill

Senate Bill 738 appropriates $1 million from the general fund to the Department of Finance and

Administration for the purpose of making disbursements to the New Mexico Mortgage Finance

Authority (MFA) to make awards to one or more grantees for the development and implementa-

tion of an affordable housing program for teachers in the Santa Fe School District in compliance

with the Affordable Housing Act.

FISCAL IMPLICATIONS

The appropriation of $1 million contained in this bill is a non-recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2011 shall

revert to the general fund.

The Affordable Housing Act (enabling legislation for the affordable housing exception to the

anti-donation clause of the New Mexico state constitution) permits the state, counties, and mu-

nicipalities to “donate” land and/or buildings, and “provide or pay the costs of” infrastructure to

support affordable housing projects. The exception permits governments only to donate land

and existing buildings they own; unlike infrastructure, which can be paid for or provided. The

exception does not cover monetary contributions or donations for land and buildings.

Chapter 105 (Senate Bill 115) created the New Mexico Housing Trust Fund to be managed by

MFA in conjunction with a New Mexico Housing Trust Fund Advisory Committee. The fund

was capitalized by a $10 million appropriation from the general fund within Chapter 347, the

Senate Bill 738 – Page

2

capital outlay bill. MFA is allowed to use money from the fund for actual expenses incurred in

administering the fund in an amount not to exceed five percent of total funds disbursed from the

fund. The State Investment Council will serve as the investment agent for the fund in order to

realize the highest possible returns.

The purpose of the trust fund is to provide flexible funding for housing initiatives that could lev-

erage other funding sources for housing in the state and to provide affordable housing for per-

sons of low or moderate income. Persons of low or moderate income are defined as “persons

and households within the state who are determined by the authority to lack sufficient income to

pay enough to cause private enterprise to build an adequate supply of decent, safe and sanitary

resident housing in their locality, or in an area reasonably accessible to their locality and whose

incomes are below the income levels established by the authority.”

SIGNIFICANT ISSUES

The MFA indicates that under current law, MFA cannot provide state-funded grants or loans that

are “significantly” below market rates to facilitate the acquisition or donation of real property for

affordable housing. The MFA would have to first acquire property by lease or purchase to con-

tribute to a real property transaction, then re-lease or re-sell it for the affordable housing purpose.

This restriction also applies to local governmental entities wishing to use state or local funds as

grants or below-market rate loans to facilitate the acquisition of real property for affordable

housing purposes.

The MFA offers the following conditions in order to award funds to one or more grantees:

“1. The MFA could provide these funds as either below-market rate loans or grants to offset in-

frastructure costs (as defined in the Affordable Housing Act) associated with building new af-

fordable rental or for-sale homes specifically for Santa Fe public school teachers

2. The MFA could provide these funds as either below-market rate loans or grants to offset in-

frastructure costs (as defined in the Affordable Housing Act) associated with acquiring and reha-

bilitating affordable rental or for-sale homes specifically for Santa Fe public school teachers

3. The MFA could provide these funds as loans to facilitate other affordable housing activities,

but the loans would have to have terms that would qualify them as “fair consideration”.”

OTHER SUBSTANTIVE ISSUES

The New Mexico Housing Trust Fund Advisory Committee consists of nine members who shall

represent geographically the state, affordable housing advocates and practitioners. The nine

members will consist of three public members appointed by the governor; three public members

appointed by the President Pro Tempore of the Senate; and three public members appointed by

the Speaker of the House of Representatives. Members of the committee shall be appointed for

two-year terms and be eligible for reappointment. (Attachment A - HTF Advisory Committee)

Appointments to the advisory committee were named, and program guidelines and policies were

developed by MFA. Statute requires that trust funds be awarded on a competitive basis and re-

quired MFA to develop an application and scoring mechanism that encourages applicants to de-

velop solutions responsive to local needs consistent with sound housing policy.

LMK/yr