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

SPONSOR Rodriquez

ORIGINAL DATE

LAST UPDATED

1/31/06

HB

SHORT TITLE Local Government Affordable Housing

SB 534

ANALYST Leger

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Mortgage Finance Authority (MFA)

SUMMARY

Synopsis of Bill

Senate Bill 534 makes an amendment based on the results of the 2006 General Election. Voters

passed Constitutional Amendment 4, amending Article 9, Section 14 of the constitution,

commonly referred to as the “anti-donation clause", to permit the state, an instrumentality of the

state, MFA, and local governments to provide or pay a portion of the cost of land, buildings, or

necessary financing for affordable housing projects. The Affordable Housing Act (Section 6-27-

3 NMSA 1978) is the enabling legislation for the affordable housing exception to the anti-

donation clause.

SIGNIFICANT ISSUES

The Affordable Housing Act must be updated after voters approved Constitutional Amendment

4. Prior to the passage of Constitutional Amendment 4, MFA points out, affordable housing

exception to the anti-donation clause permitted the state, counties, and municipalities to “donate"

land and/or buildings, and “provide or pay the costs of" infrastructure to support affordable

housing projects. Importantly, the exception permitted governments only to donate land and

existing buildings they own; unlike infrastructure, which can be paid for or provided, the

Senate Bill 534 – Page

2

exception did not cover monetary contributions or donations for land and buildings. This posed

no problem for governmental agencies who own land and/or buildings, however, MFA and other

governmental entities that do not “own" real property but wish to facilitate the donation or

discounted sale of such property for affordable housing. The passage of Constitutional

Amendment 4 was important to MFA because they could not provide state or locally funded

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

affordable housing.

MFA indicates SB534 clarifies the role of the MFA as a reviewer of proposed ordinances drafted

pursuant to the Affordable Housing Act, the process municipalities and counties must undertake

in order to enact said ordinances, and the potential for investigation by the attorney general if a

local government fails to comply with this process or if it violates its own ordinance after

enactment.

PERFORMANCE IMPLICATIONS

This bill will ensure the state statutes are consistent with the amended state constitution. The bill

allows for the state, a county, municipality, or MFA to provide incentives for the development of

affordable housing by helping to pay the cost of construction or renovation, land acquisition,

financing, or other costs associated with operating and owning affordable housing.

ADMINISTRATIVE IMPLICATIONS

MFA will update its rules and regulations to reflect changes with the Affordable Housing Act.

MFA indicates it is imperative that local governments comply with the provisions of Section 6-

27-7 of the Act so that they can timely review and provide feedback to the county or

municipality proposing an ordinance pursuant to the Act; if they fail to do so, they may be found

to be in violation of the act and the attorney general may determine an investigation is warranted.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

The Affordable Housing Act is the enabling legislation for the affordable housing exception, and

if SB534 is not enacted the existing law will be inconsistent with the state constitution.

JL/mt