Santa Fe voters approve mansion tax as housing prices rise

SANTA FE, N.M. (AP) — Voters have approved a mansion tax to pay for affordable housing initiatives in New Mexico’s state capital, Santa Fe.

Uncertified election results on Wednesday showed that nearly three-quarters of the votes were cast in favor of the new tax on sales of homes worth more than $1 million, in a city known for its high desert views, vibrant arts scene and stucco architecture.

Santa Fe resident and state Rep. Andrea Romero said the tax motivated voters and will boost spending on local affordable housing in perpetuity.

“It’s right at the heart of what matters,” said Romero, a Democrat who has led fundraising and education efforts in support of the tax. “Really, we are in a crisis.”

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Tuesday’s vote signals new public support for so-called mansion taxes to fund affordable housing and stave off homelessness.

Voters in Los Angeles last year approved a graduated tax on residential and commercial property sales of $5 million or more to address the housing shortage, while Chicago may ask voters next year whether to raise property transfer taxes, starting with sales over $1 million. , to fight homelessness.

The city of Santa Fe estimates the tax would generate about $6 million annually for its Affordable Housing Trust Fund, which guarantees affordable housing, down payment assistance for low-income home buyers, and rental assistance to stave off financial hardship and evictions. The foundation awards funds each year to affordable housing providers who can secure matching funds from other government and nonprofit sources.

The new tax is imposed on buyers for residential property sales worth $1 million or more — with no tax on the first $1 million of value.

For example, for a $1.2 million home sale, the new tax would apply to the $200,000 value. The buyer will pay $6,000 to the city’s Affordable Housing Trust Fund.

Santa Fe voters have previously shied away from high-profile tax initiatives, rejecting a 1% tax on high-end home sales in 2009, and rejecting a tax on sugary drinks to expand early childhood education in 2017.

The city of about 90,000 people is in the midst of a building boom, with thousands of recently approved housing units gradually coming online within city limits since 2021 — but most of the new units are renting at free-market rates that can strain personal finances or… Family.

Meanwhile, more than 400 single-family homes sold for more than $1 million across Santa Fe in 2022, according to an analysis commissioned by the city.

The Santa Fe Association of Realtors filed a lawsuit seeking to block the voter-approved tax, arguing that the city exceeded its authority under state law by expanding the scope of the excise tax beyond services and goods, such as tobacco and vehicles, to include real estate.

The tax falls on the buyer’s side of the ledger in a home sale, but ultimately has implications for the seller and the overall value of homes in the city, association President Drew Lambrich said.

“We are just confirming that they have the legal right to do so,” he said. “Ultimately, it has to go to the state level to amend state laws, if that’s what voters want.”

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