Affordable housing gets a break

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By Kirsten Laskey

The Los Alamos County Council Tuesday in a move to boost affordable housing approved a process that will give developers a discount on land.

Called the Land Donation and Land Discount Program, a system will be created to use public land in a cost-effective way, said Steven Brugger, housing programs manager.

“It’s to make it easier for builders to provide affordable housing for lower-income households,” he said. “The cost of land is a significant component of the total cost of building a home so by reducing that cost we can help promote affordability.”

Under the program, a land donation will be made to developers when all of the units would be provided to households that are 50 percent below the area’s median income.

Developers would get a land discount when a housing project commits to sell to households that are 50-80 percent of the median income.

The amount of the discount or donation would be included in a promissory note payable to the county and secured by a second mortgage. The mortgage and the note would be forgiven at the end of the affordability period.

The money from the note would then be returned to the affordable housing fund.

Brugger said the greater the subsidy loan, the longer the affordability period. Higher subsidies should be used for lower income household.

He added when the county conveys land for a discount, it will take half of the appraised value in cash and half in a promissory note.

For rental properties, no land subsidy would be provided to a builder serving only households greater than 50 percent of the median income. To get a discount or a donation, the applicant must rent units to households earning at or less than 50 percent of the median income.

Councilor Vincent Chiravalle asked what the basis would be to deny a builder who had qualified through the ordinance.

If a builder meets all the requirements, he asked, what discretion does the county have to deny the discount and the loan?

County Attorney Randy Autio said the council has some discretion.

The county is not required to make land available for affordable housing.

The program is a step in the right direction, Chiravalle said.

He said he believes the program solves two needs – to provide affordable housing for workers in the retail sector, which will help nurture local retail and provide housing to construction workers at the Los Alamos National Laboratory’s CMRR building.

Councilor Ralph Phelps said he was concerned with problems in the real estate market. He said he wondered if the ordinance would offer controls on the quality of the mortgages and what sort of protection the county had with sub-prime mortgages.

Brugger said there is language in the ordinance that essentially prohibits sub-prime mortgages.

 “I think it’s pretty tough to address every contingency possible but the ordinance does a great job,” Phelps said.

The county has dealt with affordable housing developments in the past, such as Piñon Trails.

However, the county did not offer land donations or discounts, forcing the developer to find another way to subsidize the project.

The land was acquired from public schools. Piñon covers 25 acres and contains 121 units, 50 of which are affordable houses and is located in White Rock.

Councilor Nona Bowman asked if any lessons have been gained through the Piñon Trails development.

Brugger said he believes the positives outweigh the negatives.

Although one homeowner in Pinon Trails had to declare bankruptcy, he still described the project as “extremely successful.”

Councilor Robert Gibson asked if students could get involved in the program. Brugger said he would consider including that in the rules and regulations for the program.

Council will discuss that at a later meeting.

The land discount and donation program follows the New Mexico Finance Authority, Councilor Sharon Stover said. She asked Brugger if he felt confident about them.

“We have to go through this process,” Brugger said. “Fortunately, they are competent, fortunately they have financial resources we intend to take advantage of … we have a demonstration of excellence working with them.”

Piñon Trails is the only subdivision in Los Alamos that offers affordable housing, although there are other lower price units in different developments, Brugger said.

He added he is unsure how many people in the county qualify for affordable housing.