Santa Fe Weighs Levy on High-Value Properties Amid Surging Real Estate Costs

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As Santa Fe grapples with rising real estate prices, the electorate is poised to determine the fate of a tax on high-value homes, aimed at funding affordable housing projects. The city, known for its unique blend of Native American and Spanish-colonial architecture and its picturesque setting amidst desert mountains, is considering financial measures to assist those priced out of the housing market, including educators, service workers, and other residents who are struggling to keep up with the increasing costs of living and housing.

The suggested tax would impact home sales exceeding the $1 million mark, proposed as a crucial support for the community members finding it challenging to afford homes or rents in the wake of a nationwide housing crunch. This influx of remote workers with high incomes and retirees with significant wealth has further escalated housing demands.

The measure on the November 7 ballot follows the trend of ‘mansion taxes’, a term used for such levies, that are being eyed or implemented in various cities, from Los Angeles to Chicago, as a means to generate funds for affordable housing and prevent homelessness.

The Tax Initiative

Should the voters give the green light, the initiative would introduce a 3% tax on the portion of residential property sales exceeding $1 million. To illustrate, on a property sold for $1.2 million, the additional tax would be calculated on the $200,000 surplus, amounting to $6,000 directed to the city’s affordable housing trust fund.

The fund is anticipated to accrue roughly $6 million yearly from this tax, contributing to price-restricted housing, helping low-income buyers with down payments, and preventing evictions through rental assistance. This trust leverages these funds to support housing providers that can obtain matching contributions from other governmental or non-profit entities, as detailed by Alexandra Ladd, who heads Santa Fe’s affordable housing office.

However, Santa Fe’s electorate has historically been hesitant about tax increases, as seen in the rejection of similar proposals in recent years.

Housing Affordability Dilemma

Mayor Alan Webber advocates for the tax, highlighting the risks of escalating housing costs to the community’s fabric. He underscores the importance of retaining the city’s diverse population, which could be overshadowed by wealthier newcomers who can afford to telecommute from this attractive locale.

The tax has garnered support from various stakeholders, including local businesses, unions, and political figures, who recognize the severity of the housing crisis in Santa Fe.

The Trend of Mansion Taxes

The notion of imposing taxes on premium real estate to combat the housing affordability crisis is gaining traction across the nation, as noted by policy experts like Samantha Waxman. These taxes are being considered as potential solutions to the challenge of securing affordable housing in an environment where both rents and property prices are on the rise.

Construction Surge

Santa Fe is currently experiencing a construction surge, with a significant number of housing units approved since 2021. Despite these developments, housing accessibility remains a concern, with new units fetching market rates that stretch the budgets of many residents. The median home price in the city has surged, signaling a widening gap between housing costs and local earning capabilities.

Opposition Voices

Critics of the proposed tax, including the Santa Fe Association of Realtors, question the city’s legal authority to impose such a tax and fear it may dampen home sales, affecting the broader economy. They also raise concerns about potential social divisions that might emerge from the tax.

In this heated debate, citizens express varied opinions, with some fearing social division, while others, seeing the community’s workforce diminishing, view the tax as a necessary step for those with the means to support broader communal well-being.

Frequently Asked Questions (FAQs) about mansion tax Santa Fe

More about mansion tax Santa Fe

• Santa Fe Affordable Housing Trust Fund
• National Housing Shortage Information
• Mansion Taxes in the United States
• Santa Fe Median Home Price Data
• Santa Fe Association of Realtors Statement