Santa Fe Approves Mansion Tax to Fund Affordable Housing, Combating Crisis
In a significant move to address the affordable housing crisis, voters in Santa Fe, New Mexico, have approved a tax on mansions to fund initiatives aimed at providing affordable housing options. The tax targets home sales over $1 million and has garnered nearly three-fourths of the votes, reflecting the public’s support for such measures.
Santa Fe, known for its stunning landscapes, vibrant arts scene, and unique stucco architecture, has been grappling with a shortage of affordable housing options. The city has seen an influx of high-income digital nomads, making it increasingly difficult for teachers, service-sector workers, single parents, and young professionals to afford local mortgages or rental payments.
The tax proposal was presented as a lifeline for these vulnerable groups, as well as a means to combat homelessness. This move follows similar initiatives in other cities, such as Los Angeles and Chicago, where tax measures were implemented to address housing shortages and homelessness.
Under the new tax in Santa Fe, buyers of residential properties valued at $1 million or more will be levied a tax on the amount exceeding the first $1 million. For instance, on a $1.2 million home sale, the tax would apply to $200,000, resulting in a $6,000 contribution to the affordable housing trust fund.
The new tax is expected to generate approximately $6 million annually for Santa Fe’s affordable housing trust fund. This fund supports programs such as price-restricted housing, down-payment assistance for low-income homebuyers, and rental assistance to prevent financial hardship and evictions. The trust also collaborates with other government and nonprofit sources to secure matching funds for affordable housing providers.
While Santa Fe has previously rejected notable tax initiatives, such as a 1% tax on high-end home sales in 2009 and a tax on sugary drinks in 2017, the approval of this mansion tax reflects a shift in public opinion and highlights the urgency of addressing the housing crisis faced by many across the country.
However, there are concerns regarding the authority of the city to implement this new tax under state law. The Santa Fe Association of Realtors has filed a lawsuit challenging the tax, questioning its legality. It remains to be seen how this legal challenge will unfold and if it will impact the implementation of the tax.
Santa Fe’s decision to impose a mansion tax is part of a growing movement of communities utilizing such taxes to fund affordable housing initiatives and combat homelessness. This approach seeks to strike a balance between addressing the housing crisis and ensuring an equitable contribution from high-income homebuyers.
As housing continues to be a pressing issue in many cities around the world, Santa Fe’s approval of the mansion tax serves as an example of proactive measures taken by local governments to tackle this challenge. The hope is that the funds generated will provide valuable support to those in need of affordable housing options and ultimately alleviate the strain on Santa Fe’s housing market.
