Policy Memorandum on Addressing Albuquerque’s Housing Crisis

To the Albuquerque City Council and Citizens

I. Executive Summary

Albuquerque is grappling with escalating home and rental prices, leading to economic and social challenges. The city’s median rent is $1650, slightly below the national average but showing a $300 increase since 2020 and a $200 increase from the same time in 2023. This memorandum proposes policy changes to address the housing shortage in light of the recent failure of the duplex amendment to the city’s Integrated Development Ordinance (IDO). The discussed policy changes focus on easing the process of obtaining variances for property owners to encourage infill development.

II. Background

Housing prices and rents are rising nationwide, with few exceptions. Cities like Minneapolis and Austin have managed to stabilize or even decrease prices through policies that facilitate new housing construction, including infill development. However, Albuquerque has struggled to implement similar reforms. For instance, an amendment to the city’s R1 zoning rules, which would have allowed duplex conversions within ¼ mile of transit corridors and urban centers, was voted down on June 17, 2024.

Change in housing prices in Austin and Minneapolis

III. Current Challenges

Albuquerque needs between 15 and 28 thousand new housing units to reach 30% and 50% AMI respectively. But the city has permitted fewer than three new units per 1000 residents each year since 2009. The city will have to implement some form of policy intervention in order to meet it’s housing needs.

Very few new unit permits have been granted in Albuquerque in the past 15 years, and almost none of them have been middle density housing.

The current process for obtaining a variance to build or convert to duplexes or other mid-density housing within R1 zones is cumbersome and uncertain. Property owners must demonstrate that their property is exceptional, that an unnecessary hardship results from this exceptionality, and that the variance will not harm the public good or the use of surrounding properties. Once granted, the variance must be utilized within one year, or it is voided. Developers will typically need to have funding in hand to meet this deadline requirement, which makes obtaining a variance financially risky. These barriers prevent variances from contributing significantly to overcoming the housing shortage.

IV. Proposed Policy Changes

1. Variance Rules Modification: Introduce an additional avenue for granting variances, allowing property owners to demonstrate that the variance contributes to the public good. This could include responding to the housing crisis, creating low-income housing, or redeveloping a nuisance lot.

2. Emergency Measure: Declare an emergency measure altering the variance process for infill housing development, making the process less onerous for property owners. This measure should require periodic renewal by the city council to prevent abuse of power.

3. Extend Variance Utilization Period: Extend the period during which the variance must be acted upon, reducing the financial risk for developers and making projects requiring variances more likely.

V. Further Considerations

The city should also consider actions to encourage further infill development in parts of the city where high density infill development is already allowed through existing zoning rules. Such areas have ample properties available for such redevelopment. For example, downtown has a third of its land area devoted to off-street parking. However, one major barrier to infill development must be addressed at the state level: New Mexico’s status as a “non-disclosure” state. The sale price of real property is not part of the public record. This hampers developers’ ability to assess the value of new development and limits the county assessor’s access to sales data.

Areas in red are off-street parking. At 1/3 of downtown Albuquerque’s land area, some of these lots could be redeveloped into housing with the right incentive structure for land owners.

The Bernalillo county assessor has tried to incentivize development of nuisance and unproductive properties through the “best and highest use” standard of assessment in which a property is assessed based on its potential value rather than current value. The lack of public sales data has hampered this strategy, but the city and state should take measures to support these efforts. Only 12 other states are non-disclosure states, so New Mexico should consider repealing this rule.

VI. Conclusion

Addressing Albuquerque’s housing crisis requires incremental and flexible policy changes. By modifying variance rules to encourage infill development, we can make significant strides towards alleviating the housing shortage and its associated economic and social challenges.