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Questa

Affordable Housing Development 101

Lisa O’Brien & Jenn Lopez

April 8, 2026

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Agenda

Affordable Housing Overview
Local Government’s Role in Housing
THP’s Recent Work in Questa

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Taos Housing Partnership Team

Taos Housing Partners (THP)

Lisa O’Brien

Project Moxie

Jenn Lopez & Josie Butler

Consultant

Daniel Werwath

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Taos Housing Partnership

THP creates affordable housing development capacity in the community through its partnership with foundations and affordable housing professionals.
THP serves as a community liaison with affordable housing professionals wanting to work in Taos County.
THP sponsors/manages programs like homebuyer education
THP is a resource to local governments on best practices and assists and/or can help to fill technical assistance needs
THP provides community education around affordable housing
THP is not a builder or a developer but can catalyze resources and partnerships to activate development opportunities.

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Affordable Housing Overview

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What is “affordable housing”?

Affordable housing means paying no more than 30% of gross income for rent/mortgage + utilities

Regulated affordable housing — what we commonly refer to as “affordable housing” are homes that have income restrictions. When the public sector invests in a housing unit, a restrictive covenant or land use restriction agreement is recorded. These limit the cost of the unit and who is eligible to rent or buy the home.

Naturally occurring affordable housing (NOAH) — this is market-rate

housing that happens to be leased or sold affordably.

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More Terms and Definitions

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Definitions

HUD - United States Department of Housing and Development.

Housing New Mexico (aka “MFA”) - is a self-supporting quasi-governmental entity that provides financing to make quality affordable housing and other related services available to low- and moderate-income New Mexicans.

Affordable Housing Act - the NM State Legislature created the Affordable Housing Act (2004)- or the Act- as an exception to the anti-donation clause in the NM Constitution to allow local governments and other political subdivisions to put resources towards affordable housing acquisition, development, financing, maintenance and operation. Essentially the Act permits public-private partnerships for affordable housing activities.

Area Median Income or AMI - is a key metric in affordable housing. It divides the income distribution of a specific area’s income distribution into two equal parts: one-half of the cases falling below the median income and one- half above the median income.

100% AMI is the midpoint of the income distribution and in general eligibility of affordable housing programs are set to below 100% AMI. For example, for HUD’s Section 8 program, their program eligibility AMI thresholds are: Low Income (at or below 80% of AMI), Very Low Income (at or below 50% of AMI), Extremely Low Income (at or below

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Definitions Continued...

Gap Financing/Funding - Gap financing is the additional funding needed to cover the difference between a project's total cost and what can be raised through primary sources like loans or tax credits. In affordable housing, it often comes from public subsidies or grants to make the project financially feasible.

Resale Control - A restriction that limits the price and conditions under which an affordable home can be resold. It ensures the home remains affordable to future income-qualified buyers, typically through a deed restriction or covenant.

Land Use - Land use refers to how land is developed and managed, including the types of buildings allowed and their purpose (e.g., residential, commercial, industrial). Local governments regulate land use through zoning codes, which shape housing density, building size, and where affordable housing can be built.

Housing Model - the structure or strategy used to develop, finance, operate, and regulate housing.

Examples include: +public housing, +nonprofit/community housing, +inclusionary zoning units (private developments required to include a portion of affordable units), +LIHTC

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Housing Continuum by AMI

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Housing in New Mexico

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Housing Development Challenges

Why Is Housing Development So Hard In 2026?

Real estate development is risky.
Building costs at record highs resulting in gaps btwn what people can afford & what’s available.
Tariffs insert a new level of uncertainty.
Although there are limited public funds available, the process to access these funds requires experience with public subsidy and real estate development.
Successful projects also need resources from local gov, which requires local gov capacity.
local land use can slow down or prohibit housing solutions.
With affordable housing it’s also not clear whose role it is to do it and therefore, no one steps in to solve the issue.

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Housing in Rural Communities

Rural Has Unique Challenges

Most housing development in rural areas requires infrastructure development; this takes time and can be risky for a developer to provide and requires millions upfront before development has any revenues.
Without infrastructure we are not able to scale projects.
Land use processes are also limiting in rural communities making housing development at scale very challenging.
Most public funding requires scale that doesn’t often work in rural communities.
Labor can also be a challenge—finding subcontractors, etc.
On top of these challenges is the additional challenges of natural disasters wiping out homes and devastating public infrastructure.

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New Mexico Financing Models

There are only a few common financial models for affordable housing in New Mexico:

For Sale - Using discounted or free land and infrastructure to create affordable for sale housing
Housing Rehabilitation - Providing funding and program support to repair and preserve existing homes, improving safety and quality while maintaining long-term affordability
Rental - Low Income Housing Tax Credits (LIHTC) to Create Affordable Rental Housing.

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Overview: Affordable For Sale Housing

Affordable homeownership projects create opportunities for moderate-income households to purchase homes at below-market prices, using public subsidies or donated resources to reduce costs.

Often paired with:

Down Payment Assistance (provides 3-5% of purchase price).
Second Mortgage Programs (can provide significant funding support for homeowner, funded with multiple sources).

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Target Market: Affordable For Sale Projects

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Considerations: Affordable For Sale Housing

Requires As Many of the Following Sources of Subsidy as Available:

Land (free or discounted).
Infrastructure (provided or financed with public funds).
Design and construction considerations (density provides more affordable housing).
Stick built versus modular – modular can be more affordable but it's hard to do side by side comparisons because each company handles onsite differently.
Interest rate fluctuation will impact mortgage amounts.
You will need to prepare homebuyers and have a resale control mechanism (second mortgage).

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Funding Sources: Affordable For-Sale Housing

Homeownership projects are typically funded by local housing trust funds

State resources are limited for homeownership, and many communities rely on capital outlay requests to fund infrastructure.
Sites are often acquired by local general funds or an occasional CDS request (Congressional Directed Spending).
Because for-sale housing has so few resources, most projects are developed as mixed-income projects.

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Funding Sources: Affordable For Sale Housing

Housing New Mexico (formerly MFA):

HOME
NM Housing Trust Fund
Primero Loan Fund
Zero Interest Home Builder Program
Innovation Fund
Various downpayment assistance programs
State Affordable Housing Tax Credits

New Mexico Finance Authority:

Opportunity Enterprise Revolving Fund- Housing Development

State:

State Appropriations
Workforce Solutions Department Fund
Capital Outlay for infrastructure

Local Resources

Local Housing Trust Funds
Foundations
Conventional Financing

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Examples: Affordable For Sale Models

New Mexico:

Homewise develops market rate mixed subdivisions to offset costs of 20-30% of the units being affordable.

Colorado Rural:

Rock Creek 24 units; free land, subsidized infrastructure and modular construction. Prices 290-330k.

Ecohab Taos: Small alternative build pilot project in Taos.

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Overview: Housing Rehab

Focuses on repairing and preserving existing homes.
Improves health, safety, and energy efficiency.
Helps maintain affordability for existing residents.
Typically serves low- to moderate-income homeowners.
Often smaller scale but critical in rural communities.

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Types of Programs: Housing Rehab

Owner-Occupied Repair Programs

Small grants or loans for critical repairs
Often targeted to seniors or low-income households

Weatherization Programs

Improve energy efficiency and reduce utility costs
Focus on insulation, heating systems, and water use

Acquisition + Rehab Programs

Purchase and rehabilitate homes for resale or rental
Often used by developers or nonprofits

Rehab Financing (Private Market)

Mortgage products that bundle purchase + rehab costs

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Funding Sources: Housing Rehab

Federal Programs

USDA Rural Development (loans + grants)
HUD HOME funds (administered by Housing New Mexico)

State Programs (Housing New Mexico)

HOME Rehab Program
Restoring Our Communities (ROC)
Weatherization Assistance Program (WAP)

Private Financing

FHA 203(k) rehabilitation loans

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Rural Challenges: Rehab Programs

Rural Has Unique Challenges

Limited contractor availability
Small project sizes can be hard to mobilize
Significant administrative capacity required to run programs and limited funding for programs
Eligibility barriers can limit participation

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Local Government’s Role in Housing

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Local Government Funds/Resources

Local governments typically provide the following types of funding:

Provide general fund resources– comes from annual budget and provides gap funding or development fee waivers for a project.
Land: it is common for local governments to provide sites for projects.
Housing Trust Funds– sources may include inclusionary fees, taxes, etc.
Pass through Capital Outlay Grant funds for infrastructure.

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Overview: Affordable Housing Act

The New Mexico State Legislature created the Affordable Housing Act (2004) to allow local governments to donate resources to create and maintain affordable housing in their communities.

The Affordable Housing Act allows communities to donate or make contributions towards acquisition, development, financing, operating, and managing affordable housing. The Affordable Housing Act is pivotal in addressing housing needs of cost-burdened households while also advancing structural rehabilitation and preservation initiatives.

Housing NM reviews all affordable housing plans and ordinances and provides comprehensive technical training and assistance on an ongoing basis to Affordable Housing projects as needed, including implementation.

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Affordable Housing Ordinance

Steps to passing an Affordable Housing Ordinance:

Ordinance must be drafted by local government (Taos County)
Submitted to and approved by Housing NM (Done)
Approved version passed by local government, with a copy of recorded Ordinance sent to Housing NM.

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THP’s Recent Work in Questa

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Recent Work in Questa

Assessed feasibility of two strategies:

Housing rehabilitation
Accessory Dwelling Units (ADUs)

Conducted partner coordination and limited community engagement

Identified need for stronger local data to guide strategy.

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Housing Rehab: Key Findings & Challenges

Existing program (Questa Lodging Project) has:

Limited administrative capacity
Volunteer-based structure
Unclear financial and risk management systems
Difficult to track performance or ensure long-term viability

Implementation constrained by:

Limited staffing and outreach capacity
Low contractor availability in rural areas
Household eligibility barriers (income, title, liens)
Regional programs exist but operate at small scale

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Housing Rehab: System Challenges

Sustainable program requires:

Dedicated administrative capacity
Reliable operational funding
Access to public rehab dollars
Consistent contractor engagement
Current structure is not sufficient for expansion

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ADU Strategy: Key Findings & Challenges

ADUs not currently permitted by right in Questa
High construction costs limit feasibility
Financing options are limited without subsidy
Infrastructure barriers:

Septic system limitations
High cost of system expansion

Zoning uncertainty adds risk for homeowners
Limited contractor interest in small-scale rural builds

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ADU Strategy: Conclusions

ADUs may be viable long-term
Near-term barriers include:

Gauge community interest in this model
Zoning
Financing
Infrastructure

Not recommended as a near-term pilot strategy

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Market Data: Important Contexts

Data sources include:

American Community Survey (ACS)
Public market data (sales + listings)
HUD income limits (AMI)

In small, rural communities like Questa:

Data is based on small sample sizes
Results can fluctuate year to year
Margins of error can be high

Some local housing situations are not captured:

Informal housing arrangements
Family or employer-based housing
Off-market rentals

Key takeaway:

Data should be viewed as directional, not exact
Best used alongside local knowledge and community input

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Market Data: Income & Affordability Context

Affordable housing defined as:

Paying no more than 30% of income on housing costs
AMI (Area Median Income) used to set affordability thresholds
Income limits vary by household size
Many housing programs target:

≤80% AMI (low income)
≤50% AMI (very low income)

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Market Data: Income Distribution

Questa has a higher share of lower-income households compared to Taos County:

Over 25% of households earn less than $20,000 annually
At the same time:

A growing share of households earn $75,000+
Indicates a wide income range and increasing income spread

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Market Data: Cost Burden

Even moderate-income households experience affordability challenges:

Housing is considered unaffordable when costs exceed 30% of income
Lowest-income households face the highest burden:

Majority of renters under $20,000 are cost burdened

Cost burden decreases as income increases

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Market Data: Income Trends

Affordability challenges persist despite income growth:

Incomes have increased over time
Growth has been uneven and varies year to year
Rising incomes do not necessarily keep pace with housing costs

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Market Data: Demographic Trends

Rapid increase in older population (60+)
Median age increasing significantly
Decline in younger populations and families with children
Smaller household sizes over time
Suggests possible:

Changing housing needs
Increased demand for smaller and accessible units

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Market Data: Key Takeaways

Housing affordability challenges are most severe for lower-income households
There is a mismatch between local incomes and housing costs
Housing supply may be limited, particularly at lower price points
Demographic shifts are changing the type of housing needed

Public data alone is not enough to understand real need in rural communities like Questa because this data has a high margin of error— local input and data gathering is critical to understanding real conditions.

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Next Steps for THP’s Work in Questa

THP remains under contract with QEDF and will complete the following activities:

Questa-Specific Data Collection: Conduct targeted, community-level data collection
Community Education & Engagement: Focus on education + gathering direct resident input

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Questions?

Lisa O’Brien

lisa@taoshousingpartnership.org

Jenn Lopez

jenn@projectmoxie.com