Committee advances bill to change multifamily property valuation, 9-1

Senate Bill 186, a proposal to change how multifamily housing is valued for property tax purposes, advanced out of the Tax, Business and Transportation Committee on a 9-1 vote after two amendments were adopted.

Supporters said the bill addresses “tax lightning” — large increases in tax bills that occur when undervalued multifamily properties are brought up to current market value on sale or new construction. Under current practice, multifamily properties in many counties are assessed at about 25% of market value; SB186 would require assessors to use current-and-correct value but limit the year-to-year increase and base taxable value at 40% of corrected value, phased in and subject to the property tax code cap referenced in the bill.

The sponsor, Senator Wirth, framed the measure as a response to long-standing assessment gaps that have left many multifamily buildings taxed far below market value. Developers and industry groups testified that the current valuation approach discourages new construction and sales because prospective buyers face a sudden, large tax increase at closing. JD Bullington of the Greater Albuquerque Chamber of Commerce, Alan Lisak of the Apartment Association of New Mexico, Eric Olsen (a multifamily industry professional) and other commercial real-estate representatives said the bill would add transparency and predictability and keep projects financially viable.

Opponents and some committee members raised concerns about the local revenue impact and whether the bill would actually produce more affordable housing. Senator O'Malley and Senator Figueroa questioned the absence of targeted affordable-housing requirements and noted the bill shifts revenue effects to other taxpayers or local governments. Senator O'Malley cited permitting delays and rising interest rates as important barriers to new construction that taxes alone do not fix.

The committee adopted two amendments. The first was a technical cleanup changing per-unit formulas to total-property valuation language. The second added an affidavit requirement compelling owners to file, within 90 days of a final certificate of occupancy, a confidential affidavit of cost and legal description for indexing by the county assessor; the amendment directed the assessor to retain the original as a confidential record and return a dated copy to the owner.

After the amendments and testimony, the committee voted 9-1 to give the bill a do-pass recommendation. The committee record shows one recorded dissent during the final vote.

The measure now moves to the Senate Finance Committee, where senators said further adjustments to phase-in years, local impacts and potential carve-outs could be discussed.

Supporters said the goal is to reduce the current disparity between neighboring properties and to restore transactions and investments stalled by the risk of sudden tax increases. Critics said the bill does not guarantee that new or rehabilitated units will remain affordable and urged the sponsor to pursue targeted incentives for lower-cost housing.

SB186 contains several cross-cutting provisions implicating county assessors’ records and property tax code procedures; the bill text and the adopted affidavit provision emphasize confidentiality and indexing of development cost submissions to allow assessors to reference the data without making it part of the public valuation record.

Committee action: Motion to adopt the two amendments was approved; final committee vote to recommend passage was 9 yes, 1 no.

The committee discussion included extensive public testimony from developers, property managers and industry trade groups and detailed exchange among senators about local fiscal impacts, long-term tax policy and housing supply dynamics. The sponsor and witnesses said other bills addressing commercial valuation may follow.

Senate Bill 186 will next be considered by committees that handle fiscal impacts and will likely receive further edits to address concerns raised by members and local governments.