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Senate Finance committee advances SB186 to change multifamily property valuation to 40% of fair market value
Summary
Committee accepted a motion to advance SB186 after testimony for and against; a proposed floor amendment to prevent existing assessments from dropping was discussed; committee approved the bill 6-4.
A proposal to change how multifamily properties are assessed advanced out of the Senate Finance Committee after extended testimony from developers, assessor-affiliated witnesses and county officials.
Nut graf: Senate Bill 186 would require disclosure of construction costs or sale prices for multifamily properties and set taxable valuation at 40% of the disclosed full value. Supporters said the change would encourage new construction by stabilizing tax expectations for developers; opponents — county assessors and county officials — warned the measure as written could shift tax burdens to single-family homeowners and reduce county revenues unless floor language prevents existing assessed values from being rolled back.
Josh Rogers of Titan Development and Billy Eagle of CBRE testified that multifamily assessments have lagged market conditions and that the bill would permit transactions and new construction to proceed without sudden tax spikes. Rogers and other industry witnesses said current multifamily taxable values are commonly near 28% of fair market value and that immediate reassessment to full market value would create “tax lightning” for owners and tenants. As one industry witness explained, an illustrative increase in property tax per unit from $1,500 to $4,500 would be a $3,000 annual change — about $250 per month per unit — and could make new projects financially infeasible.
Opponents included Joya Sparsen, executive director of New Mexico Counties, and representatives of the assessors affiliate. Daniel Lara, speaking for the assessors affiliate, said the bill “as written…provides a 60% exemption for multifamily property and shifts that property tax burden to your single family residence,” and Bernalillo County assessors estimated large local revenue impacts. Ivan Barry, chief deputy assessor for Santa Fe County, said noncompliance with sales-transfer affidavits has contributed to long-standing undervaluation and that the bill’s mechanics would need guardrails to avoid reducing current county revenues.
Sponsor and supporters told the committee they would introduce a floor amendment on the Senate floor to prevent the bill from reducing currently assessed values (i.e., a floor so that current assessments cannot be moved backward). Senator Padilla and other proponents argued the amendment would address county revenue concerns and allow the bill to encourage new development while protecting existing valuations.
The committee recorded a roll-call vote on the do-pass motion: Senator Brandt — no; Senator Campos — yes; Senator Gonzales — yes; Senator Lanier — no; Senator Padilla — yes; Senator Steinborn — no; Senator Trujillo — yes; Senator Woods — no; Senator Shandoh — yes; Senator Munoz — yes. The tally was 6 yes, 4 no; the bill advances to the floor where the sponsor indicated floor amendments will be offered.
Ending: Committee staff and the sponsor said they will circulate draft language for the floor amendment to assessors and counties before the amendment is offered; senators requested further analysis of the fiscal impact report and the amendment text before floor action.
