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Senators debate raising property-assessment cap from 28% to 40% to spur multifamily development
Summary
Lawmakers on the Senate floor debated a bill to change how multifamily properties are assessed for property tax — including an increase from 28% to 40% cited as an incentive for new development — and discussed effects on rents, investment and state and county revenue.
During a Senate floor discussion, lawmakers debated a bill that would change how multifamily properties are treated on the property tax rolls, including a proposal to move the assessed percentage applied to certain properties from 28% to 40% to encourage new development, sponsor Senator Wirth said.
The debate focused on whether the change would lower rents for tenants by bringing new units into the market or simply increase profitability for developers. A senator who identified a private real-estate background said the amendment “addresses that and changes it,” and described how investors make acquisition decisions based in part on tax-treatment expectations. “My husband and I have coached people in on both sides, commercial and residential real estate for close to two decades,” that senator said as a disclosure of interest.
Senator Wirth, the bill’s sponsor, said the proposed cap would “help stabilize that lower end” of the market and that “bringing in a whole bunch of new units also increases competition.” He described the policy as an incentive intended to get development moving and help house people in Bernalillo County and across New Mexico.
Senator Scott pressed the sponsor with a numerical example to illustrate how assessed value and taxes would affect a developer’s margins. Using an illustrative $3,000,000 construction cost, Scott said industry valuation practices often treat taxable value as about one-third of purchase price, which would put the taxable base at roughly $1,000,000; at 28% on the rolls that equals $280,000. Scott also said newer developments can face a competitive disadvantage in tax burden compared with older properties and that, in his calculation, that difference can be substantial. “There is no requirement,” Scott added while discussing the incentive, “that… developers lower rents,” meaning the bill would not obligate reduced rents as a condition of receiving tax treatment.
Lawmakers also raised fiscal concerns. One senator warned that broad tax breaks — and interaction with the state’s gross receipts tax (GRT) structure — can reduce funds available to the general fund and that counties would have to make up any revenue shortfalls at the local level. That senator said the state has many tax breaks that can help margins for businesses but also “deprived state government of the proper funds to properly fund a government.”
No formal roll-call vote or final action on the bill appears in the recorded discussion excerpt provided.
The debate combined policy details (assessment percentages and examples of assessed value math), concerns about renter outcomes and competition, and fiscal considerations about state and county revenue flows. Sponsors and questioners emphasized that the measure is intended as an incentive and that it contains no explicit rent-control or rent-reduction requirement as written.
