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Overview of the Affordable Housing Act

What is the Affordable Housing Act (AHA)?

The New Mexico State Legislature passed the Affordable Housing Act in 2007 (and amended it in 2015) as an exception to the anti-donation clause in the New Mexico 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 the affordable housing activities.

The Act is pivotal in creating local level solutions to the challenge many of the state’s low- and moderate- income residents face in trying to secure safe, quality housing.

MFA provides technical assistance to local governments pursing projects under the Act and is responsible for compliance matters.

How does the AHA work?

Under the Act, entities that are authorized to make donations to affordable housing include: the State of New Mexico, counties, municipalities, and school districts.

  • Entities eligible to receive donations- or qualified grantees as they are termed in Act- include:
    • Public entities, like housing authorities,
    • Non-profit organizations, like homeless shelters or an agency the works in home rehabilitations for low income households, 
    • Or private enterprises, which are most often housing developers
    • To be considered a qualified grantee, the entity must exist for the propose of providing affordable housing
  • Allowable donations include:
    • Land for affordable housing construction
    • An existing building for conversion or renovation into affordable housing
    • Costs of infrastructure necessary to support affordable housing projects
    • And the cost of acquisition, development, construction, financing, operating or owning affordable housing

AHA Requirements

The Act has certain requirements that must be satisfied for a local government to make donations to affordable housing. These requirements include:

  • Passing “enabling legislation”, which is an ordinance that basically incorporates the Affordable Housing Act definitions and regulations into local code.
  • The local government must also have adopted an affordable housing plan MFA must have had reviewed and approved both the ordinance and plan to be considered valid
  • After the local government has these two elements in place it can seek a qualified grantee through a local state procurement process. Local governments must certify that the entity selected to be its qualified grantee does indeed exist for the propose of providing affordable housing and is financially sound.
  • The local government can then donate to the qualified grantee through a contract that stipulates beneficiaries of the donation are low and moderate income, an affordability period, and security against loss of public funds.

Phase III

Local government makes donation to qualified grantee for affordable housing:

  • Donation must serve persons with low and moderate income
  • Requirements for affordability period
  • Stipulations to secure against loss of public funds