REAL ESTATE
Faster permitting could ease New Mexico’s housing shortage, report says
Released Wednesday, the new Homewise study points to by-right approvals and clearer zoning as fixes
New Mexico needs an estimated 58,000 new housing units to address an ongoing supply shortage, according to Housing New Mexico. Some say that cutting red tape is one of the top ways to bridge the gap.
“I can speak on behalf of every builder in this market: They’re all crying for help, and they all want to see changes made in (permitting and entitlement) processes to help get units built and ultimately get people into housing at an affordable rate,” said Matthew Dyer, vice president of development for Albuquerque-based Price Land Development Group.
With home prices rising and supply continuing to fall, Dyer said he believes streamlining permitting processes “has to be the most important conversation” in the local housing landscape right now.
That conversation is front and center in released by Homewise Inc. on Wednesday.
The nonprofit, which helps low- to moderate-income New Mexicans achieve homeownership, partnered with Mercatus Center, a research hub at George Mason University, to produce the report, titled “How to Streamline Housing Permitting in New Mexico.”
One of the primary challenges the report highlights as hindering housing permitting in New Mexico is the limitation on by-right development — a process in which housing projects receive approval from a municipality’s staff if they meet standards set by elected officials through ordinances. This is also known as administrative approval.
This differs from discretionary approval, which makes projects subject to public input through hearings and reviews by sometimes numerous boards, such as planning commissions or city councils.
“This process can block housing by favoring a small number of people who are unrepresentative of the wider community yet are most able to attend public hearings,” the report says.
Several New Mexico jurisdictions, such as Farmington and Las Cruces, have adopted or expanded by-right, administrative processes for housing in recent years. But limitations still exist in state statutes, some of which require jurisdictions to hold discretionary public hearings for subdivisions spanning more than two lots.
The report calls on state legislators to reform these statutes, which restrict housing innovation at the local level and delay attainable housing types like starter homes and townhomes.
At the local level, the report also details several actionable reforms municipalities can adopt, including reserving public input for policy-related discussions, such as annual meetings to update land development codes.
This approach, the report says, allows municipalities to incorporate more robust public input into housing rules — so that the public still has a voice — while implementing administrative approval on a case-by-case basis. The report argues that administrative approval should be the standard for typical projects, with exceptions for large or unique developments.
“In housing development, they need predictability,” said Nathan Lindquist, one of the report’s authors and a real estate development and policy manager at Homewise. “(With) administrative approval, you’ve got really clear standards. You can read the code and know whether you’re going to get approved or not.”
Objective zoning standards can also speed up the permitting process. For example, cities can set clear height limits or require traffic studies only for projects exceeding 100,000 square feet. By contrast, vague standards such as requiring projects to “follow neighborhood character” can add uncertainty, the report says.
The report also encourages localities to conduct regular analysis and set goals for permitting processes. That can include tracking average times for planning and permit approvals; creating a workflow process to identify bottlenecks; conducting surveys of planning department customers; and crafting strategic permitting plans with clear performance measures.
The report highlights cities like Las Cruces, Rio Rancho, Albuquerque, Silver City, Farmington and Artesia as leaders already embracing some of these best practices Homewise recommended.
Johanna Gilligan, Homewise’s president, said that the need for speedier permitting is compounded by New Mexico’s rising home prices, an aging housing stock and constrained supply near growing job centers.
“We’ve got the makings of an even potentially bigger problem on our hands if we don’t liberalize our regulatory framework and get government working faster,” Gilligan said.
Through this report, Gilligan is also hoping to see a shift in local governments’ perspective of infrastructure development. Before homes can be built, what’s referred to as spine infrastructure — such as roads and utilities — needs to be installed first.
The Homewise report says local governments should support high-priority housing projects by directly funding the spine infrastructure or waiving impact fees for affordable units. In some cases, local governments could be positioned to install the infrastructure, which the report says the state should encourage through “effective and consistent infrastructure programs” geared specifically toward housing production.
The cost of a development’s off-site infrastructure improvements also should be proportional to the impact of the development, according to legal precedents set by the U.S. Supreme Court. These types of improvements are often called exactions, which Gilligan said Homewise supports but with conditions.
“We’re totally comfortable with municipalities saying, ‘We want this public benefit out of this,’” Gilligan said. “But it has to be a partnership. It can’t just be trying to exact public benefit out of a development and then burdening the developer and the end owners or renters with that cost.”
Homewise and the Mercatus Center concluded their report by detailing recommendations for state lawmakers. Those include establishing incentives for local jurisdictions to adopt best practices for permitting, and creating a permanent, central state housing agency tasked with developing a comprehensive housing strategy for the state.
Gilligan, Lindquist and fellow author and Mercatus Center Senior Research Fellow Salim Furth said they believe the best practices detailed in Homewise’s report can be implemented as soon as the upcoming 60-day legislative session.
“We’re hoping to give them (this report) as … something you can do where you’re not telling people that you’re going to come and revolutionize their communities,” Furth said, “but you’re giving those communities the tools to grow when they want to.”
Kylie Garcia covers retail and real estate for the Journal. You can reach her at kgarcia@abqjournal.com.