City Council approves sale of $6 million housing GO Bonds

After voters approved $6 million of general obligation bonds in 2022, the timing and the market to sell the bonds is finally right.

On Monday, Las Cruces City Council approved two resolutions - one to sell the bonds and a second resolution that outlines an investment strategy over a three-year time period.

The $6 million was approved by voters in order to provide resources to plan, design, construct, acquire and preserve housing affordable for low to moderate income households.

The City expects to sell the bonds on March 14 and expect an interest rate of around 5.3 percent. The passed ordinance stipulates that the bonds won't be sold for an interest rate greater than 10 percent.

"We can never predict what is going to happen in the market, we can just do our best estimate," said City Treasurer Erika Jacquez.

Once sold, Las Cruces Housing and Neighborhood Revitalization Administrator, Natalie Green said the city can leverage the $6 million into over $142 million through other grants and programs and build about 800 rental units.

"Leverage is other funding sources that get sandwiched into the projects to match our funding for the construction or long-term operations," Green wrote in an email.

Gov. Michelle Lujan Grisham recently signed House Bill 195 into law, allowing the New Mexico Finance Authority to issue loans for housing development from a revolving fund that previously was only used for commercial development.

"It opens up the opportunity to access new funding sources especially for workforce and middle-income housing," Green wrote in an email. "It could impact future developments because we can possibly diversify the incomes within a development and reduce the need for local subsidy. There is still a rule making process so its too early to access the full impact to housing programs."

The City also received $1 million from the state for Three Sisters Apartments project and tentatively another $6 million during the recent legislative session for its Amador Crossing project.

The affordable housing bonds were part of $23 million that voters approved - $9.8 million for new fire station, $4.9 million to the East Mesa Public Recreational Complex and $1.98 million for park improvements.

How will City invest bonds?

The City contracted with Project Moxie to develop an investment framework for the GO Bonds.

Green said the GO Bonds would be used primarily for projects that will affect renters and first-time homeowners. The City will use $4 million toward rental tax credit development and $2 million would be used for land acquisition and development for affordable single-family housing.

Affording housing is defined as rent or mortgage that costs less than 30 percent of the combined income of the household.

According to a Harvard study cited in the Project Moxie report, the supply of low cost rentals has declined nationally in the past 10 years, losing 3.9 million units with contract rents below $600, leading to a 35 percent increase in unsheltered homelessness since 2015.

Doña Ana County has the highest rental gap - number of units available versus those needed, for income levels below 30 percent of area median income - with 4,146 units.

"This translates to thousands of potential households in the area living at risk of homelessness," the report stated.

What housing projects could receive funding from GO Bonds?

The City recently broke ground on the Three Sisters Apartments, a 70-unit affordable housing complex, situated at 130 N. Walnut and designed specifically for families with children.

Three Sisters is one of eight affordable housing projects in the City's pipeline. Council has approved a $6 million pre-commitment to help fund Phase II of the Peachtree Canyon Apartments — a multifamily apartment complex that will ultimately consist of 244 rental units at 7081 North Jornada Road and Peachtree Hills Road.

Construction is expected to begin this year on the Pedrena Apartments - an 80-unit senior rent restricted apartment complex located at 801 Farney Lane and 1955 El Paseo Road.

"It's important to acknowledge that affordable housing is such a broad spectrum that helps so many people in the community of many income levels," said Councilor Becki Graham.

With interest rates in mind, City Manager Ifo Pili said the Go Bonds sale also coincided with projects nearing construction.

"We didn't want to issue debt and then have that debt sitting and us paying interest while we were waiting for projects to get moving," Pili said.

Jason Groves can be reached at 575-541-5459 or jgroves@lcsun-news.com. Follow him on X, formerly Twitter, @jpgroves.

This article originally appeared on Las Cruces Sun-News: City Council approves sale of $6 million housing GO Bonds