Efforts to fund affordable-housing programs in Santa Fe by taxing sales of expensive homes would be thwarted if a bill that cleared the New Mexico Senate on Wednesday makes it into law.

State Sen. John Grubesic, D-Santa Fe, introduced Senate Bill 160, which won passage on the Senate floor by a vote of 34-3. The measure now heads to the House.

The legislation would prohibit cities from imposing a tax on the transfer of real property, adding a section to a state statute that already bars municipalities from imposing an income tax or excise tax.

Grubesic introduced an identical bill in 2006, which also passed the Senate but never made it to the House floor. He said he slowed the bill's progress in that session because Santa Fe city councilors "ambushed" him and asked for time to work out their objections.

In the past year, Grubesic said, he became frustrated because the city did "nothing to deal with affordable housing."

City councilors here have debated a real-estate transfer tax on several occasions in recent years, always under heavy attack from the real-estate lobby, which argues it would make homes even more expensive.

Last fall, the City Council twice voted on whether to hold a hearing that would pave the way for putting the transfer tax on the ballot for the March 4 municipal election. The proposal would have applied a 1 percent tax on the amount of a home's sale price that exceeds $500,000. Sales below that threshold would have been exempt.

While the council did not move forward on the idea, several councilors said the idea wasn't dead.

Shortly before the proposal stalled, the Santa Fe Association of Realtors participated in an advertising campaign that attacked the idea of a transfer tax. One ad, which featured a model dressed as a firefighter, was later criticized by the city fire chief for misappropriating his department's image.

The association claimed it had research from The University of New Mexico Bureau of Business and Economic Research that predicts how such a tax would impact the Santa Fe housing market, but refused to make the document public.

A city poll released in late October, after the council vote kept the matter off the ballot, indicated more than half the city's voters support such a tax.

Grubesic, an attorney who also holds a real-estate broker's license, said he would not have pushed for the state law if the city had put the transfer-tax idea before voters in the upcoming city election. But Grubesic said he has never approved of the idea.

"This is robbing people of their equity in their homes," he said. "For some people, the home investment is the biggest investment they are ever going to make, and I think invading the sanctity of that investment and that equity built up is the wrong way to go about this."

The bill's co-sponsor, Sen. John Arthur Smith, D-Deming, and some others who voted in favor of the bill, Grubesic said, want to reserve transfer-tax authority for the state.

Santa Fe Mayor David Coss, who was at the Senate to hear the discussion about the bill, said Grubesic made no effort to meet with the city before he introduced it.

"I think its a bad bill," the mayor said. "The city of Santa Fe and increasingly other local governments are trying to deal with housing prices and affordable-housing issues, and they (the bill's backers) are trying hard to take one of the tools out of our tool kit at the behest of the real-estate industry."

Coss said the proposed tax would raise about $1 million in revenue annually for an affordable-housing trust fund.

"Santa Fe has serious and almost unique affordable-housing problems, and a large piece of it is all the second-home purchases," he said. "To just take the (taxing) authority away, to say you can't touch that part of the real-estate market, is unfortunate."

Grubesic said he was concerned the city would use the revenue from a transfer tax for other needs.

"I think there's other mechanisms we can use to fund affordable housing besides imposing what I consider a double tax" on top of property tax, he said.

Grubesic said his father is a real-estate broker, and he has met with other real-estate industry representatives on the issue, but he did not recall if he had been lobbied this year to introduce the bill.

Santa Fe City Councilor Patti Bushee said she fought at last year's legislative session to prevent the ban. She said it seems that the legislator is targeting Santa Fe, the only city contemplating a transfer tax. "I don't understand his motives," she said. "They don't seem to represent the city's wishes."

The Associated Press contributed to this report.

Contact Julie Ann Grimm at 986-3017 or jgrimm@sfnewmexican.com.