Santa Fe, the first New Mexico city to take such actions as adopting its own minimum-wage law and banning drivers from talking on cell phones, could be about to pioneer another idea here: taxing sales of expensive homes to help fund affordable housing.

If the City Council finalizes its plan tonight, voters this summer would decide whether to levy a 1 percent tax on the amount of a home's sales price that exceeds $650,000.

Resulting funds would be aimed at increasing homeownership and rental housing for workers. Opponents, however, say such an ordinance would paint a bulls-eye on the backs of those who have already worked and made investments.

The transfer tax idea, which stalled last year in the face of real-estate industry opposition, has been both attacked and praised for its Robin Hood aspect: taking from the rich to give to those less well off.

Now, supporters are using the migration of the city's work force to less-expensive nearby communities as an argument that it's time to implement such a law, recently rebranded as the Workforce Housing Initiative.

Many of the city's public-safety workers such as police and firefighters commute to their jobs, including a good number who live as far south as Albuquerque and Rio Rancho. But the exodus isn't just among those workers or even among teachers and nurses, also considered an essential part of the work force.

The migration of families and workers in nearly every Santa Fe industry means about $300 million skips town each year, according to a report last fall funded by the McCune Charitable Foundation.

"That was a very powerful report that showed not only does this have social impacts in our community, but it has tremendous economic impacts, and we have to reverse this trend," said Councilor Rebecca Wurzburger, who is sponsoring the measure along with Mayor David Coss and Councilor Rosemary Romero.

Romero, who took office earlier this year, said she has received only positive feedback from people in her Casa Linda neighborhood off Cerrillos Road and Monterey Drive, and from other constituents — except those in the real-estate business who have bombarded her with chain e-mails opposing the tax.

"Truly, the average folks are saying it makes sense to us to tax the over-$650,000 houses because we don't know the people who live in them anyway," Romero said.

Latest industry figures placed the median price of a single-family house sold in the city at about $301,000. City data indicate that about 400 houses inside the city limits sold in 2007 for more than $600,000.

Realtors have mounted advertising campaigns against such a tax. And real-estate professionals are likely to testify in force at tonight's hearing, said Baro Shabizi, president of the Santa Fe Association of Realtors.

"There are issues in general as to whether this ... is the most equitable way to raise revenue. On one hand, it is only targeting, you know, the wealthy," he said, later adding: "We are not saying this is going to put anyone in the poor house, but it will have an impact."

Among factors in the decision to hold a special election this summer is the potential for intervention by the state Legislature. Legislators earlier this year considered a bill that would have prevented the city from imposing such a tax. However, that bill's sponsor, state Sen. John Grubesic, D-Santa Fe, said this week that city councilors have a false sense of urgency about whether the state will get involved with the tax issue.

Gov. Bill Richardson is talking about calling lawmakers to a special session on health care issues this summer, but Grubesic said he has no intention of trying to resurrect the bill at that time. Only topics that are placed on the governor's call can be considered during a special session. The next regular lawmaking period begins in January, after Grubesic leaves office.

The one-term senator, who plans to move to Albuquerque at the end of the year, said he believes city residents would shoot down the tax idea at the polls. "I am not real concerned about it anymore because I think people understand this is stealing equity from our homes," said Grubesic, an attorney who holds a real-estate broker's license. "I'm going through the sale of my own house right now, and the market is just bleak. It is just frightening."

Although Grubesic's home is just outside city limits, a house inside the boundary that carried the same $849,000 price tag would be subject to such a tax.

The last time the city held a special election, in 2005, fewer than 2,000 residents — only 4 percent of eligible voters — went to the polls. A narrow majority of those voters approved a gross-receipts tax increase to pay for water projects.

The City Council last year came close to scheduling an election on the transfer-tax question but narrowly voted twice to stall the proposal. Since then, two councilors who previously opposed the plan have decided they want to see how it fares with voters.

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


Who would be subject to the tax?

The proposed tax would be imposed on those who sell houses for $650,000 or higher.

How much would the tax add to the cost of a high-end house?

A 1 percent fee would be collected on any part of the sales price that exceeds $650,000. For a house selling at $700,000, for example, the fee would be $500.

How much money would be raised?

That would depend on the housing market. City Finance Department estimates, based on houses sold in the city in 2007, indicated the tax annually would generate about $1.5 million. Estimates from the Santa Fe Association of Realtors, however, are lower.

How would the money be used?

The proposed ordinance identifies 10 ways the money can be spent on "work-force housing initiatives" once deposited in the city's Affordable Housing Trust Fund: down-payment assistance; purchase of vacant land or buildings; construction of houses; maintenance and rehabilitation of housing; operation of employer housing; administrative costs to manage the trust fund; purchase of housing produced through inclusionary zoning rules; offset of costs of green building for new houses in the affordable housing program; and retrofitings of existing units.

Critics say nothing in the rules guarantees how the money will be spent, but City Attorney Frank Katz says the law's intent is clear. "It has to go into the trust fund," he said. "That's exactly what the ordinance says." City staff have said the initiatives likely would be implemented through contracts with nonprofits that already do similar work.

Who counts as "the work force"?

The term isn't defined in the ordinance as proposed. A proposed amendment defines workforce housing as "housing for those with at least one full-time worker who earns between the living wage and the amount needed to afford to live in the area." Sponsor Rebecca Wurzburger said income limits for beneficiaries likely would mimic current housing programs.

Is the Workforce Housing Initiative the same as the real-estate transfer tax proposed last year?

No, but it's similar. The current proposal has a higher price threshold than the earlier plan, which would have applied to transactions of $500,000 or more.

What sales or transfers of property would not be subject to the tax?

Exempt from the tax would be sales of commercial properties or undeveloped land, and family transfers, among other types of conveyances.


What: Public hearing on whether the city should hold a special election on a proposed real-estate transfer tax.

When: 7 p.m. tonight

Where: City Hall, 200 Lincoln Ave.