A New Mexico state authority issued $60 million in bonds to finance affordable housing in the state.
The bonds, sold by the New Mexico Mortgage Finance Authority, mature on February 1, 2042, with an initial mandatory tender on June 1, 2025. They yield 3.99% and pay interest at 5%. The securities received a rating of Aaa/VMIG 1 from Moody’s Investors Service.
“The Aa1 senior lien rating reflects the high default tolerance and adequate and steadily improving debt service coverage provided by the sum of legally separate and pledged loan agreement revenues and governmental gross receipt taxes (GGRT) coupled with the average credit quality of the borrower pool,” according to Moody’s.
The bonds will finance two affordable multifamily housing developments in Santa Fe. The city has sought to build more housing in recent years amid a shortage of affordable rentals. Half of Santa Fe renters pay 30% of their incomes in rent, according to Harvard University’s Joint Center for Housing Studies. Together, the buildings financed by the bond proceeds will supply 228 new multifamily affordable housing units.
The issuance comes as the city considers a so-called mansion tax, which would impose an additional 3% tax on the amount homebuyers pay above $1 million. The average home value in Santa Fe is $566,000, according to online real estate marketplace Zillow. Proceeds from the tax would fund the city’s Affordable Housing Trust Fund, which provides “financial assistance for affordable housing activities,” according to the Santa Fe Housing Coalition.
The bonds are special, limited obligations of the authority, payable by housing revenue.
KeyBanc Capital Markets Inc served as underwriter on the issuance, purchasing the bonds for par.