Affordable housing bill could incentivize zoning reform, density in NM cities
The recently-passed Opportunity Enterprise and Housing Development Act could incentivize housing density, i.e. more walkable, sustainable urban environments.

Just like that, the 2024 legislative session is over in New Mexico. Despite it being half the length of last year’s session, the legislature seemed to get more done for climate, transportation, and housing issues this year than last. Between clean fuels, tax credits, and housing investments, many successes are coming out of this year’s session, but there’s one small success that may have flown under the media’s radar.
House Bill 195 passed on Wednesday, Feb. 14th, appropriating $125 million to the existing Opportunity Enterprise Fund to finance middle and low-income housing projects in New Mexico. The Governor is expected to sign the bill into law before the deadline on March 6th.
While affordable housing investment is reason enough to celebrate, there’s a line within the bill that suggests the selected housing projects could move the needle toward denser, more walkable neighborhoods in New Mexican cities - making the bill more than just a housing bill, but also a transportation and climate bill, too. Before we get to that, let’s start with a little history of the Opportunity Enterprise Act and its former intentions.
The Opportunity Enterprise Act (soon to be the Opportunity Enterprise and Housing Development Act thanks to HB159) was originally passed in 2022 and allocated $70 million to the New Mexico Finance Authority (NMFA) to implement loans for commercial development, mostly in rural New Mexico. The loan fund, called the Opportunity Enterprise Revolving Loan Fund (OERF), aims to increase the inventory of commercial space across New Mexico to attract new businesses, expand current businesses, and bring jobs to the areas of the state that need them the most.
This commercial-first approach to economic development is well-intended, but speculative, and may not be exactly what New Mexico needs. Today, there are empty commercial buildings in every corner of the state, and adding ever more commercial space may be a waste of time, money, and effort.
Housing-first economic development, however, could be a more suitable approach to economic development in the state. New Mexico and the US are in a housing crisis - the City of Albuquerque has expressed that it needs an additional 13,000 - 28,000 housing units to support its growing population, and the Supportive Housing Coalition of New Mexico suggests the state has a shortage of around 30,000 rental homes. Other jurisdictions in the US have approached this issue by eliminating single-family homes, decreasing parking mandates, and more, but NM legislators have responded to this crisis by investing in a targeted loan fund at the NMFA - an institution that typically has some of the most favorable borrowing rates in the state.
So, the NMFA will be loaning developers money for housing, but what is it going to look like, and where will it be built?
HB195 lays out a list of priorities the Opportunity Enterprise Housing Development Revolving Loan Fund (HDRF) must follow, including a focus on low and middle-income housing (likely mid-rise and missing middle housing), which is exciting, but the most exciting sentence in the bill is this:
[The fund’s rulemaking board shall] prioritize projects that are in political subdivisions that are implementing zoning reforms that support housing development projects…
A sponsor of the bill, Senator Michael Padilla (D-Albuquerque), touched on the importance of zoning reform as it pertains to housing affordability as he introduced the bill to the Senate:
Financing from the new fund will prioritize projects in municipalities, and adopt improving zoning initiatives - which is one of the things that we found during the work we were doing all year on housing, Mr. President, is improving zoning practices…
An overwhelming majority of the state is zoned for single-family housing, which creates sprawl and car dependency. To attract developers and OERF monies, local governments will need to rethink the layout of their cities by allowing more than single-family sprawl.
The City of Albuquerque’s Housing Forward initiative has already kick-started some of the zoning reform needed in the Duke City. In 2023, the ABQ city council and mayor adopted two of the five core values of Housing Forward:
allowing casitas (ADUs) on all single-family plots, and
allowing the conversion of non-residential developments into multi-family dwellings.
However, they have not yet adopted the three other cornerstones of the Housing Forward initiative:
allowing duplexes on all single-family plots,
removing building height restrictions, and
reducing parking mandates for multi-family dwellings.
HB195 puts pressure on city councils and developers around the state to push for zoning reforms like these that promote density. Dense housing is not only affordable, but it creates urban areas with healthier and cheaper transportation alternatives to driving and reduces climate-changing emissions. Whether the NM legislature realizes it or not, HB159 is a housing bill and a transportation bill and a climate bill.
It’s unclear what would happen if New Mexican cities don’t implement zoning changes - I suppose the OERF could resort to building more sprawling single-family developments in Mesa del Sol, Rio Rancho, etc., or perhaps the OERF money would sit dormant. And what happens if NIMBYs squash all of the projects that the HDRF selects? Most of these questions will be answered over the lengthy rulemaking process that lies ahead, but as of right now, it appears as though HB159 is a win for density.
This article is based on my opinions and research, and not the views of NMFA.
In other news
The Clean Transportation Fuel Standard passed both chambers and is expected to be approved by the Governor. After four years of attempting to pass the standard, the hard work of many individuals and organizations across the state has paid off. The New Mexico Environment Department, especially, has worked tirelessly doing the necessary background work to pass such a bill.
Special shout-out and congratulations to my friends at NMED’s Climate Change Bureau for their ongoing success in helping secure a healthier climate and stronger economy for New Mexico!
The next Strong Towns Abq meeting is February 21st, 6-7:30 pm at Humble Coffee Downtown.