Developer Expanding into New Mexico Affordable Housing

Dominium is targeting New Mexico in a big way. Its latest construction project in the Land of Enchantment will add 216 affordable units to the city of Rio Rancho, and there’s more to come elsewhere in the state.

Ron Mehl, Dominium senior vice president and project partner, says the Sandoval Flats project in Rio Rancho, a suburb of Albuquerque, is Dominium’s first new construction in New Mexico, although it previously owned a project in the Santa Fe area it has now sold.

Dominium has made a few acquisitions since starting Sandoval Flats, which is currently under construction, and is now planning a 300-unit affordable project in Santa Fe called Turquoise Trails Apartments.

Mehl says the activity in New Mexico “falls squarely” within Dominium’s plans to expand in the Mountain West area. (The developer currently has several properties in Colorado and Arizona.)

He says doing projects in the 200- to 300-unit size is a way to tackle housing needs and achieve efficiencies of scale, both for construction and management.

New Mexico is a good fit for Dominium, Mehl says, as affordable housing resources are scarce and area median incomes are lower, making it a less competitive area.

As for Santa Fe, “We feel very strongly about that market,” Mehl says. Because of high housing prices, “people who work there can’t afford to live there.” That makes a great demand for affordable housing.

Family Oriented
Both projects have a lot of three- and four-bedroom units, and Mehl says that makes Dominium stand out. They are designed “absolutely, 100 percent” for families.

He says construction on Sandoval Flats should be finished by the end of 2026 and that Turquoise Trails should close in August or September of this year.

George Maestas, director of housing development for Housing New Mexico, which supplied tax credits and a state loan for the public-private project, says his housing finance agency is also working with Dominium on Turquoise Trails in Santa Fe.

Sandoval Flats and the potential project in Santa Fe fit Housing New Mexico’s mission because “The housing need is across the board in New Mexico. We need housing in every part of the state,” Maestas says. Sandoval Flats, which is focused on working-class residents, “is right in our wheelhouse.”

Maestas says Housing New Mexico contributed approximately $41.5 million in four percent Low Income Housing Tax Credits to the deal, which are expected to produce about $37.8 million in equity for the development (WNC & Associates was the investor) and arranged a $2 million permanent loan through the New Mexico Housing Trust Fund.

Sandoval County issued the tax-exempt bonds associated with the four percent tax credits, and the deal got a second credit, a 45L Energy Efficiency Tax Credit, which is expected to generate approximately $900,000 in additional cash equity.

Other financing sources in the nearly $88 million total development cost deal include a $27 million tax-exempt mortgage from Freddie Mac administered by Greystone Servicing Co., a $4 million cash flow loan from Colliers Securities, a $7.6 million cash flow loan from Class B LP Equity, and an $8 million in deferred developer fee from Dominium.

It always takes a financial village to get affordable housing up and built, and Dominium wants to thank a long list of development partners: “Barclays; Greystone Housing Impact (GHI); Freddie Mac Greystone; Colliers Securities; New Mexico Mortgage Finance Authority; WNC; Housing New Mexico (MFA); Sandoval County; Winthrop & Weinstine; McDermott Will & Emery LLP; Holland & Knight LLP; Orrick, Ballard Spahr; Sherman & Howard; Todd & Associates; Huitt-Zollars; Newmark Title; Kutak Rock; US Bank; and Dominium Construction and Architecture Services.”

Maestas describes Sandoval Flat’s Enchanted Hills neighborhood as “a fast-growing” and “up and coming” community in Rio Rancho. He notes that the all-affordable infill project will supply housing for residents working in Albuquerque, Rio Rancho, and Santa Fe, which is served by a rapid transit train from Rio Rancho and employs many service workers.

A Need for Rental Housing
There has been a lot of development in Rio Rancho recently, Maestas says, but much of it is single-family housing, leaving a need for more affordable rental housing.

Residents will have access to The Plaza at Enchanted Hills shopping center, which has quite a few retail outlets and restaurants.

Other services in the area include Albertson’s market, Sprouts Farmers market, Walmart Supercenter, Walgreen’s, and Dion’s Pizza. In addition, there are several bank branches that residents will be able to use.

“There are quite a few amenities in the near vicinity,” Maestas says.

Jeff Payne, chief lending officer at Housing New Mexico, says workers at the retail establishments in the neighborhood “probably will be able to live in these apartments.”

Payne adds that the high cost of housing in Santa Fe will make Sandoval Flats attractive to people who work in the capital city.

Interior amenities are set to include a clubhouse and fitness center, pool and spa, cabanas, ramada, tot lot, barbeque, dog park, and other active and passive open space areas.

Mehl notes a substantial financial amenity at Sandoval Flats — rents $300 to $400 lower than market rates.

Distinctive Design
Todd & Associates of Phoenix, architect for Sandoval Flats, notes, “The project consists of eight three-story buildings that were designed to blend with the local landscape. This project adheres to the La Plazuela de Sandoval Master Plan design guidelines utilizing regional architecture incorporating flat roofs, stucco, and wood elements.”

Maestas adds the project will have a “territorial design, mimicking the northern New Mexico Pueblo housing style.” And Mehl says, “The architecture is a little different from what we see in Colorado or Arizona,” with flat roofs and vigas (wooden beams used in adobe architecture) “that make it look traditional.”

When done, Sandoval Flats “will be a great infill project that will serve residents at or lower than 60 percent of AMI,” Maestas says.

Maestas notes, “There are a few other new developments north of this one, but there’s still a great need on that side of town.”

For a two-person household, 60 percent of the AMI is $41,520.

For a three-person household, 60 percent of the AMI is $46,680.

For a four-person household, 60 percent of the AMI is $51,840.

Pavilion Construction is the builder, and Maestas believes Dominium will be bringing in its integrated management unit to operate Sandoval Flats.

The project “will be energy efficient,” Maestas says. He says Housing New Mexico requires its developers to bring in projects at a 51 or less Home Energy Rating System (HERS) rating.

New Mexico is “definitely an area we want to continue to grow,” Dominium’s Mehl concludes.  “We’re excited about it.”