The Bluffs Apartments on DP Road in Los Alamos. Courtesy photo
BY STEPHANIE NAKHLEH
for the Los Alamos Reporter
This is the fourth article in a series on housing in Los Alamos. The first is on LANL, whose hiring has caused a further housing crunch in a town with an already-acute shortage; the second is looking at the housing situation from the real-estate-agent perspective; and the third takes on the viewpoint of several young renters struggling to find adequate housing and debating their future in the town.
The Bluffs: Senior housing on DP Road nears the finish line
I met Todd Slocum, project manager of the Bluffs housing complex on DP Road, on a hellaciously windy day at the end of March. As I slipped through a gap the chain link fence and crossed planks over a conduit ditch to shake his hand, dust and grit swirled around us. We could hardly hear each other until we ducked inside the unfinished walls of the affordable senior-housing apartment building, still several months away from being habitable. I was the only one on site not wearing a hard hat or steel-toed boots, but that wasn’t saying much—because I was one of the only people on site, period.
“Did you see the ‘laborers wanted’ sign I put out front?” Slocum asked, as he pushed a door shut against the wind. I had seen the sign, spray-painted in bright orange on a large chunk of plywood and attached firmly to the chain-link fence I’d just navigated. “I mean, this is a beautiful town,” he said, “But getting people to come up here to work is just a nightmare.”
Slocum was overseeing a crew of only 19 that day, and on the first floor, it was just himself and a worker named Joseph. We moved through the lonely gray hallways and half-finished rooms, our voices echoing. Unfinished buildings are both eerie, bearing a resemblance to a war zone, and hopeful, as you can envision the life and warmth that will soon fill them.
The spray-painted sign is what brought in Joseph. Photo by Stephanie Nakhleh
“I’ve had him since the end of August. He stopped by one day and said, hey I saw your sign,” said Slocum. “This was on a Friday. And I said, if you’re interested, come back Monday morning. He’s been here ever since. And he’s local, very local.” Slocum gestured vaguely westward. “It’s good to have him.”
View from The Bluffs Apartments looking east. Photo by Stephanie Nakhleh
The Bluffs will be a 64-unit apartment complex for seniors. The income-restricted and age-restricted units will be either one or two bedrooms. The project, which started in 2020, was slated to finish in 2021 but has run over its planned completion date several times. Starting any housing project during Covid was a tricky business, and housing construction has been hampered nationwide by supply-chain snags, runaway construction costs, and labor shortages.
“Back at the end of September they said I was supposed to go back to Phoenix by the end of October, or early November,” said Slocum, who is Arizona-based but lives where his projects are. Now, he hopes the apartments will be ready for business by summer. “If we push hard enough, midsummer. I’d say mid- to late summer.”
Slocum was not sure how much longer Joseph will be around to help, as the skilled worker was waiting to hear back from LANL on a job he applied for there. This is another impediment to local housing construction: LANL is doing a great deal of (non-housing) construction itself, which is swallowing up the small labor pool in northern New Mexico. While the high-paying jobs are great for workers, they’ve left smaller employers in a lurch. Few can compete with LANL salaries.
Because much of northern New Mexico’s labor force has been hoovered up by LANL, housing builders are forced to look outside the region. “Most of these guys are coming up from Albuquerque,” said Slocum, pointing to the scattered crew. “And it’s an hour and a half ride on a good day. God forbid that there’s a morning accident.” He said he’s working with KT Black, a nationwide staffing provider, but they don’t have any leads either. “[A representative] called me up and said, hey we can’t find anyone, nobody wants to come up there.”
Canyon Walk: Apartments for families
Just across the street from the Bluffs is another project overseen by the same Ohio-based affordable-housing developer, Bethel Development, Inc. While the Bluffs is aimed at seniors, the Canyon Walk apartments are designed for multi-family living. And they are complete. I met Sevara Salimova, community manager for the Canyon Walk, for a tour of the 70-unit, seven-building complex. One of the benefits of being community manager is that Salimova herself lives in one of the apartments.
“I love it,” she said. “It’s a beautiful apartment, especially compared to other complexes in the area that are much older and need a lot of renovations. It’s nice to have something new and as affordable as it is.”
So how affordable are these units? A quick way to get a sense of it is that the 1-bedroom, 891-square-foot apartments in Canyon Walk are about $850 a month. (The Bluffs hasn’t released its pricing yet, but it is likely to be similar.) In comparison, see these images captured from Zillow at the time of this writing, showing far higher rent for units that are a similar size to Canyon Walk, but often much older.
Clearly, Bethel’s DP Road housing is well below the market rate, and that’s for new-built housing located walking-distance from all downtown amenities. In a town with a rental-vacancy rate of only 0.06% (which is about 80 times smaller than the national average of about 5%), how is that possible?
The Byzantine World of Tax-Credit Housing
“We only do affordable housing,” said Dan Terlecki, president of Bethel Development. “It has a lot of different names: affordable, workforce, low income, Section 42—that’s the section of the IRS code that created this program. This is what we do, and we have been doing it for about 28 years or so.”
The “Section 42” IRS program that Terlecki refers to is the brain-meltingly complex system the government has been using since the Reagan administration to generate new-built affordable housing. Before this program, most commonly called the Low-Income Housing Tax Credit program (LIHTC), the US government went through three other major eras of government-built or subsidized housing efforts. The first was during FDR’s administration, back when the federal government built and managed projects itself; the second during LBJ’s tenure, when the government got away from directly building housing and instead subsidized private developers to build it; and the third era under Nixon and then Ford, when the still-used Housing Voucher program was created, the intention of which was (and is) to allow tenants to take a government-issued voucher to find their own housing where they needed it. All programs have run into unforeseen setbacks, and the main problem with the Housing Voucher program is that landlords can refuse the vouchers, which they often do. Tenants have little legal recourse in New Mexico. LIHTC housing has its critics, too: see this piece describing shortfalls.
How did LIHTC come about? In the mid-1980s, a diverse group of liberals, conservatives, housing advocates, and free-market devotees came together and hammered out Section 42, aka LIHTC, which puts American low-income housing under the auspices of the IRS—rather than, as one might reasonably expect, Housing and Urban Development. This byzantine public-private system is very difficult to summarize, but this is a town that likes to know the details, so here’s a rundown: The federal government, through the IRS, puts forth tax credits toward low-income housing. These tax credits are divvied up among all states, each state receiving an allocation based on population. The states award the tax credits to qualifying developers, who then sell the tax credits to corporations. That sale is how developers can afford to building housing below the market rate.
“What made this deal work when others didn’t”
But wait, there’s more, and this part matters to Los Alamos: not just any old developer gets tax credits. The system is highly competitive. Each state sets up a qualifying allocation plan every year, in which they lay out what they want to see from an application. A brutally competitive process then begins. The best applications win points. Whoever gets the most points gets the tax credits.
A press release from Bethel explains it like this: “Every state has a housing agency to run the program according to a set of guidelines established to reflect the needs and political will of that particular state. … As a result, the competition for credits is fierce. New Mexico, by virtue of its smaller population, receives only $5.7 million by formula ($2.74/resident) each year in credits.” For comparison, Texas received an allocation of $81.5 million in tax credits in 2021.
Only low-income tenants can live in this housing. Developers of LIHTC housing must set aside units for households earning varying levels of income, based on a HUD formula that takes “area median income” into account. Los Alamos’s AMI is a conveniently round number, about $100k, so a certain percentage of units will be for households making $60k, another percentage for $50k, and the final rung is about $40k. The units are also rent restricted, meaning that tenants pay no more than 30 percent of their income toward rent.
After decades of seeing no LIHTC projects in Los Alamos, “What made this deal work when others didn’t was the fact that the county was willing to invest $1.5 million in land and cash for both of these projects,” said Terlecki. “That’s $1.5 million apiece. If it were not for their investment in affordable housing, this project would most likely not have gone forward.” That land was part of 70 acres acquired by the county from the Department of Energy in 2018.
This level of commitment from a county government is unusual, he said. “The county knew they needed the affordable housing, and they knew that this was the only way to get it done. They realized, ‘we’re going to make a commitment to the community, and we’re going to develop some affordable housing,’ and I applaud them for that.”
“People are living in refurbished barracks”
While it may seem at first blush that the wealthiest county in the state is the last county that might need dedicated low-income housing, the reality is the inverse: wealthier counties have commensurately little affordable housing, both because high incomes naturally drive up housing prices, and because people with wealth—and this is true everywhere in the nation—have the will and the means to put a halt to affordable housing projects. This latter phenomenon is referred to as NIMBYism, and there’s much scholarship arguing that it’s the primary reason the United States has so little affordable housing—or any kind of housing. (More studies on this here, and here.) The country’s housing supply is millions of homes short of demand.
Los Alamos’s dearth of housing isn’t only because of NIMBYism, though—we have other issues. “In Los Alamos there is very, very, very little developable land,” said Terlecki. “So much of it is controlled by the National Labs. Also, it is a remote location, it’s extremely hard to get contractors. There’s no contractors in town who are of any sufficient size to do this, so you have to bring all of the labor.” This brings us back to Todd Slocum and his spray-painted sign. As a result of all these constrictions, “There is no quality affordable housing, nothing has been built in years, and people are living in refurbished barracks that rent for a lot of money, like $14-, $15-, $1600 a month,” Terlecki said.
Another barrier to housing is in the town’s development code, which until recently leaned toward restricting growth and limiting density. The 2021 Downtown Master Plan describes “unclear and outdated Development Code procedures that hinder development.” Such anti-growth regulations, and particularly anti-apartment regulations, are a key feature of American zoning laws and have been since the dawn of zoning a century ago—but in a town with “very little developable land” and intense housing needs, Los Alamos has acutely felt the pains of these artificial barriers to density. With the recent Chapter 16 Development Code update, builders have more flexibility to build multifamily housing, but exactly how much flexibility is something the town’s Planning and Zoning Commission and the County Council are still debating. (Note that I am a Commissioner, but I do not speak for the Commission, and for this article I am wearing my journalism hat.)
“We would love to build another project in Los Alamos”
Los Alamos, for its shortcomings, still has attractions for developers. “Our experience in Los Alamos, except for the fact that it’s hard to build there, has been very positive and we would love to build another project in Los Alamos,” said Terlecki. Some of the town’s drawbacks, like housing demand and supply being severely out of balance, are its attractions when it comes to a developer who wants to see their units full. In the case of Bethel’s application for the tax credits, it was also helpful to list excellent schools, a safe community, and walkability, which were all amenities that earned their application more points. “It’s a points-driven process and those points are generally associated with aspects of an application that make it more sustainable, make it more livable,” said Terlecki. “It rewards good developers.”
Developers of LIHTC projects do not merely build the housing and then sell it; they are in it for a generation, said Terlecki. “We have skin in the game, we own it for 30 years, I am personally guaranteeing these projects are going to operate for those 30 years. You have people who are highly motivated to make a success of the project.” (Read here for what happens to LIHTC projects after the 30-year period expires.)
“This is a business”
While many people assume that affordable housing happens when a developer comes along who is less profit-motivated than the rest, the reality is that all developers—including those providing affordable housing—are in the business to make money. “This is a business,” said Terlecki. “We run it as a business, so we’re very sensitive to operating expenses. Therefore, we use very sustainable materials that are going to last that 30-year period. We use mechanical equipment or plumbing equipment that is going to stand the test of time, and all of these things have an added benefit in that they are extremely good in developing a green community, because they’re highly efficient.”
Canyon Walk and the Bluffs have no gas hookups, he said: they are all-electric complexes. While many Los Alamos residents are retrofitting heat pumps into their houses to bypass the indoor pollution and high cost of natural gas, Bethel’s housing comes with heat pumps already built in.
DP Road: Advantages and disadvantages
The location on DP Road has had its upsides and downsides. On the upside, it’s centrally located and walkable. “That is one of the wonderful attributes of this location of DP Road, the walkability,” said Terlecki. “The idea that you can live in Canyon Walk or the Bluffs and you can go on to a beautiful publicly-dedicated sidewalk that is well-lit on a new street, and walk down to the grocery store, or walk to downtown services, and it eliminates that need to always rely upon a car.”
Salimova agreed: “Everything is walking distance. The dog park is right there.” She said residents are allowed dogs, and the pets have proven a real community-builder. Tenants walk their dogs on the new Canyon Rim Trail section that skirts directly behind the apartments. “When they’re walking their dogs, they’re running to each other. Everybody knows everybody, even Building 1 people from Building 7,” she said.
The Canyon Rim Trail as a nearby amenity is hard to overstate. From the apartments, Smith’s grocery is a relatively short walk on a safe, paved path. The trail also provides access to East Park, a public pool, a vet, a gym, hiking trails, and even the Los Alamos Co-Op, although that is a much longer walk.
But one of the downsides of the location wasn’t discovered until 2020, when a county contractor installing a sewer line found radiological waste on DP Road—near where the housing was to go, though not actually on the housing sites. The Department of Energy swooped in and remediated the site where the waste was found, then scoured the area where the housing was planned: that area was found to be clean. “We had this site extensively tested, extensively tested, and it had no detrimental material on it,” said Terlecki. For more background reading on the history of the land transfer and cleanup efforts on that mesa, see links at the end of this article.
One demographic need of many
While the LIHTC program—which is by far producing the most new-built dedicated low-income housing nationally—does help moderately low-income Americans, the program leaves out those earning the least. If you make less than 40 percent of your area’s AMI, the federal government does not have much to offer you. In Los Alamos, residents who make roughly $40k to $60k qualify for the LIHTC housing on DP Road, but that leaves out a chunk of people who make less.
I turned to the Los Alamos Community Development Department to ask what help there is for the lowest-income tier. “For the competitive tax credits, they have to have some units for what they call ‘extremely low-income,’ which is 30 percent below the AMI,” said Paul Andrus, CDD director. “And that’s kind of on the supply side. On the demand side, there’s a voucher program, which is set up by the county, and the allocation comes out of HUD’s national budget. We receive an allocation number of vouchers of roughly just a little over 100, so we don’t get a lot of them. Before I came to the county, the Santa Fe Civic Housing Authority was awarded the contract to administer the voucher program for us because they have the staff.” The SFCHA comes to Los Alamos “once or twice a week to meet with folks who need resource assistance, and as long as the property owner will accept Section 8 vouchers, you can rent anywhere,” he continued. “This fills the gap between the actual rent and what 30 percent of their income is. They can’t pay more than 30 percent for housing.” Bethel confirmed that they do accept those housing vouchers.
The need in Los Alamos for housing is so great across the entire spectrum that even if complexes like the Bluffs and Canyon Walk serve a limited demographic, they are still supplying badly-needed housing. Terlecki estimated the town could probably see several more LIHTC complexes built before demand would slack off, though again finding the land to build on is always difficult. Andrus, asked the same question, said the county intends to update the 2019 Housing Needs Analysis and will have a better number after that, “but my sense is that we probably need a couple-of-hundred more units for family.” (Future articles will delve into Los Alamos County’s role in housing, and in managing issues related to growth in general, such as traffic and water management.)
The residents at the Canyon Walk apartments are happy to have the affordable housing options available, said Salimova. “A few of our residents are schoolteachers and nurses that don’t get paid enough at all, which is ridiculous, and being able to have affordable housing in Los Alamos is amazing. It’s a gift, a lot of them are really grateful for it. I think that more of it is needed, and I think that a lot of them agree with that.”
Stephanie Nakhleh is a freelance writer who has spent decades writing for local publications: she cut her journalism teeth at the Los Alamos Monitor. She was raised in Los Alamos and lived in Santa Fe and then Albuquerque before moving back to Los Alamos in 2015. Her husband is Charlie, her dog is Ziggy, and her kids have graduated.
Links for further reading:
The Low Income Housing Tax Credit program, explained
New Mexico Mortgage Finance Authority’s overview of the LIHTC program
Los Alamos County’s 2010 Affordable Housing Plan
Los Alamos County’s 2019 Housing Needs Analysis
Los Alamos County’s 2021 Downtown Master Plan
Bethel wins tax credits in 2019 for development on DP Road
Article from 2020 on Bethel’s plans for DP Road in general
Article from 2021 on DP Road cleanup
Article from 2022 with an update on how Canyon Walk was proceeding
N3B, the DOE contractor responsible for environmental management and remediation in Los Alamos, has its history operations on DP Road here