"People should be able to live in the communities where they work"
"People should be able to live in the communities where they work"
A Boomtown Q+A with the New Mexico governor's housing policy advisor Daniel Werwath
Published 3/22/2024
Interview by Stephanie Nakhleh and Sam McRae
Photographs by Minesh Bacrania
Note: this interview has been edited for length and clarity.
“New Mexico needs to construct thousands of homes as fast as possible. Yet, too often, housing development is stalled by a complicated web of zoning and permitting requirements that vary from city to city and county to county. To build for the future, we need to fund development and then get out of our own way.”
-Gov. Michelle Lujan Grisham, in her sixth State of the State address, laying out her legislative priorities for the 2024 legislative session
On March 8, 2024, Boomtown interviewed Daniel Werwath, the newly-appointed housing policy advisor to Governor Michelle Lujan Grisham. In light of a widespread housing crisis across the region, we asked Werwath about a variety of housing-related issues, including the role of state and local government in housing production.
Boomtown: Tell us a little bit about yourself. Your new position is housing policy advisor for the governor, which is a position in the governor’s office that was created for you, right?
Daniel Werwath: This position didn't exist before. There was a person covering housing and homelessness prior to me, so there's a recognition that this a big enough problem that they needed to break those positions up. The other person working on housing is focusing on the homelessness piece specifically. I’m working on the bigger picture: state-level housing issues.
I’ve been working in housing in New Mexico for 20 years. My connection to that work goes back further, to the early 90s. When I was a teenager, my dad worked for a national housing non-profit called Enterprise Community Partners. He happened to get assigned to work with the City of Santa Fe in 1991, and I came with him. His work with the city’s community services department led to the program infrastructure that exists today in Santa Fe, which was for many decades the best-practice model for smaller resort cities like Santa Fe.
In '03 I moved to Santa Fe to work for the Santa Fe Housing Trust and started out in home-ownership assistance programs. My technical title was a "homebuyer counselor" working one-on-one with families to get them buyer-ready and match them with assistance programs. In 2009 or 2010, I started doing consulting work on my own. I worked on six different housing plans around New Mexico: the town of Taos, Lea County, Belen, Las Vegas, and Rio Arriba County/Española. I did some planning work in some other Mountain West cities, like Durango, Bozeman, and Flagstaff, and probably the best of them all: Missoula. The strategic work we did in Missoula was really successful.
In early 2023, I was asked by Governor Michelle Lujan Grisham to serve on a housing investment council, which was a task force focused on solving some of our bigger structural housing issues, particularly the housing-unit deficit we have in the state. That deficit is between 32,000 and 40,000 units, depending on who you ask.
But if we need like 40,000 units of housing, how do we get there? To answer that question, we have to answer some others, like: Why does it cost so much to build housing right now? What are the regulatory barriers to creating housing? What existing housing infrastructure in the state is operating without strategic alignment, or to maximum benefit?
We’re looking at leveraging the power of the state government to affect the bigger picture of housing. I was really excited about that suite of things coming into the Legislature, and like most of the things I’ve done in my career, I just jumped in.
In terms of the outcomes from this legislative session, we probably got more funding for housing by a factor of about five or six than has ever been invested at the state level: about $19.7 million to work on homelessness issues; $50 million to the affordable housing trust fund at the MFA, in addition to the $40 million recurring. So, close to $100 million for traditional affordable housing. Then $125 million toward creating the Opportunity Enterprise Revolving Fund, a workforce housing fund. The impetus for these investments is coming from the governor, who says we need to recognize that there are those across the income spectrum who don’t have access to housing.
We got most of what we wanted. We did not get the statutory authority to create the office of housing, which was unfortunate, but we did include the funding that would have gone with a statutory authority, so we have a couple million dollars to start doing this work — outside of the statutory authority.
Certainly at the state level, we want to create a framework for supporting local governments who want to be less in the way of new housing.
Many Americans are confused, for good reason, about the role the government plays in housing. How do you see it? And can you clarify the role of state vs. municipal government in housing?
How we deliver housing is so strange. The regulation and the approval of new housing is 100% government controlled, but the actual construction and delivery of housing is 100% private sector. It's one of the oddest structures you could imagine. On the government side, we’ll tell you that you can build housing: once we've done that, whatever happens on the private sector side, happens. In the best case scenarios, the government can take land-use regulations and financing incentives to point the market to solve problems. But we’re in triage mode in New Mexico right now. We're trying to figure out the best ways to address our housing issues. It's challenging. We only have so many ways to impact the approval of new housing, since housing is done at the local, not the state level.
The best state practices create basic guardrails for local governments: if your city has a housing deficit, you need achievable goals for solving that problem. You need land-use codes that are regularly updated. We looked at Colorado's model, Prop 123: they used a powerful new funding source as an incentive for local governments to update their land use and zoning. In contrast, all the best-practice research I’ve looked at says the more extreme stuff we're seeing in states like California, where you're doing top-down planning, imposed on local governments —
Are you talking about builder’s remedy, the California law allowing developers to bypass local zoning when a city fails to meet housing goals required by the state?
Yes, builder’s remedy or even more prescriptive regulations like statewide single-family zoning prohibition. Those policies can lead to backlashes that undermine the larger cause, that can actually coalesce opposition to housing. What’s more successful at the state level is creating broad frameworks that still allow a lot of local control in terms of how cities achieve those frameworks. With Prop 123, Colorado’s state government said to cities, “Here is this really powerful new funding source: to access this funding, you need to implement some things from this suite of zoning reforms.” The state provides technical assistance and model documents. It supports local governments in passage and implementation of those policies, but it's all incentive-based. They're just lowering the regulatory barrier to housing. So that's a model we're looking at; it’s dependent on having the carrots to feed into the system.
That 40,000-plus-unit housing deficit in New Mexico that's probably growing by a couple thousand units a year — what are the obstacles to a productive housing pipeline? Is there a regulatory barrier? Is it a capacity barrier? Is it a lack of funding? What could we do if we had a different set of resources, or regulatory frameworks, or other tools to help move the pipeline forward? The governor wants to see housing built, and fast. It’s our job in this office to map out how to do that as quickly as possible.
From the time of research to implementation, what does that timeline look like?
We work on a forced annual cycle of legislative sessions in the state. Our original office of housing legislation included a deadline of July to create an initial plan. Logistically, we’re working back from the next legislative session and thinking, what do we need to have in place for policy and funding priorities for housing for that next legislative session? New Mexico is a super-diverse state geographically, population-wise, in housing infrastructure, and in housing regulatory environments. There's probably very few other states in the country that deal with the range of variability that we have in New Mexico.
The current framework of housing planning is through the Affordable Housing Act. Technically that’s for affordable housing planning, but in many cases that’s the only housing planning that’s happening. Each jurisdiction creates its own housing plan. The north central Rio Grande corridor, from Los Alamos to Los Lunas, is a giant interacting housing market with something like nine housing plans done by different consultants, at different years, with different data. You look at the challenges of Los Alamos and you're like, here's a community that badly needs housing, has very high wages, has tons of resources in terms of local funding, but doesn't have the land or regulatory frameworks to support the housing growth it needs.
Right next door, you have Rio Arriba County, which has lots of land but low capacity for development and low resources.
Then you look at Santa Fe County’s housing plan, which says the county needs 300 units a year to keep up with the housing demand created by Los Alamos hiring. Obviously these things are interacting. But in our planning, we’re not creating regional strategies. What are the ways that we could be supporting housing in Santa Fe County with resources from Los Alamos County? That isn’t something that's really done right now.
We have one of the fastest-growing economies in the country right now, for any state. If we don't have housing to meet that need, we’re either creating negative impacts for existing residents, or we're slowing, or choking, the potential for economic growth.
About a year ago when we talked, you said, “the demand from LANL hiring requires 500 units per year just in Santa Fe. On the single-family homeownership side, we’ve been on average producing 200, 250 for the last few years. We’d need to double just to deal with LANL hiring. These problems are going to bleed over to Española, to Pojoaque. I’m fully expecting to see these problems bleed to Albuquerque.” A year later, do you have any updated thoughts on that?
That perspective came from serving on Santa Fe County’s advisory board for their housing planning process, and seeing data from that. I haven't seen newer data, but from our point of view, having good jobs and hiring shouldn't be a problem, but it is when we're not producing enough housing. And that's a concern across the state. We have one of the fastest-growing economies in the country right now, for any state. If we don't have housing to meet that need, we’re either creating negative impacts for existing residents, or we're slowing, or choking, the potential for economic growth.
We are in a super supply-constrained market in Santa Fe County, Los Alamos County, and southern Rio Arriba County.
Do you think that supply constraint is mostly regulatory in nature? Or is it labor?
It’s a poly-crisis, with so many different factors. We have several decades of under-production of housing from first the '09 crash and then a lot of people leaving the trades, which has left our workforce unable to meet the need. So we definitely have workforce constraints. A bill was passed this session to increase registered apprenticeship programs, creating a long-term fund that’s going to roughly double the state money going into workforce apprenticeships annually. We have to be looking at every dimension because this complex problem set is coming from a bunch of different areas.
Then you have the cost to construct. In the last couple of years, the average affordable rental unit construction cost has gone from just over $200,000 per unit to $285,000 per unit. We have these huge headwinds. The core challenge is supply, but the actual act of building housing is now more difficult than ever. Regulatory frameworks absolutely place obstacles to building new housing, especially in urban areas.
Certainly at the state level, we want to create a framework for supporting local governments who want to be less in the way of new housing. This will give us a chance to start defining what “land-use reform” looks like, because right now, that reform is not defined at all at the state level. Ultimately, it will take bigger incentives to lead reticent local governments to implement land-use reforms that make it easier, faster, and cheaper to build housing.
About 10,000 commuters climb the hill to work in Los Alamos daily. Just this past week, we've seen two severe head-on collisions, one of them fatal. Some argue that long, dangerous commutes are a housing issue: if you add thousands of jobs without adding thousands of housing units near the jobs, commuting by definition increases and it has a cost. Do you have any thoughts on that?
The direction I’ve gotten from the governor is that she feels like people should be able to live in the communities where they work. That was baked into the workforce housing development funding source. One of the prioritizations for that funding is building new housing where there is a need for it — where there is job growth.
Obviously the recent incidents in Los Alamos highlight the real potential human cost of commuting. I heard numbers from the Santa Fe MPO [Metropolitan Planning Organization] that we’re north of maybe 30,000 daily commuters in Santa Fe. Again, this points back to the need for us to understand regionally what's happening. We have 10,000 Santa Feans, or people from the region, going up to the Hill. We have 30,000 people coming from surrounding areas into Santa Fe.
It’s also worth noting that in the work that I did as a housing counselor, I learned not all the 30,000 commuters who live in Rio Rancho or Bernalillo or Pecos want to live in Santa Fe. Understanding what people actually want is a data problem. Sometimes value judgments go into housing that, at the planning level, we miss if we don't look deeper into the consumer side of housing.
These are extremely interconnected problems. If we're going to solve these complex problems, we have to be looking regionally, be looking across housing types, be looking across incomes at more integrated strategies.
In the last couple of years, we've seen interest rates basically double, which wipes out about $100,000 of buying power for the median-income family. On top of it we've seen the median home price go up about $150,000. This means we're either going to build less units with the same amount of money, or we're just going to keep putting more money into a system that seems like it's not going the right direction, in terms of construction costs and the amount of actual housing getting built.
Can't local governments help out with that by reducing onerous, expensive regulations? People don't think about how regulations like parking mandates, setbacks, and floor-area ratio really increase cost, but local governments are often resistant to changing these regulations to reduce up-front building costs.
Yeah, absolutely. A lot of communities see land use as a political third rail. It's a relatively easy thing to ignore and maintain a status quo around. This is where we have an opportunity at the state level to support local governments, to help them understand the benefits, to provide technical assistance. To provide meaningful incentives for them to work on this stuff.
There are recognitions of the challenges in land use: you don't have to go very far in Santa Fe to run into someone who has a frustration with getting a building permit, or getting a roof repair permit, right? There's a bigger issue but there's also these small problems that we face.
Looking at some of the structural problems we have: it turns out that the workforce in the land-use department is also being priced out of Santa Fe. At what point are these problems starting to reinforce each other? That’s the other piece of it: vacancies in the government are a workforce-housing problem, and also a symptom of the larger challenges we're facing right now.
Land-use reform creates better neighborhood amenities. It creates public transportation systems that work better. It aligns with the work we’re doing to tackle climate change in the built environment and the transportation sectors. It broadly benefits communities when you do this reform.
When we interviewed our new county manager, Anne Laurent, she did not seem optimistic about how much Los Alamos County can do about our own lagging housing supply. We are building, but we’re not growing on pace with demand. She asked, rhetorically, “What’s the County’s role to work on some of these issues regionally that are beyond us? We don’t have the resources either in land, workforce, or customer volume to develop an effective or efficient solution locally.” What’s your response to that?
I don’t know enough to speak specifically to that land use and regulatory framework. Los Alamos is one of the most unique communities anywhere in the country — for so many reasons, whether it be the income, the people that live there, the geographic constraints posed. We at the state level would love to see, especially in a situation where a local government doesn't feel like they can solve it on their own, that we look more regionally, that we lean on the state to help. That we can think bigger.
At the state level we can provide tools around best practices in land use and zoning. Washington state has a non-profit with best practices for land use. Every year when the legislature convenes and new laws are passed, they update model legislation. Let’s say you’re in a local community that wants to do accessory dwelling unit (ADU) reform. Well, they have a model policy for a small rural community, for a midsize community, and for a larger urban community. A city can hire the nonprofit to help do technical assistance.
Showing local governments what other communities do and have done, and what's legal, reduces the barriers to communities adopting some of these reforms. Hopefully we can show communities that after a lot of this common-sense land-use reform, the sky doesn't fall. In fact it creates more vibrant communities. It creates better neighborhood amenities. It creates public transportation systems that work better. It aligns with the work we’re doing to tackle climate change in the built environment and the transportation sectors. It broadly benefits communities when you do this reform.
There are multiple benefits, including secondary economic benefits, climate change benefits, transportation benefits. And all these other ways that we benefit from approaching housing more strategically: looking at infill housing, allowing denser housing. We have to make a case for that, and hopefully find some catalytic projects and communities to get people on board.
You've dealt with housing policy at many stages and in varying demographics. In Los Alamos, some residents are resisting efforts to build more housing because they don't see the housing crisis as something that affects them personally. Is there a succinct response that you would give to someone who says, “That's not my problem”?
Solving housing problems is broadly beneficial for communities — and we know it. In Santa Fe, we're starting to see the impacts of the housing shortage on our personal quality of life, right? You can't get in to see a doctor for six weeks. You can't get in to see a pediatric dentist for four months. If you go to your favorite restaurant, they're just closed on random nights.
It's hard for people to understand that these are housing issues, land-use issues. If there was one thing that I wish could magically happen it’s for people to understand the connection between land use and all the other spheres of life. Land use is this underlying thing that affects so many other things, right? Look at folks working in child care, who say, “Land use is making it really hard for us to create new child-care facilities.” Because there's a patchwork of regulations around the state: In some communities the fire marshal is going to be the one who says whether or not you can have home-based child care. In another community, it's going to be a zoning regulation.
We fail to see that at the root, these are land-use issues. It’s hard to explain to people that the reason your favorite restaurant is closed tonight is at its root at least partly a land-use issue. What Homewise did with their Livability Series last year is a great way to help educate people about this, because it's complex. It's nuanced. It's often counterintuitive.
We have a huge need to raise the education level of elected officials, key people in local governments, to help them understand the connectedness between these land-use issues. It is complicated and nuanced. And if you're someone who sits on the land-use board or who works in this field, you see it, and it's like this glaring problem — but to everyone else it isn't. They’re more operating in an anecdotal way around housing, right?
I think about the [Homewise series] talk with Rick Jacobus, he was talking about the greedy developer trope. But are they any greedier than say your giant local grocery store chain? We could call those “food monopolies” if we wanted to get aggressive about it. Jacobus uses the analogy of Toyota: they build a $29,000 Camry and they build a $170,000 Lexus SUV: what do you think makes them more money? It's Camrys, by a huge margin.
Jacobus draws that analogy because our land use and regulatory frameworks direct the market to build housing like Camrys or build housing like Lexuses. Look at low-density zoning — if you have an acre of land that's zoned one unit per acre, your incentive is to build a housing Lexus: the biggest, most expensive house possible on that piece of land.
But if you have that same piece of land and you can build 10 units of housing — which is probably from a climate change point of view what we should be doing anyway — the incentive then becomes “How many units can I fit on this property functionally?” It creates a downward pressure on the housing cost, because the incentive is then to build the most units, not the most expensive unit. You are incentivized to spread out your infrastructure cost, spread out your fixed costs, spread out your land cost. And you arrive at a more natural affordability: the Camrys of housing.
We have a lot of work to do in education to help people understand the connectivity between the decisions we make in land use, and how that impacts housing affordability and the market’s response to our need for housing.
Getting back to the question of where I see the role of government: I don't think anybody thinks the government should be replicating what banks do in terms of financing housing construction, but can we fund things that banks won't fund — like building a bridge that accesses the five acres of land that can have 50 units of housing on it. No bank is going to fund that $5 million bridge, then wait three years for that money to start coming back in from housing construction. Not when you've got onerous land use approval and permitting processes, and a market that's changed 180° in three years.
Can you explain how the government can finance this sort of project?
At the local level it could be things like municipal funding/financing of housing infrastructure development. Or at the state level, tools like the Opportunity Enterprise Revolving Fund will work on providing more flexible and creative development finance.
So, can we create funding environments that make projects that are currently financially infeasible, feasible? Can we use public resources to engage the private sector to solve the affordability problem? Because ultimately it is the private sector that builds houses, and has built every house. It’s that strangest of amnesia everyone has about who must have built their houses.
To me, the best-case scenario is creating regulatory environments that make it more attractive for the market to solve these affordability gaps — then use public resources to fill other gaps in the market. We’re dealing with this bigger problem, which is that a huge portion of the population has a very fixed income and there's not enough resources to help them as it is.
Can you clarify how public resources can fill market gaps?
Sure, again for non-income restricted housing it’s supports like municipally-funded infrastructure, or subsidy programs to more traditional income-restricted affordable housing.
So hopefully that's the road map or at least the organizing principles that we're using in the work that we're doing in our proto office of housing.
Thinking about where we’ll be a year from now, hopefully we’ll have some thoughtful legislation, some new funding sources, to help leverage the existing state infrastructure for housing. But underlying that, we’ll have the data that tells us what our need is. What are we doing? And is what we're doing moving the needle?
Are you hopeful that the office of housing will become more solidified next year?
The governor's office has tried two years in a row to do this. We just got through this legislative session so we're not really having conversations about the next legislative session. My biggest takeaway from my first couple of months working here is that the governor is intensely focused on really practical everyday issues affecting families in New Mexico, whether it's early childhood stuff, or healthcare access, or housing.
Her showing up at the MFA board meeting a couple weeks ago sent a clear message that we’re not just trying to create an office of housing to have a political win; there’s an intense focus on solving these problems. The scale of the problem that exists outside of the traditional affordable housing realm right now is astounding in terms of the number of entry-level working professionals that don't have access to housing, that can't buy or rent housing in the communities where they have lived, or where they work. The governor has been very clear that she wants to see these issues solved.
I think that's a great place to end. We appreciate your time today.
Thank you.
