Los Alamos is a small town with a rich history of ingenuity and can do attitude. This is never more evident than when we’re talking about the housing market. You don’t have to be a part of this community for very long to realize that you need to be creative when it comes to living arrangements. Whether we’re talking about renovating a post World War II relic like a Lustron Home (Don’t worry. If you have no idea what this is, keep watching the blog and I’ll happily explain in a future post) or subdividing a particularly large lot to make room for a new neighbor perched on the edge of a canyon. We know how to think outside the box!
Sometimes, the need for housing pushes us into completely new territory. At least for Los Alamos. A good example of this is the Mirador subdivision currently being built in White Rock. It sits on NM State Road 4 between the White Rock Visitor’s center and the stoplight at Grand Canyon. If you’ve been to White Rock lately, you’ve no doubt noticed the rows of houses being built at what almost seems a frantic pace. You’ve probably also noticed that the land itself seemed to go through endless rounds of grading and preparation before the first houses went up and became habitable toward the end of last year.
Why did it take so long for the builder to start building actual houses?
A good portion of White Rock sits on a bed of basalt. This had to be blasted and removed before building crews could lay a foundation for the houses to be built.
“Gosh, that sounds expensive!”
It is. Or was. Or rather, it WILL be. But that’s why we’re talking about PIDs. Public Improvement Districts. You might have heard the term either in the Los Alamos Daily Post or the Los Alamos Monitor or maybe in a council meeting. Or, you might have heard about public improvement districts in relation to several of them in the Albuquerque/Rio Rancho area. This concept is widely used in other larger metropolitan areas. But Mirador is the first public improvement district in Los Alamos County.
How does this work? Here is a quote directly from the November 4, 2018 Los Alamos Daily Post Article by Carol Clark.
“So how will the PID generate money in order to cover costs for administration and infrastructure? According to agenda documents, a special levy will be assessed on property in the development. Homeowners in the Mirador development will pay this levy in addition all other taxes and charges. The levy is only collected by the County and no homeowner, property owner or commercial property owner outside the development will pay it. In an earlier article published in the Los Alamos Daily Post, Community Development Department Director Paul Andrus said the cost to the homeowner will average about $200/month under the PID.”
Hmm. Let’s relate that back to the idea of buying power. I talked about buying power back on July 29, 2020. You can see that blog post here. The face value of $200/month when you’re talking about a big ticket item like a house might not sound like a lot. But when you add that $200 as a line item to your monthly house payment, it can feel enormous.
In my previous post about buying power and low interest rates, I discussed the impact of lowering interest rates because a percentage point or two, even half a point, can be the difference between making a house affordable or not. Most home buyers come into the transaction with a comfortable number in mind. They know what they can afford each month to pay for principal, interest, insurance, and taxes. They’ve done their research. They know that they need to leave room in the budget for things like utilities and maintenance costs. There are the cost of living necessities too. And that’s when $200 can be the difference between a house with a PID levy associated with it being a good idea or not.
Here’s another thing. That levy associated with the PID sticks with the house for 30 years. Sure. Homeowner A who initially moves into this lovely, brand new house might be willing to pay that extra chunk of change each month. But when they go to sell the house, they’re going to have to find the next homeowner willing to take over payments. Depending on the future of PIDs in Los Alamos County, this could affect how future buyers view that house and what they might or might not be willing to pay for it.
Whatever the future may hold for our county and our real estate market, there is no denying that PIDs offer a lot of good incentives for development. In theory, they can keep prices down and incentivize the development of difficult property by spreading out the cost of infrastructure over time and making sure only those benefitting from the development pay for it. But there are other questions that will only be answered as time goes on.
Until we have all the answers, I suggest getting as much information as possible if you’re considering the purchase of a property with a PID attached. Find out how this affects your monthly payment and ask plenty of questions about exactly what you’re paying for. Don’t be afraid to satisfy every bit of your curiosity and get as much information as you possibly can about this new and unusual obligation you’re considering. Information is always power. And don’t forget. You can always call your Realtor with any questions or concerns about your real estate transaction.
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