UPDATE: The future of affordable housing in Santa Fe hangs in the balance as the crucial Paseo del Sol extension is missing from the city’s 2026 capital outlay request list. This pivotal infrastructure project is essential for the Phase 3 development of Tierra Contenta, which promises to deliver 1,500 homes, with 40% designated as affordable.
The urgency of this situation is underscored by the city’s ongoing housing affordability crisis, a key issue during the recent mayoral election. Despite the pressing need for affordable housing, city leaders have not included funding for this critical project, disappointing nonprofit developer Homewise, which aims to lead this initiative. Deputy CEO Johanna Gilligan expressed her hope for a shift in the city’s priorities, stating, “We really believe that the city, and particularly the new administration, has an opportunity to demonstrate their commitment to affordable housing.”
This infrastructure expansion is vital; without it, construction on the much-needed housing cannot commence. City officials maintain they are collaborating with Homewise and other nonprofits to address the affordable housing shortage in Santa Fe, but the lack of financial backing for Paseo del Sol remains a significant obstacle.
Tierra Contenta’s journey began in the 1990s as a collaboration between the city and private developers. The city initially purchased land for this ambitious project, but progress has been slow, particularly during the Great Recession. Last year, Homewise stepped in as the master developer for Phase 3, agreeing to pay the city $2.3 million for the land. However, Gilligan noted that to make the project viable, they must secure at least $6 million in additional subsidies, as the affordability aspect limits their ability to transfer infrastructure costs to future homeowners.
Housing prices in Santa Fe have surged dramatically, with rents increasing by 74% and home prices by 80% since 2016. This trend has intensified the urgency for developments like Tierra Contenta, which aims to provide homes for those struggling to afford living in the city. City officials have labeled this project as one of two key initiatives to enhance affordable housing, alongside the midtown campus redevelopment.
Despite this recognition, Homewise has yet to receive any concrete financial support from the city for Phase 3. The organization has applied for funding from the Affordable Housing Trust Fund, but this year’s recipients have not yet been announced. Furthermore, the project is currently absent from the city’s Infrastructure and Capital Improvement Plan, which prioritizes funding for large infrastructure projects.
The city’s funding priorities are set to be voted on at the City Council’s final meeting of the year on December 10, 2025. Gilligan emphasized her disappointment over the Paseo del Sol extension’s removal from the city’s plans, stating that it contradicts the administration’s claims of support for affordable housing.
Homewise has maintained ongoing discussions with Mayor Alan Webber about alternative funding sources, including the potential use of road impact fees. However, Gilligan expressed frustration over the lack of movement on securing subsidies despite multiple conversations with the administration.
City spokesperson Regina Ruiz did not provide detailed answers regarding the Tierra Contenta project. However, Land Use Director Heather Lamboy indicated that the current capital improvement list was drafted nearly five years ago, suggesting that Tierra Contenta was not anticipated to be completed within that timeframe. The list is now being updated and is expected to receive approval in early 2026.
While the city previously acted as a fiscal sponsor for a significant portion of funding, the allocation is now being routed through the New Mexico Department of Workforce Solutions to expedite the project timeline. Despite receiving $8.9 million from lawmakers in the last legislative session, concerns remain regarding the city’s efficiency in managing and deploying these funds.
Gilligan has conveyed the urgency of commencing construction on the spine infrastructure, aiming for a groundbreaking in the first quarter of 2026. She described this timeline as aggressive but necessary to demonstrate the swift utilization of state funds.
The city initially exhibited strong leadership by investing in the Tierra Contenta land, but Gilligan argues that bureaucratic hurdles have stalled the vision of providing affordable housing through public-private partnerships. “There is no city in America that’s solving the housing crisis by building all of their own housing,” she stated, emphasizing the need for collaboration with the private sector.
As the situation develops, the community watches closely to see if Santa Fe will prioritize the funding necessary for this critical affordable housing initiative. With the legislative session approaching on January 20, 2026, the time for action is now.
