LEA COUNTY AFFORDABLE HOUSING PLAN Developed by HOUSING STRATEGY PARTNERS Alexandra Ladd, Principal Monica Abeita, Principal 1206 Apache Avenue, Santa Fe, NM 87505 Adopted October 2011 Lea County Commission Gregg Fulfer, Chairman Mike Whitehead, Vice Chairman Ron Black Dale Dunlap Hector Ramirez Mike Gallagher, County Manager Russ Doss, Executive Director, Lea County Housing, Inc. Lea  County  Affordable  Housing  Plan   ii TABLE OF CONTENTS Executive Summary 1 Introduction 6 Section I: Community Profile 11 Overview 11 Demographics 13 Economic Profile 17 Housing Profile 24 Section II: Housing Inventory 29 Special Needs/Shelter Beds 29 Public Housing 31 Subsidized Rental 33 Subsidized Homeownership 33 Section III: Land Use and Development 35 Governmental Constraints 35 Non-Governmental Constraints 39 Economic Constraints 44 Housing Development Feasibility Analysis 47 Summary of Housing Development Recommendations 55 Section IV: Housing Needs Analysis 57 Affordability 57 Homeownership Gap Analysis 61 Rental Gap Analysis 63 Rehabilitation of Existing Homes 69 Section V: Implementation Plan 69 Overview 69 Funding Recommendations 73 Capacity Building Recommendations 78 Program Development Recommendations 84 Real Estate Development Recommendations 90 Regulatory Recommendations 97 Section VI: Individual Community Plans 100 Overview 100 Affordable Housing Plan for the City of Lovington 103 Affordable Housing Plan for the City of Eunice 117 Affordable Housing Plan for the City of Jal 131 Affordable Housing Plan for the Town of Tatum 148 Collaboration with the City of Hobbs 162 Appendices 166 Appendix A. Lea County Major Employers 166 Appendix B: Lea County Income 169 Appendix C: Employer Assisted Housing 170 Appendix D: Ordinance Recommendations 181 Appendix E: Funding Resources for Affordable Housing 188 Lea  County  Affordable  Housing  Plan   iii LIST OF FIGURES Figure 1: Spectrum of Housing Need 6 Figure 2: Southeastern NM and Southwestern TX Regional Map 11 Figure 3: Lea County Population Trends 12 Figure 4: Unemployment Rate, 2001-2010 19 Figure 5: Lodgers Tax Receipts 22 Figure 6: Taxable Gross Receipts from Retail Trade (Lea County) 23 Figure 7: Vacancy Type 28 Figure 8: Income Distribution by AMI, Lea County 59 Figure 9: Opportunities and Constraints – Funding 73 Figure 10: Opportunities and Constraints – Capacity Building 78 Figure 11: Opportunities and Constraints – Program Development 84 Figure 12: Opportunities and Constraints – Real Estate Development 90 Figure 13: Opportunities and Constraints – Regulatory Environment 97 Figure 14: Community Housing Priorities 100 Figure 15: Five-Year Housing Goal 101 Figure 16: Income Distribution by AMI, City of Lovington 107 Figure 17: FIRM Floodplain Insurance Rate Map for Lea County, NM 115 Panel 955 of 2150 (North Lovington) Figure 18: Potential Development Sites in Lovington 116 Figure 19: Eunice Increase in Median Household Income, 1999-2009 121 Figure 20: Income Distribution by AMI, City of Eunice 122 Figure 21: Potential Development Sites in Eunice 130 Figure 22: Income Distribution by AMI, City of Jal 136 Figure 23: Potential Development Sites in Jal 146 Figure 24: FIRM Floodplain Insurance Rate Map for Lea County, NM 147 Panel 2102 of 2150 (Jal) Figure 25: Income Distribution by AMI, Tatum 152 Figure 26: Potential Development Sites in Tatum 160 Figure 27: FIRM Floodplain Insurance Rate Map for Lea County, NM 161 Panels 440 and 445 of 2150 (Tatum) Figure E-1:Sample Development Process Flow Chart 193 Lea  County  Affordable  Housing  Plan   iv LIST OF TABLES Table 1: Population Change, 2000-2010 13 Table 2: Demographics 14 Table 3: Hispanic/Latino Population Change, 2000-2010 16 Table 4: Workers by Industry 18 Table 5: Sources of Household Income 20 Table 6: Educational Attainment 20 Table 7: Pull Factors from Major Cities in SE New Mexico, 2006 21 Table 8: Housing Characteristics 25 Table 9: Housing Unit Increase, 2000-2010 26 Table 10: Building and Installation Permits, 2000-2010 27 Table 11: Vacant Housing Units, 2000-2010 27 Table 12: Inventory of Emergency Shelter/Transitional Beds 30 Table 13: Inventory of Income-Restricted Rental Properties 32 Table 14: Subdivision Categories in Lea County 36 Table 15: Jal Zoning Categories 37 Table 16: City of Eunice Residential Zoning Districts 37 Table 17: City of Lovington Zoning Districts 38 Table 18: Affordability and Incomes 48 Table 19: Single Family Subdivision Feasibility Analysis 49 Table 20: Single Family Subdivision Feasibility Analysis –Modular 50 Table 21: Single Family Scattered Site Feasibility Analysis 51 Table 22: Single Family Scattered Site Feasibility Analysis – Modular 52 Table 23: Small Multifamily Development Feasibility Analysis 53 Table 24: Small Multifamily Development – Modular 54 Table 25: Affordability Factors 57 Table 26: Lea County Income Limits 58 Table 27: Lea County Area Median Income Categories 59 Table 28: Affordability Matrix 61 Table 29: Lea County Home Sales Listings 62 Table 30: Summary of BBER Rental Survey Results 63 Table 31: Rental Rates for Hobbs Apartment Properties 64 Table 32: Market-Rate Rental Affordability 65 Table 33: Rehabilitation Needs Analysis 67 Table 34: Summary of Projected Needs/Five-Year Goal 70 Table 35: Implementation Plan Matrix 71 Table 36: Lovington Population Growth, 2000-2010 104 Table 37: City of Lovington Households at a Glance 105 Table 38: Lovington Change in Housing Units/Vacant Units, 2000-2010 106 Table 39: City of Lovington Area Median Income Categories 107 Table 40: Housing Production Plan for Lovington 112 Table 41: Eunice Population Growth, 2000-2010 118 Table 42: City of Eunice Households at a Glance 119 Table 43: Eunice Change in Housing Units/Vacant Units, 2000-2010 120 Lea  County  Affordable  Housing  Plan   v Table 44: City of Eunice Area Median Income Categories 122 Table 45: Eunice Home Sale Listings 123 Table 46: Eunice Housing Production Plan 126 Table 47: City of Jal Households at a Glance 133 Table 48: Jal Population Growth, 2000-2010 133 Table 49: Jal Change in Housing Units/Vacant Units, 2000-2010 135 Table 50: City of Jal Area Median Income Categories 137 Table 51: Jal Home Sale Listings 138 Table 52: Jal Housing Production Plan 142 Table 53: Jal Development Factors 144 Table 54: Town of Tatum Households at a Glance 149 Table 55: Tatum Population Growth, 2000-2010 150 Table 56: Tatum Change in Housing Units/Vacant Units, 2000-2010 151 Table 57: Town of Tatum Area Median Income Categories 153 Table 58: Tatum Apartments and Rental Units 155 Table 59: Tatum Housing Production Plan 157 Table C-1: Affordable Home Price Ranges 183 Table C-2: Affordable Rent Ranges 184 Table C-3: Mandated Affordability Periods 185 Table E-1: Technical Assistance Sources 189 Table E-2: Development Financing Sources 190 Table E-3: Mortgage Financing Programs 191 Table E-4: Down Payment Assistance Sources 192 Lea  County  Affordable  Housing  Plan   vi EXECUTIVE SUMMARY The purpose of the Lea County Affordable Housing Plan is to assess housing need in Lea County, to determine the feasibility of real estate development, and to provide recommendations for addressing the needs. As approved by the New Mexico Mortgage Finance Authority, this plan is in full compliance with the New Mexico Affordable Housing Act, enabling Lea County to adopt an ordinance that will mobilize public resources to support the provision of affordable housing and related services, new construction and the rehabilitation of existing homes. For purposes of this document, affordable housing is defined as a dwelling unit whose monthly cost does not exceed 30% of a family’s gross monthly income. This applies to all households earning up to 120% of the Area Median Income (AMI). Demographics Historically, Lea County’s population was based in several ranching communities and experienced rapid growth from oil and gas discoveries. Population surges and crashes have occurred over the years, as oil and gas prices rose and fell, leading to fluctuations in migration and population throughout the years. Based on historical figures, the Census routinely projected low and even declining population growth for Lea County. However, 2010 data show that not only has Lea County grown, but its growth has surpassed all previous projections to make it the fourth fastest growing county in New Mexico. Other summary data include: • Lea County has a younger population than NM and the US. • Lea County has more family and married households than NM or the US. • Lea County’s Hispanic or Latino population grew by 50% over the last decade. Economic Profile Lea County is first and foremost an oil and gas county. This is strongly reflected in the high percentage of workers found in the mining industry, which includes oil and gas extraction. According to the US Census, the agriculture and mining industry sector makes up 19.6% of all jobs in Lea County, compared to 4.1% in New Mexico and 1.8% in the US. Other industries associated with oil and gas, such as Transportation, Wholesale Trade, and Utilities, employ a greater percentage of workers than they do in New Mexico. Construction also employs a higher percentage of workers, likely due new construction projects in Lea County in the last few years. According to the New Mexico Department of Workforce Solutions, Lea County ranked 4th of 36 counties for average weekly wages of $891 in 2009. Other summary data include: EXECUTIVE  SUMMARY   1 • Lea County has a lower percentage of jobs in professional occupations, government, and low wage sectors. • Lea County’s unemployment rate is typically lower than NM. • Lea County is part of the “New Energy Corridor” including nuclear, renewable, and clean coal production and technology. • Lea County has low educational attainment levels, with 28% of adults lacking a high school diploma. • Hobbs is regional center for retail and services with steady revenue from lodgers’ and gross receipts taxes. • Large employers may be Lea County’s greatest assets for future housing development. Housing Profile Behind the boom cycle that has characterized the past eight years, Lea County has struggled to house new workers and its own growing population. The County suffers from aging housing stock, some of which has deteriorated during “bust” periods; poorly maintained rental units; an inadequate number affordable homes and rentals; and a stalled housing market in the communities outside of Hobbs that makes new development difficult. Rapidly increasing housing prices in Hobbs also pose a very real danger to low-income residents who will increasingly find themselves priced out of the market. For all of these reasons, Lea County leaders, employers, and citizens point to housing as one of Lea County’s greatest problems and as an obstacle to economic development. Other summary data include: • 70% of Lea County residents are homeowners and 30% rent their homes. • The majority of Lea County homes were built before 1990, and the rate of new construction is half of NM. • 100% of building permits issued in Eunice, Jal and Tatum since 2000 are for manufactured homes. • Vacancy rates have dropped since 2000 from 12.2% to 10.8%. Housing Inventory Housing  Type   #  of  beds/units   Emergency  Shelter   57   At the present time, Lea County’s Transitional/Supported  Housing   95   supply of subsidized and/or Public  Housing   70  units/81  vouchers   affordably priced housing is limited Income-­‐Restricted  Rental     549   in scope and primarily located in (includes  senior)   Hobbs and Lovington. Emergency Subsidized  Homeownership     109   (includes  new  units,  homebuyers   shelter and transitional/supported trained/created  and  rehabs)   rental (other than public housing) are found only in Hobbs. Lea  County  Affordable  Housing  Plan   2 Land Use and Real Estate Development There is no “one size fits all” development approach for providing affordable housing in Lea County. Rather, as the following analysis and the recommendations in this plan illustrate, real estate development will only happen as part of a “ripple effect” of improving the County’s local development capacity, increasing the financial options for people seeking housing, creating a “mortgage ready” pool of potential homebuyers, improving the collaboration and effectiveness of the service delivery network for emergency and supported housing, and rehabilitating older and deteriorating homes. Summary findings include: • Governmental regulation does not pose a significant constraint to new development. • The variability of employment erodes the marketability of single family homes. • Financing constraints are related to both the mortgage capacity of individual buyers and a lack of construction financing. • Appraised land values are often not high enough to justify construction costs. • Lack of infrastructure may be more of an obstacle than land availability for housing development. • Cloudy titles in small communities may pose barrier for redevelopment. • Lea County’s recent economic boom results in a unique rental demand due to the influx of temporary workers in the oil field and construction industries. Housing Needs Analysis There are several factors affecting affordability in any given housing market. This plan looks at income/poverty; cost and rent burden; and distribution of incomes to determine the capacity of Lea County residents to afford housing. A review of rental rates and availability and sales values indicates the depth of the supply of housing and projecting current and future needs for affordably priced housing establishes the overall demand for housing. Summary findings include: • Income and poverty rates are similar to the rest of NM with variations across the county. • Fewer Lea County households are cost and rent burdened than NM and US. • The area median income (AMI) in Lea County for a family of four is $47,100 and 63% of Lea County residents are classified as low- or moderate-income. • The actual demand for homeownership is believed to be much lower than the number of households who can actually afford a home based on income data. • On the basis of price alone, homeownership opportunities do exist in the marketplace for low and moderate-income Lea County households. EXECUTIVE  SUMMARY   3 • Lea County’s private rental market, as represented by multi-family complexes is generally unaffordable to residents with low incomes. • Lea County lacks an adequate supply of subsidized, supported housing for people with very low incomes. Projected Housing Needs Lea County is a place where low costs of living and changing employment conditions both enable and force people to relocate. Because temporary construction and fluctuating oil field employment are part of the fabric of the community, housing must be flexible enough to meet changing needs. For this reason, this and other planning documents have recommended that new housing construction focus on multi-family rental housing, as this housing type can be adapted to meet the community’s changing needs, including those of the workforce, low income residents, seniors and special needs populations. In order to identify projected housing needs, several supply/demand factors are taken into consideration. This plan identifies two types of need: “Catch Up” which considers the current unmet needs and supply deficiencies in the community; and “Keep Up” need which considers job/population growth and projects future demand. This plan projects housing needs as a five-year goal for each of the small municipalities in Lea County. Specific development recommendations and the factors used to estimate need are discussed in detail in Section VI: Individual Community Plans. The box at right shows the number of estimated Figure 15: Five-Year units projected as housing need for the next five Housing Goal years. All but five units to be constructed by the Lovington 170 units Tatum Municipal Schools trades program are Eunice 69 units Jal 63 units rental units. In Lovington, Eunice and Jal, we also Tatum 53 units recommend that ten to 12 single-family units be Lea County 355 units added to the housing inventory, either through infill or partnerships with developers. Rehabilitation of homes is projected at 17 units in Lovington, six units in Eunice, four units in Jal, and seven units in Tatum, based on the proportional number of housing units in each community. A countywide five-year rehabilitation target of 100 homes including Hobbs is established in Section IV, based on the capacity of LCHI’s HOME- funded owner-occupied rehab program, MFA’s Energy$mart program, and recommended programs for acquisition/rehabilitation and low-cost weatherization. Each of these rehabilitation initiatives is discussed in detail in Section V, pages 93-96. Lea  County  Affordable  Housing  Plan   4