What We Learned About the 3% Property Tax Cap and Zoning Reform 

Statewide Adventures in Zoning Reform

Concerns about property taxes are real and understandable. For many homeowners, especially those on fixed incomes, even small changes can feel alarming. Over the past year, one claim has surfaced repeatedly in discussions around zoning reform in Albuquerque: that changes to zoning rules could revoke the 3 percent cap on residential property tax assessment increases.

Because of the stakes involved, Strong Towns ABQ took this concern seriously. Rather than relying on speculation or secondhand interpretations of statute, we sought direct clarification from the officials responsible for administering property assessments in New Mexico.

What we learned was clear, consistent, and grounded in long standing practice.

Zoning Does Not Drive Residential Property Assessment

Through conversations requested by housing advocates statewide, including Strong Towns ABQ, our friend Becky Corran met directly with the Doña Ana County Assessor Gina Montoya Ortega and her Appraisor, Tonja Hazen, following Las Cruces’ recent zoning modernization. Las Cruces passed Realize Las Cruces, which legalized fourplexes, tienditas, and other multifamily and neighborhood-scale development citywide.

Tonja, who has assessed property in multiple counties across New Mexico including Harding County, stated emphatically that zoning does not factor into property valuation. While assessment databases may contain a zoning field, zoning information does not communicate into or interact with the assessment system and is never used in valuation or appraisal decisions.

Zoning changes, including broad legislative updates to a city’s zoning code, do not trigger reassessment.

In Doña Ana County, the zoning data contained in the assessor’s system was described as extremely outdated, including being out of date even before Las Cruces adopted its new zoning code. This reinforces the practical reality that zoning is not an input used by assessors when determining residential property value.

Neighboring Development Does Not Reassess Your Home

Another concern we often hear related to this is that if an abandoned or underused lot nearby were redeveloped, for example, into a small cluster of townhomes, it could raise the assessed value of surrounding homes. That is not how residential assessment works in New Mexico.

New Mexico uses what assessors describe as a protective assessment model. Residential assessments are based on changes to your property itself, not on improvements made to neighboring properties. New development next door does not trigger reassessment of your home.

Any annual change to a residential assessment remains subject to the 3 percent cap, regardless of nearby construction.

The 3% Residential Assessment Cap Remains Intact

Equally important was how assessors described the 3 percent residential assessment cap under New Mexico law.

Tonja described the cap as “sacrosanct.” It applies regardless of zoning or allowable density. Nothing related to zoning reform, increased density, or IDO style changes overrides or weakens the cap.

Reappraisal is triggered by:

• Building permits
  
  

• Business activity
  
  

• Substantial physical improvements
  
  

• Changes in ownership or use
  
  

Zoning changes or increases in allowable density do not trigger reassessment.

This applies to mixed use properties as well. Any portion of a property that is used as a residence, including living space and associated residential areas, remains classified as residential and subject to the 3 percent cap. Commercial portions are assessed separately.

This Is Consistent Across New Mexico

This understanding is not unique to Las Cruces.

In Bernalillo County, Assessor Damian Lara has confirmed to City Council staff that zoning changes are not communicated to his office and are not used in residential property valuation. Albuquerque’s adoption of the Integrated Development Ordinance in 2017, as well as opt in downzoning legislative changes in 2018, did not trigger reassessment or removal of the 3 percent residential cap at that time.

Materials presented to Albuquerque City Council further reflect this continuity. New Mexico Statute 7 36 21.2 limits increases in residential valuation to 3 percent per year and ties reassessment to ownership changes, use changes, or substantial improvements. Past zoning updates in Albuquerque retained the cap, and zoning modernization has not altered how residential properties are assessed.

If zoning reform alone caused reassessment or removal of the 3 percent cap, cities across New Mexico would already be experiencing widespread tax impacts. That has not happened, even as multiple cities have adopted zoning reforms that go further than what is currently proposed in Albuquerque.

We think it’s worth noting that the Bernalillo County Assessor’s office has been very cautious in publicly addressing this issue, having told us that they were “working on it” for some time before issuing clarity. In part, this reflects other pressures facing the office: the assessor is currently responding to commercial tax litigation, which has understandably shaped internal priorities and public communications. Despite that context, the fundamental fact remains, zoning changes do not drive residential assessments, and the 3% cap remains intact.

Why the Myth Persists

Much of the confusion stems from statutory language that uses the term “rezoning” without clearly distinguishing between parcel specific requests initiated by a property owner and broad, legislative zoning updates applied citywide. In practice, assessors have long understood rezoning to mean a change in use or ownership tied to physical or legal changes to a specific property, not a legislative update that changes what could theoretically be allowed across an entire city.

In limited cases involving vacant or abandoned land, assessors may consider “highest and best use” when determining value. This is a longstanding tool intended to discourage speculation and prolonged vacancy. It does not apply to occupied residential properties that continue in the same use. This information we obtained by speaking with state experts like Alex Horowitz, Daniel Werwath, and officials in Santa Fe County. 

Fear can travel faster than verification, especially when housing costs feel uncertain. But when we look at how the system actually operates, the evidence is consistent.

What This Means for Albuquerque

• Zoning modernization does not raise residential property taxes. 

• It does not remove the 3 percent assessment cap.

• And it has not done so anywhere in New Mexico.

What it does do is allow cities to grow more sustainably, reduce pressure on the limited number of neighborhoods where housing is currently allowed, and provide more housing options for people at different stages of life.

Strong Towns ABQ will continue to rely on evidence, direct conversations with public officials, and real world outcomes, rather than fear or speculation, as Albuquerque considers how to plan for its future.