Construction type, rehab scoring, and the labor package — New Mexico

The cost ceiling just moved — 130% to 120% — and it's still not a number you can look up in advance

Phase 1 established that New Mexico has no published per-county threshold basis limit table, and instead caps Total Development Cost per Unit at a percentage of whatever the field of applicants in the same round actually submits. That structure is unchanged for 2026 — but the percentage itself moved. The 2026 Universal Multifamily Underwriting Supplement, effective December 1, 2025 and incorporated by reference into both the 2026 9% and 4% QAPs, tightened the new-construction/Adaptive Reuse ceiling from the 130% Phase 1 cites (2025 QAP) down to 120%.

A developer budgeting off last year's 130% figure — or off Phase 1's own citation of the 2025 QAP — will overstate what the 2026 round actually allows. Costs above the limit aren't grounds for rejecting the Application outright; they're simply excluded from the tax credit calculation, which quietly shrinks the credit request relative to what the budget assumed.

Rehabilitation, Adaptive Reuse, and new construction: three scoring paths, mutually exclusive in one direction and stackable in another

Rehabilitation Projects (up to 5 points) require average rehab Construction Costs of at least $25,000/unit for Moderate Rehabilitation or $45,000/unit for Substantial Rehabilitation, plus at least 20 years since the certificate of occupancy or last tax-credit-funded rehabilitation — either clock qualifies. Points scale with how far past that 20-year line the Project sits.

Adaptive Reuse Projects (2 points) cover conversion of a building not originally built for residential use — motels, hotels, dormitories, convents are named examples — to multifamily rental use, with converted space required to account for at least 20% of combined building square footage in a mixed new-construction/conversion Project. Adaptive Reuse and Rehabilitation points are mutually exclusive: a Project eligible for one may not also claim the other.

What isn't mutually exclusive, and is easy to assume otherwise: Rehabilitation points can be claimed alongside Sustaining Affordability points (6, 8, or 10 points for preserving existing subsidized or at-risk housing) — the QAP says so explicitly, a real and deliberate contrast to the Rehab/Adaptive-Reuse split sitting right next to it.

Efficient Use of Tax Credits is a real external benchmark, not a relative ranking against other applicants

A Project can earn 1, 3, or 5 points by requesting fewer tax credits per low-income unit and/or per low-income square foot than published dollar thresholds — set separately for Tribal Projects, Permanent Supportive Housing, non-PSH Projects that are at least 80% efficiency/one-bedroom units, and All Other Projects, and further split by new construction, Substantial Rehabilitation, and Moderate Rehabilitation.

The QAP's own scoring-summary table actually misletters this whole run of criteria: it skips the letter P entirely and calls Efficient Use of Tax Credits "Q," then carries that one-letter shift through Non-Smoking Properties ("R"), Adaptive Reuse ("S"), Underserved Communities ("T"), and Other Scoring Points Available ("U"). The QAP's own body text and table of contents — which govern — use the un-shifted letters instead: P (Efficient Use of Tax Credits), Q (Non-Smoking Properties), R (Adaptive Reuse Projects), S (Underserved Communities), T (Other Scoring Points Available). It's a genuine drafting inconsistency inside the official document; cite the body section, not the summary table, when the two disagree.

A Project that scores Efficient Use points by requesting fewer credits than it's otherwise eligible for cannot later ask for additional credits if circumstances change, unless the combined original-plus-supplemental request still lands in the same scoring range — a real clawback-style constraint on undoing the strategy after the fact.

Labor: no LIHTC-specific prevailing wage trigger, but two real ones sit close by

New Mexico's Public Works Minimum Wage Act (NMSA 1978 §§ 13-4-10 to 13-4-17) sets prevailing wage and fringe-benefit rates for a "public works" project — construction, reconstruction, alteration, or repair undertaken by or on behalf of a public body and paid for in whole or in part with public funds — costing more than $60,000, where the state or a political subdivision is a party to the contract. A standard, privately owned LIHTC deal financed with tax credit equity, an NMHTF loan, or a HOME loan does not make the state a party to the construction contract on its own; this research did not find guidance stating that a bare NMHTF or HOME award, without more, converts a private ownership structure into a covered public-works project.

There is a real, recent exception worth flagging on its own: effective June 20, 2025, a 2025 amendment (2025 N.M. Laws, ch. 132 / House Bill 6) extended the Act to cover projects financed through municipal or county Industrial Revenue Bonds. That means a LIHTC deal that runs through the IRB property-tax-exemption structure covered in Phase 7 — where a county or municipality takes title to the real estate and issues the bonds — now is a covered public-works project: contractors need a current Labor Enforcement Fund (LEF) registration under NMSA 1978 § 13-4-13.1 before bids are due, and the project pays NMDWS-determined prevailing wage rates. The IRB tax benefit and this labor-cost obligation now arrive together.

Federal Davis-Bacon layers in on a completely separate trigger and doesn't care about IRBs at all: 24 CFR § 92.354 requires Davis-Bacon wage provisions on any construction contract covering 12 or more HOME-assisted units, and once triggered, it reaches the entire project's construction — not just the HOME-assisted units. A deal blending NM HOME dollars (Phase 7) into a 9% or 4% award needs to check the HOME-assisted unit count against that 12-unit line independently of whatever New Mexico's own state law does.

Construction underwriting parameters, and what EZFeasi doesn't do yet

The Underwriting Supplement sets minimum construction contingency at 5% of hard construction costs for new construction and 10% for Adaptive Reuse and rehabilitation — a single blended contingency rate across scope types is not how Housing New Mexico underwrites it. Builder profit is capped at 6% of Construction Costs, builder overhead at 2%, and general requirements at 6%, arm's-length; where an Identity of Interest exists between the Developer/Owner and the builder, profit drops to 4%. Architecture and Engineering fees are capped at 3.3% of Total Development Cost.

Projects funded with National Housing Trust Fund or HOME dollars carry one more federal string: once the Build America, Buy America Act is triggered, iron, steel, manufactured products, and construction materials must be U.S.-manufactured — a requirement a pure tax-credit-equity deal without those federal layers would not otherwise face.

EZFeasi has no New Mexico-specific construction-cost or labor-cost tooling built today. A developer still has to manually check, for each New Mexico deal, whether its specific financing structure — an IRB? 12 or more HOME-assisted units? — trips either the state or the federal prevailing-wage regime; nothing in EZFeasi flags that automatically yet.