Ep. 12 How Affordable Housing Gets Funded with Danny Maki

In this episode of Housing Matters, we’re joined by Danny Maki to talk about a side of housing that often goes unseen, how it all gets funded.

Danny shares insight into the process behind securing funding and why it plays such a critical role in expanding affordable housing across New Mexico. From what happens behind the scenes to the challenges and opportunities in the work, this conversation helps break down how housing decisions take shape.

If you’ve ever wondered how housing programs come to life or what it takes to support them, this episode offers a helpful look at the bigger picture.

Learn more about The Housing Trust: 

https://www.housingtrustonline.org/

Transcript

SPEAKER_01 0:00

This is Housing Matters, the Housing Trust podcast, where we share stories and insights about affordable housing and making homeownership a reality. I'm your host, Ramon Tiger Abeta. Welcome to another episode of Housing Matters. In this episode, we'll talk with Danny Mackey from MCS Governmental Affairs. So, Daddy, welcome to the podcast. This is Housing Matters. Uh, tell us a little bit about yourself.

SPEAKER_00 0:28

Thank you for having me. Born and raised here in Santa Fe, uh, graduated in Santa Fe High. I've been working in government throughout my career, from local government all the way up to state and federal government.

SPEAKER_01 0:40

What'd you do after Santa Fe High, after high school?

SPEAKER_00 0:43

I worked in uh Governor Richardson's administration as director of boards and commissions.

SPEAKER_01 0:48

Okay, so right away you get into government, say government, so you get an idea of how that works.

SPEAKER_00 0:53

Then I left and went to college at American University, where I got my degree in political science with an emphasis in campaign management and issue campaigns. Okay.

SPEAKER_01 1:02

So around stayed in the same field. Okay. And then after American University.

SPEAKER_00 1:08

I worked on Capitol Hill for several years with uh Congressman Ben Ray Lujan, uh, learned the federal side, uh, worked that whole process from homeland security uh to dairy. So back in 2006 it was, I believe, or eight, uh, we redesigned the food pyramid. Oh. We created a plate. So I was Ben's uh Congressman Lujan's representative on determining how much protein is on a plate uh to how much uh vegetables carbs and so so so if we did a podcast on food, you could become a guest and I'll have to go back to my way back machine and figure it out again.

SPEAKER_01 1:48

Nutrition. Okay, so so we've got state government right out of high school. Then you you have college education related to government, then you actually work in the federal government. What'd you do after Senator Luhans?

SPEAKER_00 2:02

So then I worked in uh the city of Santa Fe. Okay, so local government.

SPEAKER_01 2:05

Now local government.

SPEAKER_00 2:06

Okay. Um, and then I went back into state government under uh the state auditor's office and uh worked in the auditing field. Uh so how projects, if pro if money's being spent like how it's supposed to be. So auditing the uh programs that are uh being funded by the state, making sure they're doing what they're supposed to be doing. And then after that, I started my own company running and uh managing political campaigns throughout New Mexico. We did about 80 campaigns in the state of New Mexico and won about at 75% of them. Now I created my own company where I do governmental affairs, help parties like the housing trust get their way through the governmental the bureaucracy, right?

SPEAKER_01 2:53

And like the because like someone from my pers well, maybe not my perspective, because I grew up in government, but if you didn't, you really don't know how to work your way through that. Like and government means you have city, you have county, you have state, you have federal. And so even if you why if if you did work in a city or county, you do get exposed to state and federal, but if you never have and you're running a nonprofit and trying to get through one of those or all of those bureaucracies, it could be very difficult.

SPEAKER_00 3:24

It's yeah, it's way to cut the red tape. Red tape's put in place to slow government down so that they're not making quick decisions. And it's a person that helps shepherd an entity through the process, or someone that knows where funding are, knows where to capitalize on different funding for project or for getting rules passed in order to help grow an industry or help regulate an industry. It can go both ways.

SPEAKER_01 3:53

So let's talk specifically about the housing trust. So can you explain how you help the housing trust?

SPEAKER_00 4:00

So we went out to look for capital funding in order to purchase land in northern Santa Fe to create a project for low-income housing for the housing trust. So what we were able to do was go through the governor's office, workforce solution in the housing department of the state government, and find grant money and different pockets of money that was out there to the housing trust can apply. And we helped usher the project application through the process.

SPEAKER_01 4:32

So there's money out there at the state level that people could take advantage of if you're in the housing industry, you're a nonprofit. And you you talked, you you mentioned capital money. What does capital mean?

SPEAKER_00 4:44

Capital is so you have two types of pots of money. You have operation money and then you have capital. Capital is your bricks and mortar, and operation is like runs your day-to-day.

SPEAKER_01 4:55

So for housing, the capital would be like the roads, the water lines, the sewer lines. We can use capital money to build those. Correct.

SPEAKER_00 5:04

And you also capital is also able to purchase uh tangible things.

SPEAKER_01 5:10

Okay, so you could also buy stuff with it. You don't have to just build a road, you can pay for things. And so in the case of um the state of New Mexico, we have a governor, obviously, and then we have a House of Representatives and a Senate. And there's districts within each county. Is that how that works? And there's state representatives for counties and and state senators.

SPEAKER_00 5:34

So there are 32 senators throughout the state. Okay. Broken out in different districts.

SPEAKER_01 5:39

Okay.

SPEAKER_00 5:40

Through and some senators cross between four counties.

SPEAKER_01 5:44

Okay, so they're they're they're it's all district overlaps.

SPEAKER_00 5:47

It all depends on population. So based on population. Senate and House of Representatives are based on population.

SPEAKER_01 5:54

Okay.

SPEAKER_00 5:55

In Santa Fe, we have five reps and three senators.

SPEAKER_01 6:00

Okay, and then those reps and senators get a certain amount of money for capital for projects like ours.

SPEAKER_00 6:07

So each each member, each chamber, so you have the Senate and the House, they figure out what the revenue is going to be for the year. Okay. So the Senate legislative council service or legislative finance service figures out what the budget's going to be. Okay. And they set aside X amount of money, one-time money for capital projects. And that can go to counties, nonprofits, it could go to cities, different entities in order to create projects, roads, and different things that will help the citizens.

SPEAKER_01 6:37

So in the in the case of the housing trust, for example, we, as you stated earlier, we were able to access some money for affordable housing to purchase land, which we are in Las Estreas. But then that's great that you could purchase the land. But when you actually build a house, you got to build the roads, the water lines, the sewer lines. And that's where we can then say, okay, we could go. How do we get capital outlay money to get money for the roads and water and sewer?

SPEAKER_00 7:03

So each representative, each chamber gets they figure out what the total amount is. Okay. I'm going to use round numbers. Let's say it's a billion dollars. Yeah. Then they divide it uh so a third, a third, and a third.

SPEAKER_01 7:14

Okay.

SPEAKER_00 7:14

So the house gets a third, the senate gets a third, and a governor gets a there's 72 members in the house. So they divide that third into 72 members.

SPEAKER_01 7:25

Okay, so let's say three million, three million, or three hundred million, three hundred million, three hundred million. Then each you divide three hundred million by seventy-two.

SPEAKER_00 7:34

Correct. Okay. So each member got two point eight million.

SPEAKER_01 7:37

Okay, okay.

SPEAKER_00 7:38

And then on the uh Senate side, each member got four million.

unknown 7:42

Okay.

SPEAKER_01 7:43

Yeah.

SPEAKER_00 7:44

Because there's less senators than representatives. Okay. And then the governor got 300 million.

SPEAKER_01 7:49

Okay. To do what at their discretion to help their constituents like put like us put water right, water lines, roads, if if that's what they want to do.

SPEAKER_00 8:00

Correct. And then there's a big emphasis in this year's uh legislature on housing. So funding housing, funding projects. So the the money we got to purchase the land came from a piece of legislation that set aside a pocket of money for projects like the housing trust to purchase land, to make affordable housing, to bring the cost of a house down. Right. And then the capital outlay is a different pot of money that was used in order to help build the roads, help build the sewer lines, help build the infrastructure. And the reason for that is if we can get state, federal or state involvement into this process, it ultimately brings the price of the house down.

SPEAKER_01 8:44

Because you're not having to charge the buyer ultimately for the road work, the water lines, the sewer lines, even the land cost. They're literally only paying the cost of building the house. The construction of the house. The construction of the house. Yeah. That makes sense.

SPEAKER_00 8:59

So then your house that normally costs $500,000, you'll be able to sell it for around $250.

SPEAKER_01 9:07

Right. Because you saved or you got that money from another source and it doesn't have to come from the buyer. Correct. And so how does the the federal funding work?

SPEAKER_00 9:17

So the federal's process is a little different, but kind of the same.

SPEAKER_01 9:22

Okay.

SPEAKER_00 9:23

They call it earmarks instead of capital.

SPEAKER_01 9:25

Oh, okay.

SPEAKER_00 9:26

And it goes back from a term of extra money's called pork because it's the it's the fat.

SPEAKER_01 9:34

Off the budget.

SPEAKER_00 9:35

Yes. So when you trim the fat, you're giving a little extra to somewhere else. So just like on the state side, each member gets an X amount of okay.

SPEAKER_01 9:46

So because the same thing, we have senators. And we have representatives. We have representatives, and there's two senators for each state. And then the representative varies on the size of the state.

SPEAKER_00 9:55

When they build out the budget, they do earmarks.

SPEAKER_01 9:58

Okay.

SPEAKER_00 9:58

So they set aside, all right, I have this project, I need four million for project X. And then they basically mark it. Just like on a pig where they clip the ear and put a tag on its ear. Yeah. That's where the name earmarked got.

SPEAKER_01 10:14

Oh wow. So it's all so pig, pork, and like does this go back to like when it Abe Lincoln was president a lot back then?

SPEAKER_00 10:21

Yeah. Wow. Okay. So um, so then they earmark certain things within which they call the budget bill.

SPEAKER_01 10:28

Okay.

SPEAKER_00 10:29

However, they have to pass a budget bill. Lately they haven't passed anything, so there's been something called reconciliation. So whatever was passed before, they just keep that same budget and pass it again for six months extension. Okay. Keep everything running until they can come up with an agreement for a budget. So that's one way. And then there's also congressional discretionary funds.

SPEAKER_01 10:54

And can you use the money for the same purpose or like capital like growth for operation as well? And operations as well to help support the cost of running your, in this case, the housing trust. Correct. Okay. Do you do you have to be a nonprofit in order to qualify for this funding?

SPEAKER_00 11:11

Yes. For-profit entities cannot qualify for federal funds or state funds because that's considered an anti-donation.

SPEAKER_01 11:18

Okay, so that's kind of like how it looks on paper. And uh, but tell us uh obviously there's a lot going on behind the scenes when you go to the state and to the feds to try to secure this money. Can you kind of tell us about that process and what goes into it? And because obviously there's a lot of people competing for the same dollars. So what is what what what how does that work? How how does it work behind the scenes?

SPEAKER_00 11:44

So it's building relationships with legislators and our senators, making sure that we're bringing a project to them that is shovel ready. Shovel ready means we're ready to put the shovels in and start.

SPEAKER_01 11:58

And this isn't just an idea or a vision that somebody has or an organization has. There's I we can actually spend this money.

SPEAKER_00 12:05

Correct. We're past planning, we're past uh zoning, we're past everything, we're ready to get to work because you have X amount of years to spend the money. Uh you have five years to spend what funds you were given. From the federal or the state side? From the state side.

SPEAKER_01 12:19

So the state, you have five years and you got to get it spent.

SPEAKER_00 12:22

Yes. And if you don't, you can go in for something called reauthorization, but they'll do that up to two times. After that, you lose the money. Because then it's kind of like, well, if you haven't built it by now, you know, what's going on? So the state is sitting on $1.2 billion worth of uh of unspent capital outlay funds right now.

SPEAKER_01 12:39

So money they've given to organizations over the years, and then for whatever reason, they have they haven't been able to spend it. And organizations also include cities and counties, right? So like a city could ask them for I think I remember there was one community that had gotten millions for uh water upgrades and they just never did it or can't get it off the ground.

SPEAKER_00 13:03

Correct. So if you don't spend it, you lose it. And now there's they're they're changing the rules of capital outlay this past session that it has to be shovel ready. You have to be able to spend it within the it now within three years. Oh, so it got from five years to three years. You're only uh able to uh reauthorize it once. So they're being real strict on how how it happens.

SPEAKER_01 13:27

What do you what would you say are some of the biggest challenges you face when you're advocating for housing like at the state legislature? And by the way, do you do most of your work during the legislative session or is it year-round?

SPEAKER_00 13:40

It's year-round because you have interim committees. So we work, we do studies, uh, the legislators do studies, they have interim committees. So we we provide expert witnesses, we provide project updates, we provide what's going on on the ground. So is the money they put forward during the session being utilized properly and is it making a dent or is it helping the situation? So are we bringing housing prices down? Are we making sure we're getting people into houses that need houses? So that's what we do during the interim session.

SPEAKER_01 14:14

Okay.

SPEAKER_00 14:14

And we also bring out all our members, our our legislators, and give them a tour.

SPEAKER_01 14:20

Show them give them a progress report, show them that the road's getting built and the money. Here's where your money's going. Uh now again, going back to the beginning, that's one side, that's that's capital outlay, that's money for that. But there's legislation, housing legislation that you read about throughout the session. And so there, you you are involved heavily in that part too, right?

SPEAKER_00 14:46

So this past session, uh, the federal government has cut um funding for down payment assistance.

SPEAKER_01 14:53

Right. That's CDFI, but what's that we were directly impacted by that at the housing trust.

SPEAKER_00 14:58

So the state has put together a piece of legislation to help fill some of that gap.

SPEAKER_01 15:04

Okay.

SPEAKER_00 15:05

Um, so it goes to the mortgage finance authority. So what we did is we worked with the the Senate uh finance committee and also the house appropriations and tried to sculpt up a piece of legislation that will fill that gap. So they're doing a pilot program of $10 million where uh nonprofits like the Housing Trust can apply to the mortgage finance authority to get funding for down payment assistance.

SPEAKER_01 15:33

Oh, that's great.

SPEAKER_00 15:34

So that's type of legislation that's going on. There's also other legislation on zoning. So they're trying to create uh streamlined process so that building permits You get out quicker, you can get them out quicker. Yeah. You restricting how and and I mean they can go from one end to another, they can be very protective or very deregulatory. Uh there was another bill that said, you know, uh Santa Fe has a historic housing.

SPEAKER_01 16:03

Right, their district, the historic district in Santa Fe. So limiting their powers on how they can because it might be viewed as some all those rules and regulations add to the cost of housing. Correct.

SPEAKER_00 16:15

And by make it cumbersome for the person to get. So when you go in for a permit and it takes you a year to get a permit, you're sitting on uh your your equ your land without it uh being built. And if you have a loan, if you borrow it.

SPEAKER_01 16:32

You're paying interest on money you're not moving.

SPEAKER_00 16:34

So you're losing your your your fund, you're losing money while you're waiting for the process.

SPEAKER_01 16:40

And by the time you finally get your building permit, your your project budget may be blown because costs have gone up for cement or for lumber or whatever's happening in the economy around housing.

SPEAKER_00 16:53

Yes. So trying to speed up that process, there was legislation on that. There was legislation on funding, finding ways to make housing affordable. So there was a whole legislative package on housing.

SPEAKER_01 17:06

Well, and housing has become really important to the state. Um, we had a we had a guest for uh Lisa Uval from the Department of Workforce Housing, she's on one of our episodes. And what the one thing that I asked her, I said, Well, why would this housing money go to the Department of Workforce solutions and not somewhere else? And she said, Well, because housing has a direct impact on our workforce for and our ability to attract the workforce to New Mexico. If they can't afford to live here, well, they're not gonna take jobs here.

SPEAKER_00 17:42

And then also it it's good that it went there because there's already a group of people at that department that know to get the money out quicker. Right. Instead of standing up a whole new department, spending that money that should be going for housing to build up a new department. Okay, that's a is a waste of funds.

SPEAKER_01 18:01

That's a that's a good point. And and also systems in place, like you said, because again, you're setting aside this money, but if you're not spending it quickly, then I could see some people in the legislature saying, well, then give it back, or let's use it for something else if we can't get it out the door.

SPEAKER_00 18:19

Or we're not meeting our goals, so this project's not working. So we're gonna cut it and try something different.

SPEAKER_01 18:24

So what would you say from your perspective and based on what you've been experiencing uh both at the state and federal levels, uh gives you optimism about the future of housing policy and funding?

SPEAKER_00 18:37

Seeing that it's uh number one as one of the top five priorities of the state, it uh gives me hope that there's we're really taking a hard look at housing in New Mexico. Yes. Um so finding ways that we can provide assistance to people for down payment or assistance to organizations to build low income housing or workforce housing. Um because in order to have a strong workforce, we have to have a strong housing market and an affordable housing market so that everybody has the opportunity to achieve the goal of owning their own house.

SPEAKER_01 19:19

And so you you obviously don't just work on behalf of housing, right? So you are you able to do a whole spectrum of of like requests in the with both federal and and state legislatures?

SPEAKER_00 19:32

I do I mostly stay around the state side. Okay. Um I do some Fed, but not uh it's mostly all state. So it goes from energy all the way to uh from housing energy to uh technology. So I I run the gamut on different projects from from one issue to another issue.

SPEAKER_01 19:56

This was uh very good, Danny. I I could see us having more episodes with you where we focus on just maybe the federal side or come back to the state side because there's just so much to this industry, uh not just with uh with housing but also government relations. But coming back to housing, we finish all of our interviews by asking the question related to our title. And that question is why does housing matter to you?

SPEAKER_00 20:27

Housing matters to me because I was born here, I was raised here. I was fortunate enough to purchase the house that my grandmother lived in, and I have a four-year-old son. I would like for him to be able to opportunity to purchase a house here. And if he can't afford it, he wouldn't live here. I've left several times because it was expensive, but I've come back and was able to find a way to live here at home. So I want every child to have that opportunity to live here at home if they want to. That they should go out and experience the world, yes, but also have that opportunity to come back and be able to purchase a house if they so want to. Because without a house, a house j creates a generational wealth.

SPEAKER_01 21:17

Well, like you said, your grandmother, you're living in that house now. Yes. So it's something that can be passed down and given to uh the next generation. Awesome. Well, that's all for this episode. Thank you for listening to Housing Matters, the Housing Trust Podcast. Thank you for listening to Housing Matters, the Housing Trust Podcast. If you enjoyed today's episode, please subscribe, share it with a friend, and leave a review. To learn more about our work and the latest at the Housing Trust, visit housingtrustonline.org. If you are interested in partnering with us or supporting our mission, we'd love to hear from you. You can find our contact information on our website.