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Many pieces of legislation crossed the finish line during this year鈥檚 legislative session, from medical malpractice reform to tax breaks for affordable housing projects.

Yet, despite strong backing from NAIOP New Mexico and much of the commercial real estate community, legislation that would have capped nonresidential, or commercial, property tax evaluation increases at 5% per year never made it out of the gate.

In a , NAIOP Executive Director Rhiannon Samuel and Government Affairs Chair Sal Perdomo said the cap stalled after much 鈥渂ack and forth鈥� between NAIOP, the New Mexico Counties Assessors鈥� Affiliate and the New Mexico Association of Counties, a nonpartisan organization representing New Mexico鈥檚 33 counties and their public employees and elected officials.

The entities could not reach consensus on the cap number and decided instead to form a working group to hash out details and concerns over the next several months and build a stronger foundation for the 2027 legislative session, Samuel said.

鈥淎lthough this was not the outcome we were hoping for this session, we feel 鈥� that this is the best course forward,鈥� she said.

The proposed legislation 鈥� a and that were filed but never saw vote action 鈥� would have limited how much assessments of commercial properties in New Mexico could increase per year. An assessment, determined by each county鈥檚 assessor, outlines how much a property is worth and how much a property owner owes in taxes on that property.

The cap that NAIOP sought this legislative session was lower than the 12% cap proposed through legislation last year, which also stalled. Samuel said the organization felt the 5% ask was data-backed and mathematically justifiable, given the high assessments property owners have seen over the past few years.

From 2024 to last year, NAIOP鈥檚 commercial property owners 鈥� primarily based in Bernalillo County 鈥� saw an average valuation increase of 62%, according to Samuel. Some saw increases as high as 704%.

The higher valuations are in part the result of the Bernalillo County Assessor鈥檚 Office, under the leadership of Assessor Damian Lara, making a concerted effort to bring property valuations to their current and accurate values after years of past assessors undervaluing properties.

After three years of higher assessments, NAIOP felt that the office鈥檚 efforts to bring properties to current and correct values made enough progress to make the 5% cap defensible, Samuel said. But the assessor鈥檚 affiliate couldn鈥檛 get on board.

鈥淢yself included and other county assessors did not rule out coming down a little bit from that 12%, but not anywhere near what was being proposed by NAIOP this year,鈥� said Lara, vice chair of the New Mexico Counties Assessors鈥� Affiliate. 鈥淲e were just too far.鈥�

Lara said conversations exploring an 11% or 10% cap might have a better chance next year, adding that he and the New Mexico Counties Assessors鈥� Affiliate are willing to work with the commercial real estate industry鈥檚 stakeholders to reach a deal.

Samuel and Perdomo echoed Lara鈥檚 sentiment on working together, adding they are focused on getting the working group 鈥� set to include members of the New Mexico Counties Assessors鈥� Affiliate, the New Mexico Association of Counties, NAIOP and the state鈥檚 business communities 鈥� up and running over the next month or so.

鈥淚t鈥檚 a statewide effort, so that鈥檚 why there鈥檚 some speed and expediency behind it,鈥� Samuel said.

Even if a commercial property tax cap bill passes in next year鈥檚 session, the cap would still have to be approved by voters through a statewide ballot because it would amend a tax law codified in the state constitution. A statewide ballot will be offered later this year, coinciding with the general election, and it will not be offered again until 2028.

Still, the trade organization is focused on building a strong case for getting the legislation past the finish line in 2027 鈥� knowing it may still take multiple sessions to get everyone on board.

Samuel said NAIOP鈥檚 members are 鈥渃ertainly disappointed鈥� that the cap didn鈥檛 advance this year, adding it would have provided property owners with some financial predictability. But the executive director is optimistic about working with members, legislators and assessors to find common ground.

鈥淚f we want businesses (to grow), if we want New Mexicans defended from market fluctuations and inflation, we need a cap,鈥� Samuel said. 鈥淲e need to know what we鈥檙e working with.鈥�

Kylie Garcia covers retail and real estate for the Journal. You can reach her at kgarcia@abqjournal.com.