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--- version:introduced version
+++ version:(document, no version)
@@ -1,124 +1,136 @@
-HOUSE BILL 138
+Fiscal impact reports (FIRs) are prepared by the Le gislative Finance Committee (LFC) for standing finance
+committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
+are used for other purposes.
 
-57th legislature - STATE OF NEW MEXICO - second session, 2026
+F I S C A L    I M P A C T    R E P O R T
 
-INTRODUCED BY
+BILL NUMBER: House Bill 138
+SHORT TITLE: Zoning Lot Size Requirements
+SPONSOR: Romero, A
+LAST
+UPDATE:
+ ORIGINAL
+DATE:
 
-Andrea Romero
+01/30/2026
 
-AN ACT
+ANALYST: Gygi
 
-RELATING TO ZONING; PROHIBITING COUNTY OR MUNICIPAL ZONING
-AUTHORITIES FROM IMPOSING LOT SIZE REQUIREMENTS FOR RESIDENTIAL
-PROPERTIES; PROVIDING EXEMPTIONS FOR RESIDENTIAL PROPERTIES.
+ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
+(dollars in thousands)
+Agency/Program FY26 FY27 FY28 3 Year
+Total Cost
+Recurring or
+Nonrecurring
+Fund
+Affected
+RLD No fiscal impact No fiscal impact No fiscal impact
+NMMFA No fiscal impact No fiscal impact No fiscal impact
+WSD No fiscal impact No fiscal impact No fiscal impact
+Parentheses ( ) indicate expenditure decreases.
+*Amounts reflect most recent analysis of this legislation.
 
-BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
+Relates to House Bill 17 and Senate Bill 131
 
-     SECTION 1.  Section 3-21-1 NMSA 1978 (being Laws 1965,
-Chapter 300, Section 14-20-1, as amended) is amended to read:
+Sources of Information
 
-     "3-21-1.  ZONING--AUTHORITY OF COUNTY OR MUNICIPALITY.--
+LFC Files
 
-          A.  For the purpose of promoting health, safety,
-morals or the general welfare, a county or municipality is a
-zoning authority and:
+Agency Analysis Received From
+Regulation and Licensing Department
+New Mexico Mortgage Finance Authority
+Workforce Solutions Department
 
-                (1)  may regulate and restrict within its
-jurisdiction the:
+Agency That was Asked for Analysis but did not Respond
+Department of Finance and Administration
+Municipal League
+New Mexico Counties
 
-                     [(1)] (a)  height, number of stories and
-size of buildings and other structures;
+SUMMARY
 
-                     [(2)] (b)  percentage of a lot that may
-be occupied;
+Synopsis of House Bill 138
 
-                     [(3)] (c)  size of yards, courts and
-other open space;
+House Bill 138 (HB138) amends Section 3-21-1  NMSA 1978 (Zoning Authority of County or
+Municipality), prohibiting count y or municipalities from impos ing lot size requirements for
+residential properties. The bill also specifies the prohibitions apply to home rule municipalities.
 
-                     [(4)] (d)  density of population; and
+HB138 also amends Section 3-21-11 NMSA 1978 (Conflicts Between Zoning Regulations and
+Other Statutes and Ordinances) to apply only to premises that are not residential property.
+A county or local municipality may still regulate and restrict:
+House Bill 138 – Page 2
 
-                     [(5)] (e)  location and use of buildings,
-structures and land for trade, industry, residence or other
-purposes;
+• Height and number of stories
+• Percentage of the lot that may be occupied
+• The size of yards, courts, and other open space
+• Density of population
+• Location and use of buildings, structures, la nd for trade, industry, residence or other
+purposes
 
-                [B.  The county or municipal zoning authority]
-(2)  may:
+If this zoning statute conflicts with other state statutes and ordinances regarding a property that is
+not residential, the stricter of the two will take precedence.
 
-                     [(1)] (a)  divide the territory under its
-jurisdiction into districts of such number, shape, area and
-form as is necessary to carry out the purposes of Sections
-3-21-1 through 3-21-14 NMSA 1978; and
+This bill does not contain an effective date and, as  a result, would go into effect 90 days after the
+Legislature adjourns, which is May 20, 2026.
 
-                     [(2)] (b)  regulate or restrict the
-erection, construction, reconstruction, alteration, repair or
-use of buildings, structures or land in each district.  All
-such regulations shall be uniform for each class or kind of
-buildings within each district, but regulation in one district
-may differ from regulation in another district; and
+FISCAL IMPLICATIONS
 
-                (3)  shall not impose lot size requirements in
-residential zones.
+HB138 is a policy bill and so does not include an  appropriation. The bill is not anticipated to
+have any significant fiscal or operational impact on state agenci es, including the Construction
+Industries Division or other di visions of the Regulation and Licensing Department, the New
+Mexico Mortgage Finance Authority, or the Workforce Solutions Department.
 
-          [C.] B.  All state-licensed or state-operated
-community residences for persons with a mental or developmental
-disability and serving ten or fewer persons may be considered a
-residential use of property for purposes of zoning and may be
-permitted use in all districts in which residential uses are
-permitted generally, including particularly residential zones
-for single-family dwellings.
+Local governments may experience costs associat ed with eliminating residential lot size
+restrictions in their land use and planning codes.
 
-          [D.] C.  A board of county commissioners of the
-county in which the greatest amount of the territory of the
-petitioning village, community, neighborhood or district lies
-may declare by ordinance that a village, community,
-neighborhood or district is a "traditional historic community"
-upon petition by twenty-five percent or more of the qualified
-electors of the territory within the village, community,
-neighborhood or district requesting the designation.  The
-number of qualified electors shall be based on county records
-as of the date of the last general election.
+SIGNIFICANT ISSUES
 
-          [E.  Any] D.  A village, community, neighborhood or
-district that is declared a traditional historic community
-shall be excluded from the extraterritorial zone and
-extraterritorial zoning authority of any municipality whose
-extraterritorial zoning authority extends to include all or a
-portion of the traditional historic community and shall be
-subject to the zoning jurisdiction of the county in which the
-greatest portion of the traditional historic community lies.
+HB138 would preempt local zoning codes to address New Mexico’s housing shortages. As
+documented by the Pew Trusts,
+1 regulatory barriers are a primary contributor to the state’s
+housing crisis. According to Pew, in New Mexico between 2017 and 2024:
+ Homelessness increased 87 percent, 47 percent faster than the national average.
+ Median rents increased by 60 percent compared to 27 percent nationally.
+ The average cost of a home increased 70 percent, far outpacing wage growth.
 
-          [F.] E.  A zoning [authorities] authority, including
-a zoning [authorities] authority of a home rule
-[municipalities] municipality, shall accommodate
-multigenerational housing by creating a mechanism to allow up
-to two kitchens within a single-family zoning district, such as
-conditional use permits.
+Lot size restrictions fall into the category of local regulations that may increase housing costs by
+limiting density and increasing land costs. As the Workforce Solutions Department explains:
+Lot size restrictions can limit the developmen t of affordable and attainable housing by
+increasing the cost per unit (because the cost of the land for each unit is higher).
+Historically, lot size minimums have also be en a way to prevent multifamily and smaller
+home development.
 
-          [G.] F.  For the purpose of this section,
-"multigenerational" means any number of persons related by
-blood, common ancestry, marriage, guardianship or adoption."
+The New Mexico Mortgage Finance Authority adds:
+House Bill 138  may increase the affordable housing supply by eliminating minimum lot
+sizes. Higher density zoning may give acces s to potential low- and moderate-income
+households by producing lower land costs fo r the development of affordable housing
+supply.
 
-     SECTION 2.  Section 3-21-11 NMSA 1978 (being Laws 1965,
-Chapter 300, Section 14-20-9) is amended to read:
+1 https://www.pewtrusts.org/en/research-and-analysis/articles/2025/01/21/restrictive-regulations-fuel-new-mexicos-
+housing-shortage
+House Bill 138 – Page 3
 
-     "3-21-11.  CONFLICTS BETWEEN ZONING REGULATIONS AND OTHER
-STATUTES AND ORDINANCES.--If any other statute or regulation or
-other local ordinance, resolution or regulation adopted under
-authority of Sections [14-20-1 through 14-20-12 New Mexico
-Statutes Annotated, 1953 Compilation] 3-21-1 through 3-21-14
-NMSA 1978 is applicable to the same premises, and that premises
-is not a residential property, the provision shall govern which
-requires:
+[However], this type of zoning may lead to higher density and overcrowding concerns for
+current residents. On the other hand, allowing high density development can reduce urban
+sprawl, cut down on the impact of commuting, a nd provide residents with access to more
+commercial amenities including grocery stores.
 
-          A.  the greater width or size of yards, courts or
-other open spaces;
+RLD points out that the International Residentia l Code (IRC) mandates fi re separation distances
+and minimum space required between a structure and the property line to prevent fire spread.
+If lot sizes are significantly reduced, builders must still adhere to the IRC’s stricter fire-
+rating requirements for exterior walls and openings when those walls are close to
+property lines…. [IRC] dict ates how a house must be built if it sits less than 5 feet (or 3
+feet, depending on local adoption) from the property line.
 
-          B.  the lower height of building or a less number of
-stories;
+CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
 
-          C.  the greater percentage of lot or land to be left
-unoccupied; or
+House Bill 138 relates to House Bill 17 and Senate Bill  131 which would amend the same
+section of zoning code to allow accessory dwelling units, duplexes, townhouses, etc., in
+residential and commercial zones. SB131 also eliminates height restrictions.
 
-          D.  [or imposes] other higher standards."
+WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
 
-- 4 -
+Local restrictions on lot sizes in  residential areas may drive up housing prices and limit attempts
+to increase the supply of affordable housing to  address New Mexico’s current housing shortage
+crisis.
+
+KG/dw/ct