Denver housing prices have ballooned in recent years, and there is a shortage of homes working and middle-class people can afford.
Mayor Mike Johnston made building and preserving thousands of new units of affordable housing a campaign promise. Ballot Measure 2R, a 0.5 percent sales-tax increase, is his new funding mechanism to do this.
The proposal would add an extra half-percent tax to applicable sales within the city of Denver, equivalent to 5 cents on a $10 purchase.
Proponents say the local government needs money to support more affordable housing now. Opponents say sales taxes are regressive, disproportionately affecting people with less money. And they argue raising taxes only makes life in Denver more expensive.
The Denver City Council voted 9-4 to put the measure on the ballot.
Here’s the language you’ll see on your ballot:
“Shall Denver sales and use taxes be increased $100 million annually, commencing January 1, 2025, and by whatever additional amounts are raised annually thereafter through December 31, 2064, to expand and preserve affordable housing for low- and middle-income families and individuals, through a one-half of one percent (0.5%) sales and use tax increase (5 cents on a $10 purchase), to support efforts including:
• providing more affordable rental housing and reducing rent; and
• providing more affordable homes for purchase and programs to reduce the cost of buying a home;
And may a portion of the annual revenues derived from this increase be spent on administrative costs for the above purposes, and shall the revenue and earnings on this tax be collected and spent as a voter-approved revenue change and an exception to the limits that may otherwise apply under Article X, Section 20 of the Colorado Constitution or any other law?”
How would it work?
If 2R passes, Denverites will pay an additional 0.5 percent sales tax, starting Jan. 1, 2025. That tax would be imposed for the next 30 years, until Dec. 31, 2064.
The tax will bring in an estimated $100 million a year to pay for the preservation and creation of affordable housing for low- and middle-income families and individuals. That would amount to $3 billion over the next three decades.
This would be in addition to the $60 million Johnston has proposed for affordable housing in his 2025 budget. In 2024, the city dedicated $100 million to affordable housing through a mix of state and city money.
The money could be used to build and preserve more affordable rental units or reduce rent. The money could also be used to make it cheaper for lower-income people to buy a home and to provide more affordable for-sale houses and condos. For-profit and nonprofit developers would generally do the development work. The city itself would not be in the development business.
The proposal is somewhat vague on how all this would be done and whom exactly the income-restricted housing would be for. This is by design, the proposal’s authors say. They want flexibility in how to spend the money.
Johnston estimates the measure would create 44,000 new homes in the next decade.
The sales tax for purchases in Denver is currently 8.81 percent, including taxes collected by the city, RTD and the state. If the measure passes, the new sales tax would be 9.35 percent. (Another proposed sales tax increase, Ballot Issue 2Q for Denver Health funding, would bring the total to 9.65 percent if it passes, too.)
Who’s for it?
Mayor Mike Johnston led the effort to get this measure on the ballot, and he received support from nine out of 13 Denver City Council members to do it.
Habitat for Humanity and the Denver Area Labor Federation have both officially endorsed the measure.
The campaign supporting the measure is called Affordable Denver. As of Sept. 30, it had reported raising about $484,000. The top contributors, giving $50,000 each were Airbnb, James Kelley and Pat Hamill. Giving $25,000 each were Brownstein Hyatt Farber Schreck; the Colorado Low Income Housing Campaign; DaVita; and the Issues Mobilization Committee. AEG Presents and the Apartment Association of Metro Denver gave $20,000 each.
Supporters of the measure say the policy will aggressively address the city’s affordable housing shortage. They argue it is flexible enough, in the way it’s worded, to be responsive to changes in the economy.
To critics who argue a 0.5 percent sales tax increase is regressive, Johnston has argued there are many essentials that don’t get taxed in Denver: food, feminine hygiene products, fuel and more.
Denver has already lost thousands of people to displacement. It’s in danger of losing thousands more.
“Denver can’t afford to wait,” Johnston said at a campaign event.
Who’s against it?
There was no organized opposition or spending against the measure as of Sept. 30, according to campaign finance records.
However, councilmembers Flor Alvidrez, Kevin Flynn, Stacie Gilmore and Amanda Sawyer all voted against sending the measure to the public. They argued the process was rushed and the bill was lacking enough specifics to justify the raise in taxes.
“I’m still going to be a ‘no’ on referring it to the ballot because I take my responsibility of good governance really seriously, and I can’t explain what this is going to look like to my constituents,” Gilmore said at a council meeting.
Flynn was skeptical that raising taxes would actually lead to affordability.
“How many new added fees and tax increases does it take to make us affordable?” he asked. “That strikes me as counterintuitive. And so I wonder, where does it end?”
The Denver Gazette editorial board also opposes the measure.
“Johnston’s whip-out-the-checkbook generosity with other people’s money in fact would elevate the Mile High City into the stratosphere for taxes,” the board wrote, also arguing the plan was “half-baked.”
Previous Denverite coverage of Ballot Measure 2R
How does Mayor Mike Johnston plan to make Denver housing more affordable? Convincing voters to raise sales tax again
Denverites will vote on Mayor Mike Johnston’s affordable housing sales tax this November
Denver Mayor Mike Johnston’s affordable housing sales tax hits a City Council speed bump
Link to original article