Denver City Council skeptical of mayor's affordable housing sales tax plan

Mayor Mike Johnston’s proposal to provide more affordable housing through a sales tax increase was met with skepticism by the Denver City Council on Wednesday.

Several council members said the Johnston administration needs to provide more clarity about the plan before they would add it to November’s ballot.

The mayor unveiled the plan earlier this month , along with dozens of community members, nonprofit leaders, and city staff who had gathered on the steps of the Denver City & County Building. It would ask voters to approve a 0.5% sales tax increase to establish a dedicated fund for affordable housing.

“This measure, funded by a half-penny sales tax, would only cost Denver families about $2 a week,” Johnston said at Monday’s State of the City address . “But it would put us on the path to bring on the 45,000 units of affordable housing we need to fill our entire gap of affordable housing over the next 10 years.”

The mayor said the plan would bring in about $100 million annually. The money would be used in various ways to help low and middle-income Denver residents with housing costs.

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The plan went before the Denver City Council's Safety, Housing, Education and Homelessness Committee on Wednesday. Dr. Jamie Riffe, executive director of the Denver Department of Housing Stability (HOST), and Nicole Doheny, the city’s chief financial officer, appeared to review the plan.

Several council members agreed that housing costs are rising but they weren’t sure the mayor’s plan was ready for November’s ballot.

“I think we definitely are in a significant crunch here in Denver and frankly nationwide,” said Denver City Councilmember Chris Hinds. "I keep asking what I think are fundamental questions and I haven't gotten an answer yet.”

Many of those questions center on how the $100 million collected every year would be distributed. Some members wanted to know how much would be used to help low-income residents versus higher middle-income earners. Councilman Paul Kashmann said it’s clear Denver residents with lower incomes need more help with housing costs and therefore should receive a greater proportional benefit from the funding.

“I don’t see anything that assures me that’s the direction we’re going to go,” said Kashmann.

He said he would be much more comfortable with the plan if language was added to guarantee those most in need would get more help.

“I think we should be easily able to put that in the bill,” said Kashmann.

Several council members also wished there had been more stakeholder engagement, including more input from residents and businesses. The city said it reached out to several nonprofit organizations for input. But in council documents, it’s noted that some of that outreach included conversations with single representatives and emails.

If the council approves the proposal, it would be one of two proposals on November’s ballot to increase the city’s sales tax. The other proposal would increase the sales tax rate by 0.34% to help Denver Health stay afloat.

If both measures are approved, they would increase Denver’s sales tax rate to 9.65%, making it one of the highest in the state.

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Sales taxes are often criticized because they force everyone to pay the same rate, regardless of income. Critics say this harms lower-income people more than those with higher incomes. Johnston noted that items like food, gas, and medical supplies were exempt from sales tax, so the burden wouldn’t be as great on lower-income people as it would otherwise.

Denver City Councilmember Kevin Flynn raised concerns about increasing taxes to make things more affordable.

"How many new added fees and tax increases does it take to make us affordable?” Flynn asked. “That just strikes me as counterintuitive. I wonder, where does it end?"

The council has until the end of August to refer measures to the ballot. Hinds said if the council doesn’t get answers to its questions, it might not make this year’s ballot.

“So, is there enough time? I don't know,” said Hinds. “If we don't get clarity, you know, there are ballots in 2025, and we can do the deeper dive and make sure that everyone's comfortable.”

The committee postponed a vote that would have sent the plan to the full council for approval. Council members and the Johnston administration plan to work together in the coming weeks to improve the plan and add clarity where needed.

Jordan Fuja, the mayor’s press secretary, said in a statement later that Johnston was “committed to acting with urgency to address” the issue of rising housing costs. Fuja said the mayor has also been “working around the clock” with the five council sponsors to make sure the ballot measure directly addresses the city’s affordable housing needs.

“We know that the longer we wait, the more difficult and more expensive it will be to address Denver’s housing crisis, which is why we will continue to partner with Council to finalize the most effective ballot measure possible,” Fuja said. “And then we must ensure we place the measure on the November ballot so voters have the opportunity to make their voice heard on this critical issue.”

The council’s Safety, Housing, Education, and Homelessness committee will take the plan back up at its Aug. 7 meeting.

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