Denver Mayor Mike Johnston has unveiled a plan for a sales tax hike to fund affordable housing in the city. This proposal calls for a 0.5% tax increase to raise approximately $100 million annually. If approved, this would add to the already existing 0.34% sales tax hike on the November ballot, aimed at generating around $70 million a year for Denver Health. This would bring the total sales tax rate in Denver, including Colorado’s portion, to 9.65%.
Johnston argues that there is a significant shortage of affordable homes in Denver, affecting both long-time residents and newcomers. He believes that taking action now is crucial to address this issue before it worsens. The Affordable Denver Fund aims to meet the city’s affordability needs and create a vibrant community where everyone can thrive, especially workers serving the residents of Denver.
The mayor highlighted a gap of 25,000 units between the 19,000 units currently being created with existing funding sources and the projected shortage of 44,000 affordable housing units by 2033 for households earning less than 100% of the area median income. Despite having some dedicated funding sources already in place, such as the Affordable Housing Fund and the Homeless Resolution Fund, Denver is still struggling to meet the growing demand for affordable housing.
Denver has several funding mechanisms in place for housing initiatives, including a property tax, a one-time fee on new development, a sales tax hike approved by voters in 2020, and revenue from a proposition passed by Colorado voters in 2022. The Denver Housing Authority also issues bonds that are paid off with revenue generated from financed properties. However, the need for additional reliable funding, especially for essential services like healthcare, remains a concern.
While the proposal to increase the sales tax for affordable housing in Denver may seem like a step in the right direction, it is essential to carefully consider the impact on residents and businesses. Balancing the need for affordable housing with other critical services like healthcare is crucial for the overall well-being of the city. It is imperative for policymakers to assess the effectiveness of existing funding sources and ensure that any new tax hikes are justified and transparent to the public.