How does Mayor Mike Johnston plan to make Denver housing more affordable? Convincing voters to raise sales tax again

The extra funds would create 44,000 units of housing in the next 10 years.
7 min. read
New apartment buildings under construction in on Holly Street in Denver’s North Park Hill neighborhood, June 20, 2024.
Hart Van Denburg/CPR News

Mayor Mike Johnston is pushing a plan to create 44,000 units of affordable housing over the next 10 years through a new sales tax. 

“Denver can’t afford to wait,” he said.

He’s calling his proposal the Affordable Denver Fund, and he says passing it and creating housing is urgent if Denver is going to remain a desirable place to live. 

“The old rules say you can't both drive economic growth in the city and maintain affordability,” Johnston said. “We refuse to believe that. We believe Denver can be the fastest-growing economic engine in the West. And it can be the place where you can still afford to live.”

Johnston, who was surrounded by 100 supporters when he announced his proposal, accurately portrayed Denver as a place where many teachers, seniors and recent college graduates can’t afford the basics.

If the economy continues as is, affordability will float further out of reach for working and middle-class people. Denver could become a city for nobody but the wealthy, as the people who make the city function move far away. 

“What we know is if we do nothing, 10 years from now, all of those Denverites will be gone,” he said. “They will have been pushed out or priced out or moved out to someplace else. And that is a future we refuse to accept.”

Creating new and necessary housing sounds good. But can the city afford to do it? 

After all, Johnston has been slashing the city budget to pay for his new immigrant response efforts. He’s asked department heads to consider even deeper cuts in 2025. 

The program would not be paid for by the general fund. 

So where is the money for thousands of new units coming from? The answer: a tax on you. 

Johnston and City Council members Sarah Parady, Shontel Lewis, Sandoval and Darrell Watson want to convince City Council to send a ballot measure to voters that would approve a five cents on $10 sales tax to pay for the effort.

The measure began making its way through City Council committees on Monday, July 8. 

If various committees support it, the measure will be introduced to the full Council on July 29 and voted on for final passage on Aug. 5. 

Voters would have their say in November.

So what would the Affordable Denver Fund do? 

The money would be available to use flexibly to create 44,000 units of housing through multiple strategies. 

It would help preserve existing affordable housing units whose affordability requirements are set to expire. 

The money would fund developers’ citywide efforts to create new affordable multifamily properties and mixed-income developments. 

The funds would also help finance accessory dwelling units where they are permitted, creating what proponent Councilmember Amanda Sandoval described as “missing middle” housing in people’s backyards. 

Additionally, money would go to pay for rental assistance and housing vouchers for low-income households.

Denver is already working to create affordable housing. Johnston says it’s not enough.

The city is only on track to deliver roughly 19,000 units over the next decade, or nearly 2,000 a year. That’s far from what’s needed. 

This new tax would add about 5,000 units a year, helping meet the city’s projections of 44,000 needed affordable units.

A group of politicians and nonprofit surround Mayor Mike Johnston on the steps of the City and County building as he announces a proposed sales tax to fund affordable housing.
Mayor Mike Johnston and supporters on the steps of the City and County building as he announces a proposed sales tax to fund affordable housing, July 8, 2024.
Kyle Harris/Denverite

Can $100 million a year pay for all those units? 

Johnston said yes, in collaboration with for-profit and nonprofit developers, as well as and federal and state funds. 

The goal is “ambitious,” acknowledged Britta Fisher, head of the Colorado Coalition for the Homeless and a supporter of the tax.

Who’s all this new housing for? 

The housing would serve households making between 0 and 100 percent of the area’s medium income, currently $117,360 for a family of three and $91,280 for a single person. 

Why pay all the way up to 100 percent of the area median income? 

Median income is the middle point in all the salaries in the city, and even people making that much are struggling to afford to stay.

As Parady put it, roughly half the people in the city are living paycheck to paycheck and having trouble covering housing expenses.

“Think of the impoverishing impact that that has on our communities, on our civic life, and on our democracy,” Parady said.

Johnston is bullish that City Council and voters will both pass the new tax.

The lack of affordable housing has been a dominant concern among voters in recent elections. In part, Johnston was elected because of his promises to end homelessness in four years and create housing for working-class people. 

He’s aiming to bring 2,000 people indoors in his first two years in office. Compare that to the 30,409 who accessed homeless services in the metro area between July 2022 and June 2023, according to the 2023 State of Homelessness Report. 

Since those dates, thousands of new immigrants have arrived in the city, many dealing with profound housing insecurity and homelessness

The city has a housing shortage in general and a lack of affordable housing for working and middle-class people to boot.

“The old rules say you can't both drive economic growth in the city and maintain affordability,” Mike Johnston said. “We refuse to believe that.”
Kevin J. Beaty/Denverite

Most of the new homes to be built over the past decade have been geared toward the luxury market, while naturally affordable housing has been demolished in neighborhoods citywide, even as thousands of subsidized units have been created.  

Denver is on track to once again see a record number of eviction court cases filed. 

By June of 2024, Denver had already seen 7,247 eviction case filings. Compare that to the average of 8,999 a year, in the 10 years before the pandemic.

Last year saw a high of 12,910 eviction cases, and Denver is on track to hit nearly 14,500 case filings this year.

The need for housing is undeniable. But will people be willing to pay for it? 

Denverites have historically embraced taxing themselves for everything from homelessness resolution and affordable housing to the environment and the arts, raising their sales taxes by more than 30 percent over the past few years.

The current sales tax in Denver is 8.81 percent. If the people vote yes, the measure would raise sales tax to 9.31 percent. 

Johnston is backing two sales tax increases: The affordable housing proposal, and another to fund Denver Health. 

Sales taxes could go even higher, up to 9.65 percent, if Denver Health funding goes through. 

Roughly 35 percent of sales tax is paid by non-residents. Many items, from groceries to gas, are exempt. 

“This will not be the highest tax rate in the state,” Johnston said. “We think we're still very competitive with the region.”

Winter Park, in comparison to Denver, has an 11.2 percent sales tax.

Voters will have to decide if you can fix an affordability crisis by making buying things more expensive.

As Johnston sees it, the answer is yes. Housing, after all, is most Denverites’ greatest expense. 

A .5 percent sales tax that makes it possible for teachers, nurses or city workers to take $1,000 off of their monthly housing is worth it, he said.

“That is the way you make the math of this city function for the folks that are trying to work here and live here,” he said.  

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