On Halloween, Mayor Mike Johnston handed out fun-sized chocolate bars — and brochures for his affordable housing proposal, Ballot Issue 2R.
It was a personal touch for the mayor’s ambitious political campaign. He wanted to convince trick-or-treaters, and everyone else, to raise the city’s sales taxes. The goal was to generate $100 million a year to fund thousands of units of affordable housing, which is a top priority for voters.
“If this does not pass, we're probably looking at 25,000 families being displaced from Denver over the next decade,” he said in a recent interview with Denverite.
The mayor helped raise $2.5 million to convince voters to pass the measure.
But Johnston’s big swing missed. The measure got the support of 49 percent of voters, short of victory by about 6,000 votes. On Saturday morning, he acknowledged his proposal had been voted down in "a narrow loss."
It’s an unusual development in a city where voters have often approved new taxes. In recent years, voters raised sales taxes by nearly a third, funding everything from e-bikes to sidewalks, homelessness initiatives and healthy food for kids. Even in the 2024 election, the public dedicated tens of millions in new sales taxes to the city’s safety net hospital Denver Health, and nearly $1 billion in debt public school upgrades.
So, why did so many voters say "no" to Johnston's big idea?
The politics of affordable housing are difficult, Johnston says.
“Everyone believes it's a problem,” the mayor said on Thursday. “People aren't aligned on the solution.”
If approved, the ballot measure would have cost consumers an extra 5 cents of sales taxes on every $10 purchase. Each year, it could have amounted to $100 million.
Local lawmakers would have had a buffet of options to spend those funds.
Under the initiative, the money could have been used to buy and preserve units that are already affordable. It could have helped low- and middle-income people buy a new home or rent. And it could have financed private developers’ income-restricted housing projects.
Johnston estimated the measure could have helped build or preserve 44,000 housing units over the next 10 years alone.
But voters weren't sure it was the right approach.
“This is a problem that needs solving,” said voter Christopher Lee. “But this might not be the best solution.”
Friends told him the solution to the affordable housing crisis was reducing zoning restrictions to increase supply, not building more government-subsidized income-restricted housing.
Aileen Pacheco, a first-generation voter, said she’s skeptical of taxpayer-funded affordable housing developments. She would prefer rent control, a policy that the state legislature banned in 1981 and renters rights advocates have failed to overturn.
“We have these multi-billionaire companies that come to our cities and buy out these buildings and they make them pretty and they remodel them and then they raise the rent 23 times,” Pacheco said. “We're not doing anything about that.”
Ryan Anderson was skeptical that local measures could actually create much change.
“I do think unfortunately that housing and affordable housing is an issue that will only be solved systemically at a national level,” he said.
And according to voter Brian Combes, Denver has simply taxed itself too much in recent years.
“I know we need things like affordable housing,” he said. “But at the same time … we've been hit with so many other increases.”
In a challenging economy, some voters wonder whether now is the time to start new programs, Johnston said, noting that’s a statewide trend.
Some said the campaign made mistakes.
Denver voters are generous, said former Denver councilmember Robin Kniech, who researches housing and public policy. But voters like a clear vision, too, she added.
“There were a number of very close observers engaged in the realm of housing who were troubled by the lack of a plan,” Kniech said.
Voters want to see the math and to know the government is thoughtfully using their hard-earned money.
And it was unclear, at least in the ballot language, exactly how the money would be distributed and to whom.
Former mayoral candidate and longtime political observer James Mejia was on the steps of the City and County Building, as a supporter, when the initiative was first announced.
But voters craved stronger framing, he said on Wednesday. They wondered: Would the housing be for unhoused people or immigrants? Would it stave off gentrification and keep long-time Denverites in town?
Some residents feared the project would fund 1960s-style affordable housing projects, the mayor acknowledged. Others worried the city would build dense projects in their backyards. Many just don’t want to pay for other people’s homes.
“I think it was a marketing issue,” Mejia said.
And marketing mattered in a city where the public was weary from Johnston’s costly efforts to end visible homelessness and support tens of thousands of new immigrants.
“Johnston put us in a budget crisis with his House1000 and then All in Mile High initiatives and essentially broke the bank,” said former mayoral candidate Lisa Calderón.
Then, she said, he asked the public to write him a blank check.
Johnston defended the measure, pointing out that Denver City Council would reevaluate the spending every three years.
“There's more transparency and accountability in this measure than any other ballot measure I've seen at the city level,” Johnston said.
The measure had powerful supporters — and detractors.
Of the campaign’s $2.5 million warchest, $250,000 came from tech venture capitalist Reid Hoffman, a longtime supporter of Johnston. Another $250,000 came from former DaVita head and big-time political spender Kent Thiry.
Airbnb, Johnston’s old company Gary Advocacy LLC., and heavyweight developer Pat Hamill, of Oakwood Homes, gave big, too.
Yet not all developers backed the plan.
“I don't think that overtaxing our citizenry to set up a new bureaucracy at the city is the pathway to creating more affordable housing,” said RiNo developer Andrew Feinstein, of EXDO Properties.
The mayor’s mistake, as political strategist Deep Badhesha sees it, was failing to court progressive advocacy groups, who largely stayed out of the fight.
“They just missed the coalition that they needed to get this across the finish line,” he said.
Is there a path forward?
Mejia imagines Johnston and the city council will likely bring similar proposals, with some adjustments, to the public in coming years, as other mayors have done.
But Councilmember Kevin Flynn questioned the entire approach. How many new taxes would make Denver affordable, he asked?
“I don’t know if that means that we should come back or we should rethink how we do affordable housing,” he said.
The city should make it easier for developers to build faster and in more places, developer Feinstein said. Policies slowing down development worsen the crisis.
“It’s a self-inflicted wound,” he said. “Just throwing more money at it is not going to solve the problem.”
Johnston says the city is already speeding up development. The city has approved roughly 2,000 units of housing that are still waiting to break ground. The biggest bottleneck for those projects is financing. Developers, as he sees it, have plenty of places to build densely.
“The units that come on in those places will be luxury if there are not dollars to make them be affordable,” Johnston said.
Kniech wondered if a sales tax was the right way to fund affordable housing, since it disproportionately affects people already struggling to get by. Perhaps property taxes might work better, she suggested.
Overall, she said, the campaign may have focused on middle-class voters but alienated those with lower incomes.
When Johnston conceded on Saturday morning, he said he always knew passing the measure would be difficult.
"I remain committed to finding new solutions to take on this challenge," he said in a statement. "We continue to believe that our toughest problems are solvable, and we are the ones to solve them — that will never change.”
Editor’s note: This article was updated at 9:30 a.m. on Nov. 9, 2024, because Johnston conceded defeat.
