Denver mayor proposes sales tax increase to expand affordable housing

DENVER — November’s ballot is getting longer and taxes could be getting higher.

On Monday, Denver Mayor Mike Johnston announced a new ballot proposal that would increase the city’s sales tax by 0.5% to provide more affordable housing.

Johnston said the lack of affordable housing is a growing problem for families, working professionals and others who live in Denver.

“If we do nothing, 10 years from now, all of those Denverites will be gone,” Johnston said. “They’re all being pushed out or priced out or moved out to someplace else. And that is the future we refuse to accept.”

Johnston said if the proposed ballot measure is approved by voters, it would mean a 5-cent increase on every $10 purchase.

He said it would bring in $100 million per year, helping the city provide 44,000 housing units over the next decade.

“We are doing this now because Denver can’t afford to wait,” Johnston said. “We know every year that we wait, land gets more expensive, materials get more expensive, housing gets more expensive.”

The mayor’s office said the funding will be used in a variety of areas, including to help preserve existing homes and rental units, pay for new construction of multifamily rental homes, and provide vouchers to extremely low-income households.

Ismael Guerrero, CEO of Mercy Housing, which manages affordable housing communities nationwide, supports the plan, especially with other funding sources drying up.

“We know that as some of the federal funding has gotten used over the last several years, we need to replace that with local funding,” Guerrero said. “We’re excited that this is going to allow us to keep a healthy pipeline of new projects going as well as help us invest in those communities that we already have and preserve those.”

Denver’s current sales tax rate is 8.81%.

If ballot measures are approved by voters this fall, the sales tax would increase to 9.65%, making it one of the highest in Colorado outside of mountain communities.

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Proposals to increase sales taxes are often criticized because everyone must pay the same rate, regardless of their income.

Denver7 asked Johnston if his proposal was hurting low and moderate income people — the very people he’s trying to help.

“It’s important to know what is exempted from the sales tax,” Johnston said.

He said because items like food, gas, medical supplies and other basic necessities are exempt, the burden won’t be as great. But he admitted everyone will pay more as a result of a sales tax increase.

“We know this population that is working families are the ones that are hardest hit by the housing crisis and the ability to add $2 a week to their potential sales bill as a way to cut hundreds to thousands of dollars off of their monthly rent is a transformational change for them,” Johnston said.

Denver mayor proposes sales tax increase to expand affordable housing

Johnston’s office said no sales tax is dedicated solely to affordable housing right now, so this would be a first.

The city council will discuss the ballot language in its safety, housing, education and homelessness committee on July 17.

It expects to take a final vote on the measure on Aug. 5.

If approved then, the measure would be placed on November’s ballot for voters to consider.