The city's voters will weigh in on Ballot Measure 2R, also known as Affordable Denver, which would create a dedicated half-cent sales tax that's estimated to raise more than $100 million a year for affordability programs. The tax would be in place for forty years, expiring in 2064, with the revenue committed to "providing more affordable rental housing and reducing rent," as well as "providing more affordable homes for purchase to reduce the cost of buying a home," according to the language of 2R.
After first revealing his proposal in July — leaving just a month for Denver City Council approval — Johnston promoted it at a series of town halls as a way to lower rents and home prices. He told residents it would rely largely on deed restrictions, a clause written into the deed of a property that sets pricing limits.
"This proposal will provide rental and for-sale homes for fewer than a thousand households and add more regulatory complexity and complicated funding schemes," according to Strong Denver. "It will provide no relief for the vast majority of Denverites, who will continue to compete for scarce housing outside the program."
Other opponents worry that the Denver sales tax, which is already 8.81 percent, will be too high with Affordable Denver and the Denver Health tax threatening to bring it close to 10 percent. Councilwoman Flor Alvidrez called it "regressive" at an August 19 council meeting because of the potential impact on low-income residents.
"We're taxed to death," LaMone Noles, a Northeast Park Hill resident, told Westword after a town hall on August 7. "The general sales tax will be close to 10 percent — that's probably the highest in the nation. What are we getting?"
"I don't think we should be talking about making Denver more affordable by continuing to raise taxes," Councilman Kevin Flynn said at an August 19 council meeting. "It would make us almost as expensive as a resort town."
Johnston has promised residents that the proposed half-cent sales tax would hardly affect working families, since more than a third of Denver's current sales tax is paid by non-Denver residents. While the tax would cost the average family an extra $2 a week if it passes, he noted that it exempts most items that they buy.
A deed restriction would allow the city to control housing costs, according to Johnston. By offering developers tax money from the Affordable Denver fund to cover part of the cost of buying a property, Denver would have leverage to require deed restrictions from them.
"If a unit costs $400,000 to build, we're not going to spend $400,000 of taxpayers' money. We might spend $50,000, the developer springs for $350,000, and we help close that gap," Johnston explained during a July town hall. "And that gap allows us to then say, 'This unit will be deed-restricted to always be affordable.'"
But the nonprofit Strong Denver, part of the Strong Towns organization, worries that Ballot Measure 2R doesn't do enough to reform zoning or speed up permitting. "If a unit costs $400,000 to build, we're not going to spend $400,000 of taxpayers' money. We might spend $50,000, the developer springs for $350,000, and we help close that gap," Johnston explained during a July town hall. "And that gap allows us to then say, 'This unit will be deed-restricted to always be affordable.'"
"This proposal will provide rental and for-sale homes for fewer than a thousand households and add more regulatory complexity and complicated funding schemes," according to Strong Denver. "It will provide no relief for the vast majority of Denverites, who will continue to compete for scarce housing outside the program."
Other opponents worry that the Denver sales tax, which is already 8.81 percent, will be too high with Affordable Denver and the Denver Health tax threatening to bring it close to 10 percent. Councilwoman Flor Alvidrez called it "regressive" at an August 19 council meeting because of the potential impact on low-income residents.
"We're taxed to death," LaMone Noles, a Northeast Park Hill resident, told Westword after a town hall on August 7. "The general sales tax will be close to 10 percent — that's probably the highest in the nation. What are we getting?"
"I don't think we should be talking about making Denver more affordable by continuing to raise taxes," Councilman Kevin Flynn said at an August 19 council meeting. "It would make us almost as expensive as a resort town."
Johnston has promised residents that the proposed half-cent sales tax would hardly affect working families, since more than a third of Denver's current sales tax is paid by non-Denver residents. While the tax would cost the average family an extra $2 a week if it passes, he noted that it exempts most items that they buy.
"The sales tax does not apply to groceries, so it's not going to be something you pay when you go to the grocery store," Johnston said at a July town hall. "It does not apply to gas. It does not apply to medicine or medical supplies or hygiene products. There are a lot of things that are exempted."
With the tax, Johnston hopes to build 44,000 cost-controlled units for Denver renters and homebuyers during the next ten years, including more than 5,000 units in the first year.
During the next ten years, Denver will fall 44,000 units short of housing for residents making at or below the area median income (AMI), a federal standard reflecting the average household salary in a county or metro area, according to the proposal. For Denver, the 2024 AMI is $117,000 for a family of three, but it changes annually.
Johnston promised that the developers chosen for the benefit would be local and have experience building affordable housing. Archway Communities, one of the city's oldest affordable housing developers, expects to get the chance to work on Affordable Denver projects, says Katie McKenna, the housing development manager for Archway.
"We're following along and learning how we can help with the implementation," McKenna says. "We're still learning what the mechanics will be. ... I really appreciate the creativity and innovation, because certainly the challenge is growing and not shrinking, and it's going to take new solutions to get us there."
Other local housing developers that support Affordable Denver include the Colorado Coalition for the Homeless, Brothers Redevelopment and Urban Peak.
According to the ballot measure, the fund would "preserve" affordable housing in terms of pricing. Instead of just being used to invest in new development, the tax revenue would help developers buy units where rents stayed down because of existing deed restrictions or the "location and quality of housing," McKenna explains.
Just as a historic property can be preserved from decay, affordable rents can be preserved from inflation, she notes, adding that otherwise, "it's like pouring water into a bucket with holes in it. Even though we don't have enough affordable housing in the city, we do have some. But finding opportunities to preserve housing that already has low rents is really important."
Before referring it to the ballot, Denver City Council approved a variety of potential uses for Affordable Denver tax revenue. The measure's language specifies that the tax money should create rental units for people at or below 80 percent of the Denver AMI ($92,000 for a family of three) and support homebuyer and homeowner assistance programs for people at or below 120 percent of the Denver AMI ($141,000 for a family of three).
Housing vouchers and rental assistance for renters and down-payment assistance for home buyers could be funded, too. According to the mayor's office, the Affordable Denver fund could be used to support the construction of accessory dwelling units, extensions to housing units that allow more people to live on a property.
"High-income earners have replaced low-income earners, because people making $40,000 a year cannot afford to live here anymore," said Sarah Parady at the meeting. "That's frankly the reality that voters sent us here to fix."
Watson said he supported the proposal because it will bring "workforce housing," the most important issue for his north Denver and downtown constituents.
Four councilmembers voted against putting Affordable Denver on the ballot: Flynn, Alvidrez, Stacie Gilmore and Amanda Sawyer.
"It's not ready to go to the voters," said Sawyer, pointing to a lack of available information on how the tax revenue will be used.
"If I can't stand in front of my voters and say to them, 'This is exactly where your dollars are going, this is exactly who it's going to help, this is exactly where this investment is going to be, this is how much this investment is going to be,' then I'm not going to refer it to the voters," she added. "I don't think that's fair to our voters."
Gilmore voted against it for similar reasons. "I can't explain what this is going to look like to my constituents. That makes me gravely uncomfortable," she said, describing the proposed sales tax as "historic" in terms of its size.
"We have never referred something this large before without a public stakeholder process," Gilmore said. "When you hear all of the sponsors talk about it, you would think this is going to truly solve all of our housing issues."
"I just find that the heaviest burden on the largest majority of Denverites is housing," Councilman Paul Kashmann said in response. "And if we can make a dent in easing that, I think it will pale in the increase in sales tax we're asking people to spend."
The Affordable Denver campaign offered a similar response to Gilmore and Sawyer's concerns. "There is, without question, no bigger issue facing Denver now than housing affordability, which has been a clear priority for Denverites and this Mayor," the group said in a statement.
"The need for affordable housing is so great that it demands a meaningful solution like 2R," says campaign spokesperson Daniel Aschkinasi. "I understand that some council members did not see the urgency of housing affordability as we do."
