Mayor Mike Johnston recently unveiled a plan that would introduce a sales tax hike in Denver to fund affordable housing. The proposal suggests a 0.5% tax increase that could generate around $100 million annually. This initiative comes shortly after the city council approved another sales tax hike of 0.34% to support Denver Health, aiming to raise approximately $70 million per year. If both tax hikes are approved by voters, the total sales tax rate in the city, currently at 8.81%, would increase to 9.65%.
The primary goal of the proposed tax hike is to create and preserve affordable housing in Denver. Mayor Johnston emphasized the urgent need for more affordable homes, stating that the current shortage will only worsen if no action is taken promptly. He highlighted the Affordable Denver Fund as a crucial resource to meet the city’s growing affordability needs and to ensure that all residents, especially essential workers, can access housing options in Denver.
A significant disparity exists between the number of affordable housing units required in Denver and the units currently being developed with existing funding sources. By 2033, the city is projected to have around 19,000 affordable housing units, falling short of the estimated 44,000 units needed for households earning below 100% of the area median income. This gap underscores the pressing need for additional funding and resources to bridge the housing shortage in the city.
Denver already has dedicated funding streams for affordable housing initiatives. The Affordable Housing Fund, established in 2016, raises approximately $42 million annually through a property tax and fees on new developments. In addition, a 0.25% sales tax increase approved by voters in 2020 generates around $50 million each year for the Homeless Resolution Fund. Furthermore, revenue from a proposition passed by Colorado voters in 2022 contributes to the State Affordable Housing Fund, providing crucial financial support for housing projects in Denver.
In light of escalating healthcare costs and increasing demand for services, Denver Health, the city’s primary safety net healthcare provider, has expressed the need for additional sustainable funding. The proposed sales tax hike for affordable housing underscores the interconnectedness of housing and health care issues in Denver, as both sectors grapple with funding shortages and the need to support vulnerable populations effectively.
The proposed sales tax hike to fund affordable housing in Denver represents a critical step towards addressing the city’s housing crisis. With a clear focus on creating more affordable housing units and supporting vulnerable populations, this initiative has the potential to transform the housing landscape in Denver and create a more equitable and sustainable community for all residents.