Denver city leaders plan to ask voters in November to increase the sales tax rate to pay for more affordable housing projects and help Mayor Mike Johnston achieve his housing development goals.
Johnston unveiled the proposed new tax — which would add 0.5% to Denver’s current effective sales tax rate of 8.81% — during a news conference Monday morning on the steps of the City and County Building. JS reported in early June that his administration is considering a new tax to boost the city’s affordable housing efforts, amid rising home prices and rents that have made Denver unaffordable for many workers.
If passed, the tax would raise an estimated $100 million annually, with proceeds used to support affordable housing development and other housing initiatives. City officials said the money would go toward more housing vouchers, bridge loans for construction projects and other programs.
“We are very focused on the results we can deliver here for Denver,” Johnston said. “So the goal is that this will allow us to build or purchase an additional 44,000 units, which is the estimate of the total gap that we need to fill over the next ten years.”
He said without the tax, Denver is on track to see about 20,000 homes built over the next decade. The city’s gap is part of a housing shortage that Zillow recently estimated at 70,197 homes in the Denver metro.
If the tax measure were referred to the ballot in Denver, it would be the second sales tax increase to be approved by voters in November.
Last month, the City Council voted to put a 0.34% tax on the ballot, which would create a revenue stream to shore up Denver Health’s finances. The city’s social safety net hospital faces a budget deficit of roughly $70 million due to uncompensated care it provides to people without health insurance.
The council would still have to vote to put Johnston’s affordable housing tax measure up for a vote. The 0.5% rate is five cents on a $10 purchase.
If voters were to approve both measures, the city’s effective sales tax rate would rise to 9.65%. That includes state and county sales taxes, in addition to specific city taxes.
It would be one of the highest sales tax rates on the Front Range. Several Colorado mountain communities have effective sales tax rates above 10%, including Winter Park, Snowmass Village and Idaho Springs.
This is a developing story that will be updated.
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