Denver voters will decide whether to hike the city's sales tax rate as part of a multipronged effort from local leaders to boost affordable housing development in the region.
Mayor Mike Johnston and other city officials pitched a proposed increase aimed at generating about $100 million a year for affordable housing projects, a crucial element to Denver's goal of building tens of thousands of income-restricted units. The funds would go toward supporting new developments, additional housing vouchers and providing bridge loans to kick-start construction, among other programs, officials said.
If approved in November, the increase would add 0.5% to the city's current 8.81% tax rate. It would add to the tax voters approved in 2020 dedicated to funding homelessness initiatives, a program that generates about $50 million a year.
“We are very focused on the outcomes we can deliver for Denver here,” Johnston said. “So the goal is that this allows us to build or to bring on 44,000 additional units, which is what the estimate is (for) the total gap we have to fill over the next 10 years.”
Even with one of the most active development pipelines in the country, Denver — similar to other growing cities across the United States — has been struggling to address a concerning combination of rising house prices and a shortage of options for lower-income residents.
Without the proposed sales tax increase, the city is on track to add about 19,000 housing units over the next decade, a far cry from the estimated 71,000 units necessary to fill the widening gap between the number of available housing options and the cohort of people looking to fill them.
Denver multifamily rents jumped from about $1,500 a month in 2020 to the current average of nearly $1,900 per month, according to CoStar data. Demand for units at lower and middle-tier properties, which have been hit the hardest by rising rates and inflation, continues to climb. Yet despite having one of the most active apartment construction pipelines in the country, most of the units underway are concentrated at the higher end of the development spectrum.
Denver officials have attempted to address the city's worsening affordability landscape with a mix of strategies aimed at boosting housing development, specifically for lower-income renters. In 2022 the city passed its Expanding Housing Affordability ordinance that requires new developments with 10 or more units to set aside as much as 15% of the project for low-income renters.
Johnston has said his goal is to build or preserve at least 3,000 affordable housing units annually over the next eight years, and Denver voters will likely decide on a potential sales tax increase aimed at generating funds to be allocated to remedying the city's shortage of affordable units.