Denver City Council debates a dozen amendments to $100 million affordable housing sales tax measure

A divided Denver City Council on Monday night gave initial approval to send Mayor Mike Johnston’s 0.5% affordable housing sales tax to voters in November.

But even some of the members who helped carry that 8-5 vote indicated their support in a second and final vote next week could depend on additional changes especially when it comes to setting specific rules around what income levels should benefit from the potential wellspring of funding.

“I continue to share that concern about guardrails,” Councilman Paul Kashmann said before casting a yes vote. He added that he wants “to be able to look my constituents in the eye (and say) we know where this money is going.”

“I am going to vote for this tonight and we’ll see where the discussion goes before the second reading,” he said.

Monday’s meeting was the first time the full 13-member council considered Johnston’s “Affordable Denver” tax proposal. If referred to voters and passed, it would be the largest dedicated sales tax in Denver’s history, bringing in an estimated $100 million per year.

The mayor has discussed a wide range of potential uses including support for struggling renters, downpayment assistance for new homebuyers and even putting public money down as equity investments in new projects in exchange for developers building more affordable units or building units affordable for people living on low to extremely low incomes.

Despite a two-week delay to give officials time to iron out wrinkles in the still-evolving legislation, council members found themselves debating a dozen amendments before even opening up a scheduled public hearing on the ordinance.

Of those amendments, two were tabled for potential future consideration, eight passed and two failed.

The two changes that came up short stood out amid the hours-long debate. Some members pinned their no votes on those outcomes. Another amendment that did pass could potentially draw a legal challenge for infringing on powers granted to the mayor’s office in the city charter, according to officials with the City Attorney’s Office.

Here is a look at those three issues:

Targeting areas of the greatest need

The first version of the bill — now updated more than 20 times since early July — was not specific about the household income levels that the money would be used to support.

Area median income, or AMI, is the primary metric used by governments when assessing their affordable housing needs and how best to use their resources. The AMI for a family of four in Denver is $130,400 this year. That number is $91,280 for a single person, according to the city’s housing department.

But recently released data from the Denver Regional Council of Governments shows that a bulk of Denver’s affordable housing needs are being felt by people making much less than that. That needs assessment found that 78% of the city’s affordable housing shortage comes from missing units priced for people making 60% of AMI or below. That’s $78,240 per year and under for a family of four or $54,780 per year and under for individuals.

An updated version of the ordinance unveiled last week did set specific AMI limits that would dictate how the funding can be used. Those are now set at 100% of AMI and under for rental housing and 120% or lower for homeowner and homebuyer-focused projects and initiatives.

Councilwoman Shontel Lewis introduced an amendment Monday that would have lowered those levels to 80% of AMI and under for rental housing and 100% of AMI and under for ownership-focused work. The amendment would have allowed those levels to “float” upward to 100% of AMI based on market needs.

“I’m proposing this amendment to avoid use of public money to subsidize building of rental housing that is currently market rate,” Lewis said.

But a majority of her council colleagues favored maintaining more flexibility in the ordinance including having the option to use the money to support middle-income earners who are also struggling with Denver’s runaway housing costs.

The amendment failed by a vote of 8 to 5 . Lewis, Kashmann, and members Sarah Parady, Jamie Torres and Serena Gonzales-Gutierrez were in the minority.

The amendment may come back in refined form next week. Gonzales-Gutierrez joined Kashman in voting for the fill referral measure on Monday while expressing dissatisfaction with the 80% AMI figure not being written into the legislation.

“I will be a yes for tonight (but) I am here for the conversation about AMI as it relates to renters. I’m not going to give up on this,” she said. “And it does pain me because we do need this. We need it so badly.”

Council wants more oversight

At the committee level, several members expressed concerns with language in the ordinance that would allow the council to approve the fund’s first-year spending plan but would not allow direct council votes on spending plans in future years.

Lewis is seeking to solve that with an amendment that would give the council oversight on creating a “methodology” that would be used to create future spending plans.

It’s a workaround to an issue raised by Jon Griffin from the City Attorney’s Office. The charter grants the mayor’s office budgetary authority and any attempt to circumvent that could draw a legal challenge, Griffin cautioned.

Despite those concerns, that amendment passed 10 to 3 with only members Amanda Sandoval, Amanda Sawyer and Darrell Watson voting no.

“It’s not determining how much would go to specific projects but having the opportunity to review and approve what those projects might look like and what kinds of things might be brought forward,”  Gonzales-Gutierrez said.

No sunset in sight

Another idea batted around when the ordinance was being debated at the committee level resurfaced in the chambers when Councilwoman Flor Alvidrez put forward an amendment that would have seen the tax expire — or sunset — at the end of 2034.

“This sunset, after 10 years and approximately $1 billion (in revenue), will give the voters the opportunity to be the judge of the effectiveness of Affordable Denver,” she said.

But a slim majority of the council balked at the change. Officials with the city’s finance department testified that putting an expiration date on the funding — even one that could be lifted via future voters — could limit the city’s ability to leverage its tax income to issue bonds and potentially supercharge housing investments with that new debt.

In the closest vote of the night, that amendment failed 7-6 with Torres, Sawyer, Kevin Flynn, Stacie Gilmore and Chris Hinds joining Alvidrez on the losing end.

Alvidrez in her closing comments Monday said she was prepared to support referring the tax to voters until the sunset provision was struck down.

“I absolutely do not think this is ready for the voters,” she said.

The five votes against referring the measure on Monday were Alvidrez, Flynn, Torres, Sawyer and Gilmore.