Is an affordable housing tax in Denver’s future?
It’s beginning to look like a distinct possibility.
Michael Hancock mentioned a tax hike as one option to boost funds for affordable housing.
Meanwhile, agreed that his office should be pursuing “a permanent source of dedicated local funding [for affordable housing], such as a tax levy, bonds or property taxes.”
To be sure, it’s also possible the mayor and Washington will settle on redirecting other funds into housing. And that’s probably a better idea, as we shall see.
In the the past few years alone, Denver voters have approved a property tax measure to boost the budget, a mill-levy override for schools, and a sales tax hike to enlarge the city’s preschool program.
And that’s just the start. In the next few years, voters could face an impressive list of other tax and subsidy proposals, especially if housing is in the mix. Among top candidates:
• Denver has launched an ambitious planning process for the Performing Arts Complex that is likely to require public subsidies.
• Long-awaited plans to revitalize the National Western Stock Show, Denver Coliseum and Colorado Convention Center are likely require public assistance — and maybe a lot. A 2011 report put the cost of replacing just the stock show facilities at $500 million.
• The Denver Scholarship Foundation has been champing at the bit to ask voters for a sales tax to fund college scholarships for city kids. Councilman Chris Herndon offered a plan last year but pulled it only when critics complained it hadn’t been properly vetted.
You can understand why officials are tempted to add affordable housing to the list, given the present squeeze on renters and home buyers. , of the nation’s 100 largest metro areas, Denver is the 14th “least affordable.” Hancock told CPR that 38 percent of Denverites were struggling to afford housing.
Yet as it happens, there is little evidence that a tax would alleviate the squeeze or assist more than a tiny sliver of those who could use help. That’s certainly been the experience of cities that devote far more public resources than Denver to housing, including several on the West Coast.
Are there land use, zoning and regulatory policies in metro Denver that contribute to the tight market? The answer is clearly yes, and metro mayors themselves are agreed that a state construction defects law is suffocating condo development. But is that really the only such reform worth touting?
Even Denver’s inclusionary housing ordinance, which requires developers to set aside a percentage of units for people earning less than the median income or pay an opt-out fee, very likely pushes up overall housing costs while reducing supply. below the market and penalize people who fail to conform.
The auditor’s report on affordable housing, although pushing a possible tax, does contain useful advice for boosting resources, such as tax abatements and redeploying Community Development and Block Grant funds from economic development to housing.
As the audit notes, other cities “consistently dedicate [block grant] funding to housing” rather than economic development. If affordable housing is anywhere near the crisis the mayor claims, there is no reason Denver shouldn’t follow suit.
Reach Vincent Carroll at vcarroll@denverpost.com or twitter.com/vcarrolldp
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