Denver’s affordable housing sales tax has been defeated, Mayor Mike Johnston concedes

Denver Mayor Mike Johnston and backers of Ballot Issue 2R, a sales tax increase aimed at fueling affordable housing investments and programs, conceded the measure’s narrow defeat early Saturday morning.

While it made up ground in later returns after Tuesday’s election, the measure was rejected on 51% of city ballots counted so far, according to the latest results released by the Denver Elections Division on Friday evening.

That’s a slight improvement over preliminary results released Tuesday, when the measure had a rejection rate of 52.2%. The shift since then is a demonstration that voters who turned out on Election Day — casting ballots more likely to be processed on subsequent days — were more supportive of the tax measure.

But with an estimated 30,000 ballots left to be counted, 2R still trailed by 6,145 votes. The mayor, in a statement at 5:59 a.m. Saturday, acknowledged that the deficit was too steep to overcome.

“We are grateful to the council members, housing advocates and community leaders who took on the challenge of addressing our affordability crisis head-on. We knew this would be a difficult struggle, but thanks to their courage, 2R fell short by the narrowest of margins and Denverites continue to speak loudly about the need to confront rising housing costs across Denver.” Johnston said in that statement.

He added that 2R was not the only avenue the city had to tackle its housing affordability challenges and he will continue to look for new solutions.

A recent assessment by the Denver Regional Council of Governments determined that Denver will need to build or preserve 44,000 units of affordable housing over the next decade to meet the city’s demands. Without a significant boost in the amount of financing available, the market is on pace to produce only 19,000 affordable units over that timeframe, Johnston said when announcing the tax initiative this summer.

Johnston and supporters cast 2R, which would have raised an estimated $100 million per year initially and grown with the economy over its 40-year lifespan, as finally moving beyond the city’s many half-measures. It would have created a long-term funding source that they thought would turn the tide on Denver’s affordable housing shortage.

Groups including the Colorado Coalition for the Homeless, the Colorado Hotel and Lodging Association, the Mile High United Way and numerous nonprofit and for-profit development firms supported it.

But ultimately that coalition could not sell the record sales tax increase to most voters.

The City Council’s Housing and Homelessness Working Group earlier had a lunchtime discussion of the first-year spending plans for 2R revenue on its agenda for next week. As of Friday evening, that schedule had been changed to say simply a “discussion on topics related to housing and homelessness.”

Denver voters have been happy to support sales tax increases to fund priorities in the city’s recent history. They approved six dedicated sales tax streams combined in the 2018 and 2020 elections. Those included 0.25% rate hikes to fund the city’s Homelessness Resolution Fund and the Parks Legacy Fund dedicated to acquiring and maintaining parks and open space.

Denver Ballot Issue 2Q, a sales tax increase that shared the ballot with 2R on Tuesday, coasted to a victory with 56% of the vote as of Friday’s updated results. That measure, a 0.34% rate increase, is projected to bring in $70 million per year to shore up the finances of Denver Health, the city’s ailing social safety net hospital.

“We are incredibly grateful to the Denver community for recognizing the importance of protecting health care access for all,” Denver Health CEO Donna Lynne said in a victory statement on Friday evening.

In neighboring Adams County, voters roundly defeated an affordable housing sales tax measure this year. County Ballot Issue 1A received just 30% support, according to unofficial results.

That measure sought to raise the countywide sales tax rate by 0.15% and bring in $22.2 million per year. That would have allowed the county to add 6,000 affordable housing units to its stock over the next 20 years, according to Maiker Housing Partners, the county’s housing authority.

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