Boulder: Council to Pursue Affordable Housing Sales Tax

At a study session the City Council confirmed its desire to set a goal of 10 percent for affordable housing units (rental and owned). Using this number, it means currently Longmont would need 3,800 housing units to meet this goal. In her opening remarks, Kathy Fedler the City’s Housing and Community Investment Manager, noted “We have already ensured Envision Longmont has a strong affordable housing focus” and said the purpose of the discussion was to review possible incentives and revenue sources for the City’s program.

Staff explained that incentives alone will not allow Longmont to meet the 10 percent goal. Overall, the Council agreed a sales tax of at least .024 (or a quarter on a $100 purchase) is the most equitable way to generate revenue. Mayor Coombs said he is confident Longmont voters would pass such a measure. Not all Council members like raising the sales tax, but they did agree the voters should decide if affordable housing is a community goal.

Regarding incentives, the Council opted to explore density and height bonuses, property tax waivers and administrative approval for affordable housing projects by right. More information was requested on development fee waivers. The Council expressed concerns on the impact of waiving enterprise fund fees (water, electric, sewer) because as City Manager Harold Dominguez said, “Waiving these fees could impact current user rates.” It is possible the Council would have to increase the sales tax proposed if the fee waivers create too big of a budget hit. Currently, the City waives some of the fees but backfills them from the Affordable Housing fund.

Joan Peck and Polly Christensen expressed support for other tax proposals presented – linkage fees (charged on new development, similar to an impact fee that would link the fee with the impact of new development to affordable housing), user taxes and excise taxes. Peck stated developers (which she called “the industry”), need to have “skin in the game.” Christensen argued no one would object to linkage fees and noted the fee does not require a public vote. Bonnie Finley called options other than a sales tax “terrible ideas.” Peck also pushed her own idea — a rental license program as a revenue generator. Mayor Coombs argued license fees would just be passed on to renters. But Peck was undeterred although she agreed with the Mayor. “Yes, that is what they do,” she said.

Staff will bring information back to the Council. It is unclear if there will be a push to get the sales tax on the November ballot.

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