Denver’s divided City Council gave its tentative approval Monday night to pass Mayor Mike Johnston’s proposed 0.5 percent sales tax on affordable housing to voters in November.

But even some of the members who contributed to that 8-5 outcome signaled their support in a second and final vote next week. This could depend on further changes, particularly when it comes to setting concrete rules on which income groups should benefit from the potential funding source.

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

“I will vote for it tonight and we will see where the discussion goes before the second reading,” he said.

At Monday’s meeting, the 13-member council considered Johnston’s “Affordable Denver” tax proposal for the first time. If put to voters and approved, it would be the largest sales tax in Denver’s history and would raise an estimated $100 million a year.

The mayor has discussed a wide range of potential uses, including assisting struggling renters, helping new home buyers with down payments, and even providing public funds as equity investments in new projects in exchange for developers building lower-cost housing or affordable housing for low- to extremely low-income people.

Despite a two-week delay designed to give officials time to iron out errors in the still-developing legislation, council members had to debate over a dozen amendments before they could even open a scheduled public hearing on the ordinance.

Of these amendments, two were postponed for possible future consideration, eight were accepted and two were rejected.

The two amendments that did not pass stood out in the hours-long debate, with some members basing their no votes on those results. Another amendment that did pass could potentially result in a lawsuit for violating the powers granted to the mayor’s office in the city charter, according to city attorney’s office officials.

Here’s a look at these three problems:

Focus on the areas with the greatest need

The first version of the bill – which has been updated more than 20 times since the beginning of July – did not specify what type of household income the money would support.

A region’s median income (AMI) is the main metric governments use to determine their affordable housing needs and to decide how best to allocate their resources. According to the city’s Housing Authority, the AMI for a family of four in Denver this year is $130,400. For a single person, that amount is $91,280.

Yet recently released data from the Denver Regional Council of Governments shows that much of Denver’s affordable housing need is met by people earning much less. That needs assessment found that 78% of the city’s affordable housing shortage is due to a lack of units affordable to people earning 60% of the AMI or less. That’s $78,240 per year and less for a family of four, or $54,780 per year and less for individuals.

An updated version of the regulation unveiled last week set specific AMI limits that would determine how the funds can be used, which are now 100% of AMI and below for rental housing and 120% or below for projects and initiatives aimed at homeowners and homebuyers.

Councilwoman Shontel Lewis introduced an amendment Monday that would have lowered those amounts to 80% of AMI and below for rental housing and 100% of AMI and below for owner-occupied work. The amendment would have allowed those amounts to be raised to 100% of AMI based on market need.

“I am proposing this amendment to avoid public funds being used to subsidise the construction of rental housing that is currently being built at market rate,” Lewis said.

But a majority of her council colleagues supported keeping more flexibility in the ordinance, including the ability to use the money to help middle-income earners who also struggle with Denver’s out-of-control housing costs.

The amendment was defeated 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 could come back in revised form next week. Gonzales-Gutierrez joined Kashman in voting for the fill-in-the-blank measure on Monday, while also expressing dissatisfaction that the 80% AMI figure was not included in the bill.

“Tonight I’ll be for it, but I’m here to talk about AMI as it affects renters. I’m not going to give up,” she said. “And it pains me because we need this. We need it so badly.”

Council wants more control

At committee level, several members expressed concerns about the wording of the regulation which would allow the Council to approve the Fund’s spending plan for the first year but would not allow the Council to vote directly on the spending plans for subsequent years.

Lewis wants to solve this problem with an amendment that would give the council oversight over the development of a “methodology” that could be used to create future spending plans.

It’s a workaround for an issue raised by Jon Griffin of the city attorney’s office. The charter gives the mayor’s office budgetary authority, and any attempt to get around that could result in a lawsuit, Griffin warned.

Despite these concerns, the amendment passed by a vote of 10 to 3, with only members Amanda Sandoval, Amanda Sawyer and Darrell Watson voting against.

“It’s not about determining how much should go into certain projects, but about having the opportunity to review and approve what those projects might look like and what things could be moved forward,” Gonzales-Gutierrez said.

No sunset in sight

Another idea that was floated during the debate on the ordinance at committee level resurfaced in plenary when Councilwoman Flor Alvidrez introduced an amendment that would have resulted in the tax being phased out or extinguished at the end of 2034.

“This phase-out after 10 years and about $1 billion (in revenue) will give voters an opportunity to judge the effectiveness of Affordable Denver,” she said.

But a narrow majority of the City Council opposed the change. Officials from the city’s finance department testified that setting an expiration date for the funding – even one that could be overturned by future voter votes – could limit the city’s ability to use its tax revenues to issue bonds and potentially use that new debt to spur investment in housing.

In the closest vote of the evening, this amendment failed by a vote of 7:6. Torres, Sawyer, Kevin Flynn, Stacie Gilmore and Chris Hinds were the losers, along with Alvidrez.

In her closing remarks on Monday, Alvidrez said she was willing to support continuing to pay the tax to voters until the sunset clause is lifted.

“I absolutely don’t think this is ready for the voters,” she said.

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