Denver marijuana buyers would help pay for an expansion of Denver’s 10-year, $150 million affordable housing fund under a plan that includes borrowing to amp up apartment production.
Mayor Michael Hancock and other city officials have been under pressure from City Council members and affordable housing advocates for more than a year to boost the city’s investment in addressing Denver’s housing crisis, and they unveiled their plan Monday morning. If key components of the new plan win council approval this summer, the city would partner with the Denver Housing Authority to issue $105 million in bonds to underwrite affordable housing projects and acquire new land for income-qualified housing.
The upshot: In the next five years, the city’s current plan to subsidize the building or preservation of 3,000 income-restricted apartments and other housing units would be boosted to 6,400.
A large chunk would come from accelerated DHA housing projects, and much of the increased housing production would be targeted to the lowest-income group of potential residents, those making up to 30 percent of the metro area’s median household income. For an individual, that limit currently is $18,900 a year. For a family of four, it is $26,960.
Here is where marijuana comes in: The city’s 3.5 percent special tax on recreational marijuana sales would increase to 5.5 percent, a hike that requires the council’s approval. (Denver voters authorized a tax of up to 15 percent several years ago.)
That would generate about $8 million a year, officials say. The city also would devote an additional $7 million a year from its operating budget. Together, those boost the $15 million in proceeds expected from a property tax and development impact fees imposed by the council in 2016, when the affordable housing fund’s creation was approved.
Ashley Kilroy, the city’s licensing and marijuana policy director, said she reached out to marijuana industry representatives about the plan and received their support.
“We must thank our marijuana industry for stepping up to say we want to be part of the solution,” Hancock said.
To repay the DHA bonds, the city would transfer to the authority the annual proceeds from the half-mill property tax rate approved by the council two years ago. The marijuana tax hike’s proceeds would replace that money in the annual affordable housing program, which was intended to supplement declining housing grants from the federal government with more stable local funding sources.
“I think the plan in front of you demonstrates that we have heard the public, City Council and the Housing Advisory Committee in their desire to see greater investment in affordable housing so that we can see more units sooner,” said Brendan Hanlon, the city’s chief financial officer, during a media briefing.
City officials planned to present the proposal to the council’s safety and housing committee at 10:30 a.m.
The news comes amid problems with compliance in Denver’s longstanding affordable homeownership program — with nearly 200 homes owned by people whose eligibility wasn’t verified under income guidelines because the home sales escaped the city’s notice.
City officials said Monday that Hancock’s plan, which mostly will benefit renters, represents a higher commitment to helping the estimated 80,000 households in the city that are considered cost-burdened because they spend more than 30 percent of their incomes on rent or other housing costs.