Denver Looks to Cannabis Industry to Help Finance Affordable Housing
Since selling marijuana for recreational use became legal in Colorado in 2014, the industry has recorded more than $14 billion in revenues, including $4.4 billion in 2017 and another $4.7 billion in the first two months of 2018 alone. Those revenues are taxed at the state and local levels, and soon, if Denver has its way, some of those dollars will be going directly to fund affordable housing in the fast growing city.
On Monday, the Denver Post reported, Denver Mayor Michael Hancock’s office presented a proposal to city council that included hiking the city’s local tax on marijuana sales from its current 3.5 percent to 5.5 percent, bringing the total state and local taxes on marijuana purchases in Denver to 25.25 percent. The move would generate an estimated $8 million dollars a year that the city would dedicate to its affordable housing development programs.
“To me, it is a total game-changer, in how we’re thinking about affordable housing, to have these new resources in play,” Brad Segal, the president of Progressive Urban Management Associates, told the Post.
According to the Denver Post, Ashley Kilroy, the city’s licensing and marijuana policy director, consulted marijuana industry representatives about the plan and said she received their support, a point confirmed to the post by Marijuana Industry Group executive director Kristi Kelly.
Coupled with another proposed $7 million a year out of the existing city budget, the mayor’s total proposal would double the city’s annual affordable housing commitment.
Denver City Council originally approved a plan for $15 million a year over ten years for affordable housing, but between rising land acquisition values and continued population growth, housing advocates charged the plan wasn’t moving fast enough. The city estimates 80,000 households in the city are considered cost-burdened because they spend more than 30 percent of their incomes on rent or other housing costs, the Post reports. City officials often repeat the figure that every month, another thousand people move into Denver.
Community land trust backers recently told the city it’s moving so slow, they might take their land trust work elsewhere in Colorado.
It also doesn’t help that the city scaled back monitoring of an affordable homeownership program, allowing hundreds of units meant for affordable homeownership to be sold to buyers earning more than the maximum income technically allowed for those homes.
Meanwhile, although there has been a construction boom in the city, nearly all of the new units are at the luxury end of the market, leading to a glut of about 3,000 vacant luxury units in highly-desirable locations around the city. That led the city’s newly formed economic mobility department to create a new program where area companies help to subsidize units in those buildings, making them affordable for at least two years to 400 families earning between 40 and 80 percent of Denver’s area median income.
The Denver Post reports that city officials promised much of the increased housing production out of the proposed new funding would target the lowest-income category of potential residents, from the homeless to those making up to 30 percent of the metro area’s median household income — $18,900 a year for an individual, or $26,960 for a family of four.
Source: Next City