The city of Denver Colorado has approved a plan to increase the cities affordable housing revenue with a massive increase in the cities marijuana tax. The new plan will result in a 57% increase in the Mile High City’s retail cannabis tax rate increasing it from 3.5% to 5.5%. Currently the Denver Housing Authority (DHA) receives only $7.5 million in revenue from property taxes, but that will increase to an average of $21 million per year–based on $105 million over five years–and a large portion of the difference will be reimbursed from the new cannabis tax increase. Denverite.com reports:
According to the plan, the proposal will help build, preserve or obtain property for more affordable housing. It earmarks about half of the new funds to support people experiencing homelessness and very low-income individuals and families.
Right now, Denver’s affordable housing fund gets about $7.5 million each year from Denver property taxes.
“With this new plan, that property tax money would be pledged to DHA, who are great partners with the city,” said Department of Finance spokesperson Courtney Law, “and are very effective at what they do — build affordable units across the city.”
DHA will turn around and borrow against that stable source of revenue, Law said, which should enable it to raise about $105 million over the first five years. Then the city will raise the marijuana retail sales tax to make up for the money it had been getting from those property taxes.
They expect an increase in cannabis tax revenue of over $8 million a year and it will go into effect on October 1st. They are gearing their new housing to be more affordable than ever under their new “Housing an Inclusive Denver” five year plan. The plan creates a focus on including smaller and geographically diverse sites in the city’s affordable housing plan and limits amounts available for spending on single areas. Some critics have claimed that the new plan could limit the type of properties the city can obtain.
“Our plan goes for deep affordability and this has — this agreement has that baked into it,” explained Chief Housing Officer Britta Fisher at a committee meeting in August. “I’m excited to see this agreement, follow along looking at how we can provide services and housing for those earning the least in our community, and as well as our whole spectrum.”
Using cannabis tax revenue to balance budgets and pay for different unrelated services is becoming more and more common as cannabis legalization spreads nationwide. What do you think of using cannabis taxes for non-cannabis related funding, as Denver has done? Share your comments below.
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