Aug 08, 2018
DENVER – Mayor Michael B. Hancock’s proposal to double the Affordable Housing Fund – from $15 million to $30 million annually – and partner with the Denver Housing Authority (DHA) to generate an estimated $105 million funding surge for affordable housing over the next five years advanced out of the Safety, Housing, Education and Homelessness (SAFEHOUSE) Committee today.
“Affordable housing remains a primary challenge to our residents and families, and this proposal will produce more affordable homes quicker to deliver housing Denver families need and can afford,” Mayor Hancock said. “I want to thank the SAFEHOUSE committee for advancing this proposal, as well as the Housing Authority and our community and marijuana industry partners for coming together for Denver’s people and provide more funding to address this critical need in our city.”
The proposal to double Denver’s Affordable Housing Fund would improve the alignment of the fund with the five-year housing plan, Housing an Inclusive Denver. Through this proposal, Denver will be able to secure the building, preservation or land needed for more than 6,000 affordable homes for families over the next five years.
Two separate ordinance requests were advanced out of committee today: an intergovernmental agreement between the city and DHA, and an amendment to the Affordable Housing Fund removing its sunset provision and increasing the city’s retail marijuana tax rate from 3.5 percent to 5.5 percent. These ordinance requests are expected to be heard on first reading by the full City Council on August 20, with final reading on August 27.
The proposed partnership with DHA brings more funding in the form of bonds to accelerate building and preserving much-needed affordable housing. It also increases the land available for future affordable housing creation for Denver’s lowest-income residents and those experiencing homelessness. By leveraging DHA’s expertise in serving those most in need of housing they can afford, the proposal expands the city’s ability to deliver on additional areas of housing needs identified in the five-year plan.
The estimated $105 million will be generated from the issuance of bonds by DHA, supported by the appropriation of an existing half property tax mill from the city. The bonds will accelerate the timing and enhance the redevelopment of housing units maintained by DHA and create a new land acquisition fund to secure a pipeline of projects.
The new $105 million bond appropriation to DHA will:
“DHA is proud to be a partner in this creative funding opportunity that will accelerate and expand the creation and preservation of much needed affordable housing targeted at Denver's lowest income and most vulnerable residents,” stated Ismael Guerrero, DHA Executive Director. “This collaboration underscores the city’s and the Housing Authority's commitment to deliver real solutions for Denver residents most impacted by the high cost of housing.”
Under the proposal, an additional yearly $7 million General Fund contribution will be made to the Affordable Housing Fund starting in 2019. To backfill the half mill that will be appropriated to DHA, the proposal will increase the city’s special marijuana sales tax from 3.5 percent to 5.5 percent, generating an estimated $8 million per year for the fund. If approved, the marijuana tax rate increase would take effect October 1, 2018.
"Marijuana Industry Group (MIG), the leading trade association for Colorado's cannabis businesses, cares about the communities where we live and operate. Lack of affordable housing is a serious issue for people living in Denver. The city was transparent about their efforts to solve the problem, and our group deliberated the proposed tax increases against already high taxes, and the need to keep prices at a level that continues to incentivize purchasing at legal, licensed and regulated establishments. We're just a small part of the larger economy, and while cannabis is not the cause of this issue, it can be part of the solution," said Kristi Kelly, Executive Director of the Marijuana Industry Group.
The new $7 million annual General Fund allocation will:
“The structure of this proposal will allow the city to ensure we make tax dollars stretch further for housing in a financially responsible way without raising taxes on the very households we are trying to serve,” said Denver Chief Financial Officer Brendan Hanlon.
“Through our local funding, smart policy innovations and our housing partners, we’re pulling every lever we can to make Denver affordable and accessible for all,” said Eric Hiraga, Executive Director of the Denver Office of Economic Development. “The proposed doubling of the Affordable Housing Fund provides a significant boost for our community, and we look forward to applying these funds to further build our momentum in fostering housing stability citywide.”
The proposal directs about half of the newly doubled Affordable Housing Fund to support those experiencing homelessness and very low income individuals and families, and allocates the other half to fulfill other priorities within Housing an Inclusive Denver, including support for workforce families, long-time residents who want to stay in their homes and first-time homebuyers.
Since 2011, the Hancock Administration has helped to build or preserved more than 5,000 affordable housing units and launched the city’s first dedicated affordable housing fund. Efforts are guided by the recently approved five-year housing policy, strategy and investment plan, Housing an Inclusive Denver, which includes several innovative approaches ranging from eviction assistance, land trusts, land banking, accessory dwelling units, and preference policies aimed at stabilizing residents at risk of displacement.
A total of 1,187 new affordable units that have received city financing are currently under construction, and an additional 1,260 are anticipated to break ground over the next year. Last year, the city assisted 10,391 renters, homeowners, homebuyers and people experiencing homelessness by working with community partners to provide services ranging from tenant-landlord counseling to down payment assistance. Denver has also launched new anti-eviction strategies to help keep people in their homes, including the Temporary Rental and Utility Assistance program, landlord-tenant mediation, and in-court eviction assistance.