In a city where the cost of living continues to rise, and experts say tens of thousands of units are needed in the next year for affordable housing, a new tax is expected to partly close the building funding gap.
Beginning on October 1, the City of Denver will be charging a 5.5 percent tax on all recreational marijuana sales, upping the current 3.5 percent tax.
Approved by the Denver City Council and signed into law by Mayor Michael Hancock, the tax could help fund the construction or preservation of up to 6,000 individual income-restricted affordable housing units between now and 2023.
Along with other city taxes, Denver’s total marijuana tax rate will now be close to 25 percent.
In a letter to the Denver Post, Hancock said the marijuana sales tax revenue will be used to “generate a surge of $105 million in upfront funding through bonds to accelerate building and preserving much-needed affordable housing.”
“This step will also increase the land available for future affordable housing creation to support Denver’s lowest-income residents and those experiencing homelessness,” the Mayor added.
Denver’s affordable housing fund was created in 2015.
It is thought that the additional money coming from the marijuana sales tax will increase that fund from $15 million to $30 million in the next five years.
By Garry Boulard
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