Mayor Michael Hancock’s plan to combat Denver’s housing crisis faced doubts about its proposed funding sources in today’s Safety, Housing, and Homelessness Committee meeting.
The plan calls for a dedicated fund to create and supplement affordable housing units. Funding would derive from two sources, a half-mill levy placed on all property owners and a per-square-foot fee imposed on all new development projects. The property tax is estimated to cost the average Denver homeowner $12 per year, and the average commercial building owner $145 for every $1M of valuation.
Council members are in agreement that the city needs a dedicated fund for affordable housing. They challenge, however, whether the property tax and development fee are the right avenues for that goal.
Since Hancock announced the plan in his State of the City address, council members and others have suggested alternative ways to address the problem. Some have mentioned marijuana revenue, and others have pointed to the city’s general fund.
But in today’s meeting, the plan’s architects – council members Robin Kniech and Albus Brooks, who have been developing the concept for years, as well as city employees who mapped out the particulars – methodically explained why they opted against those alternatives.
Implementing entirely new sources of funding, Kniech said, is preferable to drawing money from the general fund because it keeps affordable housing from competing with critical city needs like sidewalks and police.
Denver’s Chief Financial Officer Brendan Hanlon explained that revenue from the marijuana tax is also an imperfect source because it’s unreliable. He pointed to minimal volatility as a key criterion as the team evaluated potential sources. Marijuana revenues rise and fall unpredictably, and that would undermine the city’s ability to make plans for the fund.
But other council members were unwilling to accept that the general fund and marijuana revenues were off the table.
Councilman Chis Herndon proposed an alternative that involved funding for the program coming from city coffers for the first year. Council would determine another funding source after that first year. He said that his reason for discomfort with the current plan was simply that he felt that the Council was levying too many fees on Denver residents.
“We are nickel-and-diming this community,” Herndon said. “Is there a way that we can lighten the burden on the people of Denver?”
Councilman Wayne New agrees that Council should consider using its own funds to finance the program in the beginning.
“We all agree that we need a dedicated fund for affordable housing,” New told The Independent. “The issue is how do you fund it – the [development] fee, or something else.”
Herndon told an anecdote about a call he got from a constituent who was frustrated by a recent raise in stormwater fees, which was approved by Council. Then he listed off other potential upcoming fees, like one for improving sidewalks and for supporting Denver Public Schools.
Council members Stacie Gilmore and Kendra Black noted similar concerns about constituents with fixed incomes who are already daunted by Denver’s increasing cost of living, property taxes and city fees.
Denver’s booming economy is a positive for property owners who plan to sell their property, they explained. But for people with fixed incomes and no plans to sell their property, all it means is that their taxes and costs perpetually increase.
Councilwoman Mary Beth Susman captured a prevailing sentiment among council members when she said, referring to the proposal to draw from the general fund, “You’re saying that’s impossible, but I bet it’s not.”
The committee will officially vote on the plan next Wednesday, August 24. It will go to the full council September 12, for a final vote September 19.
Photo Credit: HopeCommunities, Creative Commons, Flickr
