San Jose Votes to Move Forward With Property Transfer Tax Measure for Affordable Housing

A year after Measure V—a $450 million affordable housing bond—narrowly failed at the hands of San Jose voters, the City Council took steps to place a real property transfer tax on the March 2020 ballot in an effort to quell the region’s growing affordability crisis.

San Jose leaders have been searching for an additional funding source as they rush to meet Mayor Sam Liccardo’s goal of building 10,000 affordable homes between 2017 and 2023. But the city’s latest below-market-rate housing investment plan says that even with additional funds San Jose could come up 4,229 units short of its target

In an attempt to boost the amount of funds available for affordable housing and combatting homelessness, the city is eyeing a real property transfer tax. With an 8-0-2 approval from the council (Councilwoman Dev Davis was absent), city officials now plan on drafting a proposed ballot question. The language of the measure is expected to come up for discussion at the the Dec. 3 council meeting.

The prospective tax would be assessed on property valued at $2 million or more, exempting 95 percent of single-family home and condo sales in the city. But unlike with the failed Measure V, money from the transfer tax would go into the general fund to be allocated for any purpose—not just housing and homelessness.

Polling conducted by the city and its research partner FM3 found that a general tax measure was more palpable to voters. Plus, they’re easier to pass.

Specific tax obligations bonds require a two-thirds approval, while general tax measures only need a 50 percent-plus-one vote to succeed. Of the 806 registered voters polled, 61 percent said they’d vote yes.

“The administration’s goal is to obtain additional funding that is able to address the need for affordable housing and the high rate of homelessness and be flexible enough to address emerging needs,” Lee Wilcox, the chief of staff for City Manager Dave Sykes, wrote in a memo. “For example, in one year, there may be a need for family housing, but as the population changes, there may be a need to house young adults or seniors, or even to address other as yet undefined needs.”

While council members were quick to offer up strategies for how to spend the tax money—which has been billed as funds for affordable housing for seniors, veterans and the disabled among others—Assistant City Attorney Ed Moran warned that Tuesday’s meeting wasn’t the time to do that.

“This is a general tax,” he told the elected officials, “a tax that is going to go into the general fund for general government purposes.”

The council also approved part of a memo from council members Maya Esparza, Magdalena Carrasco and Sylvia Arenas to reach out to labor representatives and non-profit affordable housing developers as part of outreach to discuss workforce standards and “ensure quality jobs are developed from the use of these public funds.”

Councilman Sergio Jimenez, who previously supported a tax on vacant properties as a revenue source for affordable housing, cast one of two dissenting votes on the proposed 2020 ballot measure. The D2 rep said he believes that San Jose has been taxing the wrong people. Just recently, he noted, a majority bloc of his colleagues voted to waive taxes and fees for highrise developers.

“Now doing that, we pivot, turn around and look at our residents and say, ‘Hey, help us fill the hole,’” Jimenez said.

Councilman Johnny Khamis also voted against moving forward with the potential tax measure, citing concerns about overtaxation and the flexible use of funds.

“We could spend it on statutes,” he remarked. “We could spend it on many other things including housing—yes—but we could choose in any one year to spend it on anything.”

Khamis, who said he would have voted yes if the measure was a dedicated tax, added that he hoped the city wouldn’t be “subsidizing” the county’s responsibility for addressing homelessness and providing mental health services.

The California primary election takes place on March 3, 2020. For more information about local races, campaign fundraising, how to register to vote and more, visit the Santa Clara County Registrar of Voters website at sccvote.org.

Grace Hase is a staff writer for San Jose Inside and Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @grace_hase.

26 Comments

  1. This is crazy. Do you guys think we have unlimited resources to fund your pet projects. The Council continues to add fees,bonds, blah blah blah on our property taxes and they are tapped to the maximum. A Tea Party is brewing.

  2. By placing another low income (homeless housing) measure in front of the voters the Mayor and some council members are again going to the well of their constituents’ limited resources, their income. By placing a tax upon our property we are especially vulnerable to unavoidable taxation or threatened loss of property through property liens. The very place we live, our home and our security, is again becoming a source for homeless advocates and their representatives in government to raise funds. With Measure-A funds just beginning to be put to work we look around for changes in the landscape and see things are getting worse. Since Measure-A was voted in, the homeless population has actually soared another 42 percent higher in San Jose alone.

    In voting for Measure-A, I believe voters desperately wanted change. We were tired of seeing such blight and our fellow man living in such squalor. We live amongst the Titans of Silicon Valley, how could this happen here, we ask.

    However, those Measure-A monies are largely unspent for the purposes for which they were intended and nearly three years after voting for their collection and use.

    Voters should be, and mostly are skeptics when it comes to proper use of the funds which are collected by way of taxation by our government on our homes.

    But, the absurdities that even Council Member Sergio Jimenez has brought forth about previous opportunities for funding this kind of housing has been lost on the last couple of council meeting votes made on the Dias.

    The high rise developers get a pass and no longer have to pay for “in lieu of” fees for low income housing, and as well park fees. Those fees would have gone directly to support thousands of affordable housing units. We gave away Tens of millions of dollars to the very rich and prosperous downtown developers. We also have only a third of the parkland for our population, but that is a different matter.

    Now the Mayor is looking to us, his constituents, to carry the load on our backs and as well, our children’s backs, instead of that of the wealthy developer.

    To add insult to injury the Mayor believes that we are so gullible that he actually stipulated the funds go to the general fund instead of being ear marked for the purpose for which is stated. This is merely a bait and switch endeavor to balance the budget in what is expected to be lean recession years going forward.

    Lastly, let’s not fall for what again is merely another way to make our cost to live in this highest of costly cities even more so.

  3. The City of SJ already spends hundreds of millions of dollars on affordable housing. The Housing Department has a budget of over $80M/year!! and all they do is hire more paper pushers. This new tax will not even be guaranteed to go to housing.

    San Jose has a $4B/year annual budget. Saratoga Sam and his pals need to figure out how to manage this City with $4B – its more than enough!

    All of that said, if this passes at the ballot – we better not see one freaking homeless camp in SJ afterwards. Time to start holding them accountable. SJ City Hall has been a complete failure on homelessness and the housing shortage.

    • > Saratoga Sam and his pals need to figure out how to manage this City with $4B – its more than enough!

      This is the way the business world works — and how businesses succeed.

      Here’s the job we want done. Here’s the budget. If you think you can do the job, sign here. If you don’t think you can do the job, next candidate.

      ASKING FOR MORE MONEY IS AN ADMISSION OF FAILURE. It is really a request to be fired.

  4. It is our responsibility to care for the marginalized unhoused in this city as well as house the newly arriving undocumented immigrants that will make our City strong. Anyone who can afford a $2 million piece of real estate can certainly afford to help the 10s of thousands who want to make San Jose their home, but cannot afford it. The cost to sellers is a meager $15,000 on a $2 million sale. Vote YES on this ballot proposal!

    • > It is our responsibility to care for the marginalized unhoused in this city as well as house the newly arriving undocumented immigrants that will make our City strong.

      No. It is NOT our responsibility. It is only a “responsibility” that grifters imposed on the general public.

      And, NO, “newly arriving undocumented immigrants” will NOT make our City strong. It will only make our City more like the failed tribal hives they came from.

      • please delete previous comment. hit wrong button
        i totally agree that ” NO, “newly arriving undocumented immigrants” will NOT make our City strong.”
        please – I am sick to death of calling these illegals undocumented immigrants. I have friends who have legally stood in line for nine years, nine years, to legally enter this country. I owe these illegals nothing. Period.

    • It may seem like a lot of money for a house in San Jose, now. The median price was $500,000 in San Jose only a few short years ago. On average these one million dollar homes may hit two million a piece in less than ten years. Since 2013 our homes have gone up an average of one percent per month. By all accounts this tax will hit everyone that transfers ownership in their homes due to divorce, sale, inter-spousal transfer, inheritance, or the like. It is another tax which is designed not for housing but the General Fund (services, payroll), etc. It is but another way to tax us to oblivion.

      The Boston Tea Party was due to “Taxation without Representation”. I believe this is one of those cases. The homeless will remain so, but the pensions of city employees will be covered.

    • People living in million dollar houses are standing in the bread line. We need fewer not more people here.

    • The fact that it costs 2m to live here should be sufficient evidence that 10000s of people shouldnt move here. I don’t know if it could be more conclusive.

  5. Goes directly into General Fund… kerplunk… more money for additional City employees and higher pensions!

    • Exactly! Also, they are skirting the law and intent of voters by calling it a ‘general tax’ so that it only needs a 50% +1 vote to win, BUT they are marketing it as a special purpose tax for affordable housing, which Measure V was and failed to get a supermajority vote.

      NOT ONLY IS WHAT THEY ARE DOING UNETHICAL AND AGAINST VOTERS WILL, IT IS POSSIBLY ILLEGAL!!!!

      We have a lawless Council, and don’t even get me started on that dufuss we call City Attorney….

    • Though not reported here, this new tax is to raise $70M/year. Council wants us to believe this $70M will magically solve the housing shortage and homeless crisis. It won’t.

      Further, if $70M would do it, I have news for everyone. SJ’s combined Property & Sales tax receipts into the General Fund increased by $62M (ok, about 10% short) from 2018 -2019. Now, add in the increases in Utility tax, telephone tax, & business tax that we ALREADY pay and you are well over a $70M annual increase in revenue to the general fund!

      If $70M will magically solve all the problems…..ITS ALREADY THERE – WE’VE ALREADY PAID IT!

      NO MORE TAXES!!!!!!!!

  6. Vote NO! Are voters to trust money going into the General Fund to be used for “Affordable Housing”? What happens when there’s a recession and the Council can’t meet other obligations? Yep! They’ll dip into this easily obtainable stream of money. That stream of money will only grow larger as homes appreciate over ten, twenty or more years as homes have done over the past years. Unless this money is specifically earmarked for “Affordable Housing”, this will prove to be a funding source for anything a Council deems precious. Let’s also have a strict definition of what the Council/City means by “Affordable Housing”. When more than 5% of homes achieve the $2 million dollar level, say in ten or twenty years, will “Affordable Housing” mean a $1, $2 or a $3 million dollar home? Who knows? All this sounds so caring, but to me, it opens a path to a misuse of taxpayers’ funds without the specific earmarks. Let’s vote this down.

  7. In a Nov. 1, 2019 article, Diep was asked about the transportation tax measure coming on the March 2020 ballot. Diep was concerned about the number of tax measures over the last few elections, but (BUT) said that this one was “worthwhile” as San Jose becomes more dense.”
    On Nov. 19, 2019, he pushed for higher taxes for businesses and homeowners on the transfer tax that will go into the dark hole called the General Fund. He falsely claimed SJ has a deficit of $20M.
    Has Diep become a new advocate for higher taxes at all costs? Will it cost him the election to be re-elected? Time will tell.

  8. > San Jose Votes to Move Forward With Proposed Property Tax Measure for Affordable Housing

    Another transfer of resources from the “haves” to the “have-nots”..

    How do you get to be a “have-not”. Consume, consume, consume, and produce nothing.

  9. The headline should say “property transfer tax” not “property tax”. $15,000 on a $2 million house is roughly the value of a late-model used car. Just leave it in the garage when you sell so the city can liquidate it to pay for public works like bringing the A’s downtown. Put affordable housing underneath the bleachers and hire city employees to administrate a lottery to choose who gets to live there.

    • > Another bad idea from politicians for whom taxes are never too high.

      Well, their job description really boils down to spending tax dollars.

      The more tax dollars a politician can spend, the more magnificent the politician.

  10. Shameful behavior by the mayor and the city council. All these people need to be voted out of office.

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