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.