Measure E
generate might not wind up funding the affordable housing causes its backers are championing in their campaign.
That’s because the tax revenue would flow into the city’s general fund — a distinction that allows the tax to pass with a simple majority, rather than a larger share of votes. But that means supporters cannot legally require that the money fund affordable housing projects or any other specific cause.
“It’s a general fund tax, and other city councils could decide what to do with this money in any given year that it is there,” Councilman Johnny Khamis said.
Opponents also charge that the tax risks making the city’s housing crisis worse, because it will increase the cost of acquiring and developing new properties.
“Developers will have to make up the cost of this tax somehow,” Khamis said.
Measure E would add a new tax of $3.75 per $500 of a property’s transfer value for properties worth $2 million to $5 million.
That rate would rise to $4 per $500 for properties
“It’s a general fund tax, and other city councils could decide what to do with this money in any given year that it is there.” — Councilman Johnny Khamis
worth $5 million to $10 million, and $7.50 per $500 for properties worth more than $10 million.
The tax would be in addition to the transfer tax San Jose charges, at a rate of $3.30 per $1,000 worth of property value.
City officials estimate the new tax would generate tens of millions of dollars annually — from at least $22 million during a recession to as much as $73 million in boom years.
More than 6,000 people were homeless in San Jose in 2019, according to the city’s annual count of its homeless population, a 43% increase from 2017.
Meanwhile, San Jose has struggled to finance affordable housing developments since California shut down its redevelopment agencies in 2011.
The new tax would be the first substantial local source of funding for affordable housing since then.
Supporters have laid out a plan for spending the money, devoting chunks of the funding to build housing that is affordable for low- and very-low-income residents — including permanent supportive rental housing developments like Second Street Studios — as well as homelessness prevention and rental assistance efforts.
Those plans are not binding, though.
Ramsey said he shares the concern that money from the tax could get diverted to other causes.
“The promises have been pinkie promises,” he said. But the solution to that problem, he said, is to closely track how the tax revenue is used — not to shoot it down entirely.
“Let’s get the measure passed first,” he said.