In split vote, San Jose lawmakers decide to study potential 2020 tax measure

Despite warnings from Councilmembers Johnny Khamis and Sergio Jimenez that San Jose residents are becoming overtaxed, a split City Council on Tuesday decided to move forward with researching a 2020 ballot measure to help build affordable housing and shelter the city’s homeless.

Last month, San Jose administrators studied three potential tax measures – two of them were general obligation bonds, a popular option in Silicon Valley, the other was a real property transfer tax. After surveying 1,251 registered voters, the real property transfer tax was the only measure that reached a voter threshold needed to pass. A disappointing outcome in preliminary poll results, coupled with the narrow defeat of affordable housing Measure V last November, signaled to officials that a bond was no longer an option.

In a 7-3-1 vote, councilors gave the green light for administrators to continue analyzing potential ballot measures, this time surveying commercial and vacancy taxes, along with the real property transfer tax. Councilmembers Dev Davis, Pam Foley and Khamis voted against the initiative. Councilmember Maya Esparza was absent.

Councilors’ decision to focus future efforts on commercial and vacancy taxes came at the direction of Jimenez, who opposed the real property transfer tax and wanted to shift taxation away from homeowners and residents.

“I do believe in tax fatigue,” Jimenez said.

The commercial property tax would side-step homeowners and instead focus on taxing businesses and industrial properties. In 2018, East Palo Alto leaders proposed a similar tax to address homelessness and affordable housing – it passed with 79.6 percent of the vote.

Jimenez’s request to explore a vacancy tax option, however, isn’t a new one. Housing Commissioners Alex Shoor and Huy Tran last month suggested imposing a tax on vacant properties in response to the discovery that San Jose had 11,952 vacant units in 2017.

Some of Jimenez’s colleagues, though, were not on board for seeking any new tax options.

“We are going down the street looking like we’re going to be ‘tax Jose,'” Khamis said.

Khamis has been a staunch opponent of Silicon Valley piling taxes on its residents. He brought his tax bill with him to Tuesday’s council meeting to prove his point: The list of taxes were 17 long.

Davis and Foley also joined Khamis’ anti-taxation voting bloc.

Foley, who drew on her experience in real estate, was especially critical of exploring a real property transfer tax.

“It is an impediment in purchasing homes for our home buyers,” she said.

Davis felt that San Jose had missed its opportunity for another tax, adding that doing more survey research would not change residents’ minds. But Mayor Sam Liccardo said it’s important to leave all options open when looking at next steps for the potential ballot measure.

“What I’m concerned about is forgoing options and tying our hands and closing off options when we should be asking questions and gathering information,” Liccardo said Tuesday.

While voting in support of moving forward with additional research, Councilmember Raul Peralez pondered how lawmakers can cure residents’ tax fatigue.

“My hope is that we can start to see some success with the dollars that we actually do have available to us,” he said. “We still have to prove to our community members that we can make good on our commitment and produce some positive outcomes.”

City administrators will return in August with the results of additional research related to a homelessness tax on the 2020 ballot.

Contact Grace at [email protected] or follow @grace_hase on Twitter.