UPDATE: San Jose residents speak out against diverting affordable housing funds

In the face of the growing housing crisis, San Jose residents are urging elected officials to preserve funds for permanent affordable housing.

The San Jose City Council is considering reallocating housing funds from Measure E, a property transfer tax approved by voters in 2020, to instead support and shelter homeless residents in the short term. Under the two scenarios put forth in the city’s draft budget for fiscal year 2024-25, the reallocation would either leave $11 million of the $50 million fund for affordable housing — if the city can score extra state funding — or none at all. Affordable housing construction is 75% of the property transfer tax’s focus, with 25% going to homelessness prevention, rental assistance and shelters.

“Hollowing out affordable housing capital dollars will increase delays and drive up the costs of permanent supportive housing developments,” Tamra Chavez, regional director of homeless services nonprofit PATH, said.

Councilmembers on Tuesday held a public hearing on the potential reallocation, but took no action in choosing a proposal. They will make a decision during the budget process next month. The only comments from the dias came from Mayor Matt Mahan.

“We face an unenviable situation where we have very urgent needs,” Mahan said. “It’s a very tough balancing act.”

A consortium of community groups known as the REAL Coalition opposes the proposals, and held a protest ahead of the council meeting. One of those groups is SV@Home, who said there are 70,000 rent-burdened families in San Jose struggling to get by.

“I know people severely affected by the housing crisis. For the mayor to divert funds from permanent affordable housing is very distressing,” Peggy Elwell, a member of the South Bay Progressive Alliance’s steering committee, told San José Spotlight.

Those people include resident Debra Townley and her son, who were homeless for five years due to a series of unfortunate events. Townley urged the mayor not to cut funding from Measure E and to fund permanent supportive housing. Shelters are not the way for those struggling with mental and physical health conditions to live, she said.

“Please keep permanent supportive housing alive and allow us the time we need to recover from homelessness while we are finding ways to add value to our community in spite of our struggles,” Townley told San José Spotlight.

@sanjosespotlight

San Jose activists are rallying outside City Hall to protest a plan by officials to divert affordable housing money to shelters and sweeps. The crowd gathered at 12:30 p.m., just an hour before the San Jose City Council is expected to discuss two spending proposals to take permanent affordable housing funds and reallocate them toward clearing homeless people from encampments along city waterways into temporary shelters. Read more at SanJoseSpotlight.com #housing #homelessness #protest #sanjose #siliconvalley #bayarea #localnews

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Mahan’s March budget message shaped the Measure E proposals by piggybacking on a push he started last year to divert affordable housing dollars. He didn’t succeed. The council settled on a compromise that still favored affordable housing development over temporary homeless housing, but there was a shift in the fund’s priorities. This year city leaders are leaning toward realigning Measure E monies to tackle homelessness in the short term.

San Jose expects to spend $27 million clearing out the estimated 1,000 homeless people living along creeks and rivers, in response to orders by the San Francisco Bay Regional Water Quality Control Board due to high pollutant levels. Officials say if they fail to do so by June 2025, the city could face litigation and $60,000 per pollutant in daily fines. A spokesperson for the state water board said there’s no basis for the city’s claim of paying $60,000 per pollutant in daily fines.

Tuesday’s protest came days after the San Jose Housing and Community Development Commission rejected recommending either proposal for reshuffling Measure E funds. Commissioners scorned the proposals for “abdicating” the city’s commitment to long-term homelessness solutions, with some saying it betrayed the trust of voters who passed the property transfer tax in 2020 with the goal of creating more housing.

Two housing commissioners backed the mayor up last week and said the city is caught between a rock and a hard place. Some residents echoed that sentiment on Tuesday.

“With a $52 million deficit, nobody is going to get everything they want,” Dimitri, a resident from District 3, told councilmembers. “The city must prioritize moving people off the streets and creeks today and cleaning up the blight that everyone can see…that is harming the competitiveness of our city.”

Under the current proposals, $15 million in Measure E dollars could pay for homeless services, with funds for the sweeps coming from the general fund. The city will pay $10 million of the remaining amount from the general fund and $2 million from other special funds.

If the city can keep $11 million for affordable housing this upcoming budget cycle, $5.8 million would go toward the development of extremely low-income housing and $5.2 million for low-income housing, according to a city memo.

Even with continued state grant funding in the following fiscal year 2025-26, the allocation for affordable housing further decreases in city budget projections to just $6 million.

While proponents say Measure E is critical for affordable housing development, it’s not the only revenue source available to fund construction. The city in its report to housing commissioners said it has six funds that can support such development.

In addition to these funds, city officials say the potential sale of Vermont House, a 17-unit permanent housing facility, and construction of the Monterey-Bernal emergency interim housing site could bring in more cash for affordable housing.

Councilmembers are slated to hold budget study sessions and public hearings throughout May and are expected to formally adopt a budget on June 18.

Contact Brandon Pho at [email protected] or @brandonphooo on X, formerly known as Twitter. Contact Joyce Chu at [email protected] or @joyce_speaks on X, formerly known as Twitter.

Editor’s Note: A previous version of this story incorrectly stated the source of funds for the encampment sweeps.