San Jose: Supporters launch campaign for new tax meant for affordable housing

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SAN JOSE — Supporters of a proposed new
tax that could raise tens of millions of dollars
to fund
affordable housing projects in San Jose launched their campaign
Saturday morning outside the kind of development they want to
become a lot more common.

For Raymond Ramsey, his apartment in the
134-unit Second Street Studios
is his foundation. Instead of
spending all of his time in “survival mode,” worrying about
where he might sleep or how to protect his belongings, Ramsey, who
cycled in and out of homelessness for 10 years before moving into
the affordable housing development last May, said he can focus on
advocating for the thousands of people who are still living on the
streets in San Jose.

“We are living proof that the homeless population is neither
helpless nor hopeless, and that permanent supportive housing is the
key,” Ramsey told a crowd of city officials, affordable housing
advocates and other formerly homeless people at the campaign
kickoff rally in front of the building he calls home.

“We want more affordable housing like this,” he said.

The strategy that Mayor Sam Liccardo and other supporters say
will make that a reality is a new tax on real estate sales worth $2
million or more, which will appear on the ballot as Measure E in
the March primary.

“Too many of our neighbors are being pushed out of our city,
and too many of our brothers and sisters are being pushed out into
the street,” Liccardo said. “We are going to bring them all

But opponents of the measure, and even some of its supporters,
have raised the concern that the money the tax would 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 even 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 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 already charges, at a rate of $3.30 per $1,000 of
property value.

City officials estimate the 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 percent 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, Ramsey 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.

Mercury News staff writer Maggie Angst contributed to this

Source: FS – All – Real Estate News 1
San Jose: Supporters launch campaign for new tax meant for affordable housing