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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 in.”
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 report.
