AMID A BUDGET SHORTFALL, San Jose Mayor Matt Mahan wants to move money allocated to affordable housing toward temporary housing solutions — indefinitely.
San Jose is facing a potential $60 million deficit for the upcoming 2025-26 fiscal year, due in large part to a drop in sales tax revenue. At a City Council meeting earlier this month, Budget Director Jim Shannon proposed two options: permanently shift $39 million in affordable housing dollars to help fund operations at the city’s temporary housing sites, or use up to 90% of Measure E funding for the same needs during budget deficit years with a majority vote. Mahan supports permanently shifting the affordable housing dollars.
“City staff has presented us with a clear path forward — we can make last year’s Measure E allocations permanent and eliminate two-thirds of this year’s projected deficit, or we can continue debating this issue year after year while putting city services at risk,” Mahan told San José Spotlight.
Voters approved Measure E, a real estate property transfer tax, in 2020, with 75% of the funds apportioned to build affordable housing and 25% set aside for temporary housing and homeless services. This decision would change that dynamic, siphoning 100% of the roughly $55 million toward homeless prevention, temporary housing and supportive services.
Mahan has championed temporary housing solutions that accelerate getting 5,500 unsheltered homeless people off the streets. He claims this will save the city millions of dollars if invested in temporary solutions rather than permanent affordable housing.
The city already spends millions of dollars overseeing six tiny homes sites, a safe parking site and hotels that have been converted into shelters. Operating costs are expected to climb as other temporary housing sites open this year, including the Cherry Avenue and Via del Oro tiny home sites, a second safe parking site and a safe sleeping site. A multi-story modular temporary housing complex for homeless families opened on Branham Lane earlier this month.
Some question temporary housing as long term fix
Some councilmembers support shifting Measure E dollars for the next fiscal year, but not permanently.
“Homelessness remains at crisis levels, and we need all levels of government to step up with a humane approach to get people indoors and expand treatment for those that need it,” District 6 Councilmember Michael Mulcahy told San José Spotlight. “We have a ways to go on the budget, but I imagine that Measure E will play a major role in ending the crisis on our streets. These dollars may shift once again as we get a handle on unsheltered homelessness.”
District 5 Councilmember Peter Ortiz said temporary housing is ultimately not a cost-effective solution to homelessness.
“Homelessness remains at crisis levels, and we need all levels of government to step up with a humane approach to get people indoors and expand treatment for those that need it.” Councilmember Michael Mulcahy
“I would not be supportive of permanently diverting the funds,” Ortiz told San José Spotlight. “These affordable housing projects aren’t just for individuals who are homeless, but also for the working, single mom who is trying to provide for her kids. Because at the end of the day, if we’re just building interim housing, it’s going to be a bridge to nowhere.”
Measure E is the city’s single largest revenue source for affordable housing, Ray Bramson, chief operating officer of nonprofit Destination: Home and San José Spotlight columnist, said. The city may also fund affordable housing through fees it collects when developers decide to drop the number of affordable apartments below the city’s 15% requirement. But without more local investment, projects that are ready to go will not materialize, Bramson said.
“It’s critical that we continue to find local money to build housing for seniors, families, veterans and disabled members of our community,” Bramson told San José Spotlight. “Without a source, those developments just won’t happen and then we won’t have places for these people to go home to.”
Trying not to follow DC’s lead
Last year, the city awarded nearly $50 million to four affordable housing projects, with a majority of funding coming from Measure E. Due to the council shifting money to temporary housing, less funding was available for developments. The year prior to that, $145 million was given to 11 housing projects. This fiscal year, Mahan led the proposal to shift $25 million of Measure E funds to tackle homeless encampments along the waterways.
Regina Williams, executive director of nonprofit SV@Home, said Measure E money should remain fluid to meet the needs of the city.
“I’m concerned with the talk about changing it permanently, because I feel like that reflects some of what’s happening in Washington, where the power is being taken from our elected leadership to make decisions that they get to make every year,” Williams told San José Spotlight.
Contact Joyce Chu at Joyce@sanjosespotlight.com or @joyce_speaks on X.
This story originally appeared in San Jose Spotlight.