San José Mayor, Council Move Toward Compromise on Homelessness Spending

On Wednesday, San José’s city council moved closer to an agreement on how to spend money dedicated to reducing homelessness, as a pair of budget proposals sought to strike a balance between funding permanent and temporary housing.

The new plans come amid debate over the best approach to provide housing and shelter for the estimated 6,650 people experiencing homelessness in the city. The mayor and council members are negotiating how to divide a pot of revenue created by voters in 2020 with the passage of Measure E, which taxes expensive home sales in the city.

After putting forward a controversial shift toward funding temporary units last week, Mayor Matt Mahan is now proposing to keep the vast majority of future Measure E funding for building affordable apartments, while using unspent homelessness funds for interim housing. A separate proposal, written by Councilmembers David Cohen and Sergio Jimenez, takes a similar approach: maintaining the Measure E spending formula and finding money elsewhere in the budget to pay for temporary shelter in the short term.

The key difference is that Mahan, along with Vice Mayor Rosemary Kamei and Councilmember Pam Foley, are proposing to spend more of the existing Measure E money from the current and previous budget years on short-term housing. Cohen and Jimenez prioritize more of this money for permanent housing.

Currently, three-quarters of Measure E revenue goes toward building affordable housing at a variety of income levels, with the rest dedicated to temporary units and providing tenants with cash and legal assistance. The tax is expected to raise $50 million in the fiscal year beginning July 1, a decline from previous years due to the city’s slowing real estate market.

Mahan has pushed the council to spend more money on programs he argues will provide a faster pathway for unhoused individuals to exit homelessness, such as emergency interim housing, which includes prefabricated units that provide residents with a private bedroom and bathroom.

“The great news is that by working collaboratively, being creative, we are able to do both — we are able to address the immediate crisis on our streets and really accelerate those solutions, while maintaining our commitment to continuing to build that much-needed pipeline of affordable housing,” Mahan said at a Wednesday press conference.

Mahan’s earlier plan would have spent 80% of the dedicated homelessness funds in the next fiscal year on temporary shelters. Affordable housing advocates balked at the idea of cutting off money for building apartments in the 2023–2024 fiscal year, arguing such a move could jeopardize the future of projects in the pipeline. Under Mahan’s latest proposal, next year’s tax allocation will be left alone, and temporary units will instead be paid for with money from unspent Measure E and general fund dollars.

“What’s key is that we maintain our clear commitment to affordable housing under Measure E, while also ensuring solutions that address our most pressing community needs of our unhoused neighbors,” said Kamei, who represents West San José. “We can only accomplish these goals through principled collaboration and thoughtful compromise.”

Cohen, who had been working earlier in the week to forge a compromise with Kamei, Foley and Jimenez, also wants to keep the existing distribution of Measure E funds.

To pay for short-term housing, Cohen and Jimenez’s plan would combine Measure E dollars with up to $15 million in anticipated unspent general fund money, while also redirecting $3.5 million currently slated for San José Bridge, an employment program for unhoused residents.

“I wanted to find a way using what we have in our budget to be able to continue to meet our commitments to building affordable housing, while also funding the short-term need to provide safe locations for people to live in the period of time while they’re waiting for affordable housing options,” Cohen told KQED.

Mahan’s plan would reach the same investment in interim housing by tapping a greater amount of current and prior-year Measure E funds and slightly less — $10 million — from money predicted to be left over in the general fund at the end of the fiscal year.

The changes to Measure E spending require the supermajority support of eight councilmembers. It is unclear whether more progressive members like Omar Torres and Peter Ortiz, who spoke out against Mahan’s initial plan, will support any increase in Measure E dollars going toward temporary housing. But, the support of centrist voices like Cohen and Kamei to add dollars for short-term solutions suggests a path forward for compromise.

Mahan and the council are hoping to reach a deal on Measure E spending that could be included in the updated budget proposal the mayor is expected to release in early June. A hearing and vote on the plan is set for June 12.