A contentious proposal to suspend rent for three months for families who are struggling to make rent due to coronavirus was struck down by San Jose’s attorney at a virtual City Council meeting Tuesday, concerned the policy violated the Constitution.

City Attorney Rick Doyle said the city would be on the hook for the forgiven rent amounts, if it approves the proposal. Otherwise, he said, it’s equivalent to taking someone’s property away.

“The concern here, in my view, is significant because there are a lot of properties and a lot of dollars at stake that the city could be on the hook,” Doyle said. The Constitution also prohibits the government from interfering or “substantially impairing the obligation of a contract between private parties,” he added.

Instead of a suspension, Councilmember Raul Peralez, one of the two lawmakers to first propose the policy, suggested the council next week discuss a rent freeze and define how a landlord receiving financial relief could pass that onto a tenant.

“I would love to be able to do whatever we legally can do and without obviously violating the Constitution,” he said.

But Councilmember Johnny Khamis said the process, which bypassed the council’s Rules Committee, wasted people’s time and “riled up the emotions of the public for nothing” after droves of residents called into the meeting to voice their concerns.

“This is why we got into trouble to begin with — if it went through the Rules process, we could have hammered it out and found out that it was a constitutional violation,” he said. “All of us should be voting no.”

Dozens of residents on both sides of the debate made a passionate plea to lawmakers as the city grapples with impacts of the deadly COVID-19, which has shuttered businesses, killed 43 people and infected 1,285 others across the county as of Tuesday.

“Thousands of undocumented renters have lost their job and cannot apply to unemployment insurance,” said Flor De Leon-Jacobo, an organizer with SOMOS Mayfair. “It’s time to help these people because they don’t have any resources.”

But some disagreed, saying the burden was just as heavy on landlords.

“In my opinion, the government should help the tenants who have difficulties to pay the rent, instead of just sacrificing the landlord,” local property owner Yuquing Yang said. “That is a very irresponsible thing for a government to do, and it could have serious long-term consequences.”

Budgetary impacts of coronavirus

Foreseeing an economic downturn following the shelter-in-place order, San Jose leaders on Tuesday unanimously approved cutting costs to city departments and programs amid the coronavirus crisis.

City Manager Dave Sykes said the move will help avoid layoffs and save funds for next year’s budget.

The city has lost vital funds, including state-allocated sales tax and taxes collected from business-related travel, events and commerce. Sykes also expects unemployment and a coinciding recession to affect the amount of money the city receives, but city officials Tuesday said they did not know the full extent of the economic fallout.

The city estimates it could lose a total of $110 million in revenue as a result of the pandemic.

To mitigate the loss, the city approved using tax revenue collected from an agreement with eBay, expected to range between $15 million to $20 million, evaluating the use of existing reserves, reducing department budgets and eliminating one-time funding for citywide projects.

But some lawmakers said the city should approach budget cuts carefully and implement an “equity screen” to ensure underserved communities in low-income neighborhoods don’t suffer from losing out on vital services or programs.

Councilmember Sylvia Arenas noted that many of the current city programs meant to address equity only receive one time funding, but Sykes previously proposed cutting those projects.

“I know that none of this is going to be easy,” Arenas said. “I just want to make sure that the strategies that we’re using are also strategies that are going to put us in a better place to weather the storm, but at the same time, that are in line with some equity screening.”

Sykes said equity will “very much” be considered during the cost-cutting process.

City officials expect to release the proposed budget May 8 before the City Council approves a final budget for the 2020-21 fiscal year in June.

Emergency housing for shelters

San Jose lawmakers Tuesday unanimously approved allocating more than $17 million in city funds to fast-track the construction of hundreds of new units of emergency shelter for homeless people and vulnerable residents who test positive for COVID-19.

Now approved, the construction process will bypass city and state permitting rules and environmental regulations.

The lawmakers will use the funds to build modular homes for homeless individuals and San Jose residents to self-quarantine, specifically those who have contracted or been exposed to the disease.

The city qualifies for a FEMA reimbursement for the funds as long as the new units are reserved for COVID-19 positive or high-risk individuals. Under the partnership with FEMA, the agency will cover 75 percent of the costs while the state covers a portion of the remaining 25 percent.

Paid sick leave

Two weeks after the proposal was first introduced, the lawmakers Tuesday approved a paid sick leave policy for all essential employees in San Jose not covered by the federal government’s emergency coronavirus relief law.

The federal rules allow employees who are sick with the coronavirus, who have a sick family member or have been advised by a doctor to self-quarantine to qualify for sick leave.

The city’s new ordinance covers all other essential employees, carving out a two-week extension for the health care industry after a Kaiser Permanente spokesperson said the company needed more time to complete “administrative paperwork” for the policy.

“We’re asking for some time to be able to administer this in a correct manner,” Hospital Council Vice President Jo Coffaro said. “We already do this, it’s just that we have to do some administrative paperwork.”

The policy will go into effect immediately.

Contact Nadia Lopez at [email protected] or follow @n_llopez on Twitter.