Majority of San Jose voters support new tax meant for affordable housing, poll finds

Surrounded by some of the world’s most valuable companies and one of the country’s largest homeless populations, the majority of San Jose voters welcome a new tax on the city’s priciest properties that leaders say will help ease the spiraling housing crisis, according to a new poll.

At least 55% of San Jose voters say they plan to vote in support of Measure E — a new real estate transfer tax for properties worth $2 million or more on the March ballot — which city leaders have vowed to use to build affordable housing and add more homeless services, according to a poll conducted for this news organization and the Silicon Valley Leadership Group. Meanwhile, 32% of respondents say they would oppose the tax.

“Anytime you have majority support and 2-1 in favor, that’s a very encouraging position for a measure to be in with a month to go before the election,” said David Metz, whose firm FM3 conducted the poll last month.

If passed by more than 50% of voters, the transfer tax — paid by the buyer, seller or split between the two when a property is sold or ownership transfers, with some exceptions such as for inheritance — would affect less than 5 percent of properties in the city, primarily commercial and industrial parcels.

The city estimates the new tax — which will increase with inflation — would generate up to $73 million annually for homeless services and affordable housing production and at least $22 million during a recession year.

Measure E marks the second time in two years that city officials have tried to pass a local funding model for affordable housing. In 2018, a $450 million general obligation bond measure narrowly failed by 2%.

Unlike a bond measure, funds raised by a general tax like Measure E would flow into the city’s general fund and officials could not legally restrict the use of the money. Still, city officials made a “political commitment” in December 2019 to use the funds for the construction of affordable housing and the development of homeless services.

Measure E comes before voters as prominent developers and tech companies like Mountain View-based Google are pouring more money into San Jose than ever before, scooping up a wide swath of properties.

At the same time, the city’s homeless population has swelled to more than 6,000 and the city has admitted that it will not come close to meeting its goal of producing 10,000 affordable housing units by 2022. With less than two years left, the city has constructed just 1,640 units.

“One reason why we’re not seeing significant improvement in this crisis is that we do not have a sustainable source of funding,” said Mayor Sam Liccardo, who is championing the Measure E campaign. “We critically need to fill that gap in funding, which not coincidentally, was created around the same time that the crisis deepened in our city.”

Poll respondent Jeanine Camacho, 34, a former administrator for below-market-rate housing units at a luxury apartment community in San Jose, said she typically does not support general taxes but sees the need for this one.

“I just think that if we want our community to thrive, we all have to make sacrifices to enable people who have been here and who work blue-collar jobs to have the opportunity to stay here,” she said.

But other respondents such as Carl Schattke, 58, who works in tech, said he thinks more accountability is needed to truly tackle housing affordability and homelessness.

“In general, I don’t think our city has done a good job of stewardship and I don’t think the problem is a lack of money, I think it’s driven by a lack of leadership,” Schattke said.

Only 37 percent of residents polled outside of San Jose in Santa Clara, San Mateo, San Francisco, Alameda and Contra Costa counties said they would support a real estate transfer tax if the measure stated the funds raised would go toward “a variety of city services.”

Metz, the pollster, said that highlights the value of providing voters with a clear outline for the use of funds raised by a general tax like Measure E.

But Councilman Johnny Khamis, who along with Councilmembers Sergio Jiminez and Dev Davis, voted against putting the measure on the ballot sees it differently.

“If you take out the words that they’re promoting it with, no one would vote for it,” Khamis said. “It’s really disingenuous to say that it’s going to go just toward housing when it’s a general tax and it will never just go toward housing.”

The tax would vary based on a property’s transfer value — $3.75 per $500 for $2 million-$5 million properties, $5 per $500 for $5 million-$10 million properties and $7.50 per $500 for properties worth more than $10 million. For the affected properties, the new tax would be on top of the city’s current property transfer tax, which is applied to properties at a rate of $3.30 per $1,000.

Measure E’s supporters include a majority of the council, a half-dozen local nonprofit housing organizations and the League of Women Voters San Jose chapter. It is opposed by the Silicon Valley Taxpayers Association.

The Silicon Valley Leadership Group, which has championed four multibillion-dollar statewide bond measures aimed at affordable housing in recent years, has not taken a formal position on Measure E. Carl Guardino, the group’s CEO, said the poll suggests the measure is “tapping into that incredible concern of San Jose, Silicon Valley and statewide voters” about housing affordability and homelessness.

The poll of 169 registered voters in San Jose was conducted by Fairbank, Maslin, Maullin, Metz and Associates from January 11-19. It has a margin of error of +/- 7.7 percentage points.

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