In a bid to build more affordable housing, the City Council voted 8-3 Tuesday to place a property transfer tax on the March 2020 ballot. If voters pass the measure, it would take effect on July 1, 2020.
Council members Dev Davis, Sergio Jimenez and Johnny Khamis cast the dissenting votes, citing concerns about overtaxing residents and the fact that the measure wouldn’t earmark funds specifically for affordable housing.
“There’s no guarantee that this money will ever be spent on homelessness and housing or that these items will continue to be the focus for this revenue over time and other councils,” Davis said from the dais.
General tax measures require a simple majority at the ballot, as opposed to a two-thirds threshold for those that designate revenue for a specific purpose.
The last time the city asked voters in 2018 to approve a tax specifically for affordable housing—by way of Measure V, which would have authorized $450 million in general obligation bonds—it missed the supermajority mark. Now, the city’s giving it another go by lowering the bar to a general tax measure.
During Tuesday’s meeting, Mayor Sam Liccardo said the transfer tax would bring in much-needed funding to realize his goal of building 10,000 below-market-rate homes by 2022. But he joined council members Pam Foley and Lan Diep in proposing exemptions for property values below $2 million, adjusted for inflation. City officials said that would make the measure exclude 98 percent of San Jose homeowners.
Though the tax revenue would go straight to the city’s general fund and could technically be allocated for any purpose, Diep said it’s his “hope and strong belief” that the council would make it an “immediate priority” to spend the money on the city’s most pressing needs. “We tried this in 2018 with Measure V—it fell short,” Diep said. “But that doesn’t mean that we should not, as a council, continue to push for sources of funding for affordable housing.”
Councilwoman Sylvia Arenas said she’s less concerned about the general-versus-specific debate and more focused on polls showing that over 60 percent of voters favor the measure as proposed. “This is what is palatable to them, which is most important,” she said. “So it doesn’t matter whether we want a specific tax or general tax. It’s really what the voters are willing to approve”
Khamis lamented how city, school districts, the county and other local agencies have already passed so many tax measures. Meanwhile, a ballot initiative going before California voters in 2020 aims to overhaul Proposition 13—the 1978 cap on property tax increases—by exempting companies from the perk.
“When will we say we have enough taxes?” Khamis asked.
If voters OK the measure next year, it would levy a 0.75 percent tax on properties valued from $2 million to $5 million, a 1 percent rate on those between $5 million and $10 million and 1.5 percent for transfers on properties over $10 million. The tax would be split evenly between buyers and sellers.
City officials say the tax would generate up to $70 million a year.
At today’s Rules and Open Government Committee, Liccardo, council members Raul Peralez, Foley and Diep will talk about creating a spending plan for the tax. In a joint memo, they suggest allocating 10 percent of the revenue for rental assistance programs for homeless college students, victims of domestic violence, seniors and families. Another 45 percent of revenue would be devoted to building affordable rental housing for extremely low-income households, defined as a family of four earning less than $43,900.
The shared memo also recommends setting aside 35 percent of the transfer tax revenue to build bel0w-market-rate housing for very low-income and low-income families. Under the same proposal, 10 percent of the revenue would be dedicated to housing programs such as rent-restricted forgivable loans for backyard cottages, down payment assistance and first-time homeownership opportunities.
When you put a tax on something, you get less of it.
If the voters ratify it, this tax on San Jose home sales means a slowdown in those sales.
Which means less liquidity in the San Jose housing market.
Which will benefit neither buyers nor sellers.
Quite likely the voters will pass it.
Two semesters of economics should be required in high school, and another two in college.
Meanwhile, look for more people to relocate to Redding, Calif., and Saint George, Utah.
The plan is to extort funds to punish productive successful people; I wonder why so many people leave California?
> City officials said that would make the measure exclude 98 percent of San Jose homeowners.
And, it would exclude ONE HUNDRED PERCENT of non-owners of home.
In other words, this is a tax on the “one percent”.
This is the difference between a “democracy” and a “constitutional republic”.
In a republic, everyone has rights to “life, liberty, and property”.
In a “democracy”, a mob of fifty-one percent can take anything from anyone.
This is a clear case of politician driven “disparate impact”. German Lutheran pastor Martin Niemoller penned a famous assessment of political targeting of this nature.
First they came for the socialists, and I did not speak out—
Because I was not a socialist.
Then they came for the trade unionists, and I did not speak out—
Because I was not a trade unionist.
Then they came for the Jews, and I did not speak out—
Because I was not a Jew.
Then they came for me—and there was no one left to speak for me.
Probably, socialists and communists are NOT selectively disadvantaged by this political targeting of two percent of homeowners. But wait. Aren’t Jews homeowners? Aren’t Jews prosperous and wealthy?
Might the two percent of homeowners who own the most expensive homes be disproportionately Jewish?
Attacking “rich people” is often coded language for attacking “rich white people”. Attacking rich white people is often coded language for attacking Jews. Exhibit A is the attack on rich white people in New York by Jesse Jackson and Al Sharpton. Jackson was likely not attacking Baptists when he denounced the exploitation of black people perpetrated by those living in “Hymie-Town”.
https://www.latimes.com/archives/la-xpm-1986-10-19-tm-5850-story.html
Taxes are the price of operating civilization. Everyone benefiting from living in a civilized society is obligated to contribute to the payment of the operating expenses.
The ninety-nine percent NOT paying the proposed property tax are getting a free ride.
Worse, the way the tax is levied is likely discriminatory on multiple dimensions, And specifically, it is very likely covertly anti-semitic.
The proposed property tax is an outrageously ugly bad idea and the people of San Jose need to rip the Halloween costume off of this goblin so everyone can see it for the smelly dirty trick that it is.
I hadn’t noticed that until you mentioned it. Yes, the transfer tax would be only on properties worth more than $2 million.
In that case, I am changing my mind and favor it, since it won’t affect me personally.
Just kidding. Actually, your point about the injustice of majorities voting to confiscate the wealth of minorities is quite correct. It corrodes the social compact and undermines the legitimacy of government.
This situation also reminds us that democracy is not the highest political value. Rather, liberty is. Unimpeded democracy can mean mob rule, and it will in time mean mob rule without robust institutions to block public passions. Alas, I don’t know of any robust institutions capable of blocking this tax. We need a state constitutional amendment to forbid exactions on small minorities.
Our elected officials are skirting state law and voters intent by going this route. They are “calling” it a general tax on its face, but in reality it is a specific tax, exactly what was shot down by voters in 2018’s failed Measure V.
We have a rogue Council and the City Attorney is complicit in this illegal scheme.
Unfortunately, voters are turning a blind eye to this lawlessness and it will take someone with deep pockets to challenge it in court. Council knows EXACTLY what they are doing is wrong, goes against voter intent, the state constitution and SIMPLY DO NOT CARE.
Voters, please take note.
I agree! This sounds very much like a specific tax and not a general tax as San Jose politicians who are trying to sell the voters.This tax proposal requires a super majority of voters to approve the tax under Prop.13 guidelines.
Does anyone really think 100% of the collected taxes will go to providing relief for homelessness? I expect a significant chunk to be siphoned off for other things, notably police and fire services since they are the local equivalent to the Pentagon which is given a blank check by Congress.
At least half will go to hiring more city employees to administer it, which will also add to unfounded pension liability.
Vote NO. Unmarked taxes are not used for taxed reasons. This is a scam tax.
Homelessness is turning into a boondoggle for the rich, just another in a long list of welfare for the rich manipulations pushed by the Metro and other Progressive outlets. LA is a few years ahead and their billion dollar buildout is coming in an at about 500,000 a unit.
https://reason.com/video/los-angeles-is-spending-over-1-billion-to-house-the-homeless-its-failing/
Some are over 700,000. Once San Jose and LA are done say 10 years from now, units will be 800,000 to one million each. We are not talking opportunity costs or magic bean counting, thats dollars blown on sweet heart deals and political paybacks.
Or you can place a employee head tax on the corporations and generate the measly $70 million you are trying to extract from the rest of us. That’s chump change to them – they can just wire it over from Ireland or the Cayman’s or whatever other tax shelter they currently have it deposited in.
> Or you can place a employee head tax on the corporations and generate the measly $70 million you are trying to extract from the rest of us.
Why not just pass a law allowing the greedy corporations to spend the measly $70 million in Ireland or the Caymans and build the homeless housing there. They would probably house a lot more homeless there than they would by building in San Jose.
Concurrently, the city council tax and spenders spent over a half million dollars on a new, clunky city website. Tax, tax, tax, spend, spend, spend; the list of fantasies never disappears.
They only people that vote for more taxes are the ones that don’t pay them. So, yeah it will pass.
The flaw is that the average home will be $2M in less than 10 years. Then the tax will effect 70% of market.
California has the highest taxes with the lowest value of any state. The people that are running the place are lazy and wasteful. Stop voting for them.
While we don’t have a state tax in WA state we do have excise taxes on the sale of a home on a graduated sliding scale. I don’t know if it leads to reduced velocity of home sales, maybe to a degree, but I think a much more important factor in lack of sale velocity in CA would be people locked into homes by low prop 13 valuations. In WA we don’t have the same situation of one’s neighbor paying a grossly different amount of tax from one’s neighbor on a virtually identical home as in CA.
I frankly think excluding the vast majority of homes from the effects of the tax is blatant pandering to get this thing passed. Everyone should have some skin in the game on this if they get to vote on it.