The vast majority of small residential landlords in San Jose have failed to pay their share of the city’s business tax, officials say. Despite a six-month grace period and tens of thousands of mailed notices, less than 12 percent complied by last month’s deadline.

But landlords with one or two rental units may get a second chance.

Come Tuesday, the City Council will consider extending the grace period by waiving all penalties and interest for another six months. That would require the city’s Finance Department to foot the $85,000 tab for additional outreach costs.

San Jose voters approved a ballot initiative in 2016 that upped the city’s business tax for the first time in decades. Measure G—which passed with more than 65 percent of the vote—went into effect last July.

To help small rental businesses transition, the city gave them until Dec. 15 to come into compliance. The Finance Department mailed out 27,000 reminders to residential landlords potentially affected by the tax. But by the last count, only 3,181 responded by registering their rentals with the city.

More from the San Jose City Council agenda for January 9, 2018:

• Now that the state authorizes non-medical pot sales, the city plans to revise its cannabis ordinance to account for the newly sanctioned commercial market. Previously, the city only allowed nonprofit collectives to sell medicinal weed. Under the proposed changes, for-profit business will be subject to the same rules and same penalties for breaking them. And to reflect the state’s preferred terminology, San Jose will also swap the word “marijuana” with “cannabis,” which is considered a more neutral term.

• City Hall is trying to figure out what to do about its pension plans, which are low-performing and expensively managed. The retirement plans rely on large contributions from the city, which comes at a huge cost to taxpayers. “This becomes a critical public issue to the extent that the tail of retirement costs continues to wag the dog of the city budget,” Mayor Sam Liccardo wrote in a memo co-signed by several of his colleagues. “The poor performance of the plans’ investment over the last three years—whether compared to peer public pension plans, to policy benchmarks, or most importantly, to the board’s own actuarial assumptions for rates of return—has substantially burdened both the plans and the general fund.” Liccardo said what’s most troubling is that the plans have underperformed in the best of times. “We’re at a historic peak in the markets for equities, real estate and other assets, after a record run in recent years,” he continued. “We expect the Plans to underperform during downturns of the economic cycles, but their poor performance in these very good times raises troubling questions. For example, what costs will the City, our residents, and our employees have to bear when those downturns come, particularly if we’re unable to earn higher returns today that will be critical to buffer those anticipated shortfalls?”

• In 2017, San Jose got nearly $1.4 million in counterterrorism grants from the U.S. Department of Homeland Security. Some $720,000 went to the San Jose Police Department for chemical, biological, radiological, nuclear and explosive detection equipment and dual-band radios. The Fire Department got about $131,000 for mass spectrometer chemical detectors. Other funding was allocated for additional emergency planning staff.

• San Jose is teaming up with San Francisco and Santa Clara in a bid to bring the FIFA World Cup to the Bay Area in 2026.

• The city is poised to authorize financing for an affordable housing project called Quatzal Gardens, a six-story mixed-use complex that would bring 71 below-market-rate units to the East Side. Twenty of those units would be reserved for the chronically homeless and the rest for low-income residents.

• Plans to build a long-awaited Vietnamese American Cultural Center are moving forward.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260