Mathew Reed, Director of Policy at the housing nonprofit SV@Home, called the compromise on Tuesday a “big win for the city. Where we ended up was much closer to the comprehensive response that was intended by Measure E from the beginning and honored the commitments the council had made to how those resources were allocated, and importantly said they could do both. There was nothing that passed that will slow down the development and production of those interim sites.” The homelessness crisis that our communities are experiencing is a symptom of an overwhelming shortage of homes that people can afford. Interim shelters are an important innovation, but we will not be able to solve our homelessness crisis without continuing to build more affordable housing options to ensure folks have paths to a permanent home.
By Grace Hase | Bay Area News Group | June 14, 2023, 4:22 pm | Photo: Shae Hammond/Bay Area News Group
After months of intense debate over how to best spend tens of millions of dollars on the city’s homelessness crisis, San Jose has decided to move roughly $12.3 million away from affordable housing to support interim solutions — millions less than Mayor Matt Mahan sought.
The wrangling came to a head Tuesday evening amid heated budget discussions, with Councilmembers Dev Davis and David Cohen leading the charge to help all sides reach a compromise.
Since taking office earlier this year, Mahan has focused on creating 1,439 temporary beds by 2030 for the city’s unhoused population to live in until they find more permanent housing. Last month, the mayor unveiled a controversial plan that would take $38 million of Measure E money away from affordable housing and divert it to interim solutions like tiny homes, hotel rooms and safe parking sites.
The 2020 ballot initiative was passed by voters in 2020 and taxes real estate purchases over $2 million with the goal of creating a dedicated revenue stream in San Jose for affordable housing and homelessness. A majority of the money originally was set aside for permanent affordable housing, while the rest was allocated for homeless prevention measures, such as rental assistance and temporary shelters.
The mayor’s plan sparked tensions at city hall and among housing advocates, many of whom rebuked the plan, arguing that temporary housing, while necessary, will only serve as a stopgap and cost more in the long run.
On Tuesday evening, the council voted 10-1 to approve a compromise that would take $8 million of $12.7 million from a bucket dedicated to moderately affordable housing and move it to fund support programs and the construction and operation of interim shelters. In addition, $4.3 million of an $11 million inflation reserve coffer would be redirected to program administration.
The council also moved $15 million from general fund reserves to other immediate solutions, making the total budgetary investment in interim housing around $27 million.
Councilmember Bien Doan cast the dissenting vote.
Following the vote, Mahan said he was “disappointed it wasn’t more.”
“I think we’ll be back to this conversation next year,” he said. “But I think it’s certainly a move in the right direction.”
On Wednesday, the mayor told the Mercury News that “shifting $27 million toward interim solutions in one budget cycle shows that San Jose is committed to leading the way on immediate solutions on street homelessness.”
Mahan said the decision means they are still fully moving forward with interim housing, but will need to come back for additional funding in about a year and a half instead of in three years as he initially proposed.
In a statement, Cohen said his goal was preserve money for new affordable housing while also funding the interim housing the council already has approved.
“This compromise allows for the city to add staff needed to quickly move to open interim housing, operate the programs and help move people off the streets,” he said. “And we preserved all of the money that had been earmarked for low-income housing developments.”
The fight over how to spend San Jose’s Measure E dollars has become part of a larger debate over what is the best approach for getting people off the streets. Interim housing has been billed by its supporters as a quicker — and less expensive — solution since building new affordable housing typically takes years.
But a recent analysis by budget director Jim Shannon found that funding interim housing year after year could be costly. If San Jose completes its plans to add all 1,439 interim beds, hotel rooms and safe parking sites, it could cost the city upwards of $60 million a year by 2030 — more than double the city is expected to spend on interim housing next year.
Davis said it is critical the city “send a strong message that we are and remain committed to building new permanent affordable housing.”
“We need to send that message to affordable housing developers so they will continue to identify local sites even though Measure A funds have been depleted,” she said of the county’s $950 million affordable housing bond measure.
Mathew Reed, the director of policy at the housing nonprofit SV@Home, called the compromise on Tuesday a “big win for the city.”
“Where we ended up was much closer to the comprehensive response that was intended by Measure E from the beginning and honored the commitments the council had made to how those resources were allocated, and importantly said they could do both,” he said. “There was nothing that passed that will slow down the development and production of those interim sites.”
The council also unanimously approved San Jose’s $5.2 billion budget for the upcoming fiscal year. City officials forecasted a $35.3 million surplus in the upcoming year followed by a $18.8 million shortfall in 2024-25.
The budget, which is largely shaped by the mayor with his “back-to-the-basics” approach, focused on public safety, reducing blight and investing in new jobs and housing. Some of those priorities include adding 31 new sworn and unsworn officers — including six new community service officers — and increasing funding for the city’s vehicle abatement program.