In a difficult budget year, San José is making important moves to reduce barriers to housing production, but process reforms alone will not solve the affordability crisis. SV@Home applauds the City’s focus on streamlining and homelessness prevention, while urging stronger investments in affordable housing, tenant protections, anti-displacement strategies, and housing stability.
On March 17th, San Jose’s Council adopted a modified version of the Mayor’s March Budget Message, attempting to navigate the difficult choices facing the City this budget season. The City Manager forecasts a General Fund shortfall of $56 million in 2026-2027, with an additional $27 million anticipated in 2027-2028. At a time when fiscal constraints could easily push housing solutions to the margins, the Mayor’s efforts keep housing production central to the City’s agenda.
To truly meet this moment, however, San José must pair production-focused reforms with investments in housing stability, tenant protections, anti-displacement strategies, and affordable housing investment.
We are especially encouraged by the focus on reducing barriers to housing development through meaningful structural reforms. Streamlining fees, guaranteeing permit timelines, and stripping away unnecessary building codes are valuable structural changes that could significantly ease housing production.
We also appreciate the inclusion of construction tax waivers as a strategy to reduce development costs for affordable housing. This is an important acknowledgment that local fees can affect project feasibility, especially in today’s difficult financing environment. However, this waiver will benefit a limited pool of projects, and additional tools are needed to support acquisition-rehabilitation projects and new construction with project-based vouchers. Developments using project-based vouchers are already exempt from construction taxes. Acquisition-rehabilitation projects, despite being essential anti-displacement tools, often have relatively low construction valuation, so construction tax waivers produce only modest savings. The City should continue to identify additional tools to support permanent supportive housing, acquisition-rehab, and preservation, including direct local gap financing, fee deferrals, and other targeted subsidy mechanisms.
The March Budget Message maintains the commitment of 10% of Measure E funds for homelessness prevention. This remains one of the City’s most important tools to keep households stably housed and prevent homelessness before it occurs. We urge the Council not only to preserve this commitment, but to direct additional flexible revenue toward prevention.
We are concerned that no funding is identified for tenant protection Housing Element programs beyond homelessness prevention. San José’s Housing Element includes important commitments to reduce displacement and protect housing stability, but those commitments will not be meaningful without dedicated resources.
In particular, the City should identify funding for proactive code enforcement and eviction prevention strategies in Housing Element Programs including S-6, S-12, and S-28. Proactive code enforcement is especially important in older rental housing, where unsafe conditions and deferred maintenance can threaten tenants and contribute to displacement. Eviction prevention, including legal services, emergency assistance, and outreach, remains essential to keeping vulnerable households housed. San José cannot meet its housing goals by focusing only on production while underinvesting in the stability of current renters.
Finally, the March Budget Message identifies no funding to support the existing pipeline of new affordable housing developments currently advancing toward construction, nor for the preservation of existing affordable housing. Given our shortfall of existing resources, we encourage the Council to provide staff with direction and financial resources to explore the next generation of affordable housing funding.
Regulatory reform, fee waivers, and process improvements are all valuable—but they are not substitutes for actual subsidy. Affordable housing, especially homes serving extremely low-income households and people exiting homelessness, does not pencil without public investment. Likewise, preserving affordable homes and naturally occurring affordable housing requires capital to acquire, rehabilitate, and stabilize properties before they are lost to speculation or deterioration.
We appreciate the Council’s effort to advance meaningful housing reforms in a difficult budget year. But if San José is serious about being bold on housing, that boldness must include funding for affordable housing production and preservation. Structural reform alone cannot close the affordability gap, and new funding is needed for the affordable housing production and preservation we need. We call on each of San Jose’s councilmembers to commit to their strong support for future funding tools and measures at the time when they become feasible.
SV@Home stands ready to partner with the City in advancing a housing agenda that is both ambitious and equitable- one that not only makes it easier to build, but ensures that lower-income residents, tenants, and people experiencing or at risk of homelessness are not left behind.
View the City’s timeline for the remainder of the budget process, which will culminate in June.