San José Arts Advocates
sjartsadvocates.org | [email protected] | @SanJoseArts
February 6, 2026
Honorable Mayor Mahan & City Council,
We write today calling on you to step up for San José’s creative sector. Often referred to as the “experience economy,” the creative sector is the primary driver of the Transient Occupancy Tax (TOT), drawing visitors to San José who support local hospitality, retail, and other commercial industries.
The creative sector also plays a key role in supporting the City Council’s current focus area of “Growing Our Economy,” as well as the Office of Economic Development and Cultural Affairs Work Plan Goal to “Activate San José as the South Bay’s Hub for Sports, Arts, and Entertainment.”
Furthermore, data shows that San José’s nonprofit arts sector alone generates nearly $300M in annual economic impact and $6M in local tax revenue, in addition to supporting more than 4,700 jobs for local residents. This level of impact is comparable to the Sharks, who recently received a $350M commitment of public resources to ensure their long-term viability in San José. While our hometown hockey team has done much to support the arts, our sector has not seen the same level of investment from the City.
In point of fact, a recent $8M settlement in a case of excessive force by SJPD is nearly double the allocation for the City’s entire cultural grants portfolio for the current fiscal year, much of which supports community-based programs that improve public safety and promote education and cultural connection.
All of this plays out as the creative sector is at a crossroads. Divestment from federal offices is causing state, county, and philanthropic resources to respond accordingly. The City of San José’s support can mean the difference between sustainability and collapse.
Sadly, the proposed ballot measure on your agenda for Feb. 10 (Item 3.4) ignores these factors and seeks to balance the city budget at the cost of the local creative sector, whose efforts generate revenue for the TOT. To be blunt, this is the wrong choice.
For more than half a decade, SJAA has been sounding the alarm about the existential crisis faced by our creative sector. Two years ago, the city paid consultants to provide you with more than a dozen options for generating incremental increases in support for the creative sector. Yet no recommendation has moved forward, including Recommendation 11, which proposes the common sense approach of creating a baseline of General Fund support from the TOT and contributing net new growth to the arts — a path that would avoid negative impacts to the current budget deficit.
Even a modest increase of $1M to the Office of Cultural Affairs Operating Grants program would mean an additional $28,500 for every grantee. That’s one month’s payroll for a staff of five full-time creative workers. It’s scholarships for 100 students to participate in an arts education program. It’s thousands of subsidized tickets for community members to attend a play, concert, or other performance. sjartsadvocates.org | [email protected] | @SanJoseArts
We implore you to consider this as you rush to place a measure on the ballot that will do nothing to support the creative sector, without which, there would be no TOT in the first place.
SJAA is ready, willing, and able to be a collaborative thought partner in the effort to make San José an even better place to live, work, and play. We look forward to working with you.
Regards,
San José Arts Advocates Core Team
• Peter Allen, Board President, Teatro Visión & Former Arts Commission Chair • Jonathan Borca, Musician & San José Arts Commissioner • Sarah Corneille, Executive Director, Bay Area Glass Institute • Carman Gaines, Deputy Director, Local Color & San José Arts Commissioner • Hugo Garcia, Local Musician, Educator & Arts Advocate • Stacey Kellogg, San José Walls & Empire Seven Studios • Karen Kienzle, San José Resident & Director, Palo Alto Arts Center • Jessica Kwong, Community Engagement Manager, SVCREATES • Mike McGee, Former Santa Clara County Poet Laureate
• Amanda Rawson, Co-Founder, Art Builds Community
• Brendan Rawson, Executive Director, San José Jazz
• Annalisa Tkacheff, Executive Director, Silicon Valley Shakespeare • Jacob Yoder-Schrock, Managing Director, Teatro Visión
(Titles do not indicate organizational support)
cc:
City Manager
City Budget Director
Director, Office of Economic Development and Cultural Affairs Director of Cultural Affairs
San José Arts Commission
STAY in San José: A Racial Equity Affordability
Framework for FY 2026-27*
The Race Equity Action Leadership (REAL) Coalition** offers the STAY in San José framework to guide the City’s FY 2026-27 budget decisions.
Why Affordability Must Be Central
San José residents have been consistent and clear: the cost of living—and housing affordability in particular—is the top challenge facing people who live here. Year after year, the City’s own resident surveys rank housing costs, rent, and overall affordability above nearly every other concern.
These pressures are not evenly distributed. Rising housing costs, childcare expenses, and basic living costs are deepening income inequality, widening class divides, and reinforcing racial and economic segregation. Black, Latino, immigrant, and low-income households are more likely to be rent-burdened, overcrowded, displaced, or pushed out of the city altogether. Affordability challenges also fall disproportionately on people with disabilities, LGBTQ+ residents, older adults, and people with chronic health or behavioral health needs, many of whom face fixed or limited incomes, discrimination in housing and employment, and higher costs to access basic services. For these communities, affordability is inseparable from dignity, safety, and stability.
Affordability policy is therefore not race-neutral. It is one of the most powerful tools the City has to advance—or undermine—racial equity. The idea of advancing racial equity through affordability policy is consistent with the City of San José’s Racial and Social Equity Ordinance and Equity Values and Standards Policy, which require the City to proactively eliminate disparities, center impacted communities, and embed equity into decision-making. Advancing the priorities below would move the City closer to fulfilling the spirit and intent of these laws.
At its core, this framework is about ensuring that San José remains a place where people can afford to live and work—and where they belong. Policies framed as “compassionate” or “results-driven” must ultimately be evaluated by their real-world impacts on housing stability, dignity, and equity—not by rhetoric alone.
These impacts should be measured and reported transparently, with a clear focus
on whether policies are reducing racial and economic disparities and improving outcomes for the communities most affected by affordability challenges.
PART I: Affordability Framework (Housing, Childcare,
Household Stability)
1. Resolve the Homelessness Crisis by Prioritizing Deeply Affordable Permanent Housing
Shift City policy toward permanent solutions for residents with the greatest need by:
● Prioritizing housing affordable to Extremely Low-Income and Very Low-Income households
● Treating interim shelter and encampment responses as short-term bridges—not substitutes for permanent housing
Affordability impact: Without deeply affordable permanent housing, residents cycle through costly emergency systems while remaining unhoused. Permanent housing stabilizes households and reduces long-term public expenditures.
Strategies that prioritize temporary shelter or enforcement over permanent housing increase long-term costs and instability when the permanent housing supply does not keep pace with need.
2. Prevent Displacement Through Housing Stabilization
Invest in upstream strategies that keep people housed and prevent entry into crisis systems by:
● Fully funding homelessness prevention and housing stabilization services ● Prioritizing flexible assistance and stabilization supports that help households remain safely housed
Affordability impact: Preventing homelessness and displacement is far less costly than responding after crises and preserves housing stability for households most at risk of displacement.
3. Stabilize Tenants by Protecting and Enforcing Their Legal Rights STAY in San José: A Racial Equity Affordability Framework for FY 2026-27, Page 2 Ensure renters can meaningfully exercise their legal rights and remain safely housed by:
● Fully funding universal eviction defense and tenant education. An important next step would be to bring the right to counsel back and consider piloting an eviction defense approach.
● Expanding legal assistance for habitability enforcement, including unsafe or poorly maintained properties
● Acknowledging that legal rights are meaningless without access to attorneys
Affordability impact: Unsafe housing, deferred maintenance, and illegal landlord practices impose hidden costs on low-income tenants and accelerate displacement. Enforcing tenant protections stabilizes households, preserves affordable housing, and reduces reliance on emergency systems.
4. Keep Rents Affordable by Strengthening Rent Stabilization and Preserving Existing Housing
Reduce excessive rent increases while maintaining housing quality by:
● Maintaining the City’s prohibition on utility cost pass-throughs for unmetered rental units, and ensuring that tenants are not charged for utilities through allocation formulas that obscure actual usage and increase housing cost burdens
● Lowering the annual allowable rent increase under the City’s rent stabilization ordinance, which currently permits increases of up to 5% regardless of the local Consumer Price Index (CPI), which tracks inflation ● Relying on the capital fair return process—not blanket rent hikes—to address legitimate capital improvement needs
● Exploring preservation incentives that reward owners who keep rents affordable
Affordability impact: Keeping rents aligned with actual cost growth prevents displacement and preserves naturally occurring affordable housing at a fraction of the cost of new construction. Affordability strategies that rely solely on deregulation or market acceleration—without tenant protections—risk increasing displacement rather than reducing housing cost burdens.
STAY in San José: A Racial Equity Affordability Framework for FY 2026-27, Page 3
5. Reduce Family Cost Burdens by Prioritizing Affordable Childcare Expand and stabilize childcare by:
● Increasing affordable childcare slots
● Stabilizing nonprofit childcare providers serving low-income families Affordability impact: Childcare is one of the largest household expenses, as acknowledged in the City’s Child and Family Master Plan. Without affordable options, families—especially women of color and immigrant parents—are pushed out of the workforce or into economic crisis. Addressing childcare affordability is not solely a county or state responsibility; the City of San José has an obligation to work with the county to step in with meaningful investments, policy leadership, and coordination to ensure families can afford to live and work here.
6. Protect Household Stability by Responding to Harmful Federal Actions Mitigate local impacts of federal policies that threaten affordability, safety, and civil rights by:
● Planning for millions of dollars in lost or threatened federal funding ● Coordinating with Santa Clara County to close gaps in protections for those targeted by the federal administration, including immigrant families, LGBTQ+ residents, people seeking reproductive health care, climate advocates, and organizations advancing racial justice
● Defending nonprofits and community members targeted for their advocacy or service.
● Evaluating how City data systems and surveillance or enforcement technologies—including speed cameras—are used, accessed, or shared, and developing safeguards to ensure they are not repurposed for immigration enforcement
Affordability impact: When households experience fear of detention, family separation, or surveillance, people avoid work, school, healthcare, and public spaces—thereby directly reducing household income and quality of life and increasing housing instability. These disruptions compound affordability challenges and increase reliance on emergency systems. Protecting immigrant families is also a fiscally responsible strategy: immigrants contribute billions of dollars annually in local, state, and federal taxes, and policies that destabilize STAY in San José: A Racial Equity Affordability Framework for FY 2026-27, Page 4 immigrant households reduce economic participation while shifting costs to local governments.
City leadership must take a sustained and courageous public stand in defense of immigrant communities and other targeted groups, clearly condemning federal actions that undermine safety, dignity, and economic stability.
7. Center Affordability and Equity When Evaluating Potential Cuts to Community Services
In the context of a projected budget shortfall, the City must carefully evaluate any proposed reductions to community and nonprofit-delivered services through an affordability and racial equity lens. Services that prevent displacement, support older adults, provide nutrition, offer eviction advice and defense, reduce isolation, and stabilize household income are core components of the City’s affordability and stability infrastructure and should be prioritized accordingly.
Affordability impact: Cuts to the safety net would directly deepen the City’s affordability crisis and disproportionately harm communities already experiencing the greatest economic strain. When these services are reduced or eliminated, costs do not disappear; they are shifted onto families and communities least able to absorb them and often reappear later in more expensive emergency systems.
The City should prioritize maintaining services that stabilize households and prevent harm over reductions to discretionary or deferrable expenditures that do not directly affect residents’ ability to remain housed, healthy, and economically secure.
PART II: Budget-Conscious Strategies That Advance Racial Equity
1. Stabilize Communities and Improve Safety by Expanding Community-Based Alternatives to Policing and Incarceration
Invest in responses that prevent harm, stabilize households, and reduce reliance on emergency and carceral systems by:
STAY in San José: A Racial Equity Affordability Framework for FY 2026-27, Page 5 ● Expanding and sustaining the popular and effective TRUST program citywide and exploring how the City’s crisis call response can best direct calls to community-based care responses
● Establishing a Community-Based Violence Prevention and Intervention Office grounded in public health, trauma-informed care, and neighborhood-led strategies, beginning with an evaluation of successful models
● Implementing community-designed, non-punitive outreach models—co-designed with people who have lived experience of homelessness and behavioral health crises—to build trust, encourage voluntary engagement, and connect people to housing and care, including approaches similar to the HEART model proposed by REAL in the last budget cycle
● Investing in planning phases for community-designed approaches to interpersonal violence (IPV), designed by the neighborhoods or community groups that will benefit from them. These could include restorative justice, peer mentoring, and circulo practices, for example.
Fiscal efficiency and equity impact: Police, jail, emergency room, and inpatient responses are among the most expensive and least effective ways to address mental health crises and substance use. Community-based responses reduce public costs while preventing job loss, fines, incarceration, and housing instability.
Opioid settlement funds are a critical source for this work and should not be used for policing under any circumstances.
PART III: Revenue
1. Secure Long-Term Affordability Through Community-Aligned Revenue Strategies
Enable proactive, transparent exploration of revenue options that reflect community priorities by:
● Allowing City staff to explore combinations of public investments—such as infrastructure, housing, open space, childcare, and resident health and human services—that residents value
● Re-examining Measure E formulations, including potential adjustments at the highest tiers of the property transfer tax
STAY in San José: A Racial Equity Affordability Framework for FY 2026-27, Page 6 ● Authorizing polling and analysis of additional revenue concepts without repeated Council approvals, while maintaining transparency and accountability
Fiscal sustainability and equity impact: Sustainable revenue strategies must be grounded in an honest assessment of the extreme income and wealth disparities that characterize Silicon Valley. In a region where a small number of households hold extraordinary levels of wealth alongside widespread housing and cost burdens, revenue approaches should be evaluated for their ability to raise resources in a progressive manner that does not exacerbate affordability pressures for low- and moderate-income residents.
Centering progressivity in revenue exploration—including options tied to high-value transactions, concentrations of wealth, or corporate activity, while remaining mindful of legal constraints—allows the City to fund critical affordability and stability investments.
Long-term fiscal stability cannot be achieved through austerity or by balancing the budget primarily through cuts to community services; avoid ng difficult fiscal conversations only deepens inequality and increases future costs borne by residents and local governments alike.
Bottom Line
In a deficit year, budget choices are equity choices. These priorities advance affordability as a racial justice strategy—grounded in evidence, lived experience, and the City’s own equity laws.
San José can be more affordable—and must also be more humane, more equitable, and more courageous in confronting the intertwined crises of housing, health, community safety, and democracy. Meeting these expectations will require bold choices, sustained public investment, and a willingness to be judged not only by economic indicators, but by whether the people most at risk of displacement and harm are healthier, safer, and able to stay in the communities they call home.
San José must prioritize stability over symbolic or headline-driven actions, permanent solutions over temporary fixes, and dignity over coercion. The REAL Coalition calls on City leadership to advance policies that allow residents to stay in San José—not just survive here, but belong here.
STAY in San José: A Racial Equity Affordability Framework for FY 2026-27, Page 7
___________________________________
* We call this framework STAY in San José to reflect the core outcomes it advances: household stability, tenant protections, affordability, and a city where people can remain in the communities they call home. STAY is an acronym for Stability, Tenants’ rights, Affordability, and You belong here!
**The Race Equity Action Leadership (REAL) Coalition is a cross-sector alliance of more than 50 nonprofit organizations, along with many additional nonprofit partners, community advocates, and individuals with lived experience. REAL is committed to dismantling white supremacy culture and systemic racism, using our positional power to advance movement goals, and facilitating the voice of community in government decision-making. We are also committed to learning, advocacy, and organizing while building power in authentic community solidarity.
STAY in San José: A Racial Equity Affordability Framework for FY 2026-27, Page 8
January 10, 2026
Dear Mayor and Members of the City Council,
On behalf of the South Bay Labor Council and our affiliated unions, representing tens of thousands of working people across San José, we write to express our support for directing City staff to explore and report back on non-regressive revenue options that can sustainably fund critical city functions and maintain core services.
We appreciate the staff memo on a potential Transient Occupancy Tax (TOT) ballot measure and recognize it as a constructive step toward addressing near-term General Fund pressures.
Visitor-based revenue can play a helpful role in supporting city services. However, a modest increase in the TOT alone is not a panacea and will not resolve the City’s long-term, structural revenue challenges. Strengthening the General Fund while maintaining dependable resources for the arts, hotels, and tourism will help ensure continued economic activity and long-term returns for the City.
San José continues to face growing budget gaps driven by rising service demands and slower revenue growth. Maintaining essential services including public safety, homelessness response, infrastructure, parks, libraries, and neighborhood services, will require a broader and more sustainable revenue strategy that does not disproportionately impact low and middle- income residents or small businesses.
We therefore urge the Council to direct staff to return with a comprehensive analysis of non- regressive revenue options, consistent with and in support of the memo put forward by Councilmembers Campos, Cohen, Ortiz, and Candelas. This analysis should include, but not be limited to:
● A comparison of San José’s revenue structure with large Bay Area and California cities.
● Evaluation of modern business tax models, including gross receipts approaches, and how they align with today’s economy and remote or hybrid work trends. ● Consideration of safeguards, exemptions, or tiered structures to protect small businesses and avoid regressive impacts.
● Identification of revenue options that provide stable, long-term funding to maintain core city services.
Finally, we hope that you will bring stakeholders together to work collaboratively across sectors, recognizing the power of shared leadership and coalition-based problem-solving to develop solutions that serve the entire community. Taking this broader approach will give Council and the public the information needed to strengthen the City’s fiscal health while protecting core services, working families, and the local economy.
Thank you for your leadership and consideration. We look forward to continued collaboration to ensure San José has the resources necessary to serve its residents now and into the future.
Sincerely,
Jean Cohen
Executive Officer
South Bay Labor Council
Maria Noel Fernandez
Executive Director
Working Partners USA
Will Smith
Representative
IBEW Local 332
John Tucker
Representative
AFSCME 57
Jerry May
President
San Jose Fire Fighters, IAFF Local 230
Krista de la Torre
Representative
IFPTE Local 21
Enrique Fernandez
Business Manager
Unite Here! Local 19
Jon Curcio
Business Manager
IATSE Local 143
| sjchamber .com | |
February 9, 2026
City of San Jose City Council
200 E. Santa Clara St.
San José, CA 95113
RE: Item 3.4 Potential Ballot Measure Increasing Transient Occupancy Tax and Business License Tax Modernization
Dear Mayor Mahan and Honorable Councilmembers,
On behalf of the San Jose Chamber of Commerce, a 140 -year-old business organization representing employers across San Jose, we recognize that the City’s budget deficit is real and that closing this gap will require thoughtful, durable solutions. Economic development—and specifically investment in tourism, conventions, arts, and the experience economy—must be part of that solution.
We appreciate the City’s effort to address fiscal pressures and agree that visitor -based revenue tools can play a role when structured carefully and transparently.
With that context, we respectfully request the following three considerations regarding the proposed increase to the Transient Occupancy Tax (TOT):
1. Postpone the item to allow for deeper analysis and stakeholder input We ask that the City consider placing this measure on the November ballot and direct staff to provide a more thorough analysis of how additional TOT revenues could be strategically invested in tourism, convention activity, the experience economy, and San Jose’s arts and cultural ecosystem. Increasing the tax without this clarity—and without meaningful industry input—risks placing San Jose’s hotels and visitor-serving businesses at a competitive disadvantage relative to peer cities.
Importantly, two years ago the City undertook a comprehensive process—including a City Council study session on February 4, 2024—to examine funding strategies for arts, destination marketing, and destination events. That process explicitly identified the increase or reallocation of TOT revenues as one of several potential tools, alongside other revenue mechanisms. It is not clear whether or how the conclusions from that work, stakeholder input, or identified trade-offs were incorporated into the current proposal. Clarifying this connection would help ensure continuity, transparency, and alignment with prior Council direction .
This analysis should also clarify how the proposed structure differs from the current TOT framework and how San Jose’s effective visitor tax rates compare to other cities once additional
| sjchamber .com | |
revenue mechanisms are considered, including Tourism Business Improvement Districts (TBIDs) and similar assessments.
2. Revise the ballot statement to include economic development levers A simple majority vote would direct new revenues primarily into the General Fund, with an understandable goal of closing the City’s continued structural budget deficit.
Notably, existing polling did not assess voter willingness to support a TOT increase if a defined portion of the revenues were dedicated to Chapter 4.72 purposes. While a two-thirds vote threshold may present a higher bar, this structure could have been a viable option given that the tax is borne by the hotel industry. The absence of this analysis further underscores the need for additional study before moving forward.
3. Revise ballot language to clearly emphasize reinvestment in the experience economy We strongly encourage revising the ballot language to explicitly recognize the contributing industry most impacted by the tax. Emphasizing reinvestment in tourism, conventions, arts, culture, and visitor-serving infrastructure would help ensure the measure supports long-term economic vitality rather than short-term fiscal relief alone.
This distinction matters. While a General Fund solution may provide near-term stability, sustained investment in the experience economy generates recurring revenue, supports our experience economy, small businesses and cultural organizations, and strengthens San Jose’s broader tax base over time.
Hotelier input underscores these concerns.
In a recent Chamber survey of hotel members, more than 50 percent expressed concern about the timing of this proposal, and 100 percent of respondents stated that any increase in TOT should have some reinvestment directly into tourism, conventions, and visitor-serving infrastructure. This consensus reflects a shared understanding that strategic reinvestment—not diversion—is what ultimately drives occupancy, visitor spending, and economic return for the City.
Finally, we would welcome the opportunity to provide feedback on issues affecting the business community earlier in the policy development process. Timely engagement allows for better outcomes and avoids reactive responses. I am available at any time to me et with City or Council staff and look forward to working collaboratively to close the budget gap in a way that strengthens San Jose’s economy for the long term.
4) Business Community Input on Business Tax Modernization The San José Chamber of Commerce requests active in engagement in the City’s business license tax modernization effort, as the outcome will directly affect the cost of doing business, the City’s competitiveness, and the stability of San José’s employer base. Any such study should evaluate the comprehensive, effective tax rates and fees placed on businesses —including the