City Council - 2026-02-10
Meeting Intelligence Preview
Meeting Summary
San Jose City Council approved a 2% increase to the transient occupancy tax (TOT) for the June 2026 ballot, which would raise the general fund portion from 4% to 6% and generate approximately $10 million annually. The council also received a midyear budget review showing a projected $15-20 million revenue shortfall requiring $16.6 million in expenditure reductions, including pausing the opening of a new police training center and fire station 32. The council denied a conditional use permit appeal for late-night operations at After Bar and Grill at 1692 Story Road by a 7-4 vote, upholding the Planning Commission's denial due to documented compliance violations.
Key Decisions (6)
TOT Ballot Measure for June 2026
Council approved placing a 2% transient occupancy tax increase on the June 2026 ballot, raising the general fund portion from 4% to 6%. If approved by voters, this would generate approximately $10 million annually and bring San Jose's effective TOT rate to 17.1%, making rates 3% lower than PG&E including PCIA. The measure would take effect October 1, 2026.
Midyear Budget Adjustments
Council approved $16.6 million in general fund expenditure reductions to offset a projected $15-20 million revenue shortfall, primarily due to lower property tax ($14 million below budget) and utility tax revenues. Reductions include pausing opening of police training center and fire station 32, eliminating emergency medical services field coordination program, and withholding $5.7 million from salaries and benefits reserve.
Late Night Use CUP Appeal - 1692 Story Road
Council upheld the Planning Commission's denial of a conditional use permit for After Bar and Grill to operate until 2AM on Fridays through Sundays. The San Jose Police Department opposed the permit due to documented history of noncompliance including alcohol service violations, locked fire exits, and underage patrons. The establishment can continue operating until midnight as allowed by right.
2026 Weed Abatement Commencement Report
Council approved the annual weed abatement program commencement report for removal of weeds or refuse on non-compliant properties. Properties must maintain compliance for three consecutive years to be removed from the list.
San Jose Clean Energy 2026 Rates
Council approved an 18% rate reduction for San Jose Clean Energy customers compared to 2025, resulting in $92 million less in customer charges. Rates will be 3% lower than PG&E including PCIA. The utility will use $108 million from operating reserves to offset a 470% increase in PCIA fees charged by PG&E.
Support for Assembly Bill 1633
Council approved support and collaboration on Assembly Bill 1633 with no staff presentation required.
Development Activity (2)
Police Training Center
New police training facility scheduled to open in spring 2026, includes fixtures, furniture and equipment budget of $2.6 million plus $250,000 in operations
Fire Station 32
New fire station scheduled to open in spring 2026 with $700,000 operating budget
Market Signals (6)
Commercial Demand
Office vacancies remain high and commercial sector weakness is weighing down property valuations, with SARA (successor agency to redevelopment) property tax revenues at $24 million, approximately $2 million less than prior fiscal year.
Housing Demand
Residential real estate prices and sales have slightly decreased while days on market has slightly increased, indicating continued softness in the real estate sector.
Sentiment
Private development activity is up from last year but not strong by historical standards, with commercial evaluation down due to a large data center permit pulled last year not being replaced.
Infrastructure
Airport passenger levels are down approximately 11% from prior fiscal year, reflecting continued softness in business travel market.
Other
Construction and conveyance tax (transfer tax on property sales) projected to fall approximately $4 million short of $47 million budget, impacting parks, libraries, and public safety capital programs.
Other
Building and structure construction excise taxes (based on private development valuation) expected to exceed budget by approximately $2 million each in industrial and residential categories.