San José Mayor Matt Mahan Calls For 'Urgent Action' on Homelessness in City Budget Plan

Days after winning reelection to a four-year term beginning next year, San José Mayor Matt Mahan doubled down on his push to spend more city dollars to move residents experiencing homelessness into temporary housing and shelter — potentially at the cost of funding permanent affordable housing.

The budget plan unveiled by Mahan on Wednesday is likely to breathe new life into the debate over the best approach to reducing homelessness in San José. That fight was central to budget discussions last year when the council agreed to shift some funds from building apartments to standing up interim housing facilities.

Under San José’s governance structure, the mayor has one vote on ordinances before the council but has broader powers in the budget process to shape city spending. Mahan’s budget proposal, which lays out his spending vision, will go before the council for a vote next week.

Compared to other large cities around the Bay Area, San José is in good fiscal shape. City analysts projected a small $3.4 million deficit in the budget year beginning on July 1. But Mahan and the council could face some complications: the city manager said an urgent $25 million cleanup of homeless encampments is needed to avoid fines from water regulators, and many city programs that were funded on a one-time basis last year, to the tune of $23.5 million, are not included in this year’s base budget.

Mahan sat down with KQED’s Politics & Government Correspondent Guy Marzorati to discuss his spending plan.

This interview has been edited for length and clarity. 

Guy Marzorati: It seemed like the budget was more or less balanced, and then the city manager said there has to be immediate action taken at a cost of potentially up to $25 million to reduce pollutants coming from encampments into waterways. What has to be done now, and what’s at stake for the city in this? 

Matt Mahan: Well, there’s a lot at stake, Guy. The regional board [San Francisco Bay Regional Water Quality Control Board] has told us that we are not on track to being compliant with the requirements of our stormwater permit. This is serious business. This is about whether or not we’re complying with the nation’s Clean Water Act. If we are found over time to be out of compliance, the board can actually fine us up to $60,000 per day per pollutant found in the waterway. And what they pointed to in this latest rejection of our plan was the encampments along the waterways.

Our own independent analysis shows that about 90% of the trash and biowaste going into the waterways is due to unmanaged encampments. And so essentially, the water board is going to force us to do what I think is the right thing. It will not be easy. It will not be cheap. But, I frankly welcome the accountability because we have got to do a better job of providing safe, managed alternatives to encampments for the homeless residents in our community. And this, I hope, is the push that we needed, that our county, water district and other partners needed to scale up basic, dignified shelter and require that people come indoors.

In this budget proposal, you are putting forward a potential shift within a pot of money dedicated to reducing homelessness — the Measure E transfer tax — from paying for permanent housing to interim housing and shelter. This was a huge debate in the budget process last year. From a policy perspective, but then also maybe from a tactical or political perspective, how are you approaching this differently this year?

What I’m trying to do is give the council a genuine choice. There are different ways to fund the urgent action we need on homelessness. If the council prefers to reduce service levels in other departments and cut other city programs, depending on what those are, that may be something I can support and maybe the direction that we collectively go in.

The alternative, as I pointed out last year, is to take the dollars we already have for addressing homelessness and use them in more efficient and scalable ways. And don’t get me wrong, these trade-offs aren’t easy. We need more affordable housing. We need more money for prevention. There are a lot of other things we need to put money into, but I think that we have to treat the homelessness crisis truly as a crisis and take emergency action. We have to scale up basic, dignified shelter and get people indoors.

I suppose the third option would be raising revenue, but frankly, for most forms of new revenue, you have to go to the voters, and the community already feels that they’re overtaxed and maybe not getting as much impact and the outcomes they want for the dollars that they’re already sending government.

You’re also proposing a safe sleeping site in this budget, known in some forms as a managed encampment. I wonder if that’s an implicit acknowledgment that interim housing, which you and other supporters have referred to as “quick-build,” is maybe not getting built quickly enough? 

Well, it’s a lot quicker than what we were doing. So what we’ve been spending most of our money on is brand new apartment buildings, which unfortunately take $1 million a door of public subsidy and over five years to build. So that’s about as slow as it gets. Then we pivoted to these modular units, but they still take a year easily, sometimes longer. And when you’re all in with the site development, utility hookups, parking, common space, it can easily be $100,000 a door.

And when you look at the scale of the crisis, if we’re going to truly treat this as an emergency and say, ‘We need to triage the situation, get people stabilized, give people access to services, including basic sanitation, a safe place to sleep at night,’ [then] we need solutions that are on the scale of thousands of people.

The truth is, we need more scalable forms of shelter. And we have to look at things like safe sleeping and safe parking. We cannot let the perfect be the enemy of the good.

When it comes to safe sleeping sites or sanctioned encampments, won’t you face the same challenges in finding sites that you do for interim housing?

Well, we will. I think the reality is that we don’t have a choice if we’re going to come into compliance with the Clean Water Act and retain our stormwater permit and not face what would be crippling fines and liability; we are going to have to find places for people to go as we move folks away from the waterways.

We have two choices. As a community, we can either simply say, you can’t live along the waterways and good luck, and you’ll end up in neighborhoods and parks, commercial districts, industrial districts, wherever else. Or we can take responsibility for providing basic, dignified shelter, safe places to sleep with some very basic services like sanitation and security. And hopefully, over time, we can scale the case management and behavioral health services in partnership with the county.

There’s an interesting proposal in this budget around city parks. You want to potentially go to the ballot in November and ask voters to let the city lease park land for retail or commercial establishments in order to bring in new revenue. What’s an example of what this could potentially look like in San José? 

Yes, well, I want to study it. I think it’s something for us to look at. Our parks, as I point out in the budget message, have a deferred maintenance backlog that runs into the hundreds of millions of dollars. We hear from people that they want parks to be cleaner, to have more amenities and that they feel they’ve been underinvested in.

As we just pointed out, we’re in a budget crunch this year, particularly because of what we need to do around our stormwater permit. And so, we need to look at other ways of providing amenities, activating our parks and funding their long-term maintenance. When you go to New York, you visit Bryant Park, that has long-term commercial leases and commercial uses, but it also adds to the vibrancy of the park. It’s beloved; it’s heavily utilized.

I think, particularly for downtown urban parks near large venues in our entertainment district in the downtown — having private operators run a restaurant a cafe, adding amenities and being able to charge a reasonable rate to the public to be able to operate added amenities is a way to activate the space, make our parks more interesting for folks and then fund their operations and maintenance.