Separating fact from fiction on Measure E Reallocation

Panicked nonprofits and housing advocates are spinning all sorts of nonsense in their efforts to hold onto their poorly-spent Measure E proceeds. Local Real Estate Agent Mark Burns cuts through the yak to provide a clear-eyed understanding of what Measure E was supposed to do, and how to ethically and intelligently spend those monies. An Opp Now exclusive.

Opportunity Now: Local housing nonprofits are making all sorts of wild claims suggesting that Measure E was intended to exclusively line their pockets. Take us back in time and explain what Measure E’s original intent really was.

Mark Burns: When the City originally brought out the Measure E idea, their concept was we needed to provide more affordable, moderately-priced housing for a targeted group of people: first responders, teachers, nurses, and associated workers. Needless to say, that’s not what Measure E is doing now: When you look at its allocations for moderately-priced housing, it’s tiny.

They also said that Measure E’s funding mechanism, which is a property transfer tax for homes sold for $2M or more, would only be 2% of all transactions—maybe 3%. They wildly underestimated: I have run the numbers. In the first half of 2022, it was 18%, and that only includes single family, condos, and townhouses. It would probably be even larger if you include commercial properties. This year, it looks like it’s about 11.9%, but from March–May 15th, it’s 13%. We are probably going up again. But in any case, we are a long, long way from the promised 2%.

ON: I believe the term is “bait and switch.” Here’s an idea: If they misled us regarding how much of our monies they would take, why not give some of it back?

MB: They never give it back. They will always figure out a way to justify more spending. It was evident from the last budget. Check this out: They pulled in $106m for Measure E in 2022. They spent $7.2m. Okay, some of it’s in the pipeline. But the truth of it is they’re having trouble spending the windfall and never consider refunding the people they took it from, under—as it turns out—false pretenses.

ON: Why can’t they spend it?

MB: They have created this big, incompetent, bureaucratic system that hamstrings them when it comes to housing. CEQA. Neighborhood opposition. Zoning. Regulations. It just stops them from doing anything meaningful. Perhaps more importantly: It makes it economically impossible for developers, as it takes a minimum of three years or more from acquiring the land to a finished project. No sane builder will take that risk.

ON: You mentioned that the City marketed Measure E as helping people like teachers and firefighters. What does the Measure E actually say?

MB: Because Measure E funds actually go to the General Fund, in reality they can do whatever they want with it. It doesn’t have to be housing, legally. With a 2/3 vote, they can spend it on anything they like.

ON: Okay, but if they were being ethical, what would it cover?

MB: It’s supposed to cover the building of actual housing: It says affordable “shelters/permanent housing.”

ON: The nonprofits conveniently forget that “shelter” word, which is what Mahan is proposing. So his reallocation from affordable housing to shelters sounds like it’s clearly within a fair reading of Measure E. But what about using the monies for wrap-around services? Is that covered in a fair reading of E? And isn’t that the county’s job, anyways? 

MB: Shelters are clearly covered by the language of E, even though that’s not how it was originally marketed. The services are supposed to be the county’s job—and remember, housing isn’t even in the City’s charter. There’s a lot of nodding and winking going on between the City and County, making it very hard for taxpayers to know which entity is responsible for what. It’s a very confusing environment that empowers government and disempowers the taxpayer. 

Mark Burns is a residential Real Estate Agent in Cupertino and a San Jose native.

Original for Opportunitynow.