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City staff detail how San Jose’s construction-and-conveyance tax is allocated and why it leaves little discretionary funding for parks
Summary
At a council study session, staff explained the multi-step C&C tax formula: a split between a general allocation and parks, fixed costs and citywide allocations, leaving limited funds for district and equity-directed projects; staff showed a worked example and 10-year revenue variability.
City staff explained in detail at the Oct. 27 study session how San Jose’s construction and conveyance (C&C) tax is split and why the formula produces limited discretionary funds for parks.
"When C&C revenue comes into the city, it is first split," John Cicero said, explaining the formula described in municipal code. Cicero summarized the allocation: a portion (about 36%) is part of a general allocation to other services; the remaining 64% is for parks. From that parks portion the code requires fixed deductions (park yards, debt service, staffing) and citywide allocations (roughly a third of the parks share) before the remainder is split with 20% distributed equally to council districts and 80% used for equity-informed citywide priorities.
Using a $30 million example, staff showed how that top-line figure can shrink to roughly $5.4 million available for discretionary use after mandatory deductions and allocations. Cicero and the presentation materials warned that year-to-year revenue can vary widely — volumes rose around 2021–22 amid a hot housing market and then fell during inflation-driven slowdowns — and that the statutory allocation includes options (such as a 15% transfer from the general allocation to parks) that the city currently does not use.
Councilmembers asked for clarity about how changes to the formula could be proposed. Staff cautioned that changing the distribution would likely require voter approval because of language tied to existing allocations. The budget office confirmed that the general-allocation share supports a range of functions (fire, library, communications and other capital needs) and that reassigning those funds would have broader effects on the city budget.
Public commenters and councilmembers pointed to the distribution results shown by staff: some council districts have received a large share of funds because of concentrated development while other districts have collected little or none over a decade. Staff said the CNC allocation is a central reason the city has limited annual capital discretion for neighborhood-level park work.
