San Jose council pauses fire station, police academy, defunds Med 30

San Jose
City Council Meeting
February 10, 2026

TL;DR

• Council approved the 2025-2026 Mid-Year Budget Review, confirming a $15-20M revenue shortfall this year and a $55-65M forecast deficit next year. Fire Station 32 and the new Police Training Center openings are paused; the Med 30 EMS coordination program gets defunded.
• Voters will decide a measure on the June 2 ballot to raise the general fund portion of the hotel tax from 4% to 6%, generating about $10M annually.
• San Jose Clean Energy rates drop 18% from 2025 starting March 1, for $92M in customer savings; 62% renewable content held steady.
• Council upheld the Planning Commission's denial of late-night hours for After Bar and Grill at 1692 Story Road, 7-4.

What happened

1. Mid-Year Budget Review approved; new Fire Station 32, Police Training Center openings paused
   1. Council approved the 2025-2026 Mid-Year Budget Review and adopted the related appropriation ordinance and funding sources resolution. General fund revenues are expected to come in $15-20M below budget this year, mostly from lower property tax (down $14M) and utility tax revenues. Staff cut $16.6M in general fund expenditures to offset the shortfall. The forecast deficit for next fiscal year is $55-65M.
   2. What this means for you: Fire Station 32 and the new Police Training Center won't open this spring as planned. The city will reconsider opening them in the FY2026-27 budget. The Emergency Medical Services Field Coordination program (Med 30) gets cut now instead of running out its one-time funding through June. A $580,000 contract for disaster preparedness modeling software was paused. Staff also withheld $5.7M in salaries and benefits reserves that would have funded management raises and new health rates this year.
2. Hotel tax increase heading to voters June 2
   1. Council placed a measure on the June 2 ballot to raise the general fund portion of the Transient Occupancy Tax from 4% to 6%. The measure would generate about $10M annually and take effect October 1 if approved. The total hotel tax would move from 10% to 12%. The effective rate including the Convention Center Facilities Maintenance District goes from 16.5% to 17.1%.
   2. What this means for you: The tax is paid by hotel and motel guests, not by San Jose residents. The ballot language ties revenue to police and fire emergency response, homeless encampments, blight removal, and park maintenance. Polling showed 55% support; staff chose June over November partly to avoid voter fatigue from a crowded statewide ballot.
3. San Jose Clean Energy lowers rates 18%, holds renewable content at 62%
   1. Council lowered San Jose Clean Energy rates 18% from 2025, a $92M savings for customers compared to last year. Rates take effect March 1. SJCE will pull $108M from operating reserves to cover a 470% increase in PCIA fees that PG&E charges all community choice aggregation customers. SJCE customers will pay PG&E $132M in PCIA fees in 2026. Renewable content stays at 62% for GreenSource (the base product), 100% for TotalGreen, and 62% for SJ Cares (sold at a 10% discount).
   2. What this means for you: If you're an SJCE customer, your March-onward electric rates run about 3% below PG&E. SJCE met California's 60% renewable energy goal five years ahead of the state's 2030 target. After 2026, SJCE forecasts having $50-60M in reserves above its 100-day operating expense target.
4. Late-night hours denied for After Bar and Grill at 1692 Story Road, 7-4
   1. Council upheld the Planning Commission's denial of a Conditional Use Permit for After Bar and Grill at 1692 Story Road. The permit would have allowed the 7,442-square-foot restaurant in the Tropicana shopping center to operate until 2 a.m. Friday through Sunday. Police opposed, citing documented incidents including a weapon brandished in front of underage patrons in 2024. An undercover operation also found doors locked after midnight while alcohol was being served. Cohen, Ortiz, Doan, and Casey voted no.
   2. What this means for you: The restaurant continues to operate until midnight, the hours allowed by-right. The owner cannot reapply on a deferred basis; if he wants late-night hours in the future, the application process starts over.

What residents brought up

• Arts advocates pushed for arts and culture funding to be added back into the TOT measure. Speakers from the Bay Area Glass Institute, San Jose Museum of Art, Opera San Jose, and San Jose Arts Advocates spoke against excluding arts from the 2% increase. They told the council the local nonprofit arts sector generates nearly $300M in annual economic activity. The sector also supports 4,700 local jobs and contributes over $6M in local tax revenue. They asked the council to set a baseline for arts in the general fund portion of the TOT and dedicate new TOT revenue to the experience economy.
• Labor and housing groups supported exploring business tax modernization. Representatives from IFPTE Local 21, Working Partnerships USA, and SV@Home backed the joint memo asking staff to study modernization options. They pointed to the projected $55-65M deficit and noted San Jose's business tax is among the lowest in the region. Business groups including the Chamber of Commerce and the California Apartment Association raised concerns about gross receipts or headcount tax changes affecting competitiveness.
• The Tropicana shopping center property owner challenged the police count of incidents tied to After Bar and Grill. He told the council his second-floor office shares the 1692 Story Road address with the restaurant. He said property-management calls about issues across the broader shopping center are also logged at that address. He raised whether 428 incidents cited in the police memo were correctly attributed to the bar.

Also happened

• Council approved four housing ordinances. Downtown conversion projects get full waivers on two construction taxes for up to 500 units permitted by December 31, 2027, with 50% waivers on the next 1,000 units. The Multifamily Housing Incentive applies a 50% construction tax reduction to the first 3,600 units permitted by February 28, 2027. Inclusionary housing rules were updated to align with state practice, and the Mobilehome Rent Ordinance's one-year exception was repealed.
• Council adopted a position of support for AB 1633 (Haney), state legislation on private detention facility tax law. Staff was authorized to draft letters of support and explore a city sponsorship role.
• Council approved the 2026 Weed Abatement Commencement Report. Santa Clara County is directed to abate listed nuisance properties; two property representatives spoke requesting removal from the list.
• Council authorized the City Attorney to join Amicus Curiae briefs on federal actions affecting city funding, operations, or council policy authority.
• Council accepted Police & Fire and Federated retirement plan financial reports for fiscal years ended June 30, 2025 and June 30, 2024.
• Council repurposed $15,000 in District 7 cultural funds. The funds were originally allocated for a Tết Parade and will now support other District 7 cultural events including the Moon Festival and Black April.

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