San Jose hears two hours of pushback on data center plans (+ fixes living wage)

San Jose
City Council Meeting
April 21, 2026

TL;DR

• The council accepted a status report on its push to attract data centers and other large-load customers, with about 22 people speaking, most opposed. No project was approved.
• The council scrapped the city's living wage formula, which gave the lowest-paid contracted workers a $0 raise last year, and added a one-time catch-up.
• A $3.4 million contract launched "Pa'lante," an on-demand microtransit service for East San Jose, slated to start by year's end.
• The council authorized the city to build out Medi-Cal billing at three shelter sites, with projected reimbursements of $7 to $9 million a year once scaled.
• The fourth North San Jose transportation plan passed, including a light rail grade separation at First and Montague.

What happened

1. The council accepted a status report on its data center push after two hours of public pushback.
   1. About 22 people came down to City Hall to weigh in, most opposed, on the city's effort to attract data centers and other large-load customers to land already zoned for industry. The council didn't approve any project. It accepted a status report confirming the direction: 2,000 megawatts of new transmission capacity is coming to the South Bay between 2028 and 2034, the city wants its share, and PG&E is the partner. Vote was 11-0.
   2. What this means for you: The status report locks in the framework, not specific projects. Each data center still has to go through environmental review, water supply analysis, and public hearings. Staff said a 50 to 99 megawatt data center could generate $3 to $7 million a year for city services once running. California caps individual data centers at 99 megawatts. San Jose currently has about 20; Santa Clara has about 60 in a smaller footprint. The Microsoft data center already under construction in Alviso uses 100% recycled water. Council members pressed staff on water, ratepayer protections, and community outreach, and several flagged that the city is still early in setting policy on these projects.
2. The council scrapped the living wage formula after it produced a $0 raise last year.
   1. The city's living wage, currently $26.73 an hour, applies to workers on certain city service contracts. Last year, the old formula, which used the federal poverty rate for a family of three plus a geographic adjustment, returned a $0 increase. The council replaced it with the Bay Area CPI-U, the same method the airport uses. A separate memo from Candelas, Campos, Ortiz, and Casey added a one-time catch-up so workers don't carry that lost year forward permanently. Vote was 11-0; the new rate takes effect July 1.
   2. What this means for you: The largest city contracts, janitorial and security, already pay above the living wage rate, so they aren't affected. Smaller contracts will see about a dollar more per hour at next negotiation. The airport living wage, which covers a separate set of workers, is more than $6 an hour lower than the city rate. Several airport workers asked the council to align the two; the item before the council did not address the airport rate.
3. The council launched "Pa'lante," a $3.4 million microtransit pilot for East San Jose.
   1. The council signed a contract with Nomad Transit to design and run an on-demand transit service in parts of East San Jose that VTA scaled back. The contract is not to exceed $3,366,000 and is retroactive to March 25. Vote was 11-0. The pilot covers parts of Districts 5, 7, and 8.
   2. What this means for you: Service launch is targeted for the end of 2026. Outreach will run in Spanish and Vietnamese, both digital and physical, with a hotline. The service is meant to close the gap between traditional VTA routes and where East San Jose riders actually need to go, including jobs, schools, and medical appointments.
4. The council authorized Medi-Cal billing buildout at three shelter sites.
   1. The council accepted a $1.32 million federal grant and committed a matching $1.32 million from the city, for $2.6 million total, to set up the administrative infrastructure to bill Medi-Cal for services the city already provides at shelter sites. The three pilot sites are Cerone, Cherry, and Evans Lane. Vote was 10-0; Mayor Mahan was absent.
   2. What this means for you: Once the system is built and scaled across the shelter network, the city projects $7 to $9 million a year in reimbursements, money that can offset existing shelter costs. The pilot will take 12 to 18 months. HomeFirst runs Cerone and Cherry; PATH runs Evans Lane. Housing Director Erik Solivan told the council the pilot may also reveal the model doesn't work as expected, though he doesn't expect that outcome.
5. The council approved a 29-project transportation plan for North San Jose.
   1. The Connect North San Jose Multimodal Transportation Improvement Plan is the fourth such plan the council has adopted. It includes a light rail grade separation at First and Montague, transit priority along North First, a pedestrian and bike crossing at Charcot over Highway 880, and improvements on Zanker Road. Vote was 10-0; Mayor Mahan was absent.
   2. What this means for you: Light rail along North First currently takes about twice as long as driving from downtown. The grade separation at First and Montague targets the worst bottleneck on the line. The plan was shaped by over 700 community members through workshops, surveys, and stakeholder interviews. None of the projects are funded yet; the plan positions the city to pursue grants and coordinate with developers as North San Jose grows.

What residents brought up

• The data center item drew the longest public comment of the meeting. Speakers opposed cited water usage, with one resident noting that staff's commitment to recycled water "when available" leaves potable water on the table. Others cited rising utility rates in other states, air quality impacts from backup diesel generators, and habitat concerns. A biologist with the Santa Clara Valley Bird Alliance noted the proposed Alviso site is adjacent to one of the last remaining Western Burrowing Owl populations in the Bay Area, rebuilt through volunteer effort from about 10 owls to over 100. A high school student with Silicon Valley Youth Climate Action asked the council to ensure data centers do not raise utility bills, increase fossil fuel reliance, or pave over Bayland habitats.
• Several airport workers asked the council to align the airport living wage with the city living wage. One worker said she earns $19.75 an hour and pays $3,500 a month in rent. Another, with 22 years at the airport, said she earns $20 an hour. Representatives from Unite Here Local 19, Teamsters Local 665, Teamsters Local 350, Working Partnerships, and the South Bay Labor Council spoke in support of the methodology change and the catch-up adjustment.
• During open forum, more than a dozen speakers, including residents of the Jungle encampment and advocates from the Law Foundation of Silicon Valley and Showing Up for Racial Justice Santa Clara County, asked the council to pause the ongoing encampment sweep. They said 109 people from the Jungle signed up for housing, but some have been placed on waitlists or sent to "Tent City" rather than the Cerone shelter site. Speakers said sweep signage and case management communication has been English-only, and that residents who messaged case managers in Spanish did not get responses.

Also happened

• Adopted Ordinance 31318, establishing the Story Road Business Improvement District.
• Adopted Resolution RES2026-99, honoring the women and families of the Farmworker Movement and proclaiming March 31 as Farmworkers Day in San Jose.
• Reviewed pension and retiree healthcare actuarial valuations. The combined pension funded ratio improved to 75.1%, up 3 points from last year. Peak city contribution year is now fiscal 2028, one year earlier than previously projected.
• Accepted the report on the East Village Business Improvement District, with formal establishment to follow.
• Approved a $1.44 million package of grant agreements with VTA for transit signal priority and bicycle detection work.
• Deferred Item 2.8, on housing affordability restrictions when Project-Based Voucher contracts expire, to April 28.
• Approved two appointments to the VEBA Advisory Committee, four-year terms beginning June 1.

For any updates or corrections, please email steven@polisdesk.com