After strong pushback from the downtown community, San Jose City Council Tuesday postponed a decision on a proposal for parking rate hikes and extended enforcement hours until after its summer recess in August.
Already struggling with a high cost of living, downtown workers would face an added financial burden under the proposal, opponents told the council Tuesday, warning the changes could also drive away customers.
Business owners likened the rate increases to a tax on downtown, arguing it puts the area at a disadvantage compared with shopping centers like Valley Fair and Santana Row, or neighboring cities like Sunnyvale, Campbell and Los Gatos, which offer some free or lower-cost parking.
Under the proposal, meter enforcement for 1,600 downtown spots would be extended from 6 p.m. to 9 p.m. Hourly rates would also double from $2 to $4 at meters within two blocks of city-owned lots or garages.
The proposed changes would not affect street parking in Japantown, areas outside of downtown, or on East Santa Clara Street east of Fourth Street. Parking on Sundays and holidays would also remain free.
According to city staff, the proposal would generate approximately $1.2 million in revenue, plus an estimated $70,000 in fines from drivers who overstay.
The issue, however, is that projected revenue is already factored into the recently approved 2026-2027 budget — a spending plan that required $50 million in targeted cuts to balance. City officials noted that when the council returns in August, it will face the challenge of balancing the city’s financial needs against the concerns of the downtown community.
Efforts to revitalize downtown since the COVID-19 pandemic have centered on housing development, public events and marketing proximity to the McEnery Convention Center and SAP Center. While the district has made strides with an uptick in nightlife activity, it still contends with an office vacancy rate above 31% and continues to struggle with homelessness and blight. Business leaders argue that a parking rate hike now could derail that recovery.
Many community members expressed frustration that they only learned of the proposal when the agenda was posted online, urging the council to consult residents and workers before moving forward. Critics say that higher rates are unsustainable for service-industry employees, noting that inadequate late night public transit options make driving a necessity rather than a choice.
George Lahlouh, co-owner of MO Hospitality, which operates five bars downtown, employing at least 200 people, told the council that while city garages offer the first 90 minutes of parking for free, it is not enough.
“Extending paid meter hours until 9 p.m. and raising key downtown meters to $4 an hour affects the exact hours when restaurants, bars, cafes, venues and events are working to bring guests back downtown,” Lahlouh said.
“Ninety minutes does not always cover dinner, drinks, shows or the full downtown experience,” he said. “For employees, it does not cover a normal shift by far.”
While Lahlouh said he understood the city’s financial pressures, he asked council members to clarify whether the generated revenue would be reinvested downtown and what alternatives were considered.
Downtown employee Kyle Miller said he works at two downtown businesses — currently paying about $400 a month for parking, “which is about three times the amount I pay for PG&E bill and two times the amount I pay for my phone for three months of service.”
Miller said he does not have healthcare and “I feel like I shouldn’t have to pay to work here, even though I’m fine with paying what I pay now, it would eliminate my ability to work downtown.”
Councilmember George Casey pulled the item from the consent calendar — which are items usually approved by the full council with no discussion — to open it for public comment.
Casey asked the city to use the deferral period to target community outreach, explore alternatives and research citywide options beyond downtown and explore waivers.
Without discussing it in much detail, councilmembers raised several potential alternatives during the meeting, including parking garage subsidies, downtown employee waivers and a comprehensive citywide review of parking programs.
Vice Mayor Pam Foley admitted that community outreach was lacking after hearing from dozens of speakers in chambers Tuesday, all opposed to the parking rate hikes.
“That seems a little bit backward — that we would go to them after we have approved it in the budget,” Foley said. “This particular increase, it seems to me that we should have spent a lot more time reaching out to the community, engaging their input and actually finding out their concerns about the cost that their staff will have to pay in increased parking.”
City Manager Jennifer Maguire admitted the city “fell short” in its outreach to residents and promised to improve community engagement before future budgets are published and ahead of “all future major rate increases.”
Councilmember Pamela Campos said she could relate to those who spoke up against the rate increases having worked in the food service industry.
“We are considering how our city can be looking into the issue of affordability,” Campos said. “It really deserves for us to think about how we can address this issue that is impacting people’s ability to thrive, our businesses to thrive, and our city’s ability to grow and thrive.”