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It's optional I suppose. I'm not aware of any official city documents that use it, but it has historical roots.

> California Governor Felipe de Neve established the first civilian town or pueblo in California on November 29, 1777. Founded near the southern end of San Francisco Bay, it was christened El Pueblo de San José de Guadalupe.

[1] http://web.archive.org/web/20080218051828/http://www.califor...

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The official website seems to use the accent when the city name's is written in regular running text, but not when it's in all-caps or small-caps (as in the logo): http://www.sanjoseca.gov/

That used to be an unofficial convention of the Spanish language regarding accented letters: only in minuscule text but not on majuscule (capital) text. The Royal Academy has always supported (since at least 1792) that majuscules should be accented, but it was difficult to do so since movable types and typewriters didn't allow room for them: https://upload.wikimedia.org/wikipedia/commons/8/82/Acento_e...

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