The ad by the SVO political action committee showed a group of Black men rioting, with the question, "Do you really want to sign on to this."
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It was seemingly meant to sway voters away from San Jose District 6 Council candidate Jake Tonkel.
He's running against incumbent Dev Davis, who has since renounced the organization's endorsement.
It's not the first time the SVO has been accused of racist attack ads.
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"We have to acknowledge that this isn't a one event thing, it's many things that have happened, maybe they were small, but they add up and add up and add up, and they hurt our community/it was morally, ethically, and politically wrong. I won't stand for it, we won't stand for it, it's BS and it stops now," said board member Kevin Surace.
The organization has hired a third-party investigator to look into the incident.
It's also going to require racial and sensitivity training for all staff and board members.
WATCH: Our America: Living while Black
Our America: Living While Black