Despite budget shortfall, San Jose spends $17 million on tiny homes for homeless amid the coronavirus outbreak

With thousands of San Jose residents on the streets with no safe place to ride out the mounting coronavirus pandemic, city leaders are fast-tracking a $17 million plan to build hundreds of tiny homes for the homeless population.

Taking advantage of newly-relaxed state environmental regulations instituted by Gov. Gavin Newsom last month, the city anticipates that the $17 million will allow the city build up to 500 modular and pre-fabricated homes on public and private property for homeless residents.

Mayor Sam Liccardo said that he expects the city could build the units — which could typically take years to build — within weeks instead.

“We can’t know for sure what’s going to happen in the weeks ahead — particularly if there is a second wave of infections — so the need for housing that would be necessary for people who are COVID positive — or exposed or the highly vulnerable who need to self-isolate or quarantine — will be critical,” Liccardo said during a city council meeting on Tuesday.

The new tiny home units will be used to house homeless residents who have tested positive for COVID-19 and other residents who may live in overcrowded homes and are unable to self-quarantine.

With some of the red tape cleared by the state, the city hopes to run into fewer issues than it did when trying to build its first two tiny home communities for homeless residents, each was delayed months due to lengthy environmental reviews and challenges with site and lease negotiations. The city opened its first community of 40 tiny homes in February on a Valley Transportation Authority site leased by the city on Mabury Road near Coyote Creek.

Liccardo estimates that the new units will each cost about $25,000, and hopes that they could remain in place for more than a decade.

“This is pretty inexpensive,” Liccardo said. “But obviously, if we can make it last 10-15 years, it’s a huge return compared to the alternative.”

The city has already identified two potential publicly-owned sites — a 1.67-acre plot at Story Road and Knox Avenue and a 2.5-acre site at Monterey and Bernal roads. The city is also working with two private property owners to negotiate potential lease agreements for one site at 2347 1st Street and another off of Hellyer Avenue in south San Jose.

The mayor’s office is working with Mike Blach of Blach Construction and Jon Ball, formerly of Hensel Phelps, on the most effective and efficient ways to get the units up and running as quickly as possible — including the possibility of refurbishing units built for past emergencies and on disassembled work sites.

The city currently has about 850 beds available for its more than 6,000 unsheltered residents. In recent weeks, city staff has worked to expand its shelter capacity by leasing out motel rooms, utilizing 104 trailers provided by the state and setting up temporary shelters at two large facilities on the city’s convention center campus in downtown San Jose — South Hall and Parkside Hall.

City leaders voted to allocate the $17 million toward the tiny homes project despite its latest projection that it anticipates a $110 million shortfall in its budget over the next two fiscal years.

Although the city has a $4.7 billion budget, only about $1.3 billion of that is in the general fund and the remaining dollars are restricted by state and federal regulations.

For the tiny homes, the city plans to use Homeless Housing, Assistance and Prevention (HHAP) funding — a $650 million one-time block grant from the state to provide local jurisdictions with funds to address the homeless crisis. San Jose had previously planned to use the funding for a homeless navigation center but that effort had been delayed due to an inability to find a site for it.

“Our need for housing our homeless neighbors, not to mention our neighbors in overcrowded housing, has never been greater,” Councilmember Dev Davis said. “I think it’s really smart of us to be redirecting our HHAP dollars toward emergency housing. There’s not going to be a better time for us to do it.”

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