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San Jose will have to cough up an extra $5 to $10 million to build the units at VTA’s Cerone Yard
In March 2023, Gov. Gavin Newsom promised to deliver 200 prefabricated tiny homes to San Jose to provide interim housing for the homeless — ready for occupancy, and at no extra cost to city taxpayers.
The announcement, it turns out, was too good to be true.
Now, the administration is pulling back on its promise — rather than delivering the homes themselves, the state will send the city a check for $12.7 million to build them instead.
San Jose officials say the funds aren’t enough to cover the cost of the full project, and that they’ll have to scrape together another $5 million to $10 million to lease the land the homes will sit on — a six-acre empty parcel next to the Santa Clara Valley Transportation Authority’s Cerone work yard in North San Jose — as well as fund the project’s future operating and maintenance costs.
“We’re pushing full steam ahead with Cerone and the hundreds of other safe, dignified units we have in the pipeline — we have approval from VTA and support from the Council and residents,” San Jose Mayor Matt Mahan said in a statement. “We are grateful for the governor’s financial support and continued partnership in helping alleviate the crisis on our streets.”
Despite initially offering up state resources, such as use of the California National Guard to help prepare the housing site for the homes, the governor’s office said it decided to put the money in the city’s hands to allow them flexibility to work through the entitlement process.
“It was going to cost $12.7 million either way — the question is whether we signed the paper or they signed the paper,” said a representative from Newsom’s administration. “From our perspective, we are giving folks millions of dollars in capital spending to give them the capacity to deliver housing and services to the folks who need it most.”
Mahan, who is up for reelection in March, has set ambitious goals for reducing the city’s unsheltered population, which is currently estimated at 4,411, an 11% decline from the year before.
Beyond the Cerone site, three other interim housing sites are under construction in the city — adding 1,439 beds that will provide temporary stays for people for a few months as they transition from the streets to permanent housing.
Those staying in the units don’t pay rent and benefit from on-site social services. The city currently spends about $26,000 per interim housing unit each year — a total of $26.7 million for its existing network of 1,028 interim housing units. Once the additional units go in, the ongoing expense of the program could cost the city upward of $60 million by 2030.
The 200 tiny homes in San Jose were part of Newsom’s $30 million plan to build 1,200 tiny homes in four communities around the state — with 500 in Los Angeles, 350 in Sacramento, and 150 in San Diego County.
At the end of October, the California Department of General Services had selected six companies to build the units, CalMatters reported. Going forward, the four cities within the state program — as well as any other cities looking to fund tiny homes — will be able to go through these companies without having to go through a lengthy competitive bidding process.
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