“We’re going to roll with the punches,” San José Mayor Matt Mahan said in an interview. “We need the interim units, and I’m grateful to the state for kicking in most of the cost, and we’re going to fill that gap.”
The city planned to put the units at the Santa Clara Valley Transportation Authority’s Cerone Yard, near Highway 237 and Zanker Road. Mahan has championed the interim housing program as a way to provide shelter for people experiencing unsheltered homelessness in the city — a population last tallied at 4,411, according to the city’s 2023 point-in-time count.
The governor’s office did not respond directly to questions of why the state was sending San José a payment instead of the 200 homes.
A spokesperson for the governor’s office said the Department of General Services reached agreements with several small home vendors, which will allow cities like San José to purchase the homes at the state-negotiated rate.
“The state has supplied the framework, leverage, and financial support for our local partners to deliver their share of small homes for people experiencing homelessness,” the spokesperson said in a statement.
San José officials said they first learned in December that the state was changing its plan. Now, the city will need to source the units for the Cerone site as it works to build a handful of other short-term housing sites approved by the city council.
“The $12.7 million from the state will not be sufficient to construct units for 200 people at Cerone,” said the memo from city staff. “While staff continues to evaluate building and design options, additional financial contributions likely ranging from $5 to $10 million from the city or other funding sources will be necessary.”
The need for new funds to build short-term housing at the Cerone site comes as the city is confronting the rising costs of providing temporary housing and shelter to people experiencing homelessness. Recent city estimates put the cost of San Jose’s Emergency Interim Housing program at $38 million in the upcoming budget year, rising to $70 million by 2028–29.
In north San José, efforts to build interim housing have hit repeated speed bumps. After an earlier proposal was squashed due to neighborhood opposition, the city council signed off on the Cerone site in November 2022.
Months of negotiations with the VTA ensued as transit employee unions voiced concerns about hosting formerly unhoused individuals at their work site.
Finally, in October, the VTA board of directors signed off on the housing plan, and on Tuesday, the San José council voted to move ahead with a lease agreement.
“The Cerone site is really important in our long-term plans to address street homelessness,” District 4 City Councilmember David Cohen said. “We need a site in north San José in order to offer places to people that are living in our part of the city to move away from creeks and neighborhoods and off of our roads and into something better.”
Cohen said it’s unclear whether the Newsom administration’s pivot away from direct delivery of the housing could lengthen the timeline to opening the Cerone site — or whether the city will save time by handling the design and construction of the site without state involvement.
“I was just slightly concerned that given that the city public works department is engineering three different [interim housing] sites all at the same time, that if the state wasn’t there to help with the engineering at the site, then there may be a slippage in timeline,” Cohen added. “But that remains to be seen.”
In Sacramento, the Newsom administration announced late last year that 175 tiny homes will be placed in an abandoned office park — the first batch of units to be delivered through the Small Homes Initiative.
