State Aid for Tiny Homes for Homeless in San Jose Comes up $9.4M Short

Newsom lied and people are homeless.

“In March 2023, Gov. Gavin Newsom stood before a crowd in Sacramento’s Cal Expo event center and made a promise: He’d send 1,200 tiny homes to shelter homeless residents in the capital city and three other places throughout the state.

The move was part of Newsom’s push to improve the homelessness crisis by quickly moving people out of encampments and into more stable environments. But more than a year later, none of those tiny homes have welcomed a single resident. Only about 150 have even been purchased.

Irontown Modular, one of six vendors the state chose to supply the tiny homes in Sacramento, San Jose, Los Angeles and San Diego County, is “absolutely shocked” that they’ve received no orders, said Kam Valgardson, general manager of the Utah-based company.

Of course the State is facing a REAL deficit of $80 billion—maybe that is why they did not buy the homes—California is broke.

State Aid for Tiny Homes for Homeless in San Jose Comes up $9.4M Short

By Marisa Kendall, San Jose Inside,  5/28/24   https://www.sanjoseinside.com/news/state-aid-for-tiny-homes-for-homeless-in-san-jose-comes-up-9-4m-short/?utm_source=ActiveCampaign&utm_medium=email&utm_content=Tiny+Homes+Cost+Grows&utm_campaign=SJI+Newsletter+-+053024

In March 2023, Gov. Gavin Newsom stood before a crowd in Sacramento’s Cal Expo event center and made a promise: He’d send 1,200 tiny homes to shelter homeless residents in the capital city and three other places throughout the state.

The move was part of Newsom’s push to improve the homelessness crisis by quickly moving people out of encampments and into more stable environments. But more than a year later, none of those tiny homes have welcomed a single resident. Only about 150 have even been purchased.

Irontown Modular, one of six vendors the state chose to supply the tiny homes in Sacramento, San Jose, Los Angeles and San Diego County, is “absolutely shocked” that they’ve received no orders, said Kam Valgardson, general manager of the Utah-based company.

“The big problem is that the homeless people aren’t getting served,” Valgardson said. “I can complain as a business, but these homeless people are getting no support, no relief. The money’s been promised, but something’s broken in the process and nobody’s placing orders.”

There have been multiple delays and about-faces, over everything from the way the state is funding the units to the ability of local cities and counties to find places to put them. The state has suggested the delays are the fault of local governments. But tiny homes have failed to materialize even when local leaders moved quickly to approve a project site.

In some cases, it’s difficult to know exactly what’s holding up these projects. Communications involving the governor’s office are exempt from the California Public Records Act. Multiple requests by CalMatters for emails between the governor’s office and the cities and counties slated to receive the tiny homes were denied.

The state has started construction at the Sacramento tiny home site, and has made funding available to the other three cities and counties to buy their own tiny homes — delivering on its promise, Monica Hassan, deputy director of the state’s Department of General Services, said in an email to CalMatters. That bolsters the state’s “already substantial efforts to help tackle the homelessness crisis,” she said.

“Focusing solely on timelines diminishes the hard work of numerous individuals dedicated to providing much-needed housing,” she said.

Bringing tiny homes to California

The governor set up a big to-do when he made his tiny home promise in March of last year. He had sample tiny homes set up in the Cal Expo event center to use as a backdrop as he spoke. Local officials, including Sacramento Mayor Darrell Steinberg and San Jose Mayor Matt Mahan, flanked him to show their support and gratitude.

The venue also was strategically chosen — Sacramento planned to set up its allotted 350 tiny homes right there, at Cal Expo.

The plan was simple: The state would buy the tiny homes. The California National Guard would help prepare and deliver them, “free of charge and ready for occupancy.” Los Angeles was promised 500 tiny homes, Sacramento 350, San Jose 200 and San Diego County 150.

In October 2023, Newsom’s office gave its first concrete update: It revealed the six companies it contracted with to supply the tiny homes. They ranged from Pallet, a Washington-based company that specializes in sheltering unhoused people and already has multiple sites up and running in California; to AMEG, a company based outside of Sacramento that does disaster recovery and modular home building, but hasn’t built a community for homeless residents before.

But the project’s parameters changed. Instead of buying and delivering the units, the state decided to send several of the cities cash grants and let them order the tiny homes themselves. In San Jose, this left the city on the hook for more money than anticipated. The state awarded the city $13.3 million. Building the planned tiny homes for 200 people will cost $22.7 million, according to Mayor Mahan.

The mayor said San Jose told the state it would rather get tiny homes with en suite bathrooms, which are more expensive. But, Mahan said, San Jose was willing to cover the cost difference.

Instead, Newsom’s administration decided to provide cash grants in place of fully built tiny homes. It’s more efficient, Hassan said.

San José officials said they first learned in December that the state was changing its plan. San Jose plans to open its tiny home site by July 2025.

“This is a solution that even under this timeframe is significantly faster and lower cost than many alternatives,” Mahan said. “And we’re grateful for the support, and when unexpected things come up, we just roll with the punches.”

Finding space to put these tiny homes — which is the responsibility of local cities and counties — also proved challenging. Plans to place Sacramento’s tiny homes at Cal Expo, where Newsom made his splashy announcement last year, fell apart. Instead, the state intends to set up 175 tiny homes on Stockton Boulevard. The county plans to install the remaining 175 on Watt Avenue.

In March, a year after Newsom named San Diego County as one of the tiny home recipients, the County Board of Supervisors finally approved a location for the project in Spring Valley. But there’s still a lot to do. The county has to test the soil and make sure the site is safe. After that, officials plan to start getting community feedback on the planned project. The county has not yet bought the tiny homes or set an opening date.

“Like every other homelessness policy solution, local governments are fundamentally the drivers and fundamentally the implementers,” said Jason Elliott, Newsom’s deputy chief of staff. “What the state has done is provide billions of dollars in new investment, dozens and dozens of bills to cut red tape and a policy framework that pushes for faster action to resolve unsheltered encampments. But as we have seen time and time again in California, local commitment and partnership is the other side of that coin.”

San Jose, in contrast to San Diego County, approved plans to set up tiny homes at the Cerone bus yard back in October. Even so, the state didn’t send San Jose a grant agreement until March, Mahan said.

Of the four communities promised tiny homes, the state has made the most progress in Sacramento. In late January and early February, the state bought 155 units from BOSS, a tiny home company based in Montebello in Southern California. Those units, most of which are 70 square feet, have been built and are ready to ship to Stockton Avenue, said Kris Van Giesen, senior vice president of community development.

After a brief delay due to rain, a contractor hired by the state has started building out the infrastructure at the Stockton Avenue site, Hassan said. It’s slated to open this fall.

In Los Angeles, city officials still haven’t finalized locations for their tiny homes.

“The city has been working diligently to evaluate potential sites, coordinate relevant departments and prepare plans that will be submitted to the state by the end of May,” Gabby Maarse, a spokesperson for the mayor’s office, said in an email.

No one is ordering tiny homes

Another big selling point of Newsom’s plan: His administration opened up the contracts so that other cities and counties (in addition to the chosen four) could use their own money to buy tiny homes from the six approved vendors, without going through a time-consuming and bureaucratic request for proposal process.

That move was supposed to help get more tiny homes deployed quickly, and therefore, move more people out of encampments. But CalMatters spoke with all six approved vendors, and none have received any orders through that process.

Several companies said a handful of cities have reached out and expressed interest. But without cash from the state, many are finding it hard to pull the trigger.

“A lot of these cities are struggling to find the funding they need,” said Amy King, founder and CEO of Pallet.

The cheapest Pallet tiny home approved by the state contract sells for $18,900. Add an en suite bathroom, and the price jumps to $55,350. That’s still considerably cheaper than other housing options.

Other companies said the state hasn’t done as much as it could to promote the effort. There’s no website that lists the vendors covered by the state contracts, the available models and price comparisons, said Anmol Mehra, co-founder of Plugin House, an Austin-based modular home company and one of the six approved vendors.

And the state insists on approving any promotional materials the vendors put out on their own, Valgardson said. After his company, Irontown Modular, accidentally posted marketing materials online prematurely, the state made them take the materials down and get approval. It took almost two months to get the green light, Valgardson said.

The tiny home companies said they had to jump through myriad hoops to secure the state contracts. Several said they had to design new products specifically to meet the state’s strict requirements for everything from vapor-resistant light fixtures to emergency exit lighting. It took months and cost tens of thousands of dollars, Valgardson said.

David Baldwin, owner of AMEG, expected orders to start rolling in by December of last year. It’s “a little bit frustrating,” he said.

“We’re ready to go,” he said. “We have people chomping at the bit that want to go help.