Billionaire Silicon Valley developer John A. Sobrato is offering up an empty plot of land in South San Jose for 75 tiny home shelters for homeless people — and all it’s going to cost the city is $1 a year over the next half-decade.
Sobrato proposed leasing the 2-acre property, located at Via del Oro and San Ignacio Avenue near Highway 85, after learning about San Jose’s challenges in finding viable shelter sites as the city works to rapidly scale up its homeless housing stock.
In a statement, Sobrato’s son, John M. Sobrato, lauded the tiny homes as part of the family’s broader effort to combat homelessness in San Jose and throughout the Bay Area.
“My father’s offer on behalf of the Sobrato Family Foundation of a five-year no-cost lease of the property on Via del Oro for interim housing is an admirable effort to help one of San Jose’s most vulnerable populations.”
The foundation also has put $5 million toward a planned homeless housing facility now under construction at Branham Lane and Monterey Road in San Jose. Sobrato donated another $5 million to one of the Bay Area’s largest homeless shelters that opened this spring in Redwood City.
On Tuesday, the San Jose City Council unanimously agreed to lease the Via del Oro property. At the council meeting, Mayor Matt Mahan said he hopes more property owners will follow Sobrato’s example and consider leasing out vacant sites for shelters.
“It gets private property into the game, into the effort to end street homelessness,” Mahan said. “There is a lot of underutilized privately held property that up until this point has sat on the sidelines because there hasn’t been a good replicable model for getting those property owners engaged.”
The “quick-build” tiny home shelters, which are set to house around 150 people rent-free for at least a few months at a time, are expected to be completed by the middle of next year. Units will have private bathrooms, and residents will be able to move in with their partners and pets.
The San Francisco nonprofit Dignity Moves will manage the site, providing case management, mental health counseling and job training, with the ultimate goal of helping residents find permanent housing.
At the end of the five-year lease, the city aims to find a new location to move the tiny homes, a process that could cost the city another $6.5 million.
Adding the tiny homes is crucial to realizing Mahan’s ambitious goal of moving 1,000 homeless people off the street and into newly created shelter space by early next summer. An estimated 4,500 people live outdoors across the city, according to the latest count. That’s an 11% drop from 2022, largely due to the hundreds of tiny homes and other “interim” housing sites with individual rooms the city has added in recent years.
But given the Bay Area’s severe affordable housing shortage, finding permanent housing for shelter residents remains a challenge.
Last year, about half of the roughly 900 people who stayed at San Jose’s interim housing units moved into permanent homes, a much higher rate than most group shelters lacking private rooms, though results varied widely across different interim sites, according to city reports. Some locations had a maximum stay of six months, while others allowed residents to stay a year or more.
City officials estimate building the new tiny homes at Via del Oro will cost about $11.3 million, or roughly $75,000 a bed. That’s a fraction of what developers in the Bay Area spend to build permanent affordable housing, which can cost as much as $1 million a unit.
Some critics of the effort to build more interim housing, however, worry San Jose doesn’t have the money to cover ongoing costs at the sites.
One city estimate found plans to add 1,000 interim units — bringing the city’s total to around 1,500 — would cost roughly $60 million a year by 2030. Meanwhile, some housing and homeless advocates argue city funds would be better spent on permanent supportive housing, which, unlike shelters, can collect rent and housing voucher revenue to offset expenses.
But Mahan thinks the price tag is worth it, especially when considering the impact of homelessness on first responders and emergency rooms, asserting each unsheltered homeless person costs the city about $65,000 a year.