After months of dispute, Caltrans and San Jose reach agreement on tiny homes

A longstanding battle between Caltrans and San Jose has had Mayor Sam Liccardo wrought up, as he continues to fight for tiny homes on the state agency’s vacant property.

Nearly a year after the City Council approved the tiny homes for homeless residents on the agency’s land, challenges with lease negotiations and legal disputes stalled the construction of the 40 tiny homes the city wants to build right next to Highway 101 off Felipe Ave.

In a memo last month, the mayor expressed frustration with Caltrans over a “logjam” with building the tiny homes, resulting from stalled negotiations.

“The implementation of this critically-needed program has been stalled over negotiations with landowners in each case, VTA and Caltrans,” wrote Liccardo in his Sept. 24 memo. “Staff must more clearly communicate to the mayor and council the nature and source of the problem so that more robust action can be taken to resolve this logjam.”

No movement had been made to start the construction of tiny homes on Caltrans’ land since the bridge housing community was approved by the City Council in Feb. 2018 and litigation seemed unavoidable. Liccardo threatened in his memo that the agency could be violating SB 519, which allows cities to lease up to 10 unused Caltrans parcels for homeless housing for $1 per month.

But as of two days ago, Liccardo confirmed the city and Caltrans have made a deal and lawyers from both sides have “backed off.”

“Negotiating has been challenging all around, in part because we are taking land that was never designated for human habitation,” Liccardo told San José Spotlight on Friday. “We’re hoping we have paved the path to go much faster on future tiny home developments and other developments that we’re going to need. Obviously it’s taken far longer than I or anyone else would have preferred, but I hope that by going slow now we’ll be going a lot faster as we’re identifying other sites.”

The Caltrans site is one of two under development in the city, alongside a tiny homes project on a VTA parcel. A third potential site was eliminated last year in March as the result of a land swap with Santa Clara County, according to housing officials.

The dispute over tiny homes on Caltrans’ land is the latest in a long saga of disputes between the city and its statewide partners. The agencies have butted heads over land leases, such as the tiny homes community, as well as responsibilities for cleaning blight and trash from the agency’s land.

Another source of frustration for Liccardo: Caltrans insisted the city set aside $15 million for liability insurance on the site. But, as the mayor pointed out, the city is self-insured and refused to create a separate fund to cover liability, as the project’s costs would soar through the roof. Still, Liccardo is hopeful the first-of-its-kind experience with the agency will provide “a template” for future developments, as the city continues to tackle its raging homelessness epidemic.

The tiny homes will act as transitional housing for San Jose residents who are homeless, possess a housing voucher or are at risk of homelessness as they land a more stable and permanent residence.

In a statement provided to this news organization, Caltrans acknowledged its commitment to working with the city on providing temporary housing for unsheltered residents, in line with State Sen. Jim Beall’s SB 519.

“Caltrans is committed to assisting unsheltered individuals here and throughout the state,” said Vince Jacala, branch chief of public affairs at Caltrans’ District 4 office. “We have provided land to cities for $1 per month, plus administrative fees, to build temporary communities for unsheltered residents. We have been working with the city of San Jose on finalizing a lease agreement to provide temporary, emergency shelter.”

“Each of these lease agreements is unique. We are currently working with the city to address issues that include final insurance liability and legal conditions to offering emergency shelter,” Jacala continued. “Caltrans is making every effort to quickly resolve the outstanding issues.”

A second bridge housing community on a transportation agency’s land is also underway, as housing officials confirmed the city is building 40 additional tiny homes on a VTA construction storage area off Mabury Road near Coyote Creek. The average construction cost for building a tiny home on the VTA parcel is estimated at $6,500 per unit, while the total cost for setting up the site is $2 million, which includes land prep, installing utility lines, plumbing, lighting, building a community kitchen and bathrooms, landscaping, fencing and a parking lot, according to Jeff Scott, a spokesman for the city housing department.

VTA acknowledged that after three months of negotiating the “first-of-its kind” agreement with the city regarding the tiny homes, the transit agency has secured a lease for the site.

Despite the frustrating process for Liccardo, he told San José Spotlight he’s eager to have residents start moving into the new homes on VTA’s land starting on Nov. 1. The city has called the agency “a great partner,” according to Scott.

“After three months of negotiating this first-of-its kind agreement, VTA and the city entered into a lease for the VTA Mabury Road lot across from the new Berryessa/North San Jose Transit Center through 2022, pursuant to the city’s request for a site to create a Bridge Housing Community,” said VTA spokesperson Brandi Childress. “The city is well underway with its construction on the Mabury site with a grand opening event being planned by the end of this year.”

Assembly Bill 2176, a law that eases restrictions for building tiny home communities authored by former Assemblywoman Nora Campos, sunsets in 2025, but the city hopes to transition people from the homes into permanent housing by then.

Contact Nadia Lopez at [email protected] or follow @n_llopez on Twitter.