Modular housing under construction in San Jose
A three-story $70-million modular housing project that San Jose is constructing at Branham Lane has mold, plumbing and drainage issue inside the homes. Photo courtesy of Mauricio Velarde, South Bay Piping Industry.

A multimillion-dollar effort to put homeless people in pre-built housing — that San Jose officials championed as cheap and revolutionary — is delayed due to homes arriving unfinished.

The $70-million three-story modular housing project that San Jose Mayor Matt Mahan and his predecessor Sam Liccardo heralded at 1 Branham Lane also has mold, plumbing and drain issues, according to a labor union investigation. The original opening planned for April has been delayed, with the new target set for this summer.

“How do you justify putting the most vulnerable in our society into non-code-compliant buildings?” Mauricio Velarde, director of compliance with the South Bay Piping Industry, told San José Spotlight. “How was this inspected? These modular units were not brought in completed. It’s a whole big mess.”

Mold in the modular ceilings of the homes being constructed at 1 Branham Lane in South San Jose. Photo courtesy of Mauricio Velarde, South Bay Piping Industry.

The project is funded with $51 million from the state, $4 million from Santa Clara County, $5 million from the Sobrato Foundation and $10 million in city dollars. Once completed, the multi-story structure will be one of the first and largest of its kind in the state — and the largest homeless temporary housing site in San Jose — containing 204 rooms with private bathrooms and kitchens and the ability to support up to 612 people annually.

Shoveling dirt at a groundbreaking last April, Mahan said the prefabricated housing model is revolutionary because it can be built quicker and at a lower cost than traditional apartment construction. Part of Mahan’s plan to tackle homelessness in the city is to provide transitional housing with supportive services to help unhoused residents move into permanent housing.

“I expect our code enforcement department will ensure that all units in this new quick-build project are safe, clean and dignified, just as we’ve done at the six immensely successful quick-build communities we currently operate,” Mahan told San José Spotlight.

A spokesperson for the City Manager’s Office said officials are extremely concerned by the construction issues.

“We continue to believe that utilizing factory-built housing units is an important part of solving the housing crisis, and we want to ensure this project is suitable for residents to move into when ready,” spokesperson Demetria Machado told San José Spotlight.

Who’s to blame 

The city partnered with LifeMoves as the site developer and provider of supportive services and case management on the project. LifeMoves contracted with Devcon Construction Inc., a well-regarded general contractor, for construction. The work was subcontracted to Volumetric Building Companies (VBC) as the supplier and assembler of the modular pre-built homes.

Unfinished modular homes in San Jose at Branham Lane project site. Photo courtesy of Mauricio Velarde, South Bay Piping Industry.

Velarde and another union representing plumbers and steamfitters took photos of the project site on Feb. 29 and provided them to San José Spotlight. Velarde said the homes were supposed to have been assembled at VBC’s factory in Tracy. Instead, about 10 factory workers finished the installation on site, at what Velarde said were insufficient wages.

VBC CEO Vaughan Buckley told San José Spotlight that on-site workers are being paid prevailing wage rates in accordance with their trade skills.

LifeMoves spokesperson Sarah Fields said Devcon is helping VBC finish up by providing roofing, siding and carpentry workers. She said the vast majority of the additional work is being performed by union trade workers.

A much-publicized modular housing project in South San Jose is experiencing construction delays. Photo by Brandon Pho.

Left out in the rain?

Buckley said modules like those used in the Branham Lane project always require substantial on-site work prior to completion. He said the delays happened because of orders for a redesign, but declined to say from whom.

“The only request from the city was to place kitchens in the units,” Machado, the city manager’s office spokesperson, told San José Spotlight.

Buckley said any issues such as mold or water intrusion would have happened after the homes were delivered to the job site.

“No modules were delivered to the job site with any evidence of water intrusion. The San Jose project has been subject to heavy rains and on-site plumbing work over the past several months,” Buckley told San José Spotlight. “If water entered the buildings after delivery and caused any damage before occupancy, it will be remediated, as would be necessary on any construction site.”

Buckley did not respond when asked what date those materials arrived at the project site. The city manager’s office and LifeMoves declined to say. A worker on the project who was not named for fear of retaliation told San José Spotlight the materials arrived on Oct. 25.

Pablo Espinoza, spokesperson for the California Department of Housing and Community Development, said modules are always inspected by the department — or a third party on its behalf — as the units come off the factory line with a plastic covering for temporary weatherproofing. He said the homes fall under the purview of the developer when they arrive on site.

“It will certainly be the expectation of HCD that they do their due diligence to ensure that they’re going to be managed and handled appropriately to avoid concerns to the public’s health and safety,” Espinoza told San José Spotlight.

Devcon President Gary Filizetti acknowledged issues with the subcontractor and said what they paid for is not what they got.

“The prevailing wage and the quality of the work — we’re gonna make it right,” Filizetti told San José Spotlight. “We’re trying to support affordable housing.”

Contact Brandon Pho at [email protected] or @brandonphooo on X, formerly known as Twitter.

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