The surprising news that a homeless housing project near Willow Glen that would have turned recycled shipping containers into houses has come to a screeching halt has some officials saying “I told you so.”
“At $600,000 per unit, I knew this project couldn’t pencil out,” said Councilmember Johnny Khamis in an interview Tuesday. “After all, these are recycled metal containers.”
The Evans Lane project, which was planned for a vacant swath of land between Curtner Avenue, Highway 87 and Almaden Expressway, has been a point of contention for years as public officials argued over how to best use the land. But now, the nearly 6-acre city-owned site, which was supposed to be home to 61 prefabricated units, has hit a roadblock as the nonprofit developer – Allied Housing – has been unable to secure construction financing.
“Construction lenders expressed they would not invest in the development because of the risk related to financing modular construction, including repurposed shipping containers,” Department of Housing Director Jacky Morales-Ferrand wrote in a newly released memo.
Louis Chicoine, executive director of Abode Services, which works with Allied Housing to build affordable homes, told San José Spotlight that the organization couldn’t secure funding for the project beyond public dollars from San Jose, Santa Clara County and the Santa Clara County Housing Authority.
Since 2002, San Jose has invested nearly $11 million in purchasing the land and other predevelopment costs. Santa Clara County also had plans to invest $12 million in the property, but, any reconstructed plans will have to go back to county leaders for funding approval.
“We faced challenges securing the guarantees necessary to proceed with an innovative construction project involving a product that had not been tested in the marketplace,” Chicoine said.
As city officials go back to the drawing board, Morales-Ferrand said the Housing Department is now looking to build high-density housing at Evans Lane.
“The site plans would explore potential densities for the site, include a mix of unit types to house a variety of income limits and continue to incorporate many design elements, such as a dog park, community garden and will work with the Library Department to include a bridge library,” Morales Ferrand wrote.
Ex-councilman and current Planning Commissioner Pierluigi Oliverio suggested that more than three years ago.
“People (said) if we (build permanent housing), it’ll take too long,” Oliverio told San José Spotlight. “If we had done what I had suggested, we would have been done by now.”
When the City Council voted in June 2016 to approve a general plan amendment to allow the Evans Lane project to move forward, Oliverio authored a memo asking city officials to explore more dense, permanent housing on the site. While people complained that permanent, high-density housing would take too long, Oliverio said now the plans are indefinitely delayed.
“Land is scarce, especially next to a light rail station so if you’re going to build something you should do it for maximum benefit,” Oliverio added.
Khamis agrees with Oliverio.
“I’ve been advocating for the same thing for a long time,” he said. “It should be a high-density mixed-use development with some homeless housing, maybe some senior citizen housing and some other uses too.”
Khamis also said he previously sounded the alarm about spending $600,000 a piece for eight recycled shipping containers. “That made me think twice about how we spend our money,” he said.
Michael Lane, deputy director of the nonprofit Silicon Valley at Home, said he’s sad to see the development stall, but acknowledged the project’s long history and lack of housing density.
“While the idea was innovative — shipping containers — it didn’t fully use the potential of the land,” he said. “61 homes on 5 acres is simply not dense enough. The fact that this project isn’t moving forward gives the city the opportunity to rethink what could be built on the city-owned land, and will hopefully result in a project that will house many more San Jose residents.”
Morales-Ferrand said the Housing Department is pushing for a General Plan amendment to bump up the allowable density from three stories to 12 stories. However, the amendments are being done with no specific site plans for the Evans Lane project and any new project would have to be re-submitted to the City Council for review.
The amendment process is estimated to take three to six months and will be reviewed by city lawmakers in Feb. 2020.
Contact Grace Hase at email@example.com or follow @grace_hase on Twitter.