Affordable Housing Controversy

In a blow to a city struggling to build enough affordable housing, a controversial proposal to house formerly homeless people in buildings constructed from recycled shipping containers not far from San Jose’s Willow Glen neighborhood has stalled.

Once expected to house dozens of formerly homeless people and very-low income families, the much-debated Evans Lane project — between Curtner Avenue, Highway 87 and the Almaden Expressway — has been scrapped because of funding challenges. The development had been expected to include eight buildings and a community garden, dog park, library and other amenities.

“Over the past several years, development plans for the site have started and stopped due to several factors, including visioning for the site, community engagement and financing,” housing director Jacky Morales-Ferrand wrote in a new memo to the City Council. “After numerous attempts by the nonprofit developer, Allied Housing, to secure construction financing for a proposed development of 61 apartments using modular construction, Allied Housing was unable to secure construction financing.”

According to the memo, lenders were wary of investing in a development slated to include repurposed shipping containers.

The news comes as rents and home prices in San Jose soar out of reach for many residents, and makes more challenging a commitment Mayor Sam Liccardo made a couple of years ago to add 10,000 affordable units in the next several years. It also comes as the city and county face a growing homelessness crisis. According to the latest figures, more than 6,000 San Jose residents are homeless, up from around 4,350 two years ago.

Since 2002, San Jose has poured nearly $11 million into purchasing and preparing the site for development, and the city — along with Santa Clara County and the Santa Clara County Housing Authority — had committed millions more to the project.

But now the city will have to go back to the drawing board.

“In light of Allied Housing’s inability to secure financing, which eliminated the proposed development the City Council approved in early 2019, a new approach is needed,” Morales-Ferrand wrote.

Former San Jose Councilman Pierluigi Oliverio is not surprised. In 2016, the then-District 6 representative penned a memo suggesting the city explore alternatives for the site, such as housing for battered women with children or physically disabled residents. He noted the area was “characterized by a concentration of low income housing developments” that prompted concern from neighbors and generated a high number of calls to law enforcement.

The Housing Department is now planning to hire an architect to study the “best and highest density” for the site, meaning the area could ultimately turn into a mixed-income project. And the city’s housing and planning departments are pushing for an amendment to the city’s general plan — from mixed-use neighborhood to urban residential — that would allow more density and taller buildings on the site.

“It’s unfortunate that it took this long to reach the same conclusion that I proposed back in 2016,” Oliverio said during a phone interview this week.

Any new project will need to go back to the planning and housing departments, and eventually City Council, for review. And any request for funding from the city, county or other entity would also need to get new approval.

Current Councilman Johnny Khamis said he was also opposed to the idea of spending hundreds of thousand of dollars on shipping containers for a low-density project in a city where space is limited.

“I would like to see a mixed-use development,” Khamis said, suggesting housing for former foster youth.

And since the site is so close to light rail, he added, he’d like to see a 5- to 6-story, 400-unit project, perhaps with retail on the ground floor.

“I’m glad,” Khamis said, “we’re going in a different direction.”

Posted on nationalmortgagenews.com on 7/3/19.