San Jose could house more homeless veterans with state funds

Santa Clara County and its cities will have a new revenue stream next month to help people at risk of becoming homeless.

Gov. Gavin Newsom in September launched Project Homekey+, which sets aside $2.2 billion to house homeless veterans and people with behavioral health or substance use issues. The money comes from Proposition 1, passed by voters in March. This initiative builds upon the state’s Homekey program launched at the beginning of the pandemic, which gives localities money to build or convert commercial properties, hotels, adult residential facilities and more into permanent or temporary housing for those experiencing homelessness.

“Project Homekey has helped San Jose give hundreds of homeless residents safe, dignified places to live by converting existing motels into transitional housing with services for our most vulnerable,” San Jose Mayor Matt Mahan told San José Spotlight. “These grants played a critical role in helping San Jose reduce unsheltered homelessness by more than 10% year-over-year, and we’re eager to continue working to leverage Homekey+ funds to build on this momentum.”

There are some distinct differences with Project Homekey+ compared with the previous iteration: half of the permanent supportive housing built will be reserved for veterans. The new program will not fund emergency interim housing — and projects that have already received Homekey funding aren’t eligible. Supportive services such as crisis counseling, medication management, life skills training and case management will be required. Applications for funding will be available next month, with the first tranche coming in May until the money is exhausted. All construction must be completed within a year of receiving funds.

As San Jose looks to apply for funding, some of its existing Homekey projects have experienced delays. The city received about $121 million through Homekey for five projects, according to numbers provided by the Housing Department. While two are up and running, two others are still under construction. Another is set to start welcoming residents over the next few weeks. The operational sites housing homeless residents, Arena Hotel and the former SureStay motel, have dealt with poor management and living conditions even as the city got dozens of people off the streets.

Here’s a look at where the city spent its Homekey money and the status of projects.

Former SureStay motel

The downtown San Jose motel operated by HomeFirst is one of the city’s first repurposed hotel projects purchased with nearly $12 million of Homekey dollars. The city bought it at the peak of the pandemic to house older homeless adults and disabled individuals.

Residents have complained of mistreatment by workers and ongoing dangerous living conditions like mold and roaches. They say no help has been offered to transition them into permanent supportive housing despite some living there for years.

The building was supposed to change ownership from San Jose to the Santa Clara County Housing Authority last year, but delays have held up the process.

The housing authority has been in operational control of the motel since fall 2023, contracting with supportive services nonprofit HomeFirst, which took over providing food, case management and application assistance from LifeMoves last October.

Arena Hotel

The renovated Arena Hotel on The Alameda reopened last year to house homeless people. It was full on opening day, and does not require residents to be sober to live there.

The 90-room hotel was a $46-million project funded through Measure E, a real estate transfer tax passed by voters in 2020, and $24 million from Project Homekey. The long-term plan calls for knocking down the building to construct up to 200 permanent affordable apartments.

The city tapped HomeFirst to provide supportive services and supervise residents. People living there have complained of issues such as a broken elevator, food poisoning and short staffing.

Sunrise Pavilion

The former 61-room Pavilion Inn at 4280 N. 4th St. was converted into 43 studio and one-bedroom affordable apartments that will house youth emerging from foster care. Construction was recently completed. It was originally expected to finish last summer. The leasing process is underway and residents will begin moving in this month.

Project Homekey funded a majority of the project at $14.3 million, followed by $10.8 million from the county housing authority. Santa Clara County provided $4.2 million through No Place Like Home, legislation enacted in 2016, and Measure A, an affordable housing bond passed by voters that same year. San Jose provided $2.3 million from its Homeless Housing, Assistance and Prevention Program and $500,000 from Measure E.

The county housing authority owns the development and leased the property to developer Jamboree Housing Corporation to manage construction and day-to-day operations. Santa Clara County and the Bill Wilson Center will provide supportive services, including peer mentorship, employment training, mental health counseling and food.

Branham Lane tiny home village

The emergency temporary housing site in the southern part of the city was originally set to open in April. But a labor union investigation found issues such as mold and plumbing problems with the pre-built structure. A new target has been set for the end of the year. Once complete, the three-story building will contain 204 rooms with private bathrooms.

Planning for the site at 1 Branham Lane began in 2021. It carries a price tag of about $70 million for construction and operations —with $51 million coming from Homekey, $4 million from Santa Clara County, $5 million from the Sobrato Foundation and $10 million in city dollars.

Pacific Motor Inn

Downtown San Jose’s Pacific Motor Inn began construction earlier this year to convert it from a hotel that sheltered homeless people during the pandemic into a massive mixed-income apartment complex.

Located at 455 S. Second St., it was recently acquired by PMI Partners LLC, a joint venture between PATH Ventures and Westbank. In 2021, San Jose requested dollars from Homekey and secured $19 million. The city is also pouring in $25 million of its own funds to support the project.

Over the next five years, the site will be redeveloped to include 140 affordable apartments, 72 of which would be permanent supportive housing, owned and operated by PATH Ventures. A high-rise building on the same lot will have 360 market-rate apartments, owned and operated by Westbank. Westbank will also develop the lot next to the Pacific Motor Inn to house approximately 500 market-rate apartments, for a total of 1,000 mixed-income homes between the two lots.

“When the state invests additional resources, we evaluate new opportunities to bring more housing to Silicon Valley, the highest cost area of our state,” Tyler Renner, spokesperson for PATH, told San José Spotlight. “We’ll continue to work to provide as much housing and services as we can and are eager to see if this funding can be used to do so.”

Contact Joyce at [email protected] or follow @joyce_speaks on X, formerly known as Twitter.