Financial Analysis — Large Scale Shelter, Tiny Homes, Permanent Supportive Housing

7 min readMar 10, 2025

The crisis in our creeks and in our parks is real. And a crisis demands a swift and effective response, not a response years from now. To address the humanitarian crisis of the unsheltered in our streets, and the environmental crisis created by their living conditions, we must prioritize short term solution first. Shelter first; not the antiquated 2011 Housing First model that prolongs the misery of living on the street.

San Jose has 6,300 unhoused persons today. 5,500 of the 6,300 are persons who are unsheltered and living on our streets and creeks. Those folks need our help now, not years from now.

Is faster your concern?

If you want to know about speed and how much faster large congregate shelters are than tiny home or permanent supportive housing — here’s your data.

Is cost your concern?

If you want to know about structure cost and how much lower in cost large congregate shelters are than tiny home or permanent supportive housing — here’s your data.

This financial analysis will cover one part of expenses for shelter and housing — fixed one-time costs. Assuming we address all 5,500 unsheltered persons in San Jose, these would be the one-time upfront costs that would associated with the construction of shelter or housing. The ongoing yearly variable costs analysis, common with all shelter or housing, will be covered in part two of this series.

First Rung — Large Congregate Community Shelter

When we look at the Incremental Ladder of Housing Success, we need to consider the costs and speed to deploy each rung of shelter, interim shelter, and housing.

The first rung is the most cost effective and most rapid solution to shelter. Shelter can be provided to the 5,500 street unhoused in San Jose within 60 days for approximately $20K per bed, which includes design and site preparation.

Timeline

In Sacramento, a navigation center with two Sprung structures (6,300 sq. ft. and 4,470 sq. ft.) was set to open in late June, about 4.5 months after city council approval in February 1.

Setting up a Sprung Structure shelter typically takes 60 days from start to finish. This includes 15 days for design, 15 days for production, 4 days for site preparation, and 4 days for delivery, with the remaining time allocated for assembly and finalization 1. For smaller or non-insulated structures, the build rate can be faster, at up to 2,000 sq. ft. per day.

Cost

The cost of a sprung structure per bed is approximately $20,000, based on a $3,000,000 total cost for a 150-bed structure averaging $20-$30K per bed.

One of the next rungs, depending upon availability and the clients readiness, could be tiny homes or group homes, augmented with rehabilitation centers and mental health facilities.

Tiny Homes

Tiny Homes are on the next rung of the Incremental Ladder of Housing Success. Not everyone will go directly into a tiny home from the large congregate shelter. There are other options to consider up the Ladder after the first rung of large scale congregate community shelter such as: community housing such as Salvation Army, group homes, rehabilitation centers, or mental health facilities. Further advances on the ladder include: permanent supportive housing, section 8 housing, shared apartment rentals, independent apartment rentals, and first time buyer home purchase assistance. All options dependent on the production and development of various types of shelter and housing.

Timeline

2019–2020: The first site with 40 tiny homes opened in early 2020.
2021–2022: Four additional sites were completed, bringing the total to six sites with 500 beds by 2022.
2023–2024: Expansion projects added more units, including the Guadalupe Parkway site, which accommodates 96 people, and other upgrades 4.
2025 (planned): Cherry Avenue and Rue Ferrari expansions will add 280 beds by late 2025 1 2.

This totals approximately 784 tiny homes built or planned over six years, averaging about 130 tiny homes annually.

San Jose began its tiny homes initiative in August 2017, when the city council approved a pilot program to build three villages after state law changes allowed such construction. The first tiny home sites were completed and began welcoming residents in late 2019 and early 2020, marking the official start of the program’s implementation.

Size

San Jose currently has six operational tiny home sites, providing approximately 600 beds for unhoused residents. A seventh site, Cherry Avenue, is under construction and is expected to open in fall 2025, adding 136 more beds 4.

Cost

The cost per tiny home in San Jose varies widely depending on the design and amenities. Basic units can cost as little as $18,900, while units with attached bathrooms can cost up to $55,350. However, when factoring in infrastructure like plumbing and utilities, costs can rise significantly. For example, at the Guadalupe Parkway site, the total cost per unit reached over $175,000 5 8.

How the Bremerton Mayor Chose Sprung Structures over Tiny Homes

Permanent Supportive Housing (PSH)

PSH has been the mainstay policy for addressing homelessness since 2011 in San Jose. With the Housing First philosophy of no requirements for sobriety onsite, no requirements to attend group therapy or addiction services support this type of housing has delayed a solution to shelter. Housing First forced building housing to be a priority, while the immediate needs of the street unhoused were left to anguish for years at troublesome encampments.

Funding timeline

Securing funding for permanent supportive housing in San Jose can take anywhere from several months to several years, depending on the specific project, available funding sources, and the city’s current priorities. The process involves multiple stages, including project proposal, application for various funding sources, approval processes, and budget allocations, each of which contribute to the overall timeline.

Construction timeline

The average time to build permanent supportive housing in San Jose ranges from 2 to 3 years, including planning, approval, and construction phases. However, this is an approximation, and actual timelines can vary based on project specifics, funding availability, and unforeseen challenges.

A construction timeline combined with an upfront funding timeline means that building PSH can take 4 to 8 years, if everything goes according to plan.

Size

PSH projects in San Jose tend to range from about 30 to 70 units per development. It’s important to note that the number of beds may vary depending on the unit sizes (e.g., studio, one-bedroom, or family units) within each project.

Tamien Station: 135 affordable apartments, with 67 as permanent supportive housing.
The Charles: 99 total apartments, with 49 PSH units.
1860 Alum Rock: 60 total apartments, with 30 PSH units.
777 West San Carlos: 154 total apartments, with 51 PSH units.

Cost — average $1.2M per door

The Charles, a 99-unit affordable housing project set to be completed in summer 2025, has a total cost of approximately $118 million, which amounts to about $1.2 million per unit.
Another project at 797 South Almaden Avenue, which will create 99 units of either permanent supportive housing or rapid rehousing, is estimated to cost at least $118 million, also averaging about $1.2 million per unit.

SJ Funds - Permanent Supportive Housing

These are the fixed costs but when PSH runs into difficulties and needs additional funding they look to the city of San Jose. Such as South Second Street Studios asking for $5M for additional security. The City of San Jose provided $18.4 million in permanent financing for the initial development of Second Street Studios 2. In December 2023, the San Jose City Council approved a $13 million loan to First Community Housing, the developer of Second Street Studios, to prevent defaulting on a loan tied to the 130-unit homeless housing complex 3. The total amount given by San Jose to Second Street Studios, combining the initial financing and the recent loan, amounts to approximately $31.4 million 2 3.

RV safe parking sites

RV parking sites are a necessary part of the Incremental Ladder of Housing Success, however they address a smaller sub-section of the unhoused rather than the unsheltered. I include RVs here to discuss some of the fixed costs, which can vary greatly depending on the site location.

San Jose has a need for 2,000 RV parking spots. San Jose currently has two safe parking sites for RVs; totaling 128 RV spaces for those living in their vehicles. Meaning there are 1,872 RVs left on the street.

The first site opened in July 2023 at the Santa Teresa VTA light rail station in South San Jose, providing 42 spaces for homeless people living in their vehicles 7.
The second and larger site opened on March 4, 2025, at 1300 Berryessa Road near the San Jose Flea Market. This site can accommodate up to 86 RVs.

Cost — can vary widely

Santa Teresa was a paved parking lot; costs to set up were about $700K. While Berryessa had a huge lease payment of $1.7M — part of it needed to be paved and utilities brought in bringing the totla one time set up cost to $2.5M. The variable cost of lease payments ($1.7M) will grow each year.

Fixed set up costs

Santa Teresa site — $167K per RV

Berryessa site — $219K per RV

It is easy to see from the funds required and the timeline to completion that the city cannot possibly wait YEARS to build Tiny Homes and PSH for all of today’s 5,500 unsheltered residents (not to mention any increase in the unsheltered while we wait for complex funding and build these complex permanent housing projects).

A housing emergency requires emergency housing, which is exactly what large scale congregate community shelters will provide for our unsheltered — within months.