San Diego County’s long-delayed plan to put sleeping cabins on a vacant Caltrans lot in Lemon Grove is finally moving ahead, but the price tag no longer looks like a bargain. What started as a low-cost, interim shelter idea tied to a $1-a-month land lease has turned into an $11.1 million construction job with an estimated $3 million in yearly operating costs. The big jump traces back to federal rules on highway land that undercut the nearly free lease and forced county leaders to rethink how they would secure and pay for the site.
What the cabins would include
The county’s current design calls for about 60 one-room sleeping cabins at the corner of Sweetwater Road and Troy Street, each with a bed, air-conditioning, bookshelves and lighting, but no private bathrooms or kitchens, according to the project’s Notice of Exemption on CEQAnet. The filing says the property would also get communal restrooms and showers, laundry facilities and a small administration building. County materials say on-site services would include meals, case management and behavioral health access, with 24-hour security and bans on drugs and alcohol to support moves into permanent housing, per San Diego County.
Federal rules that mattered
Federal law and Federal Highway Administration policy limit how states and local agencies can sell or lease land that was bought for, or incorporated into, federally funded highway projects. Excess property is generally supposed to be sold or leased at fair market value, and the federal share of the money is expected to flow back into Title 23 transportation work. Guidance on asset recycling and property disposition also says states must get FHWA signoff for nonstandard leases, and that going below market value can create a federal credit obligation that ripples through a project’s finances. As the Federal Highway Administration notes, those limits leave very little room for deeply discounted, long-term leases on highway-related land.
Emails and the price jump
Internal emails obtained and reported this week show county staff flagged the $1-a-month lease early on as a likely problem under those federal rules, and that FHWA officials refused to back the nominal lease and instead pushed Caltrans toward a market-rate sale or rental. That stance blew up the financial model. Project documents and reporting now put construction costs around $11.1 million, with per-cabin build estimates in the roughly $12,000 to $19,000 range and an anticipated operations budget of about $3 million a year. As reported by The San Diego Union-Tribune, the county has pivoted to budgeting and negotiating a purchase and has already set aside about $2 million from its Office of Homelessness Solutions to help make that happen.
Neighbors and officials respond
The proposal has split opinion in and around Lemon Grove. Some local officials have backed the cabins as badly needed interim shelter in East County, while many nearby residents have lined up in opposition, arguing they were not adequately notified and raising concerns about public safety and property values. Mayor Alysson Snow and several county supervisors have defended the project as a step toward getting people off the street, even as critics at public meetings urge the county to focus more on permanent housing instead. Local coverage and summaries of community meetings are available from East County Magazine.
What’s next
The Board of Supervisors has authorized staff to negotiate with Caltrans on either a purchase or a lease and to keep moving through environmental review and procurement. Any final agreement will still need board approval and, if federal interests remain tied to the land, concurrence from FHWA. County outreach materials outline a phased rollout that would start with site preparation and shared facilities, followed by moving the sleeping cabins onto the lot, but the exact schedule hinges on funding and regulatory signoffs. For updated timelines, board actions and meeting dates, see project documents posted by San Diego County.
Legal implications
If Caltrans or the county pushes ahead without fully resolving FHWA’s objections, federal rules could require that the proportional federal share of the land’s value be credited back to federal highway funds or otherwise change how any proceeds are used, a potentially costly correction for a project that started as a low-budget stopgap. Guidance from the Federal Highway Administration stresses that states must document property valuations and obtain federal approval for any below-market deal to avoid payback obligations or other strings. That compliance question sits at the center of the internal emails highlighted in this week’s reporting.
