Across California, the heightened urgency associated with addressing the housing crisis has prompted a range of innovations. In Los Angeles, Flyaway Homes has become one of those innovators. They are using shipping containers – the corrugated steel metal boxes you see hauled around on semi-trucks and freight trains – to develop a model of shared-unit Permanent Supportive Housing (PSH) to reduce homelessness.
While shipping containers have been used for everything from boutique homes to commercial development, they have not factored significantly into efforts to reduce the slow pace and high cost of PSH development. Last month, LDC had an opportunity to attend an open house at Flyaway’s first shared-unit PSH development, located at 820 West Colden Avenue in Los Angeles. We got a feel for the place (it’s nice) and talked a little shop about how the model improves upon traditional PSH development.
The shipping containers, which are used for modular construction, are the most obvious innovation. This approach allows PSH units to be permitted prior to construction and assembled quickly, eliminating a portion of the soft costs associated with most new construction. For example, the Colden project took approximately 10 months to plan and develop, as compared to traditional approaches, which can take years.
The nine-unit development also uses a shared housing model, providing a home for 32 tenants (and an onsite property manager) who each have their own room and share a kitchen and bathroom with three other neighbors.
Shared housing is an important resource in the effort to reduce homelessness, but it’s rare to see a developer integrate the model into the budget and design of a newly-constructed property. Doing this has allowed the developer to finish the project at a similar price point to other PSH developments, but at a much lower cost per tenant – $109,000, including the cost of the land.
Flyaway COO Kevin Hirai explained that to make the project financially sustainable the company secured a 20-year master lease with local homeless services provider the People Concern, which guarantees supportive services for the tenants and rental income for the property for the duration of the lease. The services will be paid for by the Los Angeles Department of Health Services’ Flexible Housing Subsidy Pool program, which offers versatile rental subsidies for individuals experiencing homelessness.
Flyaway’s model relies solely on private equity to fund development, another way it differs significantly from the majority of PSH development. For the Colden Avenue project, investors contributed to the $3.6 million budget with a guaranteed return of 4.5-5 percent, paid for with the rental income generated by the property. Hirai explained that this approach to financing allowed the company to raise the initial capital very quickly and avoid some of the red tape often associated with securing government funds.
With the low cost, rapid production time, and flexibility of the project, the most exciting aspect of Flyaway’s model is its potential scalability. Flyaway anticipates that using shared modular housing to produce PSH will become an important resource within the continuum of housing solutions for a significant portion of the population experiencing homelessness. If the model proves successful, Flyaway and other similar companies could build thousands of units relatively quickly. This is one project LDC will be watching closely.
Flyaway Home’s Colden Avenue development combines several innovative approaches to housing people experiencing homelessness under one roof:
Brian Gruters, Associate, focuses on designing systems that respond to homelessness quickly and efficiently, emphasizing harm reduction and trauma‐informed care. Before joining LDC, Mr. Gruters led development of the City of San Diego’s coordinated entry system (CES) for the San Diego Regional Task Force on the Homeless. He has also worked for Breaking Ground (formerly Common Ground) and the Urban Homesteading Assistance Board in New York City, where his work centered on permanent supportive housing management. Mr. Gruters holds a master’s degree in Environmental Studies from the University of Waterloo, in Ontario, Canada, where he studied ecology and rural anti‐poverty movements. He can be reached at firstname.lastname@example.org.