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Privately Funded Shipping Container Apartments Could Help Solve Homelessness
September 24, 2018

Privately Funded Shipping Container Apartment Could Help Solve Homelessness

 

With 58,000 homeless people living in Los Angeles County, city officials and local residents alike have been grappling with possible solutions.

Now, newly formed apartment developer Flyaway Homes is stepping in to offer what could become a model for permanent supportive housing for those who are homeless: Constructing apartment buildings out of shipping containers with funding from private investors.

Lawry Meister, president of Flyaway Homes and president and chief executive of South Bay-based Steaven Jones Development Company Inc., along with Kevin Hirai, chief operating officer of Flyway Homes, plan to not only build new permanent housing but advocate for the greater cause.

“Going against the grain, I think somebody needs to lead the charge, and it’s hard for especially the bigger affordable housing developers to do that, where we’re sort of an independent voice,” Hirai, who is also founder and president of Bella Vista Property Management, said. “I think it’s important that we have that autonomy and that we can look at different ways to do things.”

Flyaway Homes is partnering with West L.A.’s homeless advocacy nonprofit organization The People Concern on the projects.

Their first project is located at 820 W. Colden Ave. in South Los Angeles. Carson-based GrowthPoint Structures, Torrance-based Del Amo Construction and Santa Monica-based VTBS Architects are also involved in the project.

When it is completed, the three-story pilot project is expected to house 32 homeless residents, who will pay $550 per month in rent for shared, four-bedroom units. There is a Los Angeles County subsidy for 20 of the beds, according to Meister. A resident manager will be on site.

A second development is already being planned nearby at 837 W. 82nd St., Meister said.

The projects come amid a larger push by Los Angeles city and county officials and residents to find housing solutions for the growing homeless population. Two years ago, Los Angeles residents voted to approve Proposition HHH to provide $1.2 billion in city bonds to build 10,000 units of permanent supportive housing. Six months later, county residents approved Measure H to fund services for the homeless and provide subsidies for apartments with support services such as mental health and substance abuse treatment.

Only a fraction of the needed housing has yet to be built, and some estimates show that a supportive housing unit could cost more than $350,000. CoStar News sat down with Lawry Meister to hear what she says about a possible solution.

CoStar News: How did you decide to become involved in building permanent supportive housing for the homeless population?

Lawry Meister: » In 2016, we were all big supporters of Proposition HHH. One day, my father, Steaven Jones, came into my office, and he said, ‘Do you realize it costs $400,000 to house one person?’ So here this $1.2 billion bond measure will only house 3,000 out of, at the time, 58,000 homeless people.

We got together, and we said, we have got to figure out a solution. What can we do? We first took a look at the road blocks. Why does it cost so much? Why does it take so long? We said, let’s put together a new model. I think the very first thing we said was, we can’t depend on government financing. First of all, there isn’t enough of it, and second of all, there are too many strings that come attached with it. There’s a lot of private investment capital out there especially right now. There’s a ton, so how do we tap into that?

So what plan did you come up with? 

» We said we’ve got to figure out a way to make it a viable investment vehicle, something that people want to put their money into. So we backed into a 5 percent return, enough that would be attractive to investors if they were helping to fix a major social issue at the same time. We came up with a name for it: social impact equity.

Then, we said, what’s our revenue stream? The People Concern agreed to lease the entire project once complete, collecting rent from the individuals supplemented with a County of L.A. subsidy. That takes all the market risk and uncertainty of how do you fill the beds and manage that whole process. The People Concern said that they would take that on. They do it all the time.

How does the construction process work? 

» We asked, how do we get the construction costs down and build a model that we can easily replicate site to site? We quickly came to modular housing, and we found a firm that rebuilds modular units from repurposed shipping containers. It happens to be based in Carson. It’s fascinating. They, basically, just use the shipping container for the frame and the steel structure. The interior walls are all furled out, insulation is installed and covered with drywall, so it feels just like a regular apartment building. The thing that makes it so cool is that the State stamps and approves the plans and it becomes a product instead of a building. So we were able to get our plans for the units themselves from the State in two months. We still had to permit the site work, and Kevin was able to get that permit from the city in about three months.

Why else do you think using modular units is so advantageous?

» While we were doing our site work, they could start making our units in the factory. So if all goes well, as soon as your foundation is done, they can bring the modules to the site. This building was assembled in three days. One day per floor. It was fascinating to see. Then, it takes about two more months to finish things up, so we think that a building like this can be planned in about a month, permitted in about three months and then constructed in six months. From beginning to end, it should only take about 10 months to house 33 people. Another key component is we wanted to do it by-right, so that means we avoided any mandated public hearing or public community approval process.

Do you foresee this working in other parts of the city outside of South Los Angeles?

We think getting out there and doing it and proving that it works is really going to help move the needle. We can’t build housing for every single person, but we can show that it works. We can share what we’re doing. We can encourage other developers to do the same thing. We’re hoping that we can change some of the fixed mentality that is out there about what this housing has to be.

 

Author: Karen Jordan

Source: Costar Market Insights


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