A developer, homeless service providers, local church leaders, and a social impact investment manager have teamed up to demonstrate that cooperation between the private sector and non-profits can beat our traditional contractors when it comes to building housing for the unsheltered. They’ve already completed several projects in South Los Angeles, and the ambitious planners of the movement are looking to build up to 1,800 units entirely without government subsidies.
Each of these units would be built for $200,000 and would open in as little as two years. This is less than half the cost and significantly less time than a traditional project would require for similar results. Backing the coalition is a $100 million equity fund, including a $50 million contribution from Kaiser Permanente.
This fund allows RMG Housing, the group’s developer, to move from acquisition to construction in one fluid step. This saves a tremendous amount of time in contrast to other developers, who must coordinate financing from both the government and various private sources. It might take other developers two to three years to begin construction, by which time RMG could have finished a project.
The group was founded when its leaders noted there were many individuals with vouchers for federal housing subsidies, but not enough units to house them. From a business perspective, this represented an untapped opportunity; from a humanitarian perspective, it was a crisis. Combined with requests from many local churches to generate revenue from the surrounding underused land, the conditions were just right for the cooperative effort to gain traction.
For now, the investment fund is expected to last only around one year, but plans for the construction of at least 1,000 units are being made. Churches’ land, investment from non-profits, and RMG’s resources represent a rare and unique partnership in which all parties involved, not to mention those who are living on the street, stand to benefit.