Why federal support for tiny homes could be a game changer

As homelessness continues to rise nationwide, one nonprofit is pushing for a paradigm shift.

DignityMoves, a San Francisco-based organization, has been leading the charge for what its founder and CEO Elizabeth Funk calls “interim supportive housing.”

These cost-effective tiny home communities aim to help individuals stabilize their lives while waiting for permanent housing options that are often years away from being built.

In a candid conversation with HousingWire, Funk explained why the current federal housing strategy is falling short — and what can be done to change it. The interview has been lightly edited for length and clarity.

HW: Over the past decade, permanent housing has been the cornerstone of federal homelessness policy. Why push for interim housing now?

Funk: So, you know, in the U.S., our strategy to address homelessness for the last decade has been very clearly mandated. It’s about permanent housing, because only permanent housing ends homelessness.

And so the only valid use of taxpayer money — quote unquote shelter — was shunned because shelter doesn’t work, which it doesn’t in a meaningful way. It keeps you out of the elements, but it’s not a place where you’re mentally ready to do something with your life, right?

But the problem is that, especially in California, where that costs a million dollars a unit on average — over $800,000 per unit — and takes years to build, we’re never going to get there. It’s just not practical.

HW: What’s the alternative you’re proposing?

Funk: We believe that if we invest in something dignified that’s in the interim, a whole lot of stuff happens — one of which is you prevent the trauma of being on the street. We call this interim supportive housing. It functions as shelter in the system.

But (the Department of Housing and Urban Development’s) definition of housing is your habitual place of residence and you have separate sleeping quarters. Well, if you’ve got your own tiny room, tiny cabin, that’s housing. It’s a form of housing. It’s just temporary.

HW: Is there any existing federal funding for these kinds of projects?

Funk: There’s very little funding — quite frankly, none from the federal level that goes to interim housing. Interim housing is such a new concept that it’s had to wiggle in.

We’ve had to apply for grants that are meant for one bucket or the other. They hand down the Community Development Block Grants and stuff that can be used for whatever — prevention, street outreach — but it’s a small amount and has to compete with many other things.

HW: Where does your funding come from right now?

Funk: Our funding is somewhat philanthropy and state funding. We apply for grants like the Encampment Resolution Funds, and there’s a Project Homekey that’s a state funding program. Hospitals step up, obviously, because half of the cost of unsheltered homelessness is carried by them.

“We’re also experimenting with an investor model because our little cabins are not technically classified under the tax code as real estate — they are personal property because they are relocatable, just like a truck.

Also, thanks to (President Donald Trump), they are eligible for accelerated bonus depreciation. So if an investor paid to construct these, they could get half the value back in a tax write-off if they’re in the 50% tax bracket.

HW: But the long-term cost is in operations, not just building the units, right?

Funk: A unit might cost $50,000 to build, but it’s another $50,000 per year to operate, and that’s an ongoing cost that cities are very hesitant to commit to. None of the programs for funding have a line of sight longer than two years. Lots of them are just one year, and that’s got everybody [looking like a] deer in the headlights.”

HW: Are there any federal programs that are helping to offset these costs?

Funk: California has its own version of Medicaid called CalAIM, and it has waivers from Medicaid that allow it to reimburse for things that happen at shelters and interim housing. It can reimburse for your case managers, housing navigation specialists, behavioral health care — all that stuff can get reimbursed.

The first thing we’re hoping for is to make darn sure that doesn’t go away. That’s probably half of the operating budgets and it’s reimbursed by the federal health care system.”

HW: And what about Section 8 vouchers — can they be applied to interim housing?

Funk: Interim housing doesn’t get Section 8 vouchers, but those vouchers are called ‘housing choice’ for a reason. The person gets to pick their apartment. Well, what if they got it in interim housing? They’re now covered, they’re paid for, right? And if they want to stay a little longer because it’s healthier for them, or if they can’t find an apartment, it won’t lapse.”

HW: That sounds like it could be controversial.

Funk: As soon as I talk about Section 8 vouchers for interim housing, all the housing people get into this zero-sum game of, ‘You’re stealing our resources.’ Every year, we have to send unused vouchers back to the federal government. We can’t find apartments. That’s criminal.

HW: There was also mention of a six-month transitional rent waiver through CalAIM. What’s the status there?

Funk: They wrote a concept paper, sent it up to the federal level, got it approved, and now we’re waiting for implementation. Everybody’s holding their breath. The medical system is offering to pay six months of rent. Like, what does that say about unsheltered homelessness, right?

HW: Final thoughts. What’s the broader vision for interim housing on a national level?

Funk: This is not about us trying to grow a business. We’re nonprofit. We’re just trying to change this thinking and get interim housing into the mainstream. We’ve literally put together a playbook — like, somebody in Toronto wants to build interim housing? Here’s your site plan. Here’s the modular manufacturer. Like, have at it.