When Employers Help With Housing, Winners Emerge
When it comes to jobs and economic opportunities, where a person lives can be pivotal. After all, if an employer is located in high-cost area, the talent pool of available hires shrinks — or productivity declines as workers face long commutes. Indeed, potentially valuable employees may lose a great advancement opportunity and pursue work elsewhere if housing costs are too high.
That’s the ultimate lose-lose scenario.
One way to tackle this challenge, which affects American cities large and small, is through employer-assisted housing, a model that is receiving increased attention as lower-income Americans continue to struggle to find affordable housing in safe and healthy neighborhoods.
Rep. Nydia Velázquez, D-N.Y., recently introduced legislation that would create new opportunities for employers interested in helping their workers pay rent or buy homes. The concept behind the Housing America’s Workforce Act isn’t new, as similar proposals have been introduced at the state level, too, but it is an approach that is beginning to resonate.
Under Velazquez’s proposed legislation — which experts say is hardly a slam dunk for passage, but does help raise the profile of the issue — employers could qualify for a 50% tax credit when helping their employees with rent or homeownership. For smaller companies, the credit would be as much as 100% of the outlay. The bill also includes grants for local government and non-profit housing groups that work on increasing employer-assisted housing programs.
Velasquez’s interest in this issue strikes close to home. Though rent costs throughout the country have escalated, the increases are especially significant in major urban areas such as her New York City district. Between 2000 and 2014, median apartment rents in New York City soared 75%, while real income declined by an average of 5%.
Employers around the country — from Under Armour and T. Rowe Price to medical centers and universities — have implemented popular and often successful employer-assisted housing programs. Experts judge the success of these efforts in a number of ways, including how long people stay, whether they’re up-to-date on payments and whether the programs help to revitalize the neighborhoods served by the grants.
The Atlantic recently spotlighted an employer-assisted housing program offered by the University of Chicago. It provides grants to staff members who choose to live in designated neighborhoods near the university’s campus. Assistance includes help with rent and downpayments, as well as homeownership classes. The program has also helped improve neighborhoods surrounding the campus.
“There are multiple winners when employers assist with housing, including the employers themselves who often benefit from the employee retention the program can provide, the employees and the neighborhood,” said Robin Snyderman, a principal with BRicK Partners in Evanston, Ill. BRicK Partners is a community development consulting and project management firm with years of experience working on local, state and federal incentives to help promote employer-assisted housing programs.
Some programs also fold sustainability into their approach. In an issue brief released by the Chicago Region’s Metropolitan Mayors Caucus on an employee-housing assistance program by Loyola University in Illinois, community relations director Jennifer Clark said they require participants to purchase or rent near a transit line that serves the university so “that they don’t necessarily need a car to work for us.”
Snyderman said she is optimistic about these types of programs’ potential for growth in part because unlike health care cost assistance, which most employees utilize, only about 10% of staff is likely to seek out housing assistance because it is limited to neighborhoods near the employer. These neighborhoods benefit from an increased tax base, new businesses and new energy, Snyderman said. She added that participating employers are most successful when aligning their housing efforts with their other priorities — such as corporate sustainability, wellness, or social responsibility programs. The right partners are also crucial.
The Johns Hopkins University in Baltimore has run an employer-assisted housing program since 1997. The university, The Rouse Company Foundation and the city of Baltimore fund it. The program focuses on home purchases, and its assistance comes with certain conditions. For instance, beneficiaries must purchase a home in the program’s target area; contribute at least $1,000 to the down payment and/or closing costs; and complete a home ownership counseling course. The program also requires that participants make the home they purchase their primary residence for at least five years. In 2013, the program contributed to the city of Baltimore winning a Robert C. Larson Housing Policy Award from ULI.
Michelle Carlstrom, senior director of the university’s Office of Work, Life and Engagement, said more than 400 employees have received grants since the program began. The grants have risen from a few thousand dollars at the program’s inception to a current maximum of $36,000.
“We’ve always had strong interest,” said Carlstrom, who has made presentations to other communities about the Hopkins program and leads walking and bus tours for employees interested in the grants.
One of the program’s benefits is that the university has multiple campuses and allows participants to live near any of them, even if it’s not right by the campus where they work.
“We feel strongly that we are adding to the tax base and development of the communities that surround us,” she said.
And is it working? It certainly has for Carlstrom, who was a single professional when she took advantage of the program in 2008. She purchased an old Victorian, benefiting from a downpayment assistance program that allowed her to afford a large home and bet on her future.
The bet paid off.
Seven years later, the “big space” is home to not just Carlstrom, but to her husband and their three young kids. They love the house and the neighborhood they call home.