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Employer-Assisted Housing: A Proven Strategy for “Housing a Competitive Workforce”
American Planning AssociationOctober 14, 2008
a nonprofit, nonpartisan group of business and civic leaders committed to serving the public interest through development, promotion and implementation of sound planning and policies so all residents have access to opportunity and a good quality of life, the building blocks of a globally competitive greater Chicago region
Founded in 1934
60 member, business-based board
24 professional staff
Partnership with hundreds of public officials, business leaders, community-based organizations and other stakeholders
Who is the Metropolitan Planning Council?
Metropolitan Planning Council Page 2
Housing and Growth Facts (informing workforce housing
strategy in Illinois)
:
-4-2
0
24
6
810
12
1416
Percent
Population Employment(1991-2000)
Housing Units Rental Units
Greatest deficit of housing for households earning below $20,000 per year
2000 Wake-Up Call: Rental Housing is NOT Safe Back-up Plan
Metropolitan Planning Council Page 4
Supply of housing that is affordable not located in high job growth areas
Negative public perceptions of “affordable housing”
1300 different municipalities, statewide, each responsible for housing policy “in their own backyard”
Lack of community support, state leadership
“Non-economic” barriers identified in 2000
Metropolitan Planning Council Page 5
Why is housing an employer’s issue?
Metropolitan Planning Council Page 7
Approx. Average
Home Price
Annual Wage
Needed to Buy
Approx. Average
Month Rent
Annual Wage
Needed to Rent All Jobs
Financial Manager Chemist
Child, Family,
and School Social
Worker
Chemist Married to
Financial Manager
City (County)
Northbrook (Cook) $620,911 $187,345 $1,442.83 $57,676 $33,653 $93,664 $55,529 $39,302 $149,193
Deerfield (Lake) $521,555 $157,367 $1,474.17 $58,923 $34,524 $89,769 $50,328 $29,698 $140,007
Highland Park (Lake) $766,651 $231,318 $1,164.11 $46,527 $34,524 $89,769 $50,328 $29,698 $140,007
Highwood (Lake) $598,265 $180,512 $922.37 $36,856 $34,524 $89,769 $50,328 $29,698 $140,007
Lake Forest (Lake) $1,055,187 $318,350 $1,398.06 $55,866 $34,524 $89,769 $50,328 $29,698 $140,007
Cannot afford to buy or rent
Can afford to rent, not buy
Can afford to buy or rent
The Update: Local Workforce Housing Market Realities
Metropolitan Planning Council Page 8
Affordability Gap
Many workers in our communities cannot afford to live near work because prices are too high and incomes too low.
Availability Gap
There is a shortage of homes affordable to the workers in our communities.
Just 13% of the local housing stock is affordable to workers earning less than $50,000 – workers that account for more than two-thirds (69%) of
the 5-community area workforce.
Homes Affordable to Workers by Income Level
13,020 (16%)
29,830(36%)
27,835(33%)
12,875(15%)1,449
(4%)3,621(9%)
6,690(18%)
26,358(69%)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Less than $25,000 $25,000 to $49,999 $50,000 to $74,999 $75,000 or H igher
Workers' Income Levels
# of W
orkers
or A
vaila
ble H
omes
WorkersHomes
By 2030, an additional 4,800 rentals and 10,000 for-sale opportunities will be needed for households earning < $75k.
Excessive housing costs for employees
lead to higher turnover ratesmake it difficult to recruit new talentreduce worker productivityproduce costly traffic and congestionreduce investment in and connection to communities
The Implications for Businesses
Metropolitan Planning Council Page 9
Problem
Metro Chicago jobs and population have grown faster -- and in separate locations than -- the supply of workforce housing.
Issue
Workforce problems result from this Jobs-Housing Mismatch.
Solution
Employer-Assisted Housing (EAH) –Maximizes employee retention by promoting live near work and providing outsourced, easy-to-administer HR benefit.
Jobs-Housing Mismatch
Metropolitan Planning Council Page 10
• But foreclosure rate among EAH employees is almost 0%.
• EAH is a proven foreclosure prevention strategy, thanks to homebuyer education and homebuyer assistance.
• Private sector leadership and dollars are more important than ever.
• Discussions and pilot initiatives are now exploring EAH as a strategy for re-appropriating neighborhoods that have been devastated by foreclosures.
• .
Today’sWake-Up Call: The Mortgage Market Meltdown
Metropolitan Planning Council Page 11
Catalysts for Change
Metropolitan Planning Council Page 13
Catalyst for Change 1: Employer-Assisted Housing
REACH model (Regional Employer-Assisted Collaboration for Housing)
Counseling/ homeownership education
Down payment assistance
Rental assistance
Small Business Consortium
Matched savings for homeownership (IDA)
Below market rate loans for purchase or home improvement
Forgivable loans based upon tenure
Marketing
Menu of Options for Employer EngagementHelp Employees Access Existing Homes
Metropolitan Planning Council Page 14
Catalyst for Change 1: Employer-Assisted Housing
Loan pool investments
Land donations
Land bank
Rental property development/investments
For-sale and rental housing development
Provide below market loans to developers of workforce housing
Advocacy
Menu of Options for Employer Engagement:Help Create New Homes for Employees
System Sensor: An Illinois EAH Pioneer
Metropolitan Planning Council Page 15
Employer LeadershipPiloted REACH model, contracting with local housing expert to provide homebuyer education, credit counselingto employees
Employees received up to $5000 in down payment assistance
ResultsCompany saved $100,000 annually in reduced turnover andabsenteeism, after recouping costs
Over 60 System Sensor employees purchased homes near work
Pittway Corporation sold the System Sensor Plant to Honeywell, which opted to continue the successful program
Leading the trendProgram inspired new incentives now available State-wideOver 70 other employers have launched programs, assistingover 1,500 employees to purchase homes in Illinois.
- Mr. Harris continued to be among the most persuasive advocates for workforce housing policy and production.
King Harris, formerly of System Sensor, utilized the REACH model and became a strong advocate of Employer-Assisted Housing in the business community after experiencing the many benefits of offering housing assistance to his employees.
Riverdale, Illinois: Three Employers offer Rental Assistance
Metropolitan Planning Council Page 16
Employer Solution
Village of Riverdale, Robinson Engineering, and St. James Health Systems will expand their existing REACH programs to offer $50 per month per employee for rental assistance up to 24 months when homes are completed
Employers will also match employee savings for home ownership
Results
Federal tax credits (LIHTC) secured to assist in mixed-income development by the Developer—4 companies benefit (including Developer)
Employers obtain EAH tax credits for investment
The Connection
EAH renters will also have first opportunity to buy in Phase II
These 3 employers also offer down payment assistance through the traditional REACH model
Rendering of new construction mixed-income homes, first phase expected to be completed in 2008
Troubled Pacesetter Development
Charter One Bank:
Investment in New Initiatives
Metropolitan Planning Council Page 17
Employer Objectives
Attract and retain talented workforce
Offer competitive benefit
Educate employees about bank’s loan programs
Employer Solution
The bank has provided down payment assistance to 140+ employees since launching their program in 2004
From the Company into the Community
Experiencing the benefits of offering EAH to their valuable employees was the beginning of the story
Charter One Bank then decided to take its level of commitment to the next level by sponsoring the Charter One Workforce Housing Initiative to create new homeowners through new employers joining the cause
"Our Employer-Assisted Housing program has given us an edge in attracting and retaining talented people. Over 140 Charter One employees have benefited from this program, enabling them to purchase homes in the Chicagoland area, including homes in redeveloping communities. This important investment in our colleagues exemplifies our continued commitment to the communities in which we live and work”.
- Scott C. Swanson. President and CEO, Charter One Bank
which was founded in 1985, is the only
broad-based coalition working to promote affordable housing
opportunities throughout Illinois."
University of Chicago and University of Chicago Hospitals:
Investment in Loan Pool
Employer Objectives
Preserve existing housing stock for households under 60% AMI who rent in the community
Stabilize surrounding community
Offer alternative resources to sub-prime lending market
Employer Solution
In 2006, made $1 million investment in Community Investment Corporation’s loan pool for rental housing preservation and rehabilitation
Target to preserve affordable housing in the five community areas surrounding the University’s Campus
How it all started
Employer launched traditional REACH program in 2003 with $7,500 down payment assistance for University employees (with help of local housing expert) and has assisted nearly 150 new homebuyers within targeted areas around the campus
Metropolitan Planning Council Page 18
Down payment assistance: $5,000-$10,000 Homebuyer educationUp to 25 buyers per yearPromote walk-to-work/community revitalizationEncourage live-near-transit
Metropolitan Planning Council Page 19
Loyola University: Promoting walkability and public transit
Employer-assisted housing (EAH) is a cost effective, easy to administer way for employers to help their employees buy or rent homes close to work.
In Illinois, the Metropolitan Planning Council, Housing Action Illinois and more than a dozen counseling agencies --in conjunction with the State --make up REACH IL (Regional Employer Assisted Collaboration for Housing). See www.reachillinois.org for more info.
State incentives, including tax credits and matching funds, are available to employers and employees who work with REACH IL partners.
REACH IL makes it easy and financially compelling for employers to offer EAH programs to their employees, by
Tailoring a model program for each employer Providing homeownership education, financial counseling and leveraging additional resources Managing the down payment or rental assistance provided by employers
As a result of the 70+ Illinois programs launched since 2000:More than 1,500 employees have bought homesOver 2,500 employees have received counseling/education
Metropolitan Planning Council Page 20
Advocate Bethany HospitalAllstate CorporationChase BankCharter One BankChicago Public SchoolsChicago Police and Fire DeptsCity of EvanstonCity of North Chicago City of PeoriaCity of Rock IslandCity of St. CharlesDeLaSalle InstituteHoneywell’s System SensorIllinois College of Optometry
• Illinois Institute of Technology • Lake Forest College
These are some of the companies that have launched EAH programs.
Loyola UniversityMB Real Estate Services Medela Corporation Mercy Hospital and Medical CenterMetropolitan Planning Council Robinson Engineering Rock Island School District Rosenthal Brothers Rush University Medical Center Seaquist Perfect St. James Hospital Swedish Covenant Hospital The John Buck Company The Walsh Group University of Chicago/HospitalsVillage of Riverdale
Metropolitan Planning Council Page 21
Understanding Employer-Assisted Housing: A Guidebook for Employers
KEY TOPICSWhat is Employer-Assisted Housing? Far-Reaching Benefits of EAH How to Create and Administer a Program
FEATURED CASE STUDIESAmerican Family Life Assurance Co., Inc. , GA Applied Materials, Inc., CACitizens Financial Group, Inc., RICVS/Caremark, DCHarley-Davidson Motor Company, WIHatch & Parent, A Law Corporation, CANorthrop Grumman Corp., NY and MS The Schwan Food Company, MN System Sensor, ILUniversity of Chicago and University of Chicago
Medical Center, IL
Metropolitan Planning Council Page 22
Why Employer-Assisted Housing?
EAH benefits . . .
The EMPLOYEE
The EMPLOYER
The COMMUNITY
The HOUSING POLICY ARENA
EAH is a win for everyone.
Metropolitan Planning Council Page 23
Metropolitan Mayors Caucus Housing Task Force Housing Endorsement Criteria Housing Action AgendaWelcome Home: Housing Our Community 12-minute housing video and cable TV segment Homes for a Changing RegionModel Housing PlanSensible Tools for Healthy CommunitiesPlanning 1-2-3Housing 1-2-3Home Grown” best practicesEmerging “Inter-jurisdictionalStrategies
Catalyst for Change 2: The Toolbox Developed by and for Mayors
Metropolitan Planning Council Page 24
Legislative Agenda
Communications Strategieswww.housingillinois.org
On-the-ground networks(Technical Assistance and Community Acceptance Strategies)
Catalysts for Change 3: Alignment of Advocates’ Voice
Metropolitan Planning Council Page 25
Resulting Statewide Activity
First Ever State Housing Policy DevelopedPrioritizing underserved populationsPromoting affordability & choiceCreating & preserving affordable and workforce housingSupporting state & local leaders in advancing housing solutionsCoordinating state departments to better link housing, economic and transportation development.Implementing administrative and legislative changes - demonstrating that “this is real”
This Plan has been updated and published annually, with semi-annual progress reports released along the way
State leaders responded to business, municipal and community voices
Metropolitan Planning Council Page 27
2002 Illinois Affordable Housing Tax Credit2002 Local Planning Technical Assistance
2003 Housing Opportunity Tax Incentive
2004 Federally Subsidized Housing Preservation2004 Affordable Housing Planning and Appeals
2005 Extension of IL Affordable Hsg Tax Credit2005 Rental Housing Support2005 Regional Planning Act
2006 Comprehensive Housing and Planning2006 Business Location Efficiency
2007: Good Housing Good Schools2008: Line item for Housing in State’s Capital Bill
IL Housing Legislation since Implementation of EAH,
Statewide Housing Policy
Metropolitan Planning Council Page 28
SB 1078 in the Senate/ HR 1850 in the House
Offers $.50 federal tax credit on every $1 employer invests
Benefits nonprofit employers with transferable credit
Provides $5 million/year for counseling agencies, structured as receding grants – to encourage counseling experts to gradually replace federal dollars with employer contracts
Introduces a change in the tax code so that the money received by employees from their employers for EAH is non-taxable
Reframes the national housing dialogue at a time when private sector investment is especially critical
Metropolitan Planning Council Page 29
National Opportunity: Please Support Housing America’s Workforce Act
Perhaps the only silver lining to today’s housing market meltdown -- including the foreclosure crisis -- is that housing affordability is a top of mind issue.The price of gas, climate change and the prospects of a new administration in DC further point toward stronger live near work and affordable workforce housing policesWhat can we do with the next transportation, climate and tax bills in DC?www.t4america.org and Brookings Institution’s Blueprint for American Prosperity are among the thought leaders offering promising suggestions.
Additional Federal Opportunities on the Horizon
Metropolitan Planning Council Page 30
For more information on “Housing for a Competitive Workforce:
A Campaign Strategy,”
please visit:
www.metroplanning.orgor
www.reachillinois.orgor
Phone: 312/863-6007