Many communities are challenged to provide housing for all residents. This article describes how the private sector — particularly employers — can work with public incentive programs and nonprofits to provide housing for workers. Some communities go a step further and integrate this approach into the housing section of the comprehensive plan.

As prices continue to escalate, increasing numbers of workers are finding it difficult and in some cases, impossible, to live near employment centers. Employer-assisted housing offers one possible solution. EAH programs can also be used to reduce sprawl and promote community development. Employer-assisted housing is any housing program — rental or home ownership — that an employer assists or finances in some way. Fannie Mae, a leading provider of EAH technical assistance, defines EAH "as an employee benefit that helps an employer achieve business goals while helping their employees with their housing needs."

Employer-assisted housing is by no means a new concept. The earliest examples of EAH can be traced back to the 19th century with the advent of company towns like Lowell, Massachusetts, Pullman, Illinois, (now part of Chicago) and Ybor City, Florida (now part of Tampa). By the 1920s, however, company towns had largely become obsolete due to changing metropolitan growth patterns and transportation improvements that allowed for greater personal mobility. The need to live near work diminished and so did the role of the employer in providing housing assistance.

Through the 1980s companies used EAH as an executive relocation perk, an option that became outmoded with the early 1990s recession. About the same time, interest in the modern form of EAH began to grow. Touted as the "benefit of the 1990s," Fannie Mae and Freddie Mac created specialized products and HUD allowed the use of HOME funds to support EAH programs. Despite these efforts, interest and application of EAH waned because employers had difficulty making the connection between providing housing assistance and economic competitiveness.

The late 1990s saw a renewed interest in reducing sprawl, increasing economic competitiveness, and the rapid escalation of housing prices. Housing advocates once again pushed the concept of EAH to the forefront with great success.

According to a recent article in Crain's Chicago Business, as of 2004, eight percent of U.S. employers offered some form of EAH. That's up from just three percent in 2000. Since the 1990s, Fannie Mae has provided technical assistance to help launch more than 700 EAH program across the country — 500 of which were launched after 2000.

Some cities, including Seattle, Denver, and Durham, North Carolina, incorporate employer-assisted housing into local comprehensive plans. Illinois, widely considered a leader in EAH, includes it in its statewide comprehensive housing plan. Delaware launched a statewide "live near your work" program designed to reduce employee commute times, increase business retention, redirect growth to already developed communities instead of greenfield (unbuilt) areas, and provide much-needed financial assistance to working families that might otherwise be priced out of the market.

EAH has also been used to assist communities in providing housing solutions for teachers, police, and firefighters. Mississippi launched the Housing Assistance for Teachers program in 1998 to help teachers live in the communities in which they work.

One of the key features of EAH is its flexibility. EAH programs are designed to help employees overcome one of three primary obstacles to homeownership: (1) education about home buying, (2) down payment, and (3) closing costs. Programs can be designed any number ways to include a variety of benefit types. Table 1 details some of most common types of benefits associated with EAH programs. Regardless of the type of benefit an employer offers, it can be customized to achieve specific workforce recruitment or retention goals. Employers should also consider their limitations in terms of staffing and funding such a program. Finally, programs can and should be customized to achieve larger community goals such as targeted revitalization and increased housing affordability.

Table 1. Types of Employer-Assisted Housing Benefits

Benefit Type	Benefit Description	Targeted Employees	Employer Cost
Financial Literacy and Homebuyer Education	Usually on-site classes by a nonprofit counseling agency on topics such as budgeting, buying a home, and maintaining a home.	Especially useful for first-time home buyers.	If nonprofit charges or employer chooses to pay, cost is usually $75 to $100 per student, plus the cost of employee time off is offered during work.
Repayable Loan or Grant	Cash loan or grant that must be repaid, usually over time or at a deferred date.	Employees with insufficient funds for down payment or closing costs and/or in areas with affordable housing problems.	Small administrative expenses may be the only costs because the employer gets cash back when the grant or loan is repaid.
Matched Savings Grant	Cash grant that matches employee savings, given to employee at deferred date.	High-turnover employee groups; used to help retain employees and reduce turnover costs.	Usually grant amount is less than the cost of the employee leaving and being replaced. The net result is either no cost or a positive return.
Forgivable Loan or Grant	Cash loan or grant that does not have to be repaid if the employee remains at least until the time the loan is forgiven.	High-turnover employee groups; used to help retain employees and reduce turnover costs. Also helps recruit employees if offered at hiring.	Usually forgiveness is timed so that the amount forgiven is less than the cost of the employee leaving and being replaced. The net result is either no cost or a positive return.
Upfront Grant	Cash gift that does not have to be repaid.	Hard-to-recruit employees.	Considered to be part of the cost of recruitment, like a hiring bonus.

There are several roles a municipality can take to promote EAH. For instance, Fannie Mae suggests that municipalities can act as role models by implementing EAH for their own employees. Planners and planning commissions can play a number of roles in developing and implementing EAH programs, including:

EAH is that rare implementation tool that benefits everyone involved: the community, the employer, and the employee. EAH can help a community target reinvestment efforts and reduce sprawl. This type of place-based EAH also encourages employees to explore housing in an area they might previously not have considered. Communities also benefit from having increased home ownership due to EAH. Higher home ownership rates generally correspond to greater neighborhood stability as well as increased tax revenues from both the home owners and the retained businesses.

In tight housing markets, EAH helps employers recruit and retain employees. Employee turnover can be incredibly expensive — costing 150 to 300 percent of the departing employee's salary — not to mention negatively impacting the productivity and morale of remaining employees. EAH also helps employers like hospitals and universities revitalize deteriorating neighborhoods with soft housing markets in which they have substantial real estate investments. Employers can also experience good will and an image boost in the larger community by providing EAH.

The employee receives the most obvious benefit in that they receive educational and financial assistance that may help them get into previously unattainable housing. EAH can create a powerful incentive for employees to remain invested in both the company and the larger community. Use of EAH programs can also significantly improve the quality of life experienced by the employee by improving housing conditions and reducing commute time.

Creating, implementing, and maintaining a successful EAH program is not without challenges. The following six lessons shed some light on how to make EAH work in your community:

Employer-assisted housing has the potential to deliver benefits to several sectors of the community making it ideal as a stand-alone approach or one incorporated into a larger community housing strategy. EAH may not be a new tool for housing choice and affordability, but it is one that is demonstrating promise across the country.

Collaboration at its Best: Long Island HomeWorks Partnership

Like many areas across the country during the 1990s, Long Island, New York, suffered the consequences of reduced defense spending when the major area employer — an aerospace company — effectively shuttered its doors. This was not the first time industry had abandoned Long Island. In response to previous plant closings in the textile and machinery industries, Long Island cities, counties, nonprofits, and economic development organizations developed a strong, coalition-based economic development machine. This coalition mobilized once again to create new economic activity in the region, this time focused on smaller firms.

The smaller firms did well, but still faced a major challenge: a lack of qualified workers. It seemed that the young people of Long Island were leaving, at first for college but then for good. Why? Because they could not afford to come home. Housing prices were simply too high for young professionals wanting to return to their hometowns. Businesses found that the lack of affordable housing made it increasingly difficult to recruit and retain the best employees. Local economic developers found that the lack of affordable housing made it difficult to attract new firms and to retain existing businesses.

In response, an economic development partnership comprised of public, private, and nonprofit entities came up with an idea to create a business and employee recruitment and retention program using affordable housing.

The Long Island HomeWorks Partnership launched in 2001, with partners including the Long Island Housing Partnership (LIHP); the Long Island Association; Fannie Mae; the New York State Affordable Housing Corporation; Suffolk County; Nassau County; and the Suffolk County Community Development Block Grant Consortium. The Long Island Housing Partnership, a nonprofit organization located in Hauppauge, is the chief program administrator. The program is available to all employers located in or relocating to Nassau or Suffolk counties.

The home ownership program works by providing matching grants and home buyer counseling to eligible employees of participating firms. Participating employers agree to provide a match to the employee contribution of at least $3,000. Employees are also eligible for up to $33,000 in additional funding from a variety of sources. Federal HOME funds can add another $12,000. Local and state funds directed to affordable housing can provide as much as $5,000 per employee. The state also offers up to $15,000 for employees purchasing homes in need of major rehabilitation.

Although they must agree to provide a minimum match of $3,000 per employee, participating employers have the flexibility to design an EAH benefits program that suits their firm. According to Peter Elkowitz, LIHP's CFO, every employer is catered to. "It is critical that the basic structure of the program be flexible enough to meet the needs of the individual employer and that you have program staff available to work with employers to craft the program best for them," he explains. Fannie Mae provides additional technical assistance to employers during program set-up. Home buyer education, provided by LIHP with support from private grants and member dues, is mandatory for all participating employees.

LIHP uses business breakfast meetings to market the program to new employers. Marketing directly to the community business leaders is critical to the success of HomeWorks, adds Elkowitz. It is important to bring the program home for people by highlighting the success stories and approaching the decision makers first, he says. Since the program launch, nearly 20 employers have agreed to participate in HomeWorks, including an entire school district and some nonprofit organizations. More than 25 families have successfully completed the process and have become home owners.

Learn more about LIHP at www.lihp.org.

Resources

Fannie Mae. 2003. Employer-Assisted Housing: Improving the Bottom Line and Unlocking Doors to Homeownership for Your Employees. Washington, D.C.: Fannie Mae.

Fannie Mae. 2003. HOME: The Home Ownership Mayors and Employers Guide. Washington, D.C.: Fannie Mae.

Jennings, Stephanie A. 2000. "Reinventing the Company Town: Employer-Assisted Housing in the 21st Century." Housing Facts and Findings 2 (2): Summer.

Pierce, Emmet. 2005. "Chicago Leads Nation in Employer-Assisted Housing." The San Diego Union-Tribune. May 17.

Singh, Shruti Date. 2005. "Employer-housing plan gains ground in Chicago." Crain's Chicago Business, February 7.

State of Illinois Governors Housing Task Force. 2005. Building for Success: Illinois' Comprehensive Housing Plan 2005. Springfield, Ill. Available at www.ihda.org/ViewPage.aspx?PageID=30.

Understanding Employer-Assisted Housing

Table 1. Types of Employer-Assisted Housing Benefits

Resources

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