Partnerships at Work
Employer Assisted Housing programs are helping to provide homes to working-class families
Employers including global corporations, small businesses, nonprofits, hospitals and universities have encountered serious problems attracting and retaining employees because of affordable housing issues, especially in rundown inner cities and pricey suburbs.
The solution: employer-assisted housing (EAH) programs that teach employees the skills they need to buy a home and provide them with financial assistance to help pay for it.
The benefits of EAH programs include ensuring employers they can recruit and retain good employees; providing employees with decent, affordable housing close to work; stabilizing and upgrading depressed communities; and reducing commuting time. And there are important economic benefits in communities with flourishing EAH programs.
The biggest benefit of the programs, obviously, is giving a community’s workforce the knowledge, skills and means they need to buy their first home. Many of the buyers are minorities and single-parent heads of households.
“I consider Aflac the best employer in Columbus, and I thank God for a company that values its employees so highly,” said Lasada Williams, an Aflac customer service specialist in Columbus, Ga. “My children and I are very pleased with our home.”
Aflac, the insurance company with the famous quacking duck TV ads, has helped 44 employees buy their first homes.
Lynn Ross, chief operating officer for the National Housing Conference (NHC) in Washington, D.C., said EAH programs are a “a win-win-win because the employer wins, the employee wins and the community wins.”
Raymond Schmidt, executive director of Select Milwaukee, which runs one of the oldest EAH programs in Milwaukee, said it has helped more than 800 families buy homes, generating about $80 million worth of quality mortgages.
The NHC works closely with the National Association of REALTORS® to promote EAH programs, teach classes all over the country and encourage REALTORS ® to participate in programs in their communities. Lisa Thompson, a Chicago REALTOR®, is active in locating homes for Chicagoans whose employers participate in the program and trains other REALTORS® all over Illinois on behalf of NAR.
“We’ve been able to partner with a lot of nonprofits, helping them to go to employers with a plan for employer-assisted housing,” Thompson said. “To me the class is very powerful because it’s a way for REALTORS® to work with nonprofits so that we can encourage nonprofits to encourage homeownership.”
Nonprofits typically serve as intermediaries between employers and employees, running the programs for the employers and providing the counseling and other educational services employees need to qualify for mortgages. In many cases, an organization that offers an EAH program contracts with a nonprofit to run it and provide the counseling. The programs also partner with other interests, notably financial institutions and REALTORS®, with a stake in the housing market.
“It includes three things really,” Schmidt said. “One, they pretty much outsource the administration of the program to us. Two, they allow us to contact their employees in a number of ways. The third piece is we encourage but don’t require the employers to make a modest investment in the employee’s purchase, almost always to support a down payment.”
Select Milwaukee’s employer clients include Harley- Davidson, the Aurora Health Care hospital chain, University of Wisconsin–Milwaukee, the United Way of Greater Milwaukee and all of its 67 affiliates, and local Boys and Girls Clubs.
One element of many EAH programs is assistance with the down payments on the homes the employees want to purchase. Many programs also offer various combinations of state and federal loans and grants and bank loans at favorable rates.
Heather Hain, director of the Rogers Park Community Development Corp. (RPCDC) in Chicago, said her program partners with 10 to 14 Chicago banks. “Having our list of partner banks has been real critical to the success of our program,” she said.
Baptist Health of Northeast Florida in Jacksonville offers employees $5,000-down payment loans. Camille Cossa, director of employee benefits, said 10 to 12 employees a year participate in the program, a total of about 60 since the hospital started the program in 2006.
Family Foundations, a Jacksonville nonprofit, administers the program and educates hospital employees who enter the home-buying program. “The classes really prepare them and let them know if they’re ready or not ready to buy a home,” Cossa said.
She said the program gives Baptist Health an advantage over competing hospitals in the Jacksonville market by making it easier to recruit new employees from the managerial level on down.
“I think it really helps to build relationships with employees,” Cossa said. “It did help with recruiting because Jacksonville is home to a number of large medical centers and it did help to differentiate us in the marketplace.”
Several banks provide down payment loans to their employees through the EAH program operated by the Long Island Housing Partnership (LIHP) in New York.
The forgivable loans employers provide to employees to assist with down payments usually range from $3,000 to $5,000. Typically, the loan is forgiven if the employee remains with the company for five years. there are many variations, however, as programs are structured to meet each employer’s needs.
Peter Elkowitz, president of the Long Island Housing Partnership in Hauppauge, N.Y., said some of the 120 employers in the LIHP program offer employees up to $10,000 in forgivable loans.
The LIHP serves Nassau and Suffolk counties east of New York City, a high-end housing market where Elkowitz said the median price of homes is about $440,000. Many residents of the area could not afford to buy a house at those prices, he said, so the affordable housing coalition that founded LIHP added an EAH program about 10 years ago.
“We were losing our young,” Elkowitz said. “We were having a brain drain.”
Northrup Gruman, the defense contractor that manufacturers the B-2 bomber, is one of the biggest companies participating in the Long Island program. The company also provides an EAH program for workers at its Pascagoula, Miss., shipyard.
“Northrop Grumman was a charter member of the program,” LIHP said on its website, www.lihp.org. “Over the past several years they have helped 27 employees purchase homes, contributing over $600,000 … Employees who could not afford to live close to work and faced long commutes or else paid high rents were able to purchase homes on Long Island and put down roots.”
“I would say we helped over 233 people get into housing over the last three to five years,” Elkowitz said. “The program has been very successful.”
A number of EAH programs tap into federal and state programs to provide substantial additional down payment and rehabilitation assistance to homebuyers.
Nassau County, the richest county per capita in New York State, has a median household income of $93,579. A family at 80 percent of median income could qualify for $37,000 in employer, federal and state down payment assistance.
In Milwaukee, according to Select Milwaukee’s Raymond Schmidt, theoretically an EAH homebuyer could get as much as $75,000 by layering several programs, but the typical assistance, including employer loans of up to $5,000, averages about $13,000.
An ancillary goal of EAH programs is to improve dilapidated neighborhoods by providing grants to help rehabilitate homes that employees are buying. Samantha DeKoven, EAH project manager for the Metropolitan Planning Council (MPC) in Chicago, said the program benefits from $50,000 to $100,000 federal Neighborhood Stabilization Program grants to communities to rehabilitate homes and put them back on the market.
The MPC has run a large, successful EAH program in the Windy City and its suburbs since 2000. More than 75 employers participate, including the University of Chicago and a number of hospitals.
DeKoven describes the program as a “golden handcuff” that helps employers retain good employees. “The employer says to the employee you’re an important employee to us, and we want you to stay employed with us,” she said.
The MPC contracts with the Rogers Park Community Development Corp. on the north side of Chicago to provide counseling to prospective homebuyers. The RPCDC runs EAH programs for the Chicago Public Schools, which suspended its program earlier this year because of budget issues, Loyola University and the City Colleges of Chicago.
“We’ve helped close to 1,500 teachers over the last five years buy homes,” RPCDC Director Heather Hain said. “It’s been very popular.”
Unlike millions of other Americans, nearly all of the employees who bought their homes with the assistance of EAH programs have stayed above water in the real estate market. A number of older programs report that none of their EAH homeowners have been foreclosed.
“We’ve had a very low, less than 1 percent, foreclosure rate on teachers,” Hain said.
An NHC study of Aurora Health Care employees who bought houses through the Select Milwaukee program concluded that “EAH participants exhibit significantly lower turnover rates than non–participating employees.” The study found the annual turnover rate for all Aurora employees was 11.8 percent, but for EAH employees it was just 4.8 percent.