anonymous

English

Research Papers in Economics

I
n  1912,  Clarkdale,  Arizona  was  founded  by  Senator 
William  A.  Clark  to  provide  housing  for  workers  at 
his United Verde copper mine in nearby Jerome. Like 
other “company towns” established during the indus-
trial heyday of the 19th and early 20th century, United Verde 
built and maintained the housing stock in Clarkdale and 
thereby ensured that its employees could live nearby. Today, 
Clarkdale is no longer a mining town, but it is home to mixed-
income housing, a thriving commercial district, recreational 
and cultural facilities, and parks, reflecting the imprint of 
Senator Clark’s original master plan for the community. 
Today, few company towns still exist. But with housing 
costs now far exceeding workforce wages in many parts of 
Arizona, the idea of “employer assisted housing”—albeit in a 
different form than the development of an official company 
town—is  gaining  renewed  traction.  In  2004,  The  Arizona 
Assocation of REALTORS partnered with Fannie Mae to 
launch “Housing Arizona’s Workforce,” a program designed 
to assist employers in developing housing benefits for their 
employees. Arizona’s pilot has now become a national effort 
called “Home from Work,” cementing the idea that employ-
er assisted housing is an important tool for addressing the 
affordable housing needs of the country’s workforce.1
More of an umbrella term than a specific program, em-
ployer assisted housing (EAH) encompasses a wide range 
of possible activities, ranging from simple and inexpensive 
strategies such as providing homebuyer education classes   
at the workplace and notifying employees about existing 
government  subsidies,  to  more  significant  interventions 
such as offering downpayment assistance and mortgage loan 
guarantees. (See Figure 1) At the heart of EAH is the idea 
that employees should be able to afford to live in the com-
munities in which they work, and that there are multiple 
benefits to being able to do so. Not only do EAH programs 
reduce employee housing costs, they also reduce the costs 
associated with commuting and congestion.2 Employers also 
benefit. A study by the Joint Center for Housing Studies at 
Harvard University shows that reducing commute times can 
increase employee morale and productivity, and decrease 
absenteeism, tardiness and stress. All of these factors can 
reduce turnover, which cost businesses an average of 25 per-
cent of an employee’s annual salary.3
Well-designed  EAH  programs  can  also  contribute  to 
neighborhood revitalization and support a broader range 
of community development goals, such as infill develop-
ment, community involvement and civic participation. In 
West Palm Beach, Florida, for example, MerryPlace received 
funding from the legislature under a pilot workforce hous-
ing project, bringing urban infill construction to an area 
that had historically been plagued by crime and abandoned 
buildings. The $45 million project qualified for $5 million 
in funds from a state workforce housing program by setting 
aside units for teachers at nearby schools. The school district 
is among several agencies funding the project. Universities 
have also used EAH programs to help revitalize neighbor-
hoods surrounding their campus facilities.
Employer Assisted Housing 
Addressing the Housing Affordability Gap 
Demand-Side Mechanisms 
Up-Front (Down Payment,    
Closing Costs) Assistance: 
  Deferred loan  
  Repayable loan   
  Forgivable loan   
  Grant 
  Savings plan withdrawals/loans 
  Employee savings match 
  Second mortgage 
  Mortgage guarantee 
 
Monthly (Carrying Costs) Assistance:
  Mortgage buydown 
  Group mortgage origination 
  Group mortgage insurance 
  Securities purchase 
  Equity guarantee  
(assurance/insurance pool)
Marketing/outreach services 
Education/counseling services 
Supply-Side Mechanisms
Advocacy
Cash participation
Provision of development sites
Donation of services
Construction financing
Purchase guarantees
Master leases
Figure 1. Employer Assisted Housing Can Span a Wide Range of Activities 
16   Spring 2008In the last five years, the number of EAH programs has 
grown significantly, though it has a long way to go before it 
is as common as health or retirement benefits. (See Figure 2) 
In part , this is because EAH remains an unfamiliar concept 
for many human resource departments, and employers may 
not be aware of the range of benefits they could offer under 
EAH. To address these barriers, the Community Develop-
ment Department has hosted forums and roundtables in 
many high-cost areas in the Federal Reserve’s 12th District 
to introduce the concept of EAH to a wide range of stake-
holders and to facilitate the partnerships needed to develop 
EAH  programs.  In  Idaho,  for  example,  Craig  Nolte,  the 
Community Development Department’s regional manager 
for Alaska, Idaho, Hawaii, Oregon and Washington, helped 
organize a “Northern Idaho Workforce Housing Summit” 
at Schweitzer Mountain Resort in Sandpoint to address the 
growing gap between the area’s wages and housing costs, 
which are being driven upwards by demand for expensive 
vacation properties. The Summit brought together over 200 
participants,  including  employers,  government  officials, 
nonprofit  organizations  and  lenders,  to  learn  how  they 
could collaborate to provide more affordable housing op-
tions in the region. Craig has also worked with banks to 
educate them about the mortgage lending opportunities as-
sociated with employer assisted housing programs.4
Another barrier to widespread adoption has been lack of 
funding to support more robust EAH programs. Some states, 
most notably Illinois, have created EAH tax credit programs 
to help offset employer costs of offering a housing benefit. 
Between 2000 and 2006, the Illinois program has helped 
over  1,000  employees  buy  homes  using  their  employers’ 
contributions towards their downpayment, and more than 
2,000  employees  have  benefited  from  credit  counseling, 
homeownership education, and down payment assistance.5 
Some state housing finance agencies and city governments 
also offer EAH mortgage programs especially for targeted 
workforce groups such as firefighters and teachers. 
Still, many suggest that there is a need for a national tax 
credit to increase the scale of these programs. The Housing 
America’s Workforce Act, introduced in Congress in March 
of 2007, aims to do just that. The Act, based on the Illinois 
model, would provide a tax credit equal to 50 percent of the 
cost of qualified housing expenses for eligible low- and mod-
erate-income employees. For homebuyers, this would pro-
vide up to $10,000, or six percent of the employee’s home 
purchase price (whichever is less), which could be used to 
subsidize  down  payments,  closing  costs,  financing  costs, 
contributions to second mortgage pools, mortgage guaran-
tee programs, or contributions to an employee homeowner-
ship savings account. For renters, up to $2000 could be ap-
plied toward security deposits and rental payments. The Act 
also would award $5 million a year in grants for nonprofit 
groups and local governments taking part in employer-assist-
ed housing programs.6 
While it is unlikely that the Act will pass before the 2008 
national  elections,  efforts  to  promote  federal  legislation 
supporting EAH will undoubtedly continue. The National 
Housing Conference, which was the driving force behind 
the introduction of the bill and which has been working to 
educate legislators about the benefits of EAH, sees this as an 
important bi-partisan issue. Rosalyn Crain, Policy Associate 
at the National Housing Conference, says that EAH offers 
“a triple win. It benefits the community, it benefits busi-
nesses, and it benefits employees. A federal law would help 
to raise the visibility of EAH as a viable and cost effective 
affordable housing strategy, one that works in rural commu-
nities as well as in high-cost metropolitan areas.”
Affordable housing is one of the many community de-
velopment issues that requires that we continue to develop 
innovative strategies that bring new resources and partners 
to the table. Craig and the other regional managers in the de-
partment will continue to explore ways to raise awareness of 
EAH programs among employers, lenders, and community 
groups, seeing it as one way to effectively leverage public 
and private funds to address housing affordability challenges 
and community revitalization within the Federal Reserve’s 
12th District. 
0
2
4
6
8
10
12
2001 2002 2003 2004 2005 2006
Source: Office of the Comptroller of the Currency (2007). 
Figure 2. Growth in Employer-Assisted Housing Benefits 
     (2001-2006)
Percent of employers surveyed that offer  
down-payment assistance (n=386) 
17 Spring 2008From Mattress Money to Checking Accounts
1.  Wyatt Buchanan (2007). “Bank accounts put in reach of poor, 
immigrants; S.F.’s pioneering effort allows residents to avoid high 
fees at check-cashing outlets.” December 4, 2007, The San 
Francisco Chronicle.
2.   Center for Financial Services Innovation (200x).  “Fact Sheet: 
The Unbanked and Underbanked.”  Center for Financial Services 
Innovation, Chicago, IL.  
3.   Matt Fellowes and Mia Mabanta (2008). “Banking on Wealth: 
America’s New Retail Banking Infrastructure and Its Wealth-Building 
Potential.”  Brookings Institution, Washington DC. 
4.   Wyatt Buchanan (2007). “Bank accounts put in reach of poor, 
immigrants; S.F.’s pioneering effort allows residents to avoid high 
fees at check-cashing outlets.” December 4, 2007, The San 
Francisco Chronicle.
5.  Abby Hughes Holsclaw (2008).  “NLC’s bank on cities campaign to 
help city leaders expand access to mainstream financial services.”  
February 4, 2008, Nation’s Cities Weekly.
6.   ibid.
Community Land Trusts
1.  David Abromowitz and Roz Greenstein (2008). “A Foreclosure-Free 
Option,” The Boston Globe, January 23, 2008.  Available online at 
http://www.boston.com/realestate/news/articles/2008/01/23/a_
foreclosure_free_option/
2.   John Emmeus Davis (2006). Shared Equity Homeownership: The 
Changing Landscape of Resale-Restricted, Owner-Occupied 
Housing. National Housing Institute: New Jersey.
3.   Gus Newport (2005). “The CLT Model: A Tool for Permanently 
Affordable Housing and Wealth Generation,” Poverty and Race, 
January/February 2005.  See also: “Building Urban Villages,” E. 
F. Schumacher Society Newsletter Jan 2006, accessed online 
on February 22, 2008, http://www.schumachersociety.org/
newsletters/06jan26.html.
4.   In the 1970s, 80s and 90s the Institute for Community Economics 
(I.C.E.), Burlington Associates in Community Development, and 
others fostered the creation of community land trusts around the 
country—providing support and technical assistance. Then, in 2005, 
I.C.E. passed the torch for training, resource development and peer-
to-peer networking to the people who run CLTs—the practitioners. 
Last year this group formed the new National Community Land 
Trust Network.  See Community Land Trust Link, Volume 1, 
Issue I, Winter 2007, http://www.cltnetwork.org/Resources/
newsletters/2007/NCLTnetwork-newsletters-winter%202007-vol1.
pdf
5.   Rosalind Greenstein and Yesim Sungu-Eryilmaz (2007). “Community 
Land Trusts: A Solution for Permanently Affordable Housing,” Land 
Lines January 2007.  Lincoln Institute of Land Policy.
6.   Gus Newport (2005). “The CLT Model: A Tool for Permanently 
Affordable Housing and Wealth Generation,” Poverty and Race, 
January/February 2005.
7.   John Emmeus Davis (2006). Shared Equity Homeownership: The 
Changing Landscape of Resale-Restricted, Owner-Occupied 
Housing. National Housing Institute: New Jersey, p. 19.
8.   Mickey Lauria and Erin Comstock (2007). “The Effectiveness 
of Community Land Trusts: an Affordable Homeownership 
Comparison,” Lincoln Institute of Land Policy Working Paper.
9.  http://www.iceclt.org/clt/cltmodel.html#impfeatures
Employer Assisted Housing
1.  “Home From Work Employer-Assisted Housing: Step by-Step Guide,” 
National Association of Realtors, available online at http://www.
realtor.org/prodser.nsf/products/126-140?OpenDocument
2.  For additional information on employer assisted housing, see: 
Schwartz, David, Richard Ferlauto and Daniel Hoffman. “Employer 
Assisted Housing: A New Tool for Low and Moderate Income 
Families.” Journal of Housing. 46.1 (1989): 31-34. Schwartz, David 
C. and Daniel Hoffman. “Employers Help with Housing.” The Journal 
of Real Estate Development. 5.1 (1989): 18-22. Sullivan, Tim. 
“Putting the Force in Workforce Housing.” Planning. 70.10 (2004): 
26-31. 
3.  The Joint Center for Housing Studies of Harvard University 
(2000). Employer Assisted Housing: Competitiveness through 
Partnership.
4.   See Office of the Comptroller of the Currency (2007). 
Understanding Employer-Assisted Mortgage Programs: A Primer 
for National Banks.  Community Development Insights, August 
2007.
5.   REACH Illinois (2007). “Employer-Assisted Housing 2006 Year-
End Report,” available online at http://www.metroplanning.org/
resources/4050.asp?objectID=4060&categoryID=2
6.   Ludwig, Fred (2007). “Federal Employer-Assisted Housing Bill Gets 
Second Chance,” Planning 73(6): 48-49.
Streamlining the Mortgage Approval  
Process in Indian Country
1.  As sovereign governments, tribes have the right to form their own 
government; the power to make and enforce both civil and criminal 
laws; the power to tax; the power to establish membership; the 
right to license, zone and regulate activities; the power to engage in 
commercial activity; and the power to exclude persons (Indian and 
non-Indian) from tribal territories.
2  See Listoken et.al (2004). The effective homeownership rate is 
calculated to reflect the factors that are usually associated with 
homeownership tenure in the United States: many owned units on 
Reservations are Mutual Help (which is a rent to own program and is 
not market based, and ‘owners’ cannot sell their units).  The effective 
homeownership rate also excludes units that don’t have electricity, 
plumbing or a kitchen.
3.   The terms of the mortgage product are also beneficial to borrowers. 
The downpayment requirement is low: 1.25% to 2.25% depending 
on the appraised value of the home.  In addition, borrowers need not 
take out private mortgage insurance (borrowers pay a 1% guarantee 
fee at closing), and need only to demonstrate a 41% debt to gross 
income ratio which can be exceeded with compensating factors. 
Section 184 loans can also be sold to Fannie Mae and Freddie Mac 
in the secondary market.  While initially the program was targeted 
primarily to on-reservation lending, the Section 184 program was 
expanded in 2002 to apply more broadly to all tribal areas.
Endnotes
22   Spring 2008

Employer assisted housing: addressing the housing affordability gap

http://www.frbsf.org/publications/community/investments/0805/employer_assisted_housing.pdf

Employer assisted housing: addressing the housing affordability gap

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics