Communities can leverage employers’ support for affordable housing in a variety of capacities, including enlisting employers to build a constituency for affordable homes, adopting employer-assisted housing strategies for public workers, providing incentives for employer investment in affordable homes and providing organizational support to interested employers.
Enlist employers to build a constituency for affordable homes
Elected officials can work to mobilize private sector support for affordable housing initiatives. To build support for housing initiatives, state and local leaders can encourage members of the business community to assume a leadership role in efforts to increase the availability of affordable homes. Employers interested in providing homes for their workers can be a powerful constituency and have the capacity to apply a great deal of political pressure to secure the approval of specific developments, as well as needed changes in state and local housing policy. State and local officials can also use the public platform to elevate the profile of employers that have made exemplary efforts to provide employee housing benefits, and persuade others to follow their lead.
Promote employer engagement in the political process
While most employer-assisted housing efforts focus on the “demand side” — those that enhance the purchasing power of employees — local business leaders can also help to increase the overall supply of affordable homes.
State and local governments have the authority and organizational capacity to approve new residential development proposals, but their efforts may be hampered by lack of public support or outright opposition. Private sector employers can play a powerful role in countering “not in my back yard” (NIMBY) sentiment and building support for particular developments. Local businesses can also be a strong voice advocating for local public policies, such as changes in zoning or other local regulations, to support the development and preservation of affordable housing more broadly.
Recognize exemplary employer participation
Communities can encourage greater employer involvement in employee housing initiatives as well as broader political engagement around housing by recognizing the contributions of employers who play a leadership role in the area. There are a variety of ways in which public officials can highlight local business leaders and encourage others to act. For example, communities can convene business leaders to discuss housing issues and the role of the private sector or ask for their support in housing-related initiatives. In addition, local officials may choose to publicly acknowledge exemplary employer participation in housing initiatives, underscoring the importance of their actions and stimulating others to act.
Facilitate connections with interested employers
While the availability of matching funds and other incentives can stimulate participation in employer-assisted housing programs, some communities take more direct steps to encourage employers to offer housing assistance. State and local officials are in a unique position to encourage collaboration between nonprofit organizations and area employers, facilitating connections that might not have otherwise been made.
Adopt employer-assisted housing strategies for public workers
In some local jurisdictions, the public sector is one of the largest employers and can lead a community’s employer-assisted housing efforts. By offering housing-assistance programs for their workers, state and local governments set an example for private sector employers to emulate and help ensure that public employees can live near where they work. In some cases these programs may target emergency response workers, such as firefighters and police officers who are critical community workers.
Similarly, communities facing employee shortages in specified occupations may choose to offer housing benefit programs to new applicants in order to improve recruitment. While many communities focus housing-assistance programs on emergency response workers or in-demand occupations, such as teachers or health care workers, some localities extend the benefits of assisted housing programs to all public workers who are likely to have challenges finding an affordable home.
Provide incentives for employer investment in affordable homes
Participation in a housing program can lead to reduced staff turnover, greater productivity and an improved corporate image; however, financial incentives may still be needed to engage employers and increase private sector involvement in employer-assisted housing initiatives.
Offer matching funds for employer contributions
Many communities leverage public funds by offering matching programs where every dollar of housing assistance provided to employees by participating employers is matched by an equivalent contribution from the state or local government (up to a specified limit). Matching funds tend to be relatively modest and are generally used for down payment or closing cost assistance, although they may also be structured to allow use of funds for renter security deposits and other purposes.
While matching programs do not directly benefit businesses because the funds pass directly to the beneficiaries, their availability gives participating employers a competitive edge in recruiting new employees by allowing them to offer a more attractive benefit package. In addition, assistance can be structured as a loan that is forgiven over time, an arrangement that provides an incentive for program beneficiaries to stay with the company.
To be eligible for participation in the program, many jurisdictions require employers to make a minimum per-employee contribution, and may also stipulate that employees receiving down payment or closing cost assistance also receive homeownership counseling and financing from an approved lender. However, this strategy works best when there are adequate resources committed to match funding programs. The recent economic downturn has strained many government budgets, limiting the ability for some communities to continue this type of support to supplement employer housing benefits.
Provide tax credits to participating employers
To encourage employer investment in affordable homes, some states have implemented tax credit programs that entitle businesses to a reduction in their state tax liability in return for contributions of cash, property and/or securities to qualifying housing organizations. Tax-exempt employers, such as hospitals and universities, may transfer their credits to individual or corporate investors that have tax liability in exchange for a cash investment.
For those employers providing employer-assisted housing benefits to their workers, the tax credit helps to offset the costs of providing this benefit. For those employers interested in helping to support affordable homes more generally in the community, the tax credit helps to reduce the effective costs of charitable contributions to an approved housing assistance provider.
Provide organizational support to interested employers
Employers feel the effects of an affordable housing shortage when they have trouble recruiting and retaining employees; however, they may be deterred from providing a housing benefits package because they lack expertise in setting one up and cannot efficiently develop the necessary skills or capacity to administer a housing program. Small businesses may be least likely to be able to design and implement a housing benefits program on their own; these companies may also be the ones most adversely impacted by employee turnover related to high housing costs. To address this need, state and local government agencies have formed partnerships with nonprofit organizations that have expertise in delivering related services, including homeownership education and counseling, down payment assistance, below-market mortgages, assistance with security deposits and rental subsidies. Employers can “outsource” their housing programs to these organizations to ensure efficient delivery of services and remain free to concentrate on running their businesses.
Offer financial and other support to housing support organizations
In areas where an existing nonprofit organization has experience and capacity, localities can provide operating support to take on the additional work of administering employer-assisted housing programs. This support can take the form of funding to build organizational capacity or defray initial costs until employers are able to cover the ongoing costs. Alternatively, communities may wish to fund new organizations — perhaps operated by or associated with a business or economic development organization — to fulfill these roles.
State and local governments can help employers by providing seed money, staff assistance and other support to organizations that administer employer-assisted housing programs on behalf of participating employers.
Work with organizations to build an approval program
State and local governments can work with the nonprofit organizations that administer employer-assisted housing programs to build an approval or accreditation program that increases the nonprofit organizations’ effectiveness and attractiveness to local businesses. By creating a list of approved nonprofit organizations, local officials can help promote employer enrollment and ensure that funds are used in conjunction with a well-managed nonprofit housing program. Linking benefit eligibility to participation in approved programs also helps to indirectly fund the operations of the organizations administering the programs.