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Key Players
Employers. The most compelling reason for employers to participate in EAH programs is enlightened self-interest linked to their financial bottom line, although many certainly also see benefits in “doing good.” The cost savings resulting from reduced turnover and lower costs of recruitment, retention, and training are key selling points, as are greater employee morale and loyalty, and improved community relations. These benefits are real for employers that have created EAH programs—as many spokespersons will attest—and should be well marketed to potential participating employers. It is also important for all partners to recognize how the business climate relates to the ability of employers to participate: While the local economy is hot, employers may be far more willing to contribute than when the market slows. The program should establish a baseline commitment for employers that allows them to remain in the program through periods of expansion and contraction. One additional selling point for employers is that, since the bulk of the program is handled by an outside agency, administrative burden for the employer is minimal.
Some employers are more suited to EAH than others. The employers with the most potential to provide a real community benefit are those that are rooted to the community in which they are located (such as anchor institutions), those that face high workforce retention and recruitment challenges due to the lack of nearby housing for workers, and those that have a demonstrated commitment to community involvement. If there are no large employers that meet these qualifications, a consortium of multiple smaller employers could make sense.
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Partner Roles EAH programs are rarely run by an employer. Having an administrative partner that raises other funds and carries out most of the work leverages the skills and talent of each organization and makes it easier for employers to participate. |
Employees. Although it may seem that employees are the easiest component of the program to enlist, employees may believe they are ineligible, think that the assistance will be ineffective, or may lack information about the program. Effective marketing and outreach to employees is crucial to ensuring participation levels sufficient to ensure program impact and sustainability.
Residents. For EAH to benefit communities, existing residents must be involved. An EAH program must take the needs, desires, and capacities of residents into account. What form of assistance do residents want and need? What can they afford? Even with EAH assistance, will residents be able to afford down payments, or will rental assistance be more effective? In promoting EAH, resident interests must be central to the creation of the program.
Public agencies. Even if not directly administering the program, public agencies can help generate local support, provide data and technical assistance, help overcome development hurdles, provide connections to local businesses, and open up funding avenues that are unavailable to private organizations.
Nonprofit partners. Generally employers do not have the expertise or the resources available in-house to administer a housing benefits program. Nonprofit partner administrators can devote more time and resources to the program than an employer, have an understanding of affordable housing and community development, have expertise in various types of affordable housing subsidies, and can offer adequate financial counseling to program beneficiaries.
Technical assistance providers. While nonprofit administrators are key to the functioning of the program, even local nonprofit housing organizations often do not have experience with the unique nature of EAH programs. Technical assistance providers can provide program start-up and tracking assistance, help tailor the program to meet specific needs, and provide ongoing expertise as needed. Local and national nonprofit organizations can play this role.
Local business groups. Private employers, local chambers of commerce, and other business groups can be key partners in marketing the concept to employers, establishing programs, and advocating for supportive policies.
Lenders. Lenders are important sources of low-cost housing financing products for EAH programs and must be convinced that they can benefit from offering discounted loan products. CRA compliance can be one motivating factor for lenders; increased business volume is another. Standardized lending products can be helpful in obtaining lender participation: Both Fannie Mae and Freddie Mac have a range of very low-down-payment loan products that can be used by EAH programs. These products encourage lender participation in EAH programs by minimizing lender risk with the guarantee that low-equity loans will be purchased on the secondary market.
Key Ingredients
Multiple/combined strategies. Program recipients may have widely disparate housing needs with respect to down-payment assistance, homeownership counseling, and credit repair. Their incomes and savings will vary, as will their ability to afford certain interest rates, down-payment amounts, or rents. Housing markets may change quickly as different price ranges and varying ratios of rental and for-sale housing come and go. To assist the widest range of possible recipients, a variety of benefit mechanisms is necessary. Using multiple strategies in combination gives the program maximum flexibility and impact. EAH is also most effective when combined with other equitable development tools.
Adequate administrative resources. The administrative partner must have a thorough knowledge of housing assistance, community development strategies, and mortgage finance, plus other skills depending on nature of assistance offered, and must have sufficient available resources to deal with the potential volume of program.
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Adequate Financing As of 2007, 1,300 employees had bought homes through EAH initiatives with MPC and REACH partners, with 413 in 2006 alone. The assistance they received from their employers ranged from $1,500 to $7,500 per household. Over 2,000 employees have benefited from REACH EAH programs in some way, including credit counseling and homeownership education. -REACH Web site |
Adequate financing. Although some programs can be initiated with relatively limited funding, high levels may be necessary to maintain programs and have significant impact. Few single employers have the necessary resources to maintain entire programs. Multiple employer funding, government financing sources, foundation funding, tax credits, and other funding sources in combination can give the program greater impact and sustainability. Availability of funding sources may change over time; multiple sources give the program flexibility to remain viable for the long run.
Understanding of responsibilities. Given that EAH typically requires multiple partners, responsibilities must be clearly delineated: Employers, administrators, technical assistance providers, and other participants must each understand their roles. The REACH partnership in Illinois cites its Memorandum of Understanding, which clearly describes the role of each partner and is signed by the partners at program start-up, as a key to the success of the program.
Oversight. When used as a neighborhood revitalization strategy in weak market or transitioning neighborhoods, EAH has the potential to raise housing values and create gentrification pressures. Programs should be monitored to guard against negative effects on local residents. Oversight should be independent; groups involved in administration of or technical assistance for the benefit should not be involved in oversight, as there may be a conflict of interest. Local CBOs or other community groups not otherwise involved in the program could play this role.
Understanding local conditions. Employer-assisted housing requires a thorough understanding of local housing and labor markets: What type of housing is available at what price? What are workers able to afford in what areas? What types of industries are in an area, and what wages are being paid? Knowledge of these conditions is crucial to assessing the viability of a program; which employers, industries, and parts of the region should be involved; what kinds and levels of subsidy to offer; and what amounts of financing are needed.
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