GMHF has Supported Employer Assisted Housing Efforts in Over 30 Minnesota Communities
GMHF Shares Lessons Learned
Since 1996 GMHF has helped local organizations mobilize successful EAH programs. Working with residents, city officials and employers has resulted in the creation of hundreds of new affordable housing units and a few lessons learned.
Local owners are accessible- Talking directly to business owners is the most effective way to communicate.
Local owners make decisions more quickly- Locally owned firms can decide on corporate giving or benefit options without referring such decisions to remote decision makers.
Community concern and involvement is higher- Local connections create a stronger sense of civic responsibility than would be felt by the CEO of a national company based in another state. Local business owners are also typically involved in many civic and community matters -affordable housing may already be on their radar.
Smaller local employers are motivated- While contributions from main street employers may be modest they can be surprisingly generous and serve to build community support and awareness for affordable housing among local public officials and the community at large.
Minnesota owned companies are the next best prospect.
If employer ownership is not local, a Minnesota-owned business is the next most likely type of employer to become involved in a local affordable housing initiatives. Minnesota owned employers better understand the direct connection between the availability of workforce housing and their ability to attract and retain workers. National and internationally owned firms are least likely to participate.
If company ownership is out-of-state, such as a national or international firm with a local office or branch, financial participation is less likely. Having said this it is also important to also say “never say never”. Special business relationships, personal connections, shared concerns or outright generosity on the part of a national or international firm may very well result in support for a local housing initiative (see the Mayo Clinic contribution in Rochester and Hormel's efforts in Austin).
Keep it simple, but smart.
Everyone — buyers, lenders, realtors and other partners — wants a program that is easy to explain and understand. The desire for simplicity is one reason why downpayment assistance grant programs are popular. However, it gets more complicated if larger amounts of funding — for instance, $10,000 or more — are available to borrowers.
Should everyone receive the same amount of assistance, regardless of need, just to keep it simple? Is increased complexity acceptable if the program makes better use of limited resources? Smart choices in program design should not be sacrificed for simplicity, but a program that no one understands is useless. Keep focused on your goals, design a good program and always keep looking for ways to simplify.
Know your goals.
Before investing in a housing program, employers should carefully consider their goals. For some employers, there may be several motives, including creating housing for workers and strengthening the community.
Some questions to consider might include:
Should funds be provided as a grant or will repayment be required?
Will the program be used as an incentive to retain employees?
Can funds be available to non-employees?
Are there other important business-related goals, such as Community Reinvestment Act credit for bank investors?
Setting clear priorities and goals at the start will help to create a program that meets everyone’s needs.
Understand the housing market.
It is easy for a well-intentioned employer to offer help without fully understanding the problem. Before starting any program, employers and their partners need to understand the local housing market.
Questions to ask should include:
If a downpayment assistance program is created, are there enough moderately-priced houses for employees to purchase in the community?
If rental housing is identified as a need, how much are people willing to pay for rent?
Are there new units in the pipeline or programs in development that might affect the market?
Good research and a thorough understanding of market issues will prevent many headaches later in the project.
Seek help from good partners.
If someone is offering help, take it. While this is good advice in almost any circumstance, it's particularly important for employers that are considering investing in a housing program. Fortunately, there are local Housing and Redevelopment Authorities, Economic Development Authorities and nonprofit housing organizations available to help in designing an initiative, applying for funding, and administering a program. If no one has offered help yet, keep looking.
Contact GMHF or the Minnesota Housing Finance Agency for names of organizations active in your area. Attend a training session on applying for funds. If the idea is good, somebody else has probably already tried it and learned from it. Most people in the housing business are willing to help others avoid the mistakes they have already made.
Pool funds and leverage resources to increase impact.
Starting a program can seem overwhelming or futile if an employer wants to help, but can only make a small financial contribution. To address this challenge, local businesses can leverage their individual contributions by combining resources with other employers. Pooled funds can then be used to start a downpayment assistance fund or can be granted to affordable housing developments in the community.
In addition, several agencies and organizations have programs that assist affordable housing efforts across the state. For example, communities and lenders can partner to apply for firstmortgage funds through the Minnesota Housing Financing Agency’s Community Activity Set Aside program. Buyers who access this program receive a below-market interest rate mortgage and can qualify for additional secondary financing.
Refer to the Minnesota Housing Resource Guide, for more information on statewide resources and programs.
Focus on marketing.
Every business owner knows that advertising is critical to generating new customers. The same rules apply for an employer assisted housing program. Without a good marketing program, an initiative is unlikely to succeed. A common mistake is to assume that since housing is needed in the community, there will be more applicants than money available. Ironically, many people who might be qualified may assume that the program will not work for them. Even though the need may be significant, the program will still require effective, targeted marketing to be successful.
Allocate funds for program administration.
An idea is developed, funds are raised and an employer assisted housing program is created. Now, who will operate it? Funds for program administration are essential to the ongoing success of an initiative. While most employers want to provide funds that will go directly to homebuyers,
it is critical to find resources to administer the program. Without funds for administration, programs operate on a shoestring budget and potential buyers often do not receive all of the assistance they need.
Provide access to homebuyer education and affordable mortgage products.
Since owning a home is often described as the “American Dream,” it is not surprising that many employers want to support affordable homeownership programs. In addition to employer financial assistance, however, other important resources are needed to create successful homebuyers. Quality homebuyer education is a critical component of a successful homeownership program, especially if the potential buyers have modest incomes or are first-generation homebuyers. Homebuyer education classes and individual counseling teach people about monthly budgeting, credit and loan options, and help them to determine if they are ready to own a home. For many people, existing credit problems need to be resolved over a one- to two-year period with the help of a homebuyer counselor before they are ready to purchase a home.
For employees who are ready to buy, affordable first-mortgage products are critical in making homeownership possible. The first mortgage loan has the largest impact on a buyer’s monthly payment, so finding loan products with features like below-market interest rates, downpayment assistance and flexible underwriting will make the difference for many buyers.
Take credit and give credit.
Employers should not hesitate to take credit for their participation in housing efforts. The recognition is deserved and it may encourage other employers to participate. Remember to give credit to the other partners who have helped to make the program a success. The partnerships created by this initiative can be invaluable in developing future projects. |
