Opening the Door to HomeownershipEmployer-Assisted Housing Programs

A report published byHomeward Inc., a not-for-profithousing association for RuralElectric Cooperatives in Iowa.

Dr. Arthur T. CoxAssociate Professor & DirectorReal Estate Education ProgramUniversity of Northern IowaCedar Falls, Iowa

Robin WagnerPublic Relations & Housing SpecialistButler County Rural Electric CooperativeAllison, Iowa

Communities represented in this report

1. Los Angeles, California (2)2. Baton Rouge, Louisiana3. Des Moines Iowa4. Las Vegas, Nevada5. Baltimore, Maryland6. Portland, Oregon7. Cleveland, Ohio8. Milwaukee, Wisconsin9. Oskaloosa, Iowa10. Glenwood Springs, Colorado

Cover Photo:View of Glenwood Springs, Colorado.Courtesy of Holy Cross Energy, an electric cooperativewith an EAH program described in this report.

ForewordBy Robert J. Bauman, President, Homeward Inc. andGeneral Manager, Butler County Rural Electric Cooperative

We are pleased to present this report, Opening the Door to Homeownership, in which we exploreseveral employer-assisted housing (EAH) programs and ways employers are using these

programs to benefit their businesses and the people they employ.

To those who want to build employee morale and loyalty, we hope this report will inform andenlighten you. Consider the decisions employers made when they initiated housing programs for theiremployees. They are all different and all valuable.

In 1977, a group of professionals in the rural electric industry from Iowa established Homeward, Inc.,a not-for-profit housing organization. Together we have taken on projects to make housing moreaffordable for our cooperative members and our communities. In the future, we will be working withemployers in rural Iowa to establish housing programs for their employees. What we learned from thisreport has helped us greatly and we hope it will help you.

Homeward Board of Directors Robert Bauman, President Butler County Rural Electric Cooperative, Allison, IA Mike Hagen, Vice President Wright County Rural Electric Cooperative, Clarion, IA Hancock County Rural Electric Cooperative, Garner, IA Fran Buckel, Secretary Franklin Rural Electric Cooperative, Hampton, IA Garry Hintz, Treasurer Sac County Rural Electric Cooperative, Sac City, IA

Employer-Assisted Housing ProgramsOpening the Door

Employer-assisted housing (EAH) programs are a growing trend at many work places acrossAmerica. Designed to help employees meet their housing needs, employers with EAH programs

are realizing rewards that are both immediate and long-term.EAH programs include a variety of types of assistance. Forgivable

loans, down payment assistance subsidies, and upfront grants supplementedwith deferred loan features are just a few examples. Assistance may alsoinclude cost of living differentials, closing costs assistance and affordablerental housing.

In this report we review several EAH programs and investigate theways that companies are using these programs to 1) increasehomeownership, 2) attract and retain employees, 3) improve housingconditions and 4) heighten the employer’s image in communities where theemployer operates.

EAH programs increase homeownership in a variety of ways, but allpromote homeownership by reducing the cost to acquire housing. Beyondthis basic benefit, some programs also manage to reduce the cost of living.For example, EAH programs that encourage homeownership inneighborhoods where employees can walk to work or take publictransportation often result in decreased use of family vehicles (Allen 1998).Additionally with the emergence of location efficient mortgages (Hoevelerand Liu 1998) borrowers can afford to spend more on their home becausethey spend less on transportation.

When used as a tool to attract employees, EAH programs canenhance a company’s efforts to hire the best and brightest individuals.Housing programs can be valuable components of compensation packages,especially in areas with high housing costs. Making the dream of attractiveand affordable housing possible can influence the decisions employees make about accepting jobswith prospective employers. EAH programs can help nurture a positive, long-term relationshipbetween employees and employers who are committed to them.

EAH programs can bring new incentives for improving housing conditions andneighborhoods. Some are designed to stimulate construction in communities with housing shortages,while others promote rehabilitation and neighborhood preservation. One program in Milwaukee,Wisconsin resulted in $22 of additional neighborhood investment for every dollar invested in theprogram by employees (Walk to Work Program 1997).

Companies with EAH programs report that heightening their image in the communities wherethey serve is an important benefit of their EAH programs. In many cases, employers, especially largecorporations, are perceived as impersonal and uninvolved in their communities. Through EAHprograms, employers can contribute to the economic vitality of communities by improving the realestate markets and encouraging employees to establish long-term relationships with other localbusinesses and organizations.

Every new home creates 2.1jobs directly related toconstruction and manymore jobs through increaseddemand for householdgoods and services.

The NationalHomeownership Strategy:Partners in the American

Dream,U.S. Department of Housing

and Urban Development,May 1995.

Brief History

The concept of employers helping employees obtain good, safe and affordable housing is not new. EAH programs date back to the beginning of the century with the Kohler Company. In 1918,

Kohler recognized a need for housing among employees moving to their company headquarters inWisconsin. The company built The American Club to provide housing for “single men of modestmeans.”

After World War II, housing in America was in short supply. Recognizing this, the Ford MotorCompany initiated a housing program for employees working at their company in Dearborn,Michigan. In Iowa, employers also saw the need for housing for their employees. The AluminumCompany of America built a large number of affordable, single-family housing units in the late 1940s.Although the company did not subsidize this housing, it was designed to be affordable and suitablefor young families of those the company was trying to attract as employees. The housing was alsopart of a larger campaign promoting the use of aluminum in construction.

Fannie MaeMany of the EAH programs described in this report were set up with guidance from Fannie Mae

(FNM/NYSE), a federally-chartered, shareholder-owned company and the nation’s largest source ofhome mortgage funds. Loan products available from Fannie Mae are helping to increase theavailability and affordability of housing for low-,moderate- and middle-income Americans.

Fannie Mae partners with employers across thecountry to design EAH programs and use FannieMae’s loan products. While the agency does not lendmoney directly to homebuyers, local banks may offerFannie Mae products including:

1. Magnet 3/2. The borrower provides 3 percentfor the down payment and 2 percent supplementedfrom another source. Loans are limited to thosewith household incomes at or below area medianincome.2. Magnet 5. The borrower provides 5 percentfor down payment and no income limitations arerequired.Fannie Mae’s products support a variety of EAH plans, but most are structured as a loan or

matching grant to help employees with down payment, closing costs or monthly mortgage payments.Loans can be designed as forgivable over a period of years, as deferred loans paid at resale or asamortized loans payable over five years at a favorable interest rate.

The change in population directly affects the supplyand demand of housing in a community.

Small Town Housing: Policy and Potentials,The University of Nebraska-LincolnCooperative Extension, May 1996.

Review of EAH ProgramsStructure, Delivery, Objectives & Benefits

Loyola Marymount University,Los Angeles, CAThe Plan

Loyola Marymount University operates two housing programs for full-time faculty members.The primary focus of the EAH programs is to help faculty overcome the high cost of housing in thevicinity of the university.

A Home Purchase Program for tenure-trackfaculty and a Rental Assistance Program for newlyhired members have both been in place since 1990.According to Kirsten Andresen, Manager of FacultyHousing and Real Estate, the university initiated theprograms to attract and retain quality faculty.EligibilityHome Purchase ProgramUnder this program, down payment assistance isavailable to faculty who have been on tenure-trackstatus for two years and have signed a contract toreturn for a third year. The faculty member mustcontribute 5 percent as a down payment toward thepurchase price of the home, as well as provide fundsfor all closing costs. The university will supplementthe down payment up to a maximum of 10 percent ofthe purchase price, in the form of a second mortgageloan with a term of 15 years. The followingrestrictions apply depending on the location of thehome relative to the campus:

• If the home purchased is within a 15-mileradius of campus, the maximum purchase price is$500,000 or four times the annual household incomeof the faculty member, whichever is greater.

• If a home is purchased more than 15 miles from campus, the maximum purchase price is fourtimes the faculty member’s annual household income. Down payment assistance in this case is limitedto the difference between the amount paid from personal funds and 15 percent of the purchase price,up to a maximum of 10 percent of the purchase price.Rental Assistance Program

Only faculty or full-time visiting faculty who do not own a home in the Los Angeles area areeligible for the Rental Assistance Program. The program was designed to encourage the establishmentof an academic community close to campus and increase faculty participation in campus activities.Additional program goals included reducing commuting times for faculty and providing them withreasonably priced rental housing that would facilitate savings for eventual home ownership.

The rental housing is affordable, rather than luxurious, and rent does not exceed 25 percent ofhousehold income. The university leases residential units (apartment, condo or duplex) and then

High housing costs and other factors have led someemployers to provide homebuying assistance toemployees so that they can obtain affordablehomeownership closer to their worksites. Employer-assisted housing programs hold enormous potential forexpanding homeownership. Yet, many employers,public and private, do not recognize the benefits thatcan accrue from such programs or are not aware oftheir potential and practicality.The National Homeownership Strategy: Partners in the

American Dream, U.S. Department of Housing andUrban Development, May 1995.

sublets them to eligible faculty members at a rate compatible with the faculty member’s income. Thedifference between the market rental rate and the amount the faculty member actually pays as rent isthe amount of the benefit received from the university. Benefits range from $850 for a one-bedroomunit to $1,325 for a three-bedroom unit for families with two or more children.Results

The university believes the programs have been successful in attracting excellent faculty andmitigating the faculty’s difficulty in obtaining affordable housing. To date, 43 faculty members haveused the Home Purchase Program and 8 have participated in the Rental Assistance Program.

Mid-City Redevelopment Corporation,Baton Rouge, LAThe Plan

General Health Systems in Baton Rouge launched its employer-assisted housing programthrough a subsidiary, Mid-City Redevelopment Corporation, in September 1996. According toElizabeth Thomas of Baton Rouge General Hospital, the purpose of the program is to revitalizeneighborhoods around the hospital.Eligibility

Hospital employees who have been with the system for 3 or more years and have attended afirst-time homebuyer-training course are eligible for assistance. The assistance is in the form of aforgivable loan, which may be used to purchase new or existing housing within targetedneighborhoods.

Any employee can receive $1,500 in assistance if housing is purchased within a 67-blocktarget neighborhood. Assistance from $1,000 to $1,500 is available for low-to-moderate incomeemployees (115% of median income or below) for down payment or closing costs on purchases madewithin a 1,000-block area of the mid-city region. A loan is forgiven when the employee remains in thehome for 5 years.Results

Initially this program sparked excitement from hospital employees and the community, but noemployees have yet used the program. However, General Health Systems believes the program hasserved as a good recruiting tool for employees to take the first-time homebuyer course that isrequired for assistance. With the average value of residential building permits issued in Baton Rougein February 1997 at $86,765, it might be that the $1,500 in assistance is not enough to motivateemployees to purchase in the target neighborhoods.

Principal Employee Home Advantage Program,Des Moines, IAThe Plan

In the spring of 1995, The Principal Financial Group in Des Moines began offering theEmployee Home Advantage program. The Principal’s goals for the program were to help makehomeownership affordable for its employees and to help revitalize targeted areas in Des Moines.Eligibility

The program gives qualifying employees a five-year $10,000 forgivable loan toward thepurchase of a home. Assistance is available to employees who have been with the company for at leastone year and desire to purchase or build a home in the area surrounding downtown Des Moines.Additionally, down payment and closing cost assistance of $1,250 for housing outside the target area

is available. In both instances, employees must remain with The Principal for five years after receivinga loan in order for it to be forgiven.

On occasion, the employer has partnered with a local nonprofit organization for housingassistance in specific areas of Des Moines. The nonprofit organization provides from $7,000 to$25,000 in rehabilitation funding for the homebuyer to upgrade his or her dwelling.Results

Because the labor market in Des Moines is extremely tight, the housing assistance programhelps the company hire employees it would not otherwise attract. Additionally, the program hasencouraged the revitalization of the city of Des Moinesby pumping dollars into the community and by improvingneighborhoods in the downtown area.

The Principal has reported no problems with theoperations of the program. A few participatingemployees have ended their employment beforesatisfying the five-year period required for the loan to beforgiven, but elected to keep their houses.

Jim Donnelly, Senior Associate CommunityDevelopment, with Principal Residential Mortgage, Inc.,thinks highly of The Principal’s housing assistanceprogram and the vital role it has played in neighborhoodrevitalization. Donnelly suggests other employersseriously consider implementing a housing program fortheir organization.

Mercy Home Advantage Program,Des Moines, IA

As a mortgage banking company, Principal Residential Mortgage provides assistance toMercy Hospital in Des Moines for its Mercy Home Advantage Program. Mercy Hospital’s program,initiated in 1997, is targeted at revitalizing the homes in the areas surrounding the hospital’sdowntown campus. Currently, this includes a 13-block radius. In the future, the program mightexpand to give greater housing options for their employees. With the exception of its size, theprogram is identical to The Principal’s and appears to have delivered many of the same benefits.

Rhodes Realty, Las Vegas, NVThe Plan

Rhodes Realty claims to have been the first employer in Nevada to offer housing assistance toemployees. Begun in 1997, Rhodes Homes Employer-Assisted Housing Program offers two differentoptions. Both are available to employees who have been with the company at least six months and arein good standing. All homes purchased under the program must be new Rhodes Realty homes.Eligibility

The first option requires the total income of all persons in the household not exceed $40,000.The buyer must provide 3 percent of the purchase price from his or her own funds for down payment.The employer will contribute another 3 percent, not to exceed $5,000. Two percent of the employer’scontribution is added to the amount of the employee’s down payment, giving the employee a totaldown payment of 5 percent. The remaining 1 percent is used for closing costs.

Manufactured housing is a major source ofaffordable housing, especially for many lower andmoderate-income families living in rural andsuburban areas. In 1994 over 300,000manufactured homes – one out of every five single-family homes built – were added to the nationalhousing stock.

The National Homeownership Strategy: Partnersin the American Dream, U.S. Department of

Housing and Urban Development, May 1995.

The assistance is in the form of a three-year forgivable loan. Employees who leave thecompany early must pay in proportion to the time they were employed. For example, if an employeestays for two years after purchasing a home through this program, he or she must repay one-third ofthe loan.

The second option holds no income limitations. Under this option, the employee provides 5percent of the purchase price from his or her own funds. Rhodes Realty contributes 3 percent of thepurchase price. This 3 percent cannot exceed $5,000, but can be used for additional down paymentsor to cover closing costs.Results

It appears many employees are interested in the EAH program, but cannot save the 5 percentdown payment requirement. In 1998, Rhodes Realty reported that only one employee hadparticipated. In spite of this, Rhodes Realty recommends the program to others. Cheryl Pike, EscrowManager, states that, “The program is a valuable part of the total employee incentive package andhelps with employee retention.”

Holy Cross Energy, Glenwood Springs, COHoly Cross Energy is an electric cooperative serving Glenwood Springs, Vail and outlying

Aspen areas where the median selling price for a home is around $500,000 and rentals areunaffordable for its employees. As far back as 1978, this electric cooperative faced situations where itcould not attract and retain employees unless housing assistance was offered. As a result, Holy CrossEnergy has offered various programs to help solve their employees’ critical housing problems.

Initially the cooperative experimented with modest housing subsidies for its line crewworkers. The cooperative has also owned several mobile homes that were rented to employees.The Plan

Today Holy Cross Energy offers three EAH programs. Employees cannot participate in all ofthem, but every employee can benefit by participating in one of the following:

Housing Allowance Program. A monthly subsidy of $450 is available for “outpostemployees” who must live and work in close proximity to the high cost of living areas.

Rental Program. When upkeep on the mobile homes becamea problem, the cooperative sold them and built two rental units overits headquarters in Vail. These, along with two additional units ownedin Aspen, are rented to employees. According to the co-op’s managerof administrative services, Bob Gardner, Holy Cross Energy opted outof expanding its rental program when employees indicated theypreferred to purchase homes.

Reimbursable Mortgage Assistance Program. Under thisprogram, which was begun in 1996, the cooperative pays part of themortgage on single-family homes purchased anywhere within 30minutes of Holy Cross Energy’s offices in Aspen, Vail or GlenwoodSprings. To qualify for the program, the employee must provide 5percent of the purchase price for down payment and closing costs.Holy Cross Energy takes a second mortgage on each property.

Holy Cross established a formula of participation based on theemployee’s total household income and the monthly cost he or she canafford. The cooperative contributes the difference needed as a housingallowance that is added to the employee’s paycheck. The maximumaffordable mortgage is determined and, based upon the employee’s priority ranking, a multiplier

Holy Cross Energy service territoryin Colorado, where high housingcosts led this employer to provideseveral EAH programs.

utilized to determine the mortgage amount Holy Cross Energy will subsidize. For example, a linecrew worker who can afford a $100,000 mortgage based on his or her income can, with a multiplierof 3, get a $300,000 mortgage with help from Holy Cross Energy. When the home is sold, Holy CrossEnergy recovers a portion of the allowance.Eligibility

All employees are eligible for Holy Cross Energy’s programs, but staff who serve on-call inAspen and Vail get first priority for assistance. There are no income guidelines or first-timehomebuyer restrictions. New employees are also eligible.Results

Holy Cross Energy’s programs are administered in-house. Twelve employees haveparticipated in the reimbursable mortgage assistance program and all employees who are eligiblereceive the housing allowance.

University of Southern California,Los Angeles, CAThe Plan

The University of Southern California’s EAH program for faculty and staff, consisting of bothsubsidy and loan programs, was begun in 1980. According to Roberta Giolli of the UniversityTreasurer’s Office, funding for the loan program comes from university funds, while the subsidies arepaid from the treasurer’s department budget.Eligibility

Under the loan program, the university provides a seven-year loan up to $100,000 or 33percent of the purchase price. The loan, in the form of a second mortgage, can be paid back over theseven years or by balloon payment when due. Interest rates for loans are set at the 30-year Treasurybond rate plus 50 basis points, or a minimum rate of 7 percent.

The Neighborhood Home Ownership Program is a subsidy program that is provided to allbenefits-eligible USC employees for development of the communities around the institution. Theprogram is helping many junior employees purchase homes. A total subsidy of $25,000 is providedover a seven-year period. For the first three years $5,000 is provided. During the fourth year $4,000is given, $3,000 in year 5, $2,000 in year 6, and $1,000 in year 7.

In addition, the university also provides closing-cost subsidies, down payment assistance andmonthly housing allowances for full-time faculty. The individual university departments fund theseprograms. USC believes the down payment assistance is a major component in the overall programsuccess. They are aware that employees face greater hardships in accumulating a down payment thanmaking mortgage payments.

A restriction requiring that real estate purchased be the employee’s primary residence isenforced. The university believes the program is a successful outreach project that demonstrates itsbelief about the value of community support.Results

As a result of these programs, over 800 employees have benefited. The programs have beeninstrumental in helping the university attract key faculty from around the country and the world.

Panel Components Corporation inOskaloosa, IA

Designed with help from Fannie Mae’s Partnership Office in Des Moines, Iowa, this programbegan in 1998 with a one-year allocation of $25,000 to help employees purchase homes.

The PlanPanel Components planned a Home Purchase Assistance Program with these purposes:

1. To provide direct financial assistance for a full-time employee’s home purchase.2. To provide incentives that will allow Panel Components to recruit and retain employees.3. To encourage homeownership.

Assistance is in the form of a forgivable home purchase loan, tied to continued employment over afive-year period, and forgiven by 20 percent each year the employee continues working at PanelComponents. Panel Components holds second mortgages on all properties involved until loans areforgiven or paid. The maximum loan amount is the lesser of $5,000 or 5 percent of the homepurchase price and can be used for closing costs or for down payment assistance.Eligibility

To qualify for the program, the employee must provide 3 percent of the purchase price fordown payment and closing costs. Funds can be used to purchase homes in any location in Iowa, aslong as the home is the employee’s primary residence.If the home purchased ceases to serve as the primaryresidence or an employee’s employment with PanelComponents terminates, the unforgiven portion of theloan will convert to a fully amortized loan for theremaining term. Interest then accrues at a rate equalto the current prime rate.Results

Simple in design, this program foundimmediate success and Panel Components exhaustedall of the $25,000 allocated for 1998. A total of fiveforgivable loans were used to help Panel ComponentsCorporation employees purchase homes in threedifferent Iowa communities: Oskaloosa, West Des Moines and Roland.

In January 1999, the company plans to refund the program with $25,000 for a second year.According to Tammy Blackburn at Panel Components, “Recruiting and retaining employees is one ofour biggest concerns. The labor market is tight and helping employees with homeownership is reallypositive.”

Baltimore City Employee Homeownership Program,Baltimore, MDThe Plan

In 1996, the city of Baltimore, Maryland, established a goal to boost homeownership not onlyfor employees with lower incomes, but for a broad spectrum of potential city employees, includingsenior management, middle management and line staff. The city structured the program as an up-frontgrant, supplemented with a deferred loan feature and allocated $2 million for the project.Eligibility

The program was made available to all 26,000 city employees. Full-time employees in goodstanding for at least six months are eligible. Completion of a homebuyer education course is alsorequired. Eligibility is restricted to first-time homebuyers or employees who have not owned aprinciple residence during the previous three years. This restriction, however, is waived on a case-by-case basis for employees whose incomes exceed 80 percent of the area median. The purpose of thewaiver was to specifically attract moderate-income people to city homeownership.

Panel Components Corporation has 85 employees atthis plant in Oskaloosa, Iowa. Through their EAHprogram, employees are able to purchase homes inOskaloosa and the surrounding area.

To obtain $10,000 in assistance, a city employee must provide a minimum of $1,000 for his orher part of the down payment. The city matches the down payment up to $2,500 and then lends theemployee the difference, which cannot exceed $10,000. For example, an employee with $2,500 indown payment from their personal funds would receive $2,500 as the maximum matching grant. Theemployee is also eligible for an additional $7,500 deferred loan. The result is an employee with$2,500 for a down payment is able to come to closingwith a total of $12,500. The deferred loan isstructured with a 10-year term. The principal balancedeclines each year the employee continues to work forthe city.Results

The $2 million in available funds meant that ifparticipants were eligible for the full $10,000 inbenefits offered, a maximum of 200 employees wouldactually be able to participate. Funds were exhaustedin the first eleven months of operation.

Fannie Mae brought 24 lenders into theprogram and 12 of those became very active inhelping employees access home loans.

In its first year of operation, 825 employees enrolled in the homebuyer education course and342 were actually eligible for the program.

In 1998, the city amended the program with these changes:• Reduced the benefit amount from $10,000 to $5,000.• Offered a designated yearly amount for a set period.Additionally, the city is planning to structure a private-sector EAH incentive program for private-

company employees who buy homes in the city.

Emanuel Hospital Neighborhood Homeownership Program,Portland, OR

In 1990 Emanuel Hospital implemented an employer-assisted housing program that has helpedimprove a surrounding city neighborhood in Portland, Oregon. The program, administered throughthe human resources department, illustrates ways that a local employer can enhance its communityrelations by helping revitalize a deteriorating neighborhood.The Plan

Reacting to community opposition to the demolition of houses near the hospital for a buildingexpansion, Emanuel Hospital took steps to repair relations through an employer-assisted housingplan. The program supported home purchases in a neighborhood surrounding the hospital that wasdeteriorated and crime-ridden. The hospital hoped to provide a benefit for their employees whilestimulating the neighborhood’s economic growth. To design the program, the hospital assembled anadvisory committee consisting of the Portland Housing Authority, the Oregon Housing FinanceAgency, the Oregon Community Foundation, the Black United Fund, city officials, lenders, nonprofitdevelopers, real estate agents and home-buyer education providers.

To fund the program, Emanuel set aside $100,000 per year for a three-year period. Loans of$5,000 with interest to cover down payment and closing costs were available until the fund was

Home in Oskaloosa, Iowa, purchased with assistancefrom Panel Components Corporation’s EAH program.

exhausted. The loan principal is forgiven at a rate of 20 percent of theprincipal amount each year and is taxable income to the employee.Employees can also apply for $500 in up-front earnest money.Eligibility

To be eligible for the hospital’s EAH plan, an employee must bein good standing with a minimum of 12 months employment at Emanuel.He or she must maintain good standing in subsequent annualperformance reviews. Employees must be pre-qualified for a mortgageloan by a lender and have saved 2 percent of the required downpayment.

Participants are also required to complete a homebuyereducation course. The hospital provided $50,000 to two nonprofitorganizations to provide that service in conjunction with the hospitalplan.Results

Over time, the hospital and community realized these benefits:• Home prices increased in the neighborhood surrounding the

hospital. This prompted Emanuel to raise the maximum saleprice of homes eligible for their program from $65,000 to$85,000.

• 75 employees bought homes in the declining neighborhoodaround the hospital.

• Employee and community relations improved.• Several local companies developed similar employer-assisted

programs.

Four Local Hospitals,Cleveland, OH

Looking for ways to retain employees with low incomes and build good relationships with thelocal government resulted in the development of an employer-assisted plan at four hospitals inCleveland, Ohio, in 1996.The Plan

The institutions offer assistance in the form of a five-year forgivable loan for down paymentand closing costs. The maximum loan available is $2,500. Funding for the program comes from theCleveland Clinic Foundation, $50,000; Kaiser Permanente, $25,000; University Hospitals, $100,000;and Inner City Nursing Home, $15,000.

Hospitals were allowed to establish individual guidelines. For example, one health careinstitution required employees to have three years of service to qualify. Cleveland Clinic limitedemployee participation to 25 employees, Kaiser Permanente would assist 15, University Hospitals setits limit at 60 and Inner City Nursing Home would assist 5.

With assistance from Fannie Mae, a nonprofit local housing organization hired a full-timeemployee to market the program and administer the EAH programs for the hospitals.

To introduce the program to employees, an informational housing fair was held at eachhospital. Lenders, nonprofit organizations and other housing providers participated at the lunchtimeevents. Approximately 500 employees and patients attended.

According to a study sponsoredby the Natural ResourcesDefense Council, people wholive near their place ofemployment experiencesubstantial economic savings intransportation costs. The councilsuggested that households in theSan Francisco Bay Area save$350 to $450 per month byliving near the urban centers.

The National HomeownershipStrategy: Partners in the

American Dream, U.S.Department of Housing and

Urban Development, May 1995.

EligibilityTo receive the full benefits, employees must buy homes within the city of Cleveland. Homes

can be newly built or renovated, but must meet city code requirements and be in “move-in” condition.Employees must be full-time, with one year of service and contributing to a household income

that is at or below the area median income. They must also be first-time homebuyers, willing to staywith the employer for at least 12 months after the home purchase, and must be owner-occupants ofthe property.Results

Guidance from Fannie Mae helped them combine efforts with a community developmentinitiative to promote neighborhood revitalization and the construction of 500 homes within walkingdistance of the hospitals. Federal and state tax creditsfor housing activity within designated zones,combined with the hospitals’ EAH plans, resulted inpositive benefits for their low-income employees.

In the first six months of operation, onehospital helped 20 out of 105 eligible families becomehomeowners.

As lenders, the hospitals have found theprograms to be relatively hands-off while theemployees do most of the legwork. The hospitals gainthe lion’s share of the program’s rewards with verylittle effort beyond giving out applications andverifying employee eligibility. Program representativeAnne O’Donnell highly recommends use of employer-assisted housing programs to other employers.

One result of the program, which wasanticipated during the planning stage, was that manyemployees purchased homes near the hospitals wherethey worked. The project illustrated that having newhousing developments near an employer’s location isattractive to both employers and employees.

The program also showed that housing fairsand seminars are more effective when held at the work place. Additionally, administration by anonprofit organization was instrumental in the success of this EAH program.

Walk to Work, Milwaukee, WIThe Plan

The Walk to Work program is administered by Select Milwaukee, Inc., a nonprofitorganization that has been promoting homeownership and stabilizing neighborhoods since 1993. In1998, the program was sponsored by nearly 14 employers in Milwaukee, including the MilwaukeePublic Schools, Milwaukee Rescue Mission, Harley-Davidson Motor Company, Northwestern MutualLife, Sinai Samaritan Medical Center, MGIC and the Greater Mitchell Street Association.Eligibility

Employers may identify their own program goals and designate neighborhoods as eligible.Examples include the following:

For many potential homebuyers, the lack of cashavailable to accumulate the required down paymentand closing costs is the major impediment topurchasing a home. Other households do not havesufficient available income to make the monthlypayments on mortgages financed at market interestrates for standard loan terms. Financing strategies,fueled by the creativity and resources of the private andpublic sectors, should address both of these financialbarriers to homeownership.The National Homeownership Strategy: Partners in the

American Dream, U.S. Department of Housing andUrban Development, May 1995.

• Northwestern Mutual Life & Harley Davidson both provide up to $2,500 for down paymentassistance to eligible employees purchasing new or existing homes. Assistance is in the form ofa no-interest, three-year forgivable loan. Refinancing is not eligible. Units can be single-family,duplex, multiple use or condominium. The buyer need not be a first-time homebuyer.

• MGIC’s plan is similar to Northwestern Mutual & Harley Davidson, but with a $3,000 loanlimit per family.

• Sinai Samaritan Medical Center provides a maximum $3,000 forgivable loan as long as theemployee contributes a minimum of $500 toward the purchase price. Loans are forgivableover five years.

In addition, Select Milwaukee participates in a community-based homebuyer counselingorganization with lenders who target first-time homebuyers. Called New Opportunities inHomeownership in Milwaukee, the organization’s purpose is to increase access to home mortgageloans and provide pre-purchase counseling and advice.

Select Milwaukee also supports the Milwaukee Value Real Estate Professional DesignationProgram to identify real estate professionals with a commitment to the Milwaukee neighborhoodhousing market. Designated real estate professionals receive special training on innovative loanproducts and credit guidelines that meet the needs of city buyers.Results

Raymond Schmidt, executive director of Milwaukee’s Walk to Work program, is proud of theprogram’s success. From October 1993 to March 1998, the program helped 134 employees purchasehomes. The average assistance provided by employers was $2,455, with the average employeeinvestment at $4,392. Of the 134 purchases, 51 have been suburb to city moves. With over 200employer-assisted purchases to date, the Walk to Work program has resulted in over $10 million inhome sales.

Employer-Assisted Housing ProgramsConclusion

The most exciting fact about EAH programs is that everyone benefits when good quality housing isobtainable. Benefits of EAH programs appear to fall into three broad categories: contributing to localeconomic development efforts, attracting and retaining employees, and establishing a good corporateimage.Contributing to local economic development efforts

EAH programs can focus on the redevelopment of declining urban areas and the support ofhousing construction in both rural and urban areas. Communities with these programs have seen innercity neighborhoods revitalized and new housing built in deteriorating areas. Neighborhoods have beenmore desirable places to live and real estate values have increased in targeted areas. In many cases,smaller communities experience more construction of single-family dwellings as an ancillary benefit.

A significant number of employees who participate in EAH programs are choosing to liveclose to their employers. Even so, this is often not possible in communities with housing shortages. Inour report, several employers resolved housing shortages by stimulating new housing developments inneighborhoods close to their businesses and proved that EAH programs can contribute to theavailability of improved housing stock in both rural and urban communities.Attracting and retaining employees

EAH programs can be valuable tools in any employer’s recruiting efforts. Programs that helpattract and retain high quality employees can compliment employers’ other human resource efforts.Subsidized housing programs, especially in areas with tight labor markets and skyrocketing housingprices, are important recruitment and retention tools (Grimsley 1998).

In this era of tight labor markets these programs are increasing loyalty and morale. Employeesare more likely to stay with an employer who is helping to solve their housing needs. An EAHprogram that promotes homeownership can create a more stable work force and help an employerretain key staff. According to Fannie Mae, “Without the stability of homeownership, employees maybe more transient, adding to company recruitment and training costs” (“A Status Report,” January1997).Establishing a good corporate image

Maintaining an image as a good corporate citizen is important for many companies. An EAHprogram can enhance an employer’s working relationship with the local government and raise itsprofile in a positive manner. Regardless of the number of employees participating in an EAH program,local communities universally view EAH efforts of employers as unselfish.

Overview of ProgramsIn our study, EAH programs with levels of assistance from $5,000 to as high as $25,000 had

the most participants, with the higher amounts used most often in urban areas. The most commontype of assistance was an outright grant or a forgivable loan that was tied to a minimum length ofservice and satisfactory performance on the part of the employee.

Maximum AmountsEmployers EAH Programs Types Available to EmployeesLoyola Marymount University Down Payment Assistance Loan 10% of purchase price (limits on cost of

home applied)Rental Assistance Subsidy 25% of household income not to exceed

$1,325/monthMid-City Redevelopment Corp. Down Payment Assistance Forgivable Loan $1,500Principal Residential Mortgage Down Payment Assistance Forgivable Loan $10,000(includes Mercy Hospital) Closing Cost Assistance Grant $1,250

Rehabilitation Funding Forgivable Loan $25,000Rhodes Realty Down Payment Assistance Forgivable Loan 3% of purchase price not to exceed $5,000Holy Cross Electric Assoc. Housing Allowance Program Subsidy $450 per month

Rental Program Affordable Rentals Varies, based upon need and priorityranking

Mortgage Assistance Subsidy Varies, based upon need and priorityranking

University of Southern Calif. Down Payment Assistance Loan $100,000 or 33 percent of purchase priceMort. Payment Assistance Grant or Subsidy $25,000

Panel Components Corporation Down Payment Assistance Forgivable Loan $5,000 or 5% of purchase priceBaltimore City Down Payment Assistance Grant/For. Loan $10,000Emanuel Hospital Down Payment Assistance Forgivable Loan $5,000

Closing Cost Assistance Grant $500Four Local Hospitals: Cleveland Down Payment Assistance Forgivable Loan $2,500Milwaukee Down Payment Assistance Forgivable Loan $3,000

Citations1. Allen, J. Linn. 1998. “Mortgages with a Motive.” Chicago Tribune, July 26, 1998.2. Fannie Mae. January 1997. “Employer-Assisted Housing: A Status Report.”3. Grimsley, Kirstin Downey. 1998. “More firms providing subsidized housing.” Saint Paul

Pioneer Press, November 28, 1998.4. Hoeveler, James, and Liu, Donna. 1998. “Accessibility vs. Mobility: The Location Efficient

Mortgage.” Available from: http://www.cnt.org/lem/apa/htm.5. “Walk to Work Program.” 1997. Select Milwaukee, Inc., Raymond Schmidt, Executive

Director, 2209 N. Dr. Martin Luther King Jr. Drive, Milwaukee, WI 53212.

Bibliography1. Allen, J. Linn. 1998. “Mortgages with a Motive.” Chicago Tribune, July 26, 1998.2. Chicago Tribune. 1998. Section 8, Page 11, April 19, 1998.3. Cliburn, Jill K. 1997. “Scorched by the Sun.” Rural Electrification Magazine 56 (November):

24-27.4. Hoeveler, James. 1998. Center for Neighborhood Technology, 2125 West North Avenue,

Chicago, IL 60747. Also available from: http://www.cnt.org.5. Hoeveler, James, and Liu, Donna. 1998. “Accessibility vs. Mobility: The Location Efficient

Mortgage.” Available from: http://www.cnt.org/lem/apa/htm.6. Fannie Mae, n.d. “Case Study: EAH Plan for local hospitals, Cleveland, Ohio.”7. Fannie Mae, n.d. “Case Study: EAH Plan for local universities, New Orleans, Louisiana.”8. Fannie Mae, n.d. “Case Study: Emanuel Hospital/Legacy Health System Neighborhood

Homeownership Program, Portland, Oregon.”9. Fannie Mae. January 1997. “Employer-Assisted Housing: A Status Report.”10. Fannie Mae, n.d. “Case Study: Washington University and BJC Health Systems Employer

Assisted Housing Programs, St. Louis, Missouri.”11. Grimsley, Kirsten Downey. 1998. “More firms providing subsidized housing.” Saint Paul

Pioneer Press, November 28, 1998.12. Strickland, Rosalind G. 1998. The Cleveland Clinic Foundation, Cleveland, Ohio.13. O’Donnell, Anne. 1998. University Hospitals, Cleveland, Ohio.14. “Panel Components Corporation Home Purchase Assistance Program.” June 1998. Panel

Components Corporation, P.O. Box 115, Oskaloosa, IA 52577-0115.15. U.S. Department of Housing and Urban Development. May 1995. “The National

Homeownership Strategy: Partners in the American Dream.”16. “Walk to Work Program.” 1997. Select Milwaukee, Inc., Raymond Schmidt, Executive

Director, 2209 N. Dr. Martin Luther King Jr. Drive, Milwaukee, WI 53212.

An initiativeThis report began in 1998, as a research project completed by Jessica Heilman during her final year of study

in the University of Northern Iowa’s Real Estate Program. We are indebted to her for compiling much of the datacontained in this report.

Butler CountyRural Electric Cooperative521 N. MainPO Box 98Allison, IA 50602319-267-2726

Franklin Rural Electric Cooperative1560 Highway 65 NPO Box 437Hampton, IA 50441515-456-2557

Hancock CountyRural Electric Cooperative600 W Third StreetPO Box 149Garner, IA 50438515-923-2654

Sac CountyRural Electric Cooperative601 E Main StreetPO Box 397Sac City, IA 50583712-662-4275

Wright County Rural Electric Cooperative2099 Highway 3 WPO Drawer 113Clarion, IA 50525