employer-assisted housing: overview » introduction » provide incentives
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Goal: Increase the Availability of Affordable Homes
Role: Generate Capital
Policy: Leverage Employers' Commitment to Affordable Homes for Workers

Provide Incentives for Employer Investment in Affordable Homes
States and localities have developed a number of financial incentives to encourage employers to provide housing benefits for their employees or the larger workforce:

Portland Place
Portland Place, Minneapolis MN -- Photo courtesy of LHB, Inc.		Click on the links below to learn more:

Offer matching funds for employer contributions
Leverage public funds by offering matching programs where every dollar of housing assistance provided to employees by participating employers is matched with a public contribution

Provide tax credits to participating employers
Encourage employer investment in affordable homes with tax credit programs


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Provide incentives for employer investment in affordable homes
While participation in a housing program can lead to reduced staff turnover, greater productivity and an improved corporate image, financial incentives may still be needed to engage employers and increase private sector involvement in workforce housing initiatives.

Other pages in this section:

Oakman ManorAdopt employer-assisted housing strategies for public workers
In some communities the public sector is one of the largest employers. 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.


Hastings MarketplaceProvide organizational support to interested employers
Design and administration of an employer-assisted housing program can take a substantial amount of time and require expertise that many businesses do not have. Some communities have found it useful to fund local nonprofit organizations to make these services available to interested employers.


Brush ParkEnlist employers to build a constituency for affordable homes
Elected officials can use their influence to mobilize private sector support for affordable housing initiatives, thereby raising the profile of businesses that take the lead in offering employer-assisted housing programs and prompting others to follow suit.

Click here to review case studies of employers who have established employer-assisted housing programs, or click here to view other resources on working with employers to improve the availability of affordable homes.


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 downpayment 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 (as 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, most jurisdictions require employers to make a minimum per-employee contribution, and may also stipulate that employees receiving the benefit receive homeownership counseling and financing from an approved lender.
Solutions in Action
Delaware's Live Near Your Work program, launched by the State Housing Authority in 2003, provides matching downpayment or closing cost assistance to the staff members of participating employers.

To qualify, employee household income and home purchase prices cannot exceed specified thresholds, and homes must be located in proximity to the workplace -- typically within a 3-mile radius. Employers contribute $1,000 per participating employee, which is then supplemented with an equivalent state contribution and matching funds from the local community, if it's also a program participant.

Slightly higher grants are available for homes purchased in targeted revitalization areas. Employees who receive the grants must add $1,000 from their personal savings, complete a HUD-approved housing counseling course, and secure financing from an approved lender.

Click here for more information on the program.

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.  For example, the City of Philadelphia's Home - Buy -  Now program was suspended in the spring of 2009 due to a lack of city funds.  Prior to suspension, the 4-year old program offered matching funds of up to $5,000 for homebuyers employed at one of 35 participating Home - Buy - Now workplaces.  In 2009 alone, the city assisted 61 homebuyers purchase homes in Philadelphia.   Due to the program's success and small share of the overall city budget, the city plans to restore funding to the Home - Buy - Now program and reach the  mayor's goal of growing the city population by 75,000 people over a 10-year period. 

Although Home - Buy - Now matching grants are not currently being offered by the City as of January 2010, the program's 35 partners continue to offer EAH benefits to their employees.  Click here to learn more about Home - Buy - Now.  

Click here to read a case study, prepared by Abt Associates for the National Association of Home Builders, describing the Live Near Your Work program in Baltimore, Maryland.

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Provide tax credits to participating employers

To encourage employer investment in affordable homes, some states offer 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.

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.

In Illinois, the Affordable Housing Tax Credit Program offers a 50-cent state income tax credit for every dollar invested in employer-assisted housing or donated to the creation of affordable homes. Legislation creating the credit, passed in 2001, authorizes an initial allocation of $13 million in tax credits through 2011, with $2 million reserved specifically for employer-assisted housing initiatives. There are no restrictions on the number of employees that receive assistance, although to be eligible for the credit the total investment by an employer or group of employers must be at least $10,000. Illinois employers can receive the credit by offering down payment and closing cost assistance, below market-rate mortgages, mortgage guarantee programs, rent assistance and/or individual development account plans to qualifying employees. Click here to leave the site and learn more.

Click here for more examples of tax-credit strategies.


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