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Added benefits

Companies kick in cash to help employees become homeowners

Ben Clark's job as a field technician for a south suburban engineering firm comes with some perks he likes: an annual bonus, company softball games and golf outings and lots of collegiality at assorted corporate team meetings. But he says one perk stands above all the rest as a sign of his bosses' faith in his abilities and his future at the company. Last September his employer, Robinson Engineering, kicked in $5,000--at no cost to him--so he could buy his first home.

"All I have to do is stay at the company for five years after my closing date," says Clark, 21, who bought a one-bedroom condominium in Glenwood. "It's a great thing they did, showing me they appreciate my effort as part of the team and they're really considering how I make out in life."

That show of support is a two-way street, according to Chris King, president of South Holland-based Robinson. "It's a commitment from us to the employee, and from the employee back to us," King says. The cost of finding and training new civil-engineering employees is steep, he says. By forging a long-term bond with Clark , the company avoids the high price of putting a replacement in his slot. In the past four years, Robinson has made $5,000 housing loans to four employees, each with the stipulation that the amount will be forgiven if the employee stays on for five years.

"They're all still here," King says. "That's good for us because we're in a growth period, so turnover is not something we want to worry about. As a firm, we structure pretty high in our benefits to try and encourage employees to stay; that $5,000 loan is one more incentive."

Robinson Engineering isn't the only company using forgivable housing loans as a spur for employee loyalty. Since 2000, at least 20 Chicago employers--including corporations, hospitals, municipalities and the public schools--have set up employer-assisted housing, or EAH, programs to help low- and middle-income employees afford homeownership.

While application time varies by plan and employer, some programs take only a few weeks more than a standard mortgage. That doesn't include credit counseling or other prep work the counselors determine that applicants need.

And if employees leave, loans are called in full. That's why employers say they are careful to recommend only those with good work records. But they also say it works both ways; having secured this lower-cost financing via your employer, you are likely to work harder to keep your job.

About 250 Illinois home buyers have relied on the boost from an EAH program, according to Robin Snyderman, housing director for the Metropolitan Planning Council. At least three times that number have gotten help straightening out their credit and otherwise planning for homeownership through the confidential counseling that most EAH programs include, she says.

Snyderman and others backing EAH programs expect those numbers to climb rapidly in the next few years, as more employers find out what a sweet deal an EAH can be.

"I don't know that there are any pitfalls," King says. "It's win-win." Along with the payoff in worker loyalty and reduced training costs, his firm can get a tax credit from Illinois equal to half what it spends on the EAH program.

But even without that credit, the first Illinois company to set up a forgivable housing loan program appears to have made back every penny it has given away.

System Sensor, a St. Charles firm that makes smoke detectors for commercial and industrial use, worked with the Metropolitan Planning Council to launch a pilot EAH in the beginning of 2000. Twenty employees each got $5,000 in housing assistance the first year, and according to Dick Braun, the company's director of human resources, "we saved about $100,000 in turnover and costs to fill positions, so we broke even on it." The same has been true in subsequent years, he says. About 60 System Sensor employees have bought homes using forgivable loans from the company.

Like King, Braun says there is no evident downside to setting up an EAH program--not even for employees, who might cynically believe a forgivable loan comes with some sort of paternalistic strings attached. That possibility disappears when the employer establishes its program through an independent housing-assistance corporation, an agency whose expertise lies in counseling low- and moderate-income on how to become credit-worthy in the eyes of home lenders. (System Sensor works through Joseph Corp. in Aurora .) Counseling is confidential and not something that the employer has any access to or influence over.

In fact, Snyderman says the outside counseling agencies sometimes make the deal even better for a potential home buyer, because they know about other programs that can help the buyer on top of what the employer does.

Through an Illinois Housing Development Authority program, for instance, a buyer with a household income less than 50 percent of the area's median can qualify for another $5,000 from the state on top of the EAH funds. For aspiring home buyers whose jobs are in relatively pricey neighborhoods, "$5,000 from your employer doesn't bridge the gap to homeownership," she says, "but double that and it makes a big difference."

Clark benefited first from the counseling. "I was living with family in Harvey and didn't think it was possible I could buy a place on my own," he says, "but they helped me figure out what I needed to do to get myself ready to buy my first home." Next he took advantage of the money, without which, he says, "I definitely couldn't have done it."

There's a third party benefiting from Clark 's purchase of a home in Glenwood, says King, the company president. That would be Glenwood. Robinson Engineering is the municipal engineering staff for the southern suburb and at least 37 other towns in the Chicago area and Northwest Indiana . The company's EAH requires borrowers to live in one of its client towns.

"It helps the towns see that we have a vested interest in their community, our people are involved there," King says.

Other employers use an EAH to achieve some other goal. Charter One Bank, for example, makes $5,000 forgivable loans available to employees, but pushes the upper limit to $8,000 for a borrower who buys in a neighborhood the U.S. Census identifies as "emerging" (a low- to moderate-income area), the better to help improve those neighborhoods. And some 15 of the 96 hospitals in the eight-county metropolitan area have EAH programs in place as one facet of their attempt to ease the shortage of skilled healthcare workers, says Scott Ziomek, director of government relations for the Metropolitan Chicago Healthcare Council.

At System Sensor, borrowers can get a forgivable loan only if they buy a house within 15 miles of the plant, or, if they live within that distance, they buy a house that's closer to the plant. The idea is to help workers reduce their commute time, Braun says. "When commuting time is less, attendance at work is greater and you can spend more time at home with your family," he notes. "If you have bad weather and you live far from work, it's sometimes easier to call in for a sick day, but if you live nearby, you'll come in."

The EAH and other incentives have helped reduce worker absenteeism at System Sensor from 16 percent to less than 5 percent, Braun says. But it's not only about getting people to come to work, it's also about making it possible for people with modest incomes to live where the jobs are. In the 1990s, the distance between the Chicago-area's job centers and its affordable housing grew, MPC's Snyderman says. That means longer commutes, more traffic and greater detachment from the workplace.

It also threatened to isolate System Sensor from the pool of labor, according to King Harris, who owned the company through his firm Pittway Corp. at the time the EAH was getting started. (He has since sold Pittway to Honeywell.) In the mid-1990s, Harris says, "we were having trouble attracting enough employees to meet our production needs. We ended up setting up a twin plant in Juarez , Mexico , because labor is plentiful there."

When MPC's Snyderman approached Harris, who is involved with the group, about launching a pilot EAH program, he says, "this looked like a way where we in the business sector could take some leadership in attracting the workforce to where we are building our plants, instead of just asking political leaders what they're going to do about it."

So System Sensor's EAH program started up because the boss, Harris, wanted one. But Braun says it has survived because it works. To hourly workers, "the company can seem like we're just the money-makers, and all we want is to have these people come work for us," he says. "But a program like EAH shows them we're interested not only in what they do for us but their family life--that we want them to be able to buy a home."

Keywords

Housing

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