Live near work: a solution to rising gas costs - Metropolitan Planning Council

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Live near work: a solution to rising gas costs

Part Five in an ongoing series linking energy consumption and development patterns

With the price at the pump topping record levels, many advocacy groups have published their own version of “10 Tips for Reducing Your Energy Consumption.” While individual efforts – as well as critical thinking in the ongoing alternative fuels debate – are integral, communities also must start planning carefully to achieve the only sure-fire method for curbing America’s oil addiction: cutting car trips. Imagine the possibilities if we stopped subsidizing unnaturally low gas prices, and started letting the market catch up to rising consumer demand for pedestrian and bike-friendly communities near jobs, retail and public transportation. This is Part 5 in an ongoing Metropolitan Planning Council Web series, highlighting how we, as a region, can start recognizing every chance to grow or rebuild as another opportunity to diminish our auto dependency. Check back every other Thursday to learn innovative ways we can beat our oil addiction through sensible growth.

Most of us assume that at some point we’ll be homeowners. After all, that’s the American dream, right? House, garage, backyard. In fact, close to 70 percent of Americans do own their own homes, according to the National Housing Conference’s 2003 study, Locked Out. Yet, while the overall U.S. homeownership rate has continued to rise, the rate of homeownership for working families with children actually has fallen to 59.6 percent, 3 percentage points lower than it was prior to 1980, and 8.7 percentage points below the 2003 national homeownership rate.

Part of the problem is the lack of affordable homes for sale in job-rich areas. Often, in order to afford to own a home near work, families must double up or move to communities where the land is cheap, but the jobs are scarce. Because of this jobs-housing mismatch, workers are enduring “marathon” commutes. While some of us are fortunate enough to live near commuter rail lines, many face countless hours stuck in traffic, wasting time that could be better spent with our families or in our communities, spending far too money much on gas, and contributing to air pollution. The burden on individuals is heavy; as a region, the costs are staggering: every year, the Chicago metropolitan area fritters away some 365 million gallons of fuel, $4.2 billion in financial losses, and 237 million hours.

Tori Williams, a Chicago Public Schools (CPS) teacher and mother of 10-year-old Darius McCaskill, knows firsthand the difficult choices many workers face about where they can afford to live. Williams, who teaches kindergarten at Claremont Academy on the city’s South Side, has been a CPS teacher for seven years. Despite her professional job, Williams was unable to buy a home until May 2006. Exasperated with renting, she and her son moved in with her parents to save money for a downpayment. Then she found out about CPS’ employer-assisted housing (EAH) program. 

CPS is among dozens of companies in the Chicago region and around the country stepping up to help their workers buy homes close to work. Through employer-assisted housing programs, employers provide workers with downpayment or rental assistance and connections to credit and homebuyer counseling from a nonprofit housing organization. If the employee stays with the company for the agreed-upon length of time, usually five years, the loan is completely forgiven.

“It’s worked out great,” explains Ms. Williams, who received $3,000 in downpayment assistance from CPS, which leveraged an additional $3,000 from the Illinois Housing Development Authority and $3,000 from LaSalle Bank. “It brought down the final purchase price. I’ve been telling everybody!”

More than 600 employees have benefited from their employer’s assistance to buy homes closer to work through the Metropolitan Planning Council’s EAH initiative. Starting with one company in 2000, the program has grown to include more than 60 participants throughout northeastern Illinois, including McHenry County-based Medela Corporation, Allstate Insurance, City of St. Charles, Village of Riverdale, Charter One Bank, and Chicago Public Schools. In 2005 alone, regional employers invested more than $1.3 million to help their workers purchase homes.

These programs are fully customized and easy to administer. REACH Illinois partners, the local nonprofit housing experts, provide credit counseling and homebuyer education to employees and fully manage the program, relieving companies’ staffs of administrative hassles.

Employers like the program because it’s a way to differentiate their companies in the marketplace. Some companies use the benefit to attract new employees; others focus on it as a retention tool. In other communities, it’s viewed as a redevelopment tool, a way to invest in and improve the area.

"It's a commitment from us to the employee, and from the employee back to us," says Chris King, president of South Holland, Ill.-based Robinson Engineering. "I don't know that there are any pitfalls. It's win-win. It helps the towns see that we have a vested interest in their community, and our people are involved there."

The State of Illinois offers incentives that make EAH programs even more compelling. As part of the Illinois Affordable Housing Tax Credit program, employers can earn state income tax credits worth 50 cents for each dollar in benefits given. In addition, the state will match dollar-for-dollar any EAH assistance provided to eligible employees in northeastern Illinois — up to $5,000 based on household income. Finally, many employers who create EAH programs will qualify for federal tax deductions, because any investment in the program can be written off as donations through one of the many nonprofit REACH organizations.

The federal government also has seen the opportunity to encourage employer-assisted housing. Inspired in great part by lessons learned in Illinois, the Housing America's Workforce Act (HR 3194 and S1330) – introduced in the Senate by Sen. Hillary Rodham Clinton (D-N.Y.), Sen. Gordon Smith (R-OR) and Sen. Mel Martinez (R-FL) – has garnered bipartisan support as a constructive response to the decrease in homeownership rates among moderate-income working families.

"Employer-assisted housing programs support working families, while also reducing turnover costs for employers,” said Sen. Clinton. “Our proposal will expand EAH by offering tax credits to participating employers, excluding as taxable income the assistance received by employees, and supporting start-up counseling work essential to the success of the program. This is clearly a public-private partnership that is proven and makes sense."

To support private sector investment in housing solutions, the Housing America's Workforce Act offers a tax credit of 50 cents for every dollar that an employer provides to eligible employees. In addition, to ensure that employees receive the full value of employers' contributions, the act defines housing assistance as a nontaxable benefit, similar to health, dental and life insurance. Finally, the act establishes a competitive grant program available to nonprofit housing organizations that provide initial technical assistance, program administration, and outreach support to employers undertaking EAH initiatives.

"For fairly nominal costs," says Bennett Rosenthal, of Lake County, Ill.-based Rosenthal Brothers, "the program helps retain loyal and dedicated employees."

To build on Illinois’ successes and support the federal proposal, the Metropolitan Planning Council is now offering technical assistance. We can help you design and implement an employer-assisted housing program in the Chicago region or around the country. Housing Action Illinois can help with employers located in Illinois outside the Chicago region. For more information, visit the REACH Illinois Web site.

Read Part One of the series.
Read Part Two of the series.
Read Part Three of the series. 
Read Part Four of the series.

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