2005 Mid-Year REACH Report - Metropolitan Planning Council

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2005 Mid-Year REACH Report

REACH-Illinois contines expanding in the first half of 2005, with 72 new successful homebuyers and six new employers signing on.

In the first half of 2005, employer-assisted housing initiatives in Illinois took great strides forward, with the Metropolitan Planning Council (MPC) and its REACH partners expanding efforts in the Chicago region, Housing Action Illinois (formerly Statewide Housing Action Coalition) and new REACH partners gearing up statewide, and a new partnership with state departments beginning to meld.

REACH Illinois began in 2000 with one MPC-designed pilot partnership between System Sensor and the nonprofit Joseph Corporation, which, in the first year, helped 16 employees buy homes within 15 miles of work. By the middle of 2005, the program boasts more than 40 committed employers, including 19 with programs targeting the new mixed-income communities being developed through the Chicago Housing Authority (CHA) Plan for Transformation. Over 400 new homebuyers have been supported by EAH during these five years, and an additional 200-300 have benefited from counseling provided by the REACH partners.

Employer Sign-Ons
In the first half of 2005, six new employers signed on to offer EAH while others moved into implementation. In the Chicago region, Swedish Covenant Hospital, Lake Forest College, and Rush University decided to launch. MB Real Estate, Midway Movers, and Mercy Hospital announced that they would offer programs linking employees with homes in the CHA mixed-income communities. In addition, several existing EAH partners announced they would expand their programs to support the mixed-income communities: Bank One, MB Financial Bank, First Midwest Bank, Charter One, and Bank of America. In other parts of the state, Housing Action worked with various employers, preparing them for official approvals later in the year.

Most employers have decided to offer $5,000 as a forgivable loan to employees who commit to stay with the employer for five years. Employees are referred to a REACH partner for credit counseling, homebuyer education, and assistance through the homebuying process.

Small Business Consortium: A New Model
A new small business consortium model has also been developed. This model will provide a cost-effective, hassle-free way for businesses expecting to assist fewer than five employees to participate in EAH. The first small business consortium in the Chicago region is being led by the Local Employment and Economic Development (LEED) Council, an independent nonprofit organization of local businesses and industries working to promote employment and economic development along the North Branch of the Chicago River. Businesses that sign up for the consortium will be able to refer their employees to LEED Council, which will manage and administer the program. Spanish Coalition for Housing will provide counseling to employees. The bilingual housing counselors will help employees repair credit, understand the homebuying process, and prepare for homeownership. Letters went out in late May to the members of LEED Council and the Industrial Council of Northwest Chicago inviting employers to join the consortium. An informational meeting held in July was attended by 50 businesses and two aldermen.

Employee Participants
In the first half of 2005, 130 employees signed up to participate and 72 employees bought homes with assistance from their employers. This includes 37 teachers participating in the new Chicago Public Schools housing program which kicked off in April. While data is not available for all buyers, based on existing information, the median employee income is $46,000; the median household income is $51,000, which is approximately 100 percent of Area Median Income. The median household size is two people. There were four Latino, 10 Asian, 11 African-American, and 17 Caucasian buyers. In addition, 29 employees put money down on contracts for homes related to the Plan for Transformation that will be available in the months ahead. The following table provides greater detail, including information summarized by employer.

Table 1
Successful Homebuyers

Employer Name

System Sensor

City of Evanston

University of Chicago

Northwest Hospital

Chicago Public Schools

All* Median

All* Average

REACH Partner

Joseph Corporation

Housing Opportunity Development Corporation

Neighborhood Housing Services of Chicago

North West Housing Partnership

Various

Various

Various

Total number of buyers

3

2

18

2

37

72

72

Employer assistance

$5,000

$5,000

$7,500

$5,000

$3,000

$3,000

$4,532

Median employee salary

$29,954

$48,440

$40,920

$36,992

N/A

$45,533

$41,158

Median household income

$75,112

$48,940

$51,000

$52,644

$52,620

$50,958

$55,630

Median household size

4

3

2

2

1

2

2

Median income as % of AMI (considering family size)

95%

80%

100%

100%

104%

100%

99%

Number of non-white buyers

3

2

10

0

11

16

16

Median purchase price

$109,000

$282,500

$179,250

$134,950

$195,000

$189,000

$192,820

Median bank loan amount

$94,000

$179,000

$150,000

N/A

N/A

$156,000

$149,616

Number of buyers receiving other assistance

1

2

13

0

0

17

17

Number of first-time buyers

3

2

17

2

37

63

63

*Totals included in the overall median and average include buyers who were the only employee from a company purchasing a home.
Information about those buyers is not included to protect the individual's confidentiality.

Launched Programs
In June, St. James Hospital and Healthcare, with sites in south suburban Chicago Heights and Olympia Fields, rolled out its new EAH program to employees with informational sessions at each location. Staff from MPC and Regional Redevelopment Corporation (RRC) explained the program, described the assistance to be provided, and detailed eligibility requirements. Approximately 30 employees participated, and the hospital expressed confidence that the initiative would meet the goals of helping employees realize their dreams of homeownership, encouraging retention, rewarding valued employees, assisting employees to live near work, and supporting reinvestment of the communities near the hospital. Eligible employees who complete the homeownership education course with RRC will receive $5,000 in down payment assistance from the hospital, to be forgiven over the five-year work commitment.

Chicago Public Schools (CPS) rolled out an EAH program for teachers in April, aiming to distinguish itself in a competitive market for teachers. The district also hopes the EAH program will help reduce turnover by making teachers invested homeowners in their communities. To quality for the benefit, teachers must have one year of teaching experience, be a first-time homebuyer in Chicago, commit to teaching for CPS for five years, and participate in homeownership education provided by one of the four approved counseling organizations: Rogers Park CDC, ACORN, Chicago Urban League, or Spanish Coalition for Housing. CPS provides an interest-free loan forgiven at the end of five years in the amount of $7,500 for teachers who choose to buy a home in one of the CHA mixed-income communities or $3,000 to purchase anywhere else in the city of Chicago.

City of Chicago Champions EAH
In addition to the significant EAH program launched by the Chicago Public Schools, Chicago Mayor Richard M. Daley hosted two breakfasts in the first half of 2005 to encourage broad business participation in EAH. In February 2005, the mayor participated in a panel discussion on employer-assisted housing attended by over 100 business leaders. Illinois Institute of Technology (IIT) Vice President David Baker moderated the panel, which also included MPC President MarySue Barrett, Chicago Housing Commissioner Jack Markowski, and CHA CEO Terry Peterson. The event recognized new employers "signing on" to EAH in support of the CHA Plan for Transformation. Media coverage of the presentation appeared in Crain's Chicago Business, on the World Business Chicago Web site, and on WVON-AM and WBBM-AM radio. The mayor's public support for EAH generated significant interest among businesses citywide.

In April, Mayor Daley hosted a second EAH meeting for hospital CEOs. This presentation discussed how EAH can help address the workforce shortage within the health care sector, including nurses and technical positions. As a result, Rush University Hospital and Mercy Hospital announced their intent to launch programs. These are in addition to the University of Chicago Hospitals and Advocate Bethany Hospital, which have EAH initiatives up and running. Later in the spring, the Metropolitan Chicago Healthcare Council sent a letter to 140 members in the Chicago region, highlighting the benefits of EAH initiatives, particularly for recruiting and retaining employees. Several other hospitals are also finalizing plans to implement their own initiatives.

State of Illinois Supports EAH
Having developed great incentives for employers to participate in EAH (tax credits, and downpayment matching funds, and counseling cost reimbursement), in 2005, the Illinois Housing Development Authority (IHDA) has increased its support for marketing EAH to businesses. Working with the Dept. of Commerce and Economic Opportunity (DCEO) and the governor's office, IHDA is assisting with statewide EAH outreach, including funding a new marketing brochure designed for a statewide audience. DCEO has started including MPC and its EAH partners in meetings with employers that are expanding or relocating their operations.

More Chicago-Area Communities Explore EAH
The Affordable Housing Planning and Appeals Act, which was passed into law in 2003 and took effect in 2004, requires communities to have 10 percent of their housing stock affordable to moderate-income families. IHDA determined that 49 communities in northeastern Illinois (based on 2000 Census data) do not have enough affordable housing. Those communities are developing new plans to attain that 10 percent goal. MPC offered assistance to communities designing their policies, and Highland Park, Glencoe, Lake Zurich, and Long Grove have included EAH in their new housing plans.

REACH Partners
The Metropolitan Planning Council and Housing Action Illinois are working with IHDA and other state agencies to introduce EAH to businesses throughout the state and link them with a local nonprofit housing counseling organization that can administer the program. The following list indicates the breadth of coverage now available for employers interested in their own EAH programs.

In the Chicago region:

  • ACORN - Chicago
  • Affordable Housing Corporation of Lake County - Lake County
  • Chicago Urban League - Chicago
  • Corporation for Affordable Homes of McHenry County - McHenry County
  • DuPage Homeownership - Center DuPage County
  • Genesis CDC - Chicago
  • Housing Choice Partners - Chicago
  • Housing Opportunity Development Corporation - Cook County, north
  • Joseph Corporation - Kane County, Aurora
  • Neighborhood Housing Services of Chicago - Chicago
  • North West Housing Partnership - Cook County, northwest
  • Regional Redevelopment Center - Cook County, south
  • Rogers Park CDC - Chicago
  • Spanish Coalition for Housing - Chicago

Outside of the Chicago region:

  • CEFS Economic Opportunity - Effingham
  • Community Investment Corporation of Decatur - Decatur
  • Land of Lincoln Legal Assistance - Champaign
  • Madison County Urban League - Alton
  • METEC - Peoria
  • Mid-Central Community Action Agency - Bloomington
  • NHS Freeport - Freeport
  • Neighborhood Partners of Kankakee - Kankakee
  • Project Now - Rock Island
  • Rockford Area Affordable Housing Coalition - Rockford
  • Springfield Housing Authority - Springfield
  • Two Rivers Council - Quincy
  • Western Egyptian Economic Opportunity Council - Steelville

Trainings
Housing Action, a long-time expert in capacity-building for nonprofit housing organizations, has linked its training expertise with its commitment to expanding EAH. It sponsored several training sessions to help build capacity and program impact for housing counselors throughout the state. Many of the REACH partners listed above participated in these trainings.

January 24-28 - Train the Trainer, Homebuyer Education: Neighborhood Reinvestment Corporation staff provided a five-day training on designing, marketing, and conducting homebuyer education courses, an essential component of employer-assisted housing. The training was attended by 30 people representing more than 20 agencies from throughout the state.

May 12 - Counselor Max Training: Held in collaboration with Freddie Mac to demonstrate the Web-based housing counseling tracking software. Staff from ten nonprofit housing counseling organizations who attended the training learned to manage intake, create customized reports, schedule and track educational classes, prepare customized budgets and worksheets for clients, as well as streamline program outreach activities.

June 12-13 - Two-Day Credit Counseling for Maximum Results: Offered in collaboration with Neighborhood Reinvestment Corporation's State-Based Training Initiative, Housing Action provided a training for counselors on debt, credit repair, and budgeting. This course was particularly targeted toward counseling agencies participating in REACH Illinois.

Legislative Activities - State and Federal
Hailing the success of the Illinois Affordable Housing Tax Credit program, the General Assembly approved a bill extending the life of the program for another five years. The legislation made no changes to the original program. As such, tax credits will continue to be available to employers that help their employees with housing, including down payment assistance, rental assistance, Individual Development Accounts (savings programs for homeownership), reduced interest mortgages, and mortgage guarantees.

The Rental Housing Support Bill (HB 4100) created a state-funded rental assistance program. Modeled on a successful City of Chicago program, the new state program provides funds for local communities to pay subsidies directly to landlords who charge affordable rents to low-income families. The program also provides funds for long-term operating support for new or rehabbed affordable rental housing units.

Ill. Rep. Kathleen Ryg (D-Vernon Hills) sponsored a "Location Matters" bill. The legislation advances one of the key principles of the 2002 Local Planning Technical Assistance Act, encouraging DCEO to provide incentives to employers advancing housing or transit solutions.

On June 29, U.S. Sens. Hillary Rodham Clinton (D-N.Y.), Gordon Smith (R-Ore.) and Mel Martinez (R-Fla.) introduced Housing America's Workforce Act of 2005. Sen. Dick Durbin (D-Ill.), Minority Whip, is a co-sponsor of the bill. As proposed, the legislation provides a $.50 federal tax credit on every dollar an employer invests in EAH for down payment, rental assistance, and housing counseling contracts. To ensure this program is successful and hassle-free for the employer, the legislation provides initial support to the nonprofit housing agencies administering the program for employers and providing professional and confidential counseling services to participating employees. Finally, the legislation excludes as taxable income the housing support employees receive from employers. This legislation represents a major milestone and builds on lessons learned in Illinois, where EAH is supported via tax credits, matching funds, and counseling services.

EAH Links to FHA
Thanks to numerous conversations among REACH partners, MPC, and the U.S. Dept. of Housing and Urban Development (HUD) staff, the REACH Illinois model now works in conjunction with the Federal Housing Administration's (FHA) insurance. The assistance provided by employers to their employees to purchase homes makes a huge financial difference, often enabling a renter to become a homeowner. These families also benefit from the other resources the REACH partners help them access, such as the Federal Home Loan Bank Downpayment Plus, IHDA's Mortgage Credit Certificate, and communities' first time homebuyer programs. One mortgage product that is particularly helpful to working families is the FHA insurance. In the past, employees had to choose between using an FHA loan (possibly the only mortgage available to them, based on their credit history and personal financial situation) and accepting the employer's down payment assistance because these programs could not work together. In May, HUD formally approved a proposal enabling FHA loans to be used with the Illinois EAH program.

Public Attention to Employer-Assisted Housing
MPC and the Metropolitan Mayors Caucus produced a new video highlighting the need for affordable housing close to jobs and transit throughout the Chicago region. Welcome Home: Housing Our Community includes segments from partner employers Northwest Community Healthcare and the City of St. Charles, as well as an employee of Northwest Community Healthcare who successfully purchased a home in Arlington Heights with down payment assistance from her employer and homebuyer education provided by the North West Housing Partnership. An excerpt of the video can be viewed on MPC's Web site at www.metroplanning.org and is available in its entirety on CD by contacting MPC.

The National Community Investment Forum, a national summit on workplace-based financial services, was held in Chicago in May. Joyce Probst from Gov. Rod Blagojevich's office, Hank Webber from the University of Chicago, and former St. Charles Mayor Sue Klinkhamer participated in a panel discussion about employer-assisted housing.

The national Shelterforce magazine, published by the National Housing Institute, included an article by MPC's Housing Director Robin Snyderman on EAH activities in Illinois.

Employer-assisted housing also received extensive media coverage, including in the Chatham Southeast Citizen, Chicago Sun-Times, Chicago Tribune, Crain's Chicago Business, Illinois Real Estate Journal, the Kane County Chronicle, Lincoln Daily News, New Independent, Peoria Journal Star, Rockford Register Star, San Diego Union-Tribune, Star, and World Business Chicago's newsletter

The Metropolitan Planning Council is grateful to the following whose support made this work possible:

Fannie Mae Foundation
The Partnership for New Communities
Illinois Housing Development Authority
City of Chicago, Department of Housing
Polk Bros. Foundation
Washington Mutual
Sara Lee Foundation
University of Chicago
The University of Chicago Hospitals and Health System
Illinois Institute of Technology
The John D. and Catherine T. MacArthur Foundation
McCormick Tribune Foundation

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