On Common Ground: Winter 2008

S m a r t G r o w t h ’s

AFFORDABLE

2 ON COMMON GROUND WINTER 2008

Opportunities
C
reating a range of housing opportunities and
choices is a major principle of Smart Growth,
as stated by the Smart Growth Network, a
In this issue of On Common Ground, we highlight
the many efforts nationwide to provide affordable
housing for working Americans. Several articles
coalition of more than 30 organizations including the focus on the many programs that have been
U.S. Environmental Protection Agency, Smart developed to meet the needs of people in specific
Growth America and the NATIONAL occupations, such as police officers, teachers and
ASSOCIATION OF REALTORS®. Other Smart resort workers. Other articles discuss tools, such as
Growth goals, such as greater mobility, reduced employer assisted housing and preservation of
traffic congestion and mixed-use walkable affordable rental housing, which can help moderate-
communities, can best be achieved when every income people with housing costs.
community has housing for all income levels. In addition to housing costs, transportation costs
The inclusion of “ workforce housing” is an put an additional burden on households. As described
especially critical element of a complete community. in this issue, Transit-Oriented Developments are an
Workforce housing is described as housing serving increasingly popular form of development that can
those who make between 60 to 120 percent of the lower consumers’ transportation costs. Building
median income in their local area, or perhaps even up mixed-income housing at transit locations is the key
to 200 percent in markets with high housing costs. to providing a valuable mix of affordable
These are the people on whom we rely for basic transportation and affordable housing. By looking
services in our communities, including education, law holistically at affordable housing, transportation and
enforcement, safety, retail services and health services. land use planning can lead us to Smart Growth
approaches to providing greater housing
opportunities for all Americans.

For more information on NAR and Smart Growth, go to www.realtor.org/smartgrowth.
For more information on NAR and Housing Opportunity, go to www.realtor.org/housingopportunity.
On Common Ground is published twice a year by the Government Affairs division of the NATIONAL
ASSOCIATION OF REALTORS® (NAR), and is distributed free of charge. The publication presents a wide
range of views on Smart Growth issues, with the goal of encouraging a dialogue among REALTORS®,
elected officials and other interested citizens. The opinions expressed in On Common Ground are those of
the authors and do not necessarily reflect the opinions or policy of the NATIONAL ASSOCIATION OF
REALTORS®, its members or affiliate organizations.

Editor Co-Editor
Joseph R. Molinaro Mike Lehrman
Manager, Smart Growth Programs Housing Opportunity Program
NATIONAL ASSOCIATION OF REALTORS® NATIONAL ASSOCIATION OF REALTORS®
500 New Jersey Avenue, NW 500 New Jersey Avenue, NW
Washington, DC 20001 Washington, DC 20001

Distribution:
For more copies of this issue or to be placed on our mailing list for future issues of On Common Ground,
please contact Ted Wright, NAR Government Affairs, at (202) 383-1206 or twright@realtors.org.

WINTER 2008 ON COMMON GROUND 3

Analyzing
the Market
Today’s current
housing
opportunities
and challenges
By David Goldberg


I
f there was an upside to the bursting of the for planning and design at New Urban Builders,
“housing bubble,” it was supposed to be that the Inc. in Chico, CA. “In a sense, we stole from the
end of the meteoric rise of home prices would at future market.”
least make homes more affordable in the red-hot Builders “stole” from that market, Anderson said,
metro areas that are the epicenter of the slump. by focusing on larger, more expensive homes, while
After all, the years-long run-up during the period of ignoring the large swath of households that would
anomalously low interest rates had torturous have been perfectly happy with a smaller house,
consequences for households supported by town house or condo they could afford—especially
teachers, firefighters and countless other modestly in locations that offered shorter commutes. “A lot of
paying jobs. The commute to areas where they people were stretching to get into big houses they
could “qualify” for a more affordable home got didn’t really want, thinking that it would be easier
longer and longer, and budgets were stretched to sell it later to someone else who didn’t really want
thinner and thinner. it,” Anderson quipped.
Today, we hear story after story about high-
production homebuilders and other developers
bleeding red ink as new subdivisions go begging.
With builders slashing prices to lure buyers, sellers
of existing homes are watching their hoped-for
asking prices recede. Bad news for sellers, but
perhaps good news for first-time homebuyers.
But then there’s that other set of headlines: The
foreclosure crisis among high-risk mortgages is
leading major lenders to pull in their horns and
ratchet up qualification requirements or leave the
business altogether. At the same time, mortgage
rates for Adjustable Rate Mortgages are on the rise.
All this is making it tougher and more expensive for
less-affluent buyers to get into their own homes.
“There is an affordability problem, and I’m
guessing that it has gotten worse recently and will
continue to get worse in the next few years,” said
Kermit Baker, who serves as chief economic analyst
at the American Institute of Architects and the Joint
Center for Housing Studies at Harvard. “The
marginal buyer was getting in with adjustable rate
mortgages more than fixed. Many of those are gone,
and rates are going up.” At the same time, he noted,
“The concessions by builders are affecting a certain
piece of the market, but you don’t see widespread
lowering of prices. People selling their own homes
will wait for the market to recover.”
There isn’t a single housing market, of course.
Market conditions are by their nature highly
localized. In some areas the time on the market and
price can be heavily influenced by just a small
number of large projects. “You could pick out 15 or “It’s fair to say we are
20 metro areas where there was massive
overbuilding,” Baker said, “but the issues are in the entering a fundamental
areas where the subdivisions are, but not in the rest
of the metro area. The area where we’re seeing turning point in how
concessions is in the new home market, where there
is inventory overhang.”
households are making
Where have those buyers gone? “Buyers are on
strike now because many who would be looking for
housing decisions
a move-up house already exercised that option
when rates were low and prices for the first house
and responding to
were high,” said R. John Anderson, vice president changing conditions.”

“We’re seeing changes in lifestyles and
a growing preference for being close
to jobs and activities.”
Since the 1970s, the median size of newly built housing costs anymore. You have to talk about
houses has grown by roughly 45 percent, reaching housing and transportation, because it is getting so
2,300 square feet early this year, according to the expensive.” In high-mileage Atlanta, for example,
U.S. Census Bureau. This occurred even as the combined cost of housing and transportation
households were shrinking. In 2006, the share of accounts for 61 percent of the typical household
single-person households edged past the proportion budget, higher than any other region save the San
of households with children; both hovering near 31 Francisco Bay area. But with one in seven
percent. Wages, meanwhile, have stayed flat in households nationally paying more than half of its
recent years. income for housing, according to the Joint Center,
There are signs the building industry has begun Atlanta is far from alone.
to take notice. Saddled with a surplus of larger To accommodate the new economic and
houses that are a drag on the bottom line, high- demographic realities, Baker said, “There will
production builders such as KB Home and Centex continue to be a trend toward more of a mix of
have announced that they will build smaller, more housing types and uses in areas closer to jobs. And
affordable homes aimed at first-time buyers. more changes are ahead now that sustainable
Already in the second quarter of this year, the design and green building are coming into play as
average size had slipped to 2,241 square feet, and people become concerned about climate change
market observers believe the trend will continue. and energy independence.” Recognizing the
There are a number of signs that the slumping growth in a more “urban” market, at least four of the
sales in exurban subdivisions and shrinking house big, national homebuilders—KB Home, Centex, K.
sizes are bellwethers of something more than a Hovnanian and Toll Brothers—have created
temporary market “correction,” Baker said. “It’s fair divisions focused on building attached and other
to say we are entering a fundamental turning point housing in mixed-use settings.
in how households are making housing decisions But will all these changes help more people find
and responding to changing conditions. an affordable place to live? Tammie Hoy, executive
“The affordability issue is something more director of Low Country Housing Trust in
pressing in the last couple of years. We’re also Charleston, SC, thinks they will, if they are managed
seeing changes in lifestyles and a growing well. “The best way to promote affordability is to
preference for being close to jobs and activities. maximize land, because that’s the biggest cost on
Homebuyers were disillusioned with buying houses the coast. We promote higher density, mixed use
15 to 20 miles from what they needed or wanted to communities because that’s more efficient in terms
do, and now higher fuel costs underscore that and of land and infrastructure. If it’s well done it can
you’re paying more for transportation.” reduce the cost and make a nicer neighborhood.”
Egbert Perry, CEO of The Integral Group, an Building a denser mix of housing types requires
Atlanta developer, agreed. “You can’t just talk about a transition from viewing housing as a commodity


to building distinct places, said Anderson. And that presents a greater design challenge than carving out
makes the design both of individual homes and of uniform lots and offering a few similarly sized house
neighborhoods all the more critical, he added. plans. Closely grouped houses have to be arranged
At the level of the individual home, this means to allow for private space, as well as usable, shared
“recognizing that one size really doesn’t fit open space. Buildings of all sizes and types must be
everyone,” he added. This can mean, for example, built with similar design detail to protect the
building houses as small as 1,000 square feet and property values and cohesion of the neighborhood.
avoiding house plans that have the garage Meeting the changing demand and economic
incorporated, and making a detached garage an circumstances will require that not only developers
option rather than a standard feature. This makes change their way of doing business, but that
the house cheaper, but it also increases flexibility for government does as well. Local governments have
the buyers, he said. “Once the garage is detached, played a role in promoting the building of higher-
we don’t really care whether you buy a garage or end subdivisions over more affordable homes, some
not. You can do it now or later, build it bigger and developers said. Most jurisdictions zone their land
put an apartment over it; or skip it and build a into single uses at low densities. Many also have
carport.” The smaller a house is, the more the put up a growing number of regulatory barriers to
available space needs to be used flexibly and more-affordable housing, imposing requirements
efficiently—a bigger design challenge than for larger lots, bigger houses and restrictions on
building a separate room for each function, but also multifamily housing. When interest rates were low
a big money-saver. and barriers to building affordable homes high,
Similar considerations operate at the builders cranked out the large, single-family houses
neighborhood level as well, Anderson said. Buyers that are now waiting for buyers.
looking at a particular neighborhood should have a In the Bay Area and Central Valley of California,
variety of options, from small to large houses or from where Anderson works, building the more
attached to stand-alone. “People decide they want to affordable, compact configurations can require a
be in the neighborhood and they decide which dozen or more special allowances, he said. At times
house is a better fit or more affordable.” Again, this his firm has negotiated a special zoning overlay
known as a form-based code, which regulates the
form and placement of buildings so that the overall
Building a denser mix design has a “high-quality” feel, whether the units
of housing types are costly or more affordable.
Government can help make homes more
requires a transition affordable in others ways as well. To help meet the
powerful demand for “workforce” housing for the
from viewing housing technology workers making $50,000-$80,000 a year,
Anderson is working with local jurisdictions to
as a commodity to develop smaller one- and two-bedroom
condominium flats. In Chico, the city offers second
building distinct places. mortgages to help cover costs. Employers are
getting into the act, too. In Silicon Valley, some
companies are offering their employees an
Employer-Assisted Housing plan to help pay for a
downpayment or closing costs.
Though well behind northern California in terms
of house prices—like every other region—the
Charleston area is seeing similar changes, Hoy
said. “Developers are finally starting to think of
working families as a niche market,” she added.
“It’s a whole new set of customers for developers
who think of it that way. But everyone—developers
and local governments alike—is having to go to
school on how to build for it successfully.”
David A. Goldberg is the communications director for
Smart Growth America, a nationwide coalition based in
Washington, D.C. that advocates for land-use policy reform.
In 2002, Mr. Goldberg was awarded a Loeb Fellowship at
Harvard University where he studied urban policy.

WINTER 2008 ON COMMON GROUND

Balancing
Shared equity home ownership
addresses affordable housing needs
By Judy Newman


the Cost
N
ancy Rowand and her 18-month-old twin equity housing, a trend that, in the past few years,
daughter and son were welcoming the has taken on the momentum of a bullet train.
holidays in their tiny Washington, D.C. Though their numbers still make up only a
apartment on Christmas Eve, 1977. small percentage nationwide, more and more
But their joy faded quickly when Rowand people are embracing shared equity arrangements
received a startling, hand-delivered “gift:” an to become homeowners.
eviction notice. Shared equity, also called permanently
New owners of the eight-building, 96-unit affordable home ownership or third sector housing,
complex—built in the 1940s to house military or is a step between the traditional American housing
military support staff—wanted to tear down the alternatives of either buying or renting; of private
600-square-foot, one-bedroom apartments between home ownership or ownership by a government
Georgetown and American universities or convert agency or nonprofit organization.
them to condominiums. In shared equity arrangements, a homeowner
Rowand and her neighbors, a diverse group of generally receives some type of subsidy from a
moderate-income people, were not about to let that government agency or nonprofit group, reducing
happen without a fight. They formed a committee, the purchase and payment costs. In return, the
hired lawyers and appealed to the city for help. “We homeowner shares the rise in the home’s value with
had a rally and chanted, ‘we shall not be moved,’”
Rowand said.
Southern Lights in Boulder, Colorado
And they won. In 1979, the Beecher Cooperative
was created, 63 units in six buildings, for an initial
buy-in cost of $1,000 per household plus a co-op
fee to cover a blanket mortgage on the property.
Nearly 30 years later, the Beecher Cooperative is
still going strong. In 1986, members bought out the
limited partnership that co-owned their buildings,
raising $2.5 million through individual share loans
averaging $30,000 from the National Cooperative
Bank. Today, households pay $550 to $800 a month
in mortgage and co-op fees,
Rowand said, a lot less than the
area’s market-rate, one-bedroom
rents of about $1,400.
“We’re very much of an
anomaly,” Rowand said. “We
really have a beautiful situation
in an area of Washington, D.C.
that’s very pricey, wooded and
Three types of
very desirable.”
The Beecher bunch might not
shared equity
have foreseen it at the time, but it
was part of what has become a
housing are
growing trend toward shared gaining ground.

that organization. There are income guidelines for and reduce their home-buying costs while
purchasers and often, rules on use of the property, investors could participate in “a new asset class,”
shared governance, and caps on appreciation. the report suggested.
A study on shared equity home ownership by Also in April, a Business Week article said one
John Emmeus Davis for the National Housing type of shared equity mortgage already is
Institute (NHI) in 2006 concluded that “after becoming more prevalent: parents contributing to
waiting in the wings for many years, third sector their child’s home downpayment and claiming a
housing is now reaching a broader audience and comparable share of the appreciation when the
winning wider support.” Davis estimated there home is sold.
could be anywhere between 500,000 and 800,000 But the concept of shared equity is not without its
shared equity units around the country. But that bumps, ranging from how long covenants should
number will likely explode over the next decade. As stay in effect to how much equity the homeowner
housing costs have soared, more and more cities should receive. And it is not for everyone. Shared
have adopted inclusionary housing requirements equity homeowners won’t get rich on their real
and set up housing trust funds. estate investment. At the Beecher Cooperative,
Meanwhile, an expanding range of alternatives units are now valued at $90,000; condos in the two
is being explored as the call for affordable home buildings that did not join the co-op were recently
ownership grows louder. Shared equity mortgages, selling for $250,000. But that’s the crux of the
in which homeowners share the increased value program: to keep home ownership affordable.
of their property with investors, are touted in an Most commonly, three types of shared equity
April 2007 report co-authored by New York housing are gaining ground, the NHI study said:
University economics professor Andrew Caplin in limited equity co-ops, such as the Beecher
partnership with the Fannie Mae Foundation. Cooperative, deed-restricted housing and
Homeowners would gain a new source of financing community land trusts.
In Boulder, Colo., four families moved into two
Deed-restricted houses, new duplexes in July in Southern Lights, a deed-
restricted housing project initiated by the Boulder
town houses and Area REALTOR® Association.
With the help of Boulder’s Affordable Housing
condominiums are Alliance—a nonprofit group that already had
built other deed-restricted units nearby—and the
the fastest growing city’s land contribution, the REALTORS® raised
$75,000 and worked side-by-side with the
form of shared equity homeowners-to-be, hammering, painting and
landscaping the property.
home ownership.
City’s Edge in South Burlington, Vermont

Elmwood in St. Albans, Vermont


Southern Lights in Boulder, Colorado

REALTORS® worked side-by-side with the
homeowners-to-be, hammering, painting and
landscaping the property.
The Victorian-style duplexes were sold to shared equity home ownership, the NHI study
families earning 80 percent of the median income said, primarily because so many communities are
or less, about $57,000 for a three-person household. now using regulatory incentives and inclusionary
“Architecturally, they do not resemble affordable mandates, requiring that some or all new housing
housing that you may be used to seeing,” said developments include affordable units.
Kenneth Hotard, senior vice president for public Community land trusts also are sprouting
affairs with the Boulder Area REALTOR® nationwide, from Burlington, Vt. to Irvine, Calif.
Association (BARA). Traditionally, the land trust owns the land and
Two of the units are 1,504 square feet, with four leases it to the owner of the home that sits on the
bedrooms and two baths; they sold for $200,000. land. With condominiums, there’s no land to lease,
The other two, at 1,227 square feet, with three so a covenant fulfills a similar purpose.
bedrooms and two baths, sold for $175,000. The Burlington Community Land Trust, one of the
“Market rate would be at least twice that much,” oldest community land trusts in the U.S., was
Hotard said, noting that Boulder’s median home founded in 1984. Renamed the Champlain Housing
sale price is $560,000. Trust when it merged with the nonprofit Lake
City rules specify that when the current Champlain Housing Development Corporation in
homeowners sell their duplexes, the price cannot 2006, it is also one of the largest, encompassing
appreciate more than 1 to 3.5 percent a year. nearly 400 single-family homes and condominiums,
Boulder also has inclusionary zoning rules more than 1,400 rental units and six co-ops with 115
requiring 20 percent of all housing built to be homes in a three-county area of northwest Vermont.
permanently affordable. But a problem has Eighty employees run the land trust, which also sees
emerged, Hotard said: there’s not enough housing its mission as revitalizing declining neighborhoods,
for middle-income people. not just with housing but also stores and offices.
“We’re basically driving the middle class out,” “We really are a large-scale community develop-
he said. BARA plans to work with the city to create ment organization,” said Kirsten DeLuca, homeland
incentives to build more middle-income homes. and technical assistance program manager.
Deed-restricted houses, town houses and Champlain serves households below the area’s
condominiums are the fastest growing form of median income and provides a subsidy that lowers


the cost to the buyer, then limits the appreciation Neighbors who paid full price don’t get angry,
the homeowner can receive to 25 percent when the DeLuca said. “If you can afford to buy a market-
home is later sold. rate home on your own, that’s a better investment.
For example, on a home priced at $200,000, You’ll get 100 percent of the appreciation.”
Champlain may provide a $50,000 subsidy. When People get involved with the land trust because
the owners decide to sell, a fair market appraisal is they’re “entirely priced out of the market,” DeLuca
conducted. If the home is then worth $240,000, the said. “We’re talking nurses, teachers, firemen;
owners will get $10,000 of the $40,000 middle-class and working-class folks cannot afford
appreciation. They sell the home back to the land to buy property in our area. We have a critical
trust for the amount they initially paid—$150,000— affordable housing crisis and that’s what you’re
plus $10,000, for a total of $160,000. The land trust seeing in many parts of the country,” she said. “If
keeps the housing affordable by providing the next folks want to afford a home, for many people, this is
buyer with a $70,000 subsidy, holding the their only option.”
mortgage down to $170,000, DeLuca said. The Champlain Housing Trust is seen as a
Potential homebuyers not only can buy units built model for the nation and serves as a mentor to land
by Champlain, they can also find a home they like trusts organizing elsewhere, including City First
but can’t afford in another location and ask to make Homes, incorporated in Washington, D.C. in
it part of the land trust, with a subsidy from the October. Its goal: creating 1,000 units of
organization to help cover the fair market value cost. “permanently affordable workforce housing”
within three years.

“If folks want to own a
home, for many people,
this is their only option
[the land trust].”


“It has become increasingly clear that workforce
housing was a challenge that was facing D.C. for
which there were no large-scale solutions,” said
David Wilkinson, executive director of City First
Enterprises, nonprofit parent of City First Homes.
City First is using a $10-million city grant
coupled with $65 million in private financing,
whose investors will receive federal New Markets
tax credits. The homes will target families at 80
percent of D.C.’s median income, currently at
$94,500 for a family of four.
Average home prices are nearly $450,000,
Wilkinson said. “A teacher in D.C. in 2000 could
buy one of every three homes. Now, it’s closer to
one in 10. Real estate rates have risen much more
quickly than incomes in D.C. so the city is facing
potential shortages of teachers and health care
workers and others.”
City First plans to work with developers to build
town homes, single-family homes, condominiums
and cooperatives in mixed-income developments
throughout the District of Columbia, Wilkinson
said. City First will help finance the affordable
housing part of the development which will be
passed along as a 3 percent second mortgage for
the homebuyer.
For example, on a $300,000 home, the buyer
would take out a $225,000 conventional mortgage.
The remaining $75,000 would come from City First
as a second mortgage, with 3.1 percent interest.
When the buyer later sells the unit, the buyer takes
25 percent of the appreciation.
“We are told by home ownership counselors and
other real estate market experts across the city that
demand will be very high for this. It will
significantly increase the affordability of units,”
Wilkinson said. Developers like the idea because it
expands the number of potential buyers for their
units, he added.
Irvine, Calif. is another community establishing
a new land trust. Approved by the city in 2006, its
goal is to create 9,700 units by 2025—10 percent of
Irvine’s housing stock.
Shared equity housing is “a vision that is
neither impractical nor remote,” the NHI study
said, calling for more resources and research into
such programs. Public and private support are
growing, the study noted, adding, “There are
encouraging signs that third sector housing has Shared equity housing is
finally arrived.”
a vision that is neither
Judy Newman is a business reporter for the Wisconsin
State Journal newspaper in Madison, Wis. impractical nor remote.


A New
Benefit
Employer Assisted
Housing in the
21st century


By Mike Lehrman

I
n his work entitled “The World is Flat,” Thomas Friedman explained how
astounding advances in technological collaboration combined with the global
spread of capitalism have fundamentally altered the way businesses operate.
In a growing global economy, companies are now facing more fierce competition
for business and resources both locally and around the world. This competition
extends to recruiting and retaining a productive workforce.
As the business landscape continually evolved, the median home price in
the United States increased from $126,000 in 1997 to $228,900 in July of 2007,
an increase of more than 80 percent. As business practices have changed at
an ever increasing rate, so have demands on space in America’s urban areas,
and housing prices have risen dramatically as a result. Skilled workers are
now in higher demand at a time when the price of owning a home is the
highest in history.
Employers have begun to recognize that in order to remain competitive in
the changing business landscape of the 21st century, they must attract and
retain skilled employees. One way that businesses have increased their
recruitment and retained more employees is by enacting various housing
benefit programs.
Employer Assisted Housing (EAH) is a term that describes an employer
benefit program that helps employees attain housing in both the rental and
home ownership markets. A financial EAH program can take many different
forms, but is most commonly administered as downpayment assistance,
rental/mortgage assistance, shared equity, forgivable loans, matched savings
or upfront grants.
According to the Society of Human Resource Managers (SHRM) annual
benefits survey, the number of employers who offer their employees


downpayment assistance has increased greatly in Act,” originally proposed in 2005, provides a
the past seven years. In 2000, only 3 percent of all federal tax credit to companies for a portion of the
employers offered a downpayment assistance expenses that they incur by offering a housing
benefit program. In 2007, that number increased benefit to their employees. Furthermore, this
significantly to 11 percent of all employers. legislation treats housing assistance benefits of up
Rental and mortgage assistance programs have to $10,000 as nontaxable income for the employee.
experienced similar increases during the same Lastly, the legislation creates a competitive
period. In 2000, only 6 percent of all employers grant program whereby nonprofit organizations
offered rental assistance. In 2007, that number that assist in the administration of EAH programs
increased to 19 percent, dropping slightly from the can apply for federal grants to fund their efforts.
high of 22 percent in 2006. Mortgage assistance Many times nonprofit organizations offer free
programs doubled during this time period as well, credit counseling services to employees who
increasing from 6 percent to 12 percent. participate in an EAH program.
Employers in the most competitive fields with Enacting such a bill would create a large
highly skilled workers have turned to these tools as incentive for employers to offer EAH benefit
a way of increasing recruitment efforts and programs to their employees. Despite having
retaining employees for a longer period of time, numerous cosponsors, the legislation did not make
thus increasing productivity and limiting costs. it to the Senate floor for a vote, but future prospects
Employers have found that offering a benefit like a for the bill remain promising.
forgivable loan can greatly increase retention rates, As policymakers have become more aware of the
as employees have a financial incentive to remain increasing value of EAH programs, so also have
with the company until the full balance of the loan federal regulators. In August of 2007, the Office of
is forgiven. These programs have the potential to the Comptroller of the Currency released a report
improve the bottom line of employers who face entitled “Understanding Employer-Assisted
high turnover rates and engage in competitive Mortgage Programs: A Primer for National Banks.”
employee recruitment. The study was released as a response to the

SHRM Benefits Survey, 2000-2007 Employers have found
Benefit Mortgage
Assistance
Rental
Assistance
Downpayment
Assistance
that offering a benefit
Yes/No Yes No Yes No Yes No like a forgivable loan
2000
2001
6%
9%
89%
88%
6%
8%
90%
89%
3%
5%
93%
92%
can greatly increase
2002 7% 94% 5% 95% 4% 96% retention rates.
2003 12% 88% 15% 86% 9% 91%
2004 12% 88% 19% 81% 8% 92%
2005 13% 87% 21% 79% 9% 91%
2006 12% 89% 22% 78% 11% 89%
2007 12% 88% 19% 81% 11% 88%

As the popularity of EAH expands, it is
beginning to be recognized among policymakers as
an important tool which helps to expand home
ownership and revitalize communities. Despite
this, currently there is no federal incentive for
companies to offer employees a housing benefit.
Companies do not receive any tax incentive for
offering this kind of benefit program, and unlike
health, dental or life insurance benefits, employees
must pay tax on all housing related benefits that
they receive.
Senator Hillary Clinton (D-NY) introduced a bill
in April of 2007 that would change this portion of
the tax code. “The Housing America’s Workforce


REALTORS® have taken important
roles to promote EAH programs.
increasing popularity of EAH programs, and was When Lane heard about the Home From Work™
intended to explain to bankers their responsibility program, she thought it was a great fit for her efforts
when issuing a loan to a homebuyer who is in Las Vegas, and she traveled to Denver in late
participating in an EAH benefit program provided 2006 to participate in an NAR sponsored Home
by their employer. From Work™ training session. Lane recognized
In addition to politicians and federal regulators, “bringing the employer into partnership with
REALTORS® have also taken a leadership role by nonprofits and lenders creates another source to
promoting EAH in their own communities. In 2006, help potential homeowners achieve the dream of
the NATIONAL ASSOCIATION OF REALTORS® home ownership.” She adds, “the program is about
(NAR) launched Home From Work™, an outreach building goodwill by educating the employers and
and educational campaign that teaches educating the public.”
REALTORS® how to assist employers in creating Lane has successfully achieved that goal,
their own EAH program for their employees. working with the city councils of Henderson and
Home From Work™ encourages REALTORS® to Las Vegas along with a statewide title company to
get involved with lenders and nonprofit groups in organize eight-hour HUD approved homebuyer
their communities to help promote employer educational courses for employees who are
assisted housing and increase home ownership interested in home ownership. Lane is currently
opportunities. Dawn Lane, a REALTOR® from Las working with these employers to construct an EAH
Vegas, Nev., has done just that. financial benefit program that meets their
In 2002, Lane founded the HOPE program individual business needs.
(Housing Opportunities, Programs, and Education). Policymakers, regulators, nonprofits, lenders
The HOPE program is a partnership between and REALTORS® have taken important roles to
REALTORS®, local lenders and nonprofits to supply promote EAH programs as viable ways for
HUD-approved home ownership education and employers to improve their bottom line while
funding to prospective homeowners. Since 2002 the remaining competitive in the market and
HOPE program has helped prospective homeowners promoting home ownership and vibrant
find funding from nonprofits and affordable communities. EAH employee benefit programs are
financing to achieve the dream of home ownership. a growing trend among companies and can be a
To date, Lane and the HOPE program have helped valuable tool to help employers recruit and retain a
more than 300 families become homeowners, and highly skilled workforce in an ever changing
have never lost one to foreclosure. business environment.
Mike Lehrman is an associate in the Housing Opportunity
Program of the NATIONAL ASSOCIATION OF REALTORS®.


The
Founda tion
of
home
ownership
REALTOR® Housing Foundations
are providing innovative solutions
for affordable housing
By Brad Broberg


J
oyce Patton froze in disbelief. Then she mortgage-ready was eligible to win a free house if
hugged her children. Then she cried. Joy, not they had not already bought one.
sorrow, triggered her tears. Her name had just Talk about affordable housing! All people had to
been drawn as the winner of a new home. do was show up for the annual drawing—and cross
Six months later, Patton is still pinching herself. their fingers.
“I never win things,” said the Charlotte, N.C. “I’ve never seen lives change in one moment
resident. “Every time I walk in the house, I smile.” like that,” said Rodney Tucker, executive director of
Patton’s good fortune was no accident. She earned the Charlotte HOF. “It was very exciting to see.”
a chance to put her name in the hat for a 1,500- Of course, giving away a home a year—or 10 or
square-foot home by completing a first-time 100—won’t solve the country’s affordable housing
homebuyer education program—all made possible by crunch anytime soon. But it did build some buzz about
the Housing Opportunity Foundation (HOF) of the the buyer education program and provide a creative
Charlotte Regional REALTOR® Association (CRRA).
Between 2003 and 2007, the CRRA Housing
Opportunity Foundation teamed up with local
builders to give away five homes to promote a
buyer education program it co-sponsored with the
Charlotte Housing Partnership. Each year,
everyone who completed the program and became

Providing a range of
housing choices at all
price levels is a principle
of Smart Growth.

example of how state and local REALTOR®
associations are striving to make housing
more affordable for more people.
Across the country, local REALTORS®
and state REALTOR® associations have
established REALTOR® Housing
Foundations. The Foundations are
identifying, developing and promoting
ways to expand affordable housing in
their communities. Today, approximately
300 state and local associations sponsor
programs of their own through their
foundations to assist buyers, renters and
builders of affordable housing.
It’s not just the “right thing to do.”
Providing a range of housing choices at all
price levels is also a principle of Smart
Growth that allows people to live in the
same community where they work,
taming sprawl and curbing the congestion
created by mass commutes.
Beyond that, a healthy supply of
affordable housing creates a more dynamic
market for REALTORS®.
Joyce Patton, winner of a new home through
the first-time, homebuyer education program.


“At the end of the day, if people aren’t moving support a wide range of affordable housing initiatives
into the first home and building equity, there’s and organizations in their communities—with more
never going to be a second home,” said Monica and more emphasis on increased production of
Rodriguez with the California Association of workforce housing.
REALTORS® (CAR). “We’re helping people grab How big is the problem? Nearly one-third of
the first rung of that ladder.” Americans worry they will never be able to afford a
The CAR recognized early on the growing chasm home and nearly 60 percent are concerned that the
between incomes and housing prices—and not just for high cost of housing is hurting their local economy,
the poor, said Toby Bradley, former president of the according to a 2006 survey by the NAR’s Housing
CAR. “Much of the workforce, even the middle class, Opportunity Program.
cannot afford housing,” she said. “The statistics are While individual markets vary widely, the average
bad all over the country.” monthly mortgage and interest payment climbed from
Bradley began pushing $840 in 2003 to $1,132 in 2006. Other costs associated
the issue to the front burner with home ownership also have risen steeply. The
in 2000. Three years later— Energy Information Administration estimates that
during her term as between 2005 and 2006, the average price of
president of CAR—the electricity rose 12 percent, natural gas rose 28 percent
association launched its and heating oil rose 25 percent. Meanwhile, annual
Housing Affordability Fund. state and local property taxes climbed from an
“The market—supply and average of $969 per person in 2002 to $1,121 in 2004,
demand—wasn’t taking according to the U.S. Census Bureau.
care of the problem,” she The lack of affordable housing also is hurting
said. “We needed to become renters. According to the 2006 Housing
more proactive.” Opportunity Program survey, more than two-thirds
Over the years, the CAR’s of Americans believe that families in their
Housing Affordability Fund community have difficulty paying their rent
has awarded $1.8 million compared to 7 percent who thought so in 2005.
to local REALTOR® State and local associations are using many
Associations in California, different models to attack the problem. The New
which have used it to Jersey Association of REALTORS® (NJAR) Housing
Opportunity Foundation awards some
money to local associations to support
various projects of their choosing, but
most goes to New Jersey Community
Capital (NJCC), a nonprofit
corporation that finances the creation
and preservation of housing and
commercial real estate.
Since 2004, the NJAR Housing
Opportunity Fund has given more
than $200,000 to NJCC, including
$57,900 in 2007. The money helps
support a program that supplies
pre-development financing for
affordable housing—both homes and
apartments—developed by nonprofit
and community organizations.
Examples include redevelopment
Pleasantville, New Jersey of the F. Berg Hat Manufacturing Co.
in Orange. When completed, the
converted factory will include a mix of
Nearly one-third of Americans 35 market-rate and affordable housing
units. Other projects supported by the
worry they will never be able Housing Opportunity Fund include
the development of 10 apartments in
to afford a home. Montclair and two single-family
homes in Pleasantville.


Although $200,000 is a relative drop in the Grants from the CAR Housing Affordability
bucket, the money provides pre-development Fund have helped local associations support a
financing that many organizations are unable to variety of strategies to achieve that goal, including
obtain from more traditional sources. “Partnering housing trusts. The Marin Association of
with New Jersey Community Capital enables us to REALTORS® received $150,000 to support the
leverage our contribution to make a much larger Marin Workforce Housing Trust (MWHT), which
impact on the supply of affordable housing provides low-interest loans to housing developers
throughout the state,” said Teresa Tilton, director of that construct homes and apartments affordable to
political affairs and member services for NJAR. lower- and moderate-income families.
The NJAR also strives to make an impact by According to the MWHT, the median price of a
showing its members examples of successful single-family home in Marin County is $899,000
affordable housing initiatives. Every year, the NJAR forcing many local workers—teachers, nurses,
joins with the New York and Pennsylvania police officers, clerks—to commute long distances
associations to hold the Triple Play Convention in
Atlantic City. And every year, the Housing
Opportunity Fund sponsors a bus tour of “We care about affordable
redevelopment projects in Atlantic City—many of
which include affordable housing. housing and helping all
“It’s a way to show our members the new face of
affordable housing and give them ideas that they
members of the community
can take back to their communities,” said Tilton.
Member donations account for much of the
get into a house.”
money REALTOR® associations use to support
affordable housing initiatives. Other major sources
include fund-raising events, a slice of association
dues and—where state law allows—interest from
earnest money in escrow accounts.
The Colorado Association of REALTORS® relies
on escrow interest to fund its Housing Opportunity
Foundation. With an annual budget of between
$300,000 and $500,000, it awards grants to housing
organizations that help first-time homebuyers, the
homeless and victims of natural disasters and
domestic violence.
The foundation also helps families in danger of
losing their homes. Last year, it gave the Colorado
Division of Housing $30,000 to help launch a new
Foreclosure Prevention Call Center. The center—
the first of its kind in the country—connects
homeowners involved in foreclosures with
counselors who help them find options to eviction.
As the rising cost of housing has priced more and
more people out of the market, the term affordable
housing—often stigmatized as low-income
housing—is being replaced by the term workforce
housing to better reflect that it isn’t just “poor”
families who can’t afford to buy a home. In
California, for example, only 14 percent of the
state’s households can afford a median priced
home, according to the CAR.
“We certainly can’t solve the problem on our own
or address the problem in a comprehensive
fashion,” said Rodriguez. “But we want to show we
are at the table, and we care about affordable
housing and helping all members of the community
get into a house.”


The fund helps low- to moderate-income
families qualify for a conventional loan.
from surrounding counties. As a result, traffic In Charlotte, the Home Giveaway Program
clogs the roads, workers lose time with their generated plenty of publicity, but the CRRA
families and employers struggle to hire and retain Housing Opportunity Foundation is not a one-trick
quality employees. pony. Among other activities, the foundation also
Given Marin County’s location—it’s directly conducts a Workforce Housing Certificate Program
across the Golden Gate Bridge from San that helps REALTORS® learn how to work with first-
Francisco—the high price of housing is not time homebuyers. The program includes
unexpected. But housing costs are also a problem participation in Home from Work™.
three hours away in sparsely populated Calaveras Developed by the NAR, Home from Work™
County, where demand from retirees and people teaches REALTORS® to work with employers to
buying vacation homes is pricing the local develop housing benefit plans that offer buyer
workforce out of the market as well. education, downpayment assistance, loan
“You’d be hard-pressed to find a house here for guarantee programs and other forms of
less than $350,000—even a small one,” said Tim assistance to their workers.
Muetterties, a local REALTOR® and current chair of That’s just the sort of hand up that gives working
the board of trustees of the CAR Housing men and women like Joyce Patton a shot at home
Opportunity Fund. ownership. As it turns out, the luck of the draw was
Compared to Marin County, that may sound like all Patton needed. Yet the single mother of three—
a bargain, but incomes in Calaveras County are who went back to college to study electrical
about one-third as much as incomes in the Bay Area engineering and now designs distribution systems
and many members of the workforce end up leaving for the local power company—was on track to buy a
to find more affordable housing. “The American home on her own thanks to the financing options
Dream is to own a home, and if you can’t find a and access to downpayment assistance she gained
place you can afford, you’re going to move through the buyer education program.
someplace where you can,” said Muetterties. “I feel like I should carry cards with information
To stem the tide, the Calaveras County [about the program] to pass around to people,”
Association of REALTORS® established a Housing she said.
Assistance Fund, receiving a $19,000 grant from the Brad Broberg is a Seattle-based freelance writer
CAR Housing Opportunity Fund and raising specializing in business and development issues. His
$19,000 on its own to get the program started. The work appears regularly in the Puget Sound Business
fund helps low- to moderate-income families qualify Journal and the Seattle Daily Journal of Commerce.
for a conventional loan by providing downpayment
assistance or buying down the interest rate.


Transit-

O
nce the site of Denver’s historic Elitch gardens and
amusement park, Highlands’ Garden Village in Colorado
might just be one of the best examples of recent transit-
oriented development and Smart Growth around.
The approximately $105 million project created by Jonathan
Rose Companies boasts a bus line just 10 minutes from downtown;
75,000 square feet of retail space; schools; a theater; a carousel;
140,000 square feet of open space—and every bit of it is tastefully
entwined with dozens of lofts, multi-family residences, town homes,
single-family houses, senior residences and carriage houses.


Portland, Oregon

Oriented By Amanda Kramer

Developments
Affordable choices: Connecting
communities to the workplace

Jonathan Rose Developer Chuck Perry said the project, which
was completed in 2007, has been a rousing success. And for a site
that may have been considered “underutilized” a few years ago,
Perry said, the Highlands’ area in Denver is now basking in the
light of its successful marriage of transportation lines and life—
the key to transit-oriented development, or “TOD.”
“These (TODs) are the wave of the future,” said Perry. “We
need to be continually working to create dense, mixed-use,
mixed-income communities.”


TODs address affordable housing
What Perry is saying—and what he’s helping to
build—isn’t far off the mark.
According to the Center for Housing Policies’
most recent report, “A Heavy Load: The Combined
Housing and Transportation Burdens of Working
Families,” a growing number of cities across the
United States are identifying a lack of affordable
housing, an increase in commute times and traffic
congestion as high-priority issues. In fact, the study
suggests that it’s critical for cities or regions
throughout the United States to constantly consider
both a housing and transportation policy—together.
Mariia Zimmerman, vice president of policy for
Reconnecting America, spends much of her time
studying the impacts and policies surrounding
current transportation-oriented development and
how her organization can improve federal policy’s
investment in the trend.
Zimmerman, whose national nonprofit
organization works to integrate transportation
systems and the communities those systems serve,
said the benefits of living in a TOD can be far-
reaching—and all touch on the issues identified in
the Center’s study.
“If you’re looking at one development versus a
TOD community, there’s much more benefit if it’s
part of a whole community strategy,” Zimmerman
said. “We see households who live near transit own
a half a car less and spend less on transit. There are
other benefits if you’re in a vibrant, mixed-income,
walkable neighborhood—you’re getting more
exercise, there’s nice engaging open space …
you’re creating great places.”
“For the developer, the positives are that there’s
more of a price premium for the TOD units—even
with the higher cost it takes to do many of these
projects. I think at its most basic element that’s
what’s appealing for development,” Zimmerman
continued. “The retail mixed-use side is still hard
for the developer and may have slower immediate
return, but the unit can maintain itself over the
longer-time horizon.”
Zimmerman said Reconnecting America has
looked at the issue of incorporating mixed-income
housing into TOD communities.
“With a lot of urban markets there’s concern
about gentrification and displacement,” she said.
“There’s a growing interest in seeing if there are
ways we can create mixed-income TODs so we
have units available for people with a range of

ON COMMON GROUND WINTER 2008

incomes, working families as well as some low- $519,” Perry said. “I believe that the key to effective
income households.” TOD is going to be to ensure there are mixed-
Perry said he finds the issue of mixed-income income communities and they create a sense of
housing critical to the future of TODs. He said his place and a sense of community.”
company considered and incorporated varying Perry said another older, but still thriving, TOD
housing costs into the Highlands’ project. his company worked on was the Denver Dry Goods
“The reactions have been very positive particularly Building renovation and renewal. Adjacent to a
here—and what people really recognized is that light rail line and completed in phases from 1993 to
we’ve created a sense of space, very pedestrian- 1999, the downtown historic department store was
friendly. It’s an inter-generational community and redeveloped into housing, offices and retail stores
the most significant thing is that you can stand at the using a handful of “green,” or environmentally
bottom of a picture (of the development) and see friendly, features and attention to detail. Perry said
town houses for $300,000 or apartments that rent for other developers had simply suggested the space

“These (TODs) are the wave of the future.”
Highlands’ Garden Village in Colorado


Dry Goods building renovation in Denver, Colorado

The future of TODs
The key to effective Currently, Zimmerman said Reconnecting
TOD is going to be America is just beginning to research current
trends in TOD and its future.
to ensure there are “I can’t say where it is right now,” Zimmerman
said. “Anecdotally, what we’re hearing is it does
mixed-income depend on the market. In the Twin Cities, some
people are putting plans for TODs on hold. In the
communities. D.C. area; Charlotte, North Carolina; and the Bay
area and the L.A. area in California, we’re hearing
be used as retail, but his company felt the project that the market is healthy in terms of sales and
would fare better and serve more if the TOD model prices—from all income levels. It actually appears
were used on the 350,000-square-foot space. to be holding its own.”
Perry said aside from focusing on mixed-income Whether waxing or waning, though,
projects, he also strives to plan TODs that are as transportation planner Katherine Perez said it’s
gentle to the environment as possible. For the Dry simply smart to realize that TOD could and should
Goods renovation, Perry said his company play an important role in future development
contracted with an organization to create an energy across the country.
model for the building and incorporated a set of Perez, who currently serves as vice president of
energy-saving features like rebuilding historic development for Forest City Development in
windows with double-paned glass, using low VOC California and is often on the “front end” of
paints and glues, and installing a cooling system development projects, said there are a number of
that uses evaporative techniques. All are features to issues inherent to TODs that are important for
maintain a home’s affordability into the future. developers and real estate professionals to


understand. TOD planning that addresses the need design—the best kind of land use and transit
for live/work environments and affordable housing pairing, they understand the value of transit.”
options must be a priority. Perez said that as for the future of TOD,
“The real estate market is really going through developers across the United States may want to
some tough times,” Perez said. “What cities and pay attention to overseas models.
residents and community folks should be doing “They’re in Hong Kong, Singapore, Tokyo,” Perez
right now—if they have a corridor and a busline— commented. “They’ve marshaled sustainability—
is planning these TODs.” and comparatively, affordability—and they’re good
Perez said some TOD markets are mature while at that. They’ve marshaled technology, and on the
some are not there yet. transit side they make it very efficient. If you miss a
“New York and Boston are mature, and Portland train there’s another in 30 seconds.”
is sort of the gold standard of TOD,” Perez Perez said models for the best in TODs can be
remarked. “They really do the best kind of urban found outside the country—where the fear of
density and entrepreneurship often inherent to this
type of development is nowhere to be found.
TOD could and “We’ve got a lot to learn from overseas partners
should play an and colleagues—how we take good ideas and not be
afraid to cherry pick them, and how to be ambitious
important role in with this stuff,” Perez said. “We’re not there yet, but
we will get there, in my lifetime, for sure.”
future development. Amanda Kramer is a freelance writer from Evansville, Wis.

Portland, Oregon WINTER 2008 ON COMMON GROUND 31

The American
Communities are attempting
to ensure affordable rentals


Dream … By Steve Wright

of Affordable Rental Housing


I
f home ownership is the American Dream, then
lack of affordable rental housing is the
American Nightmare.
For a huge percentage of Americans—those who
are part of the increasing low-wage workforce,
elderly, disabled, entry-level professionals, even
mid-level wage earners in expensive big cities—
renting makes more sense than home ownership.
While the need for affordable rental housing has
never been greater, the uphill battle to preserve
existing affordable housing has never been steeper.
A number of factors—an endless maze of U.S.
Housing and Urban Development (HUD)
regulations, the lure of market-rate rent earnings,
high land values, perplexing local building codes—
Chicago, Illinois
threaten to diminish an affordable rental housing
inventory that already fails to meet the rising
demand for it.
The John D. and Catherine T. MacArthur A number of factors
Foundation is supporting a 10-year, $75 million
initiative to preserve and improve affordable rental threaten to diminish
housing across the country.
The foundation’s “Window of Opportunity: an affordable rental
Preserving Affordable Rental Housing” goal is to
directly support the preservation and improvement
housing inventory.
of 100,000 affordable rental homes and to
significantly improve the regulatory and funding from which to successfully maintain, manage
environment for preservation through policy and operate properties that are affordable to
reforms at local, state and federal levels. low- and moderate-income renters.
“Harvard University’s Joint Center for Housing • Transactions. Current housing programs and
Studies reports that over the past 10 years, two regulations are fragmented, cumbersome,
existing units were lost for every affordable rental often unpredictable and inconsistently applied.
newly built,” said Debra Schwartz, director of Transactions that would transfer properties to
Program-Related Investments for the MacArthur new owners committed to preserving
Foundation. “Without concerted action, our nation’s affordability and providing good long-term
stock of affordable rental housing is projected to fall by stewardship are difficult, costly and slow.
another million units or more in the decade ahead.” In the Chicago region, the MacArthur
“It is expected that by the end of 2007, more than Foundation is breaking barriers by funding the
$3.5 billion in new long-term subsidy and financing Preservation Compact, an Urban Land Institute
will have been invested in ‘Window of Opportunity’ project that will save at least 75,000 existing
projects at an average cost of roughly $80,000 per affordable homes in Cook County by the year 2020.
home,” she added. “This is significantly less than The compact is working to create more
the cost to build a new affordable rental unit responsive and flexible financing from investors,
anywhere in the country today.” expedited approvals or tax incentives from the
Schwartz, sharing observations she and MacArthur public sector and creative development strategies
colleague Erika Poethig delivered at a HUD both from for-profit and nonprofit developers.
symposium, identified three barriers to affordable One recent victory involved the Lorrington
housing preservation that must be overcome: Apartments in Chicago’s Logan Square
• Properties. Current resources, incentives and neighborhood, which has been affordable since
requirements tied to affordable rental 1985. The building owner’s Section 8 contract was
properties do not adequately encourage or expiring, and he was ready to sell.
require owners to preserve long-term With housing costs steadily rising in the popular
affordability or to sell to other owners neighborhood, the classic building’s 54 units could
committed to that objective. have easily been sold to a for-profit condo
• Ownership. Current policies also limit the conversion developer.
ability of owners to recapitalize, earn sufficient But a combination of public, private and
cash flow and build a sustainable capital base nonprofit agencies preserved them as affordable.


The nation’s largest nonprofit developer housing tax credits and bonds, $63 million in loans
bought, rehabilitated and now manages and $39 million in tax-increment financing.
the building—with a contract ensuring Additional money will come from the Illinois
affordable rental prices through 2027. Housing Development Authority, the Federal Home
A case study provided by the Loan Bank and private investors and lenders.
Preservation Compact explains that the Without such aggressive programs, the nation’s
pre-development financing was provided lack of affordable rental housing will continue to
by a nonprofit lender specializing in create dire consequences, according to Sheila
emerging markets. Crucial financing was Crowley, president of the National Low Income
provided by both the state of Illinois Housing Coalition.
through tax credits and a housing trust
fund and the city of Chicago via bonds
and Community Development Block
Grant funds.
The city of Chicago will
In August, Chicago Mayor Richard
Daley announced that the city will help
help create nearly 2,700
create nearly 2,700 affordable rental units affordable rental units
for low- and moderate-income households in 29
developments in neighborhoods across the city. for low- and moderate-
The city’s $277 million contribution to the
multiyear project includes $175 million low-income income households.
Block grant-funded development in San Antonio, Texas

WINTER 2008 ON COMMON GROUN

A national housing trust fund
would be a tool for reinvesting in
affordable housing preservation.

“Communities are incomplete,” she said. “People housing. HUD needs to preserve the stock it has to
who do jobs that the community needs—hospital remain competitive in the market. At the end of the
aids, cashiers—these folks must work more than day, the problem is budgetary—(the federal)
one job and are left with fewer hours for family time. domestic discretionary budget is low.”
There are health and education consequences.” Crowley also called on HUD to provide help to
“Kids who are in families who don’t have maintain the aging housing stock that was created
affordable housing move from school to school,” with its dollars.
she added. “With these increased rates of school “The federal government needs to put more
mobility—churning through school system to money into this. A national housing trust fund
school system—they don’t learn and are trying to would be a tool for reinvesting in affordable
catch up. Teachers in the classroom must devote housing preservation,” Crowley said.
extra time to them, which has a negative effect on Recently, in additional efforts to preserve
the quality of schools.” affordable housing, the House passed the
Crowley said for owners who want to get out of “National Affordable Housing Trust Fund Act of
HUD’s rule, there should be incentives to 2007,” which will create a national fund to be used
encourage them to sell to nonprofits that will to produce, rehabilitate and preserve affordable
maintain the apartments as affordable rentals. housing. The funds could also be used for home
“If you have a property that is in a declining ownership assistance including downpayment and
neighborhood, you tolerate it,” she said of HUD closing costs.
hurdles. “But if the neighborhood is improving, The obstacles preventing affordable rental
then you’re motivated to get out of affordable housing preservation could be further removed by:


More affordable rental housing can be
preserved by providing tax relief to owners
of aging, low-income housing portfolios.
states and counties matching the dollars that come air, congest the roads, lower productivity and
from HUD, affordable developers creating good increase absenteeism.
community relations programs that erase • There is a negative impact on community life
neighborhood opposition and some sort of because people don’t identify with either their
incentive or device that would assist developers in work community or their home community and
overcoming regulatory barriers at the local level. are on the freeway when they could be coaching
Denise Muha, executive director of the National Little League or volunteering at the hospital.
Leased Housing Association, said a lack of • The incidence of substandard housing
affordable housing rentals can result in problems increases as tenants don’t have decent choices,
ranging from an insufficient amount of service so they accept whatever dwelling they can find.
workers to keep an economy going to dangerous • Overcrowding results in both apartments and
situations where 10 or more people are crammed houses. When housing is unaffordable, two
into a tiny housing unit. families will double-up to rent housing.
“Owners’ decisions to renew the contracts or • Illegal conversions—usually garages, but any
terminate their low-income use are generally structures not intended to be housing—create
market based, but can be attributed to something an unsafe supply of rental housing to meet
we call ‘HUD fatigue,’” which Muha defined as demand in the underground economy.
owners “just getting tired of dealing with the HUD • Employers cannot find workers to fill essential,
layers of rules and changing policies and recently but lower paying, jobs.
HUD’s inability to pay its bills—specifically, • Many young families leave the area and most
subsidy on Section 8 contracts. Many owners have others can’t afford to move in, so an expensive
waited one or more months for their funds, leaving area’s population becomes older very quickly.
them late in paying mortgages, etc.” School population declines and perfectly good
Muha said more affordable rental housing can schools close for lack of students.
be preserved by providing tax relief to owners of As National Church Residences continues to
aging Section 8 (low-income housing) portfolios in expand beyond its traditional portfolio of affordable
exchange for selling the properties to new owners housing for elderly and disabled people and tackles
that will recapitalize them to remain affordable for more diversified projects for all ages and
years to come. populations, Senior Vice President of Acquisitions
She notes that current tax laws act as a and Development Michelle Norris sees a need for
disincentive for investors in certain properties to more flexibility from HUD.
consent to a sale to a new entity that would “HUD headquarters must help steer the deal
rehabilitate and extend the life of affordable through the complicated old regulations that seem
apartment complexes. to want to trip up every deal and expedite the
“It is shameful that in the richest country in the timing. Preservation often takes longer to do than
world, a worker earning two times the minimum new construction, which means we aren’t reaching
wage is living in substandard housing or doing as many communities as we should quickly
without sufficient food, medicine, etc. to pay the enough.” Norris said.
rent,” Muha said. “Americans have lost interest and “Preservation is complicated, often frustrating
as a result, so has our federal government, in and hard to execute with excellence,” she
ensuring that our citizens have a decent and safe continued. “However, when it is done right, it is
place to live. Until housing becomes a priority on the absolutely the right thing to do. It is more
national agenda, there will be families and elderly economical than building new, it is inherently
and disabled folks living in substandard housing.” green, it allows residents to stay in their
Julie Bornstein, president of the Campaign for communities and it creates partnership and great
Affordable Housing, can easily tick off a list of the pride in all who are involved in saving the housing.”
consequences of not preserving a healthy inventory
Steve Wright frequently writes about Smart Growth
of safe, well-located and affordable housing: and sustainable communities. He and his wife live in
• Workers are pushed farther away from jobs and a restored historic home in the heart of Miami’s Little
must endure long commutes that pollute the Havana. Contact him at: stevewright64@yahoo.com.


BUILDING STRONG By Christine Sexton


COMMUNITIES
Housing options for those who protect, serve and teach

Builders develop Barrington Village
in Raleigh, North Carolina


A
simple act of Christmas charity has become executive director of the San Diego Association of
the inspiration for an innovative effort to REALTORS® (SDAR) and the driving force behind
help those who help everyone else. the group’s new program, Everyday Heroes,
Years ago, Tim Mercurio was a Cincinnati administered by the recently developed SDAR
policeman who one Christmas Eve decided to bring Ambassador Foundation.
home a woman and her two kids caught shoplifting The goal of Everyday Heroes is to provide
instead of put in jail. This random act of kindness education and financial preparation, as well as buy
resonated with one of the kids, who years later as down mortgage loan interest rates, for up to 10
part of a school project, wrote a letter to the qualifying San Diego Police Department officers by
policeman, identifying him as a hero. the end of 2007. It’s part of a trend across the
The incident left a lasting impression on Mike nation where REALTORS® are helping to provide
Mercurio, the son of the kindly policeman. “I never workforce housing to those who serve, protect,
looked at him the same again,” said Mercurio, the teach and care for Americans.
“I saw the challenges my dad had. I can only
imagine the challenges these men and women
have,” Mercurio said of San Diego police officers.
The first phase of the program will assist police
officers, but Mercurio envisions that after the
Ambassadors Foundation receives its tax free

REALTORS® are helping
to provide workforce
housing to those who
serve, protect, teach and
care for Americans.


designation from the federal government, it can
blossom further, extending to firefighters and other They really need to live
municipal employees who may not be able to afford
homes in the zip codes where they work. in the cities they are so
“They really need to live in the cities they are so
vested in serving,” Mercurio said. vested in serving.
The Everyday Heroes program is funded in part
by the Ambassadors for Cities grant program, which
is funded by the NATIONAL ASSOCIATION OF
REALTORS® in partnership with the United States
Conference of Mayors. Funding for Everyday
Heroes comes from other sources as well, including
a recent golf outing that raised $25,000 and an
upcoming benefit dinner.
Those who have an interest in vying for the
officers’ business, such as REALTORS® and
mortgage bankers, also have to contribute to the
program, by paying a $49 fee and registering for the
ABCs course, or Ambassador Buyer Certification,
which helps them help first-time homebuyers.
To qualify for the program police officers must
have served on the force between two and five
years and must also be a first time homeowner.
Prequalified officers will be offered access to Eure helped develop the Hertford Pointe
educational programs and be given information complex, which boasts 24 apartments. The units
about other organizations and programs in the city have two bedrooms, two baths, a living room, an
that promote home ownership. updated kitchen, a dining area and laundry room.
Teachers, too, are often held out as heroes, and They rent for $500 per month and profits will be used
similar to police officers, can be locked out of to pay off the $2.2 million interest-free loan issued by
affordable housing in the communities where they State Employees Credit Union Foundation, the
work. In Hertford County, N.C., young teachers charitable arm of Eure’s credit union.
fresh out of college cannot find affordable rental The school system donated the land, the town
units in the county. At times, the lack of available and county extended utility lines, and private
rental housing meant the county couldn’t hire businesses donated money. Hertford County
enough teachers. James Eure, senior vice president School District Executive Director Betty Pugh had
of the State Employees Credit Union and president an easier time recruiting teachers this year, and she
of the Partners for Hertford County Public Schools, knows that the Hertford Pointe apartment complex
helped broker a deal that changed all that. is the reason.


On Common Ground: Winter 2008

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