Issues: Affordable Housing

Concept growing of employers creating proximate housing for workers

Article, By Erik Pisore, The Daily Transcript
Wednesday, December 7, 2005

While "workforce housing" is usually defined as housing affordable to low- to moderate-income workers, as commute times increase in San Diego County and home prices remain high, a different concept is emerging: employee housing with convenience.

Under this concept, an employer, on its own land, would develop housing either onsite or in proximity to the work place. This housing would be affordable and offered to employees either exclusively or possibly at a discounted price before being made available to the public.

The classic case of this concept is in Hershey, Penn., where the Hershey Co. (NYSE: HSY) for some time owned a majority of the housing in which employees occupied, according to Elizabeth Morris, president and CEO of the San Diego Housing Commission.

"It's a really old idea ... but it hasn't been practiced much. I think it has a tremendous amount of potential," Morris said, adding that the idea has been given more thought as commute times increase. The average commute in San Diego is 25.9 minutes, and employers' concerns continue to grow regarding long-term retention of employees.

According to the executive summary by the Employee Benefit Research Institute, among all wage and salary workers age 20 or older, the median tenure level was 4.9 years in 2004.

"These tenure results indicate that, historically, most workers have repeatedly changed jobs during their working careers, and all evidence suggests that workers will continue to do so in the future," the summary said, citing the median length of employment for all wage and salary workers has not changed appreciably since 1983.

The combination of commute time and employee retention has resulted in what is being called the first partnership of its kind in San Diego between a developer and major employer, and an example of employee housing with convenience.

Last month The Olson Co., a Seal Beach-based developer, and the Paradise Valley Hospital in National City broke ground on Paradise Walk, a development that would include 96 townhouses on an unused area within the hospital's 54-acre campus. The intent of the development is to enable employees at the hospital to live in the 96 units and walk to work.

"With the median priced resale home over $500,000 in the region, homes available at $400,000 will extend that dream of home ownership to more local residents," said Donna Morafcik, vice president of communications for the San Diego chapter of the Building Industry Association.

The units will be up for sale $50,000 below market rate value to employees 60 days prior to being offered to the general public. Employees can receive the $50,000 discount because the hospital was able to lower the land price after partnering with Olson.

According to Tony Pauker, San Diego regional president of Olson, if a unit is vacated, it will then first be made available to other employees before being offered to the general public.

But will living directly next to their place of work appeal to hospital employees?

"... A lot of people would like the opportunity to reduce their commute and are interested enough in getting housing," Morris said.

According to the hospital, it is the largest employer in National City with more than 1,400 workers; but only 10 percent of those workers live within the city. Thus, Olson expects that the units should be completely occupied by hospital employees who desire a walking commute.

"We anticipate a strong response," Pauker said.

Another example of employee housing with convenience is an aspect of the San Diego State University 2005 Master Plan, which calls for the development of 540 homes on approximately 32 acres of land just north of Interstate 8. The development, Adobe Falls, already has been approved, and units would be available either for rent or as a permanent residence, according to the SDSU Division of Business and Financial Affairs, Facilities, Planning and Management.

"It provides an excellent opportunity to develop affordable high-quality housing for faculty, staff and graduate students by offsetting the cost of land," said Stephen L. Weber, SDSU president, during a CSU Board of Trustees Hearing.

A slightly different example of employee housing with convenience is Smart Corner, a $160 million development in Downtown's East Village across from San Diego City College.

Unlike the previous two examples, Smart Corner will not focus on "affordable housing", but rather on encouraging those who work downtown to occupy the development.

A method the development has used to lure those who work within downtown is to market the development initially to them, Morris said. This tactic could be one way to influence people to live within walking distance of their work, while at the same time not living directly next to it.

Of the three examples, Paradise Walk is unusual, according to Morris, because companies rarely have such a large amount of unused land that can be set aside for housing.

However, there are other ways for employers to help their workers that go beyond actually building housing, such as offering loan guarantees and establishing homebuyer education programs.

Regardless of the method, the ability for employers to aid their employees in the home buying process while simultaneously cutting down commute time is essential.

"When people can't afford to live where they work, families suffer, businesses suffer and communities suffer," Thomas Stevens, president of the National Association of Realtors, said recently.

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