This is how Chapel Hill plans to help town employees buy a house, pay the rent

Will paying town employees up to $7,500 to help them buy a home, or 1,850 to help them pay the rent, make workers happier and more invested in the community.

Chapel Hill hopes to find out. Its Employee Housing Incentives pilot program could launch this winter,

The program is the first of its kind for Triangle-area governments, although the Durham and Wake county school districts have taken small steps to address the problem. In Wake County, for instance, the school system gives new employees a list of apartments offering discounted rates and other financial incentives for teachers.

Last year, the Durham Public Schools partnered with the State Employees Credit Union and nonprofit housing provider CASA on a plan to build 24 affordable apartments on district land. SECU has financed affordable housing projects in five other N.C. school districts: Asheville and Buncombe, Hertford, Dare and Hoke counties.

Chapel Hill’s program is meant to attract and keep quality town employees and make it easier for employees to be involved in the community, affordable housing manager Nate Broman-Fulks said. Employees also benefit from reduced stress, a shorter commute and greater financial security when they live close to where they work, he said.

The town is paying for the pilot program with $49,050 from its Affordable Housing Fund. The pilot is expected to help 12 employees: five with home purchases and seven with rental housing.

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Preference will go to workers with more years of service if interest outpaces funding, said Sarah Vinas, assistant director of the town’s Office of Housing and Community Development. Financial counseling will be mandatory for those who take advantage of the program.

“We don’t necessarily anticipate a huge rush,” she said. “That’s part of our thinking in starting small and learning through the pilot.”

Whether the program continues after the first year will depend on how many employees use it and their feedback, she added.

Employee survey

The Town Council asked staff to come up with a plan last year. Staff surveyed town employees twice and held four focus groups involving 38 police, fire, transit and other employees.

Over 260 employees responded to the first survey — about 40 percent of the town’s employees — and 180 filled out the second one.

The surveys found three out of four Chapel Hill employees live outside of town, largely due to the high cost of housing and taxes. Over 60 percent of survey respondents earn less than the area median income of $73,300 for a family of four.

The survey also found one out of four town workers commute 30 minutes or more to work each day. Over 60 percent expressed interest in the new housing pilot program.

Housing benefit

Employees who take advantage of the program’s rental incentive can get a one-time grant of $1,250 to $1,850, depending on the number of bedrooms, to help pay a security deposit and utility connection fees. The rental grants are available to employees earning up to 80 percent of area median income — roughly $64,500 — and must have a 12-month lease within the town limits.

Employees who want to buy a home can get up to a $7,500 grant toward downpayment or closing costs. The incentive is available to employees earning up to 115 percent of the area median income — roughly $92,700 — and the home must be their primary residence.

The town would write checks to closing attorneys and landlords, and also offer financial and homeownership counseling, Vinas said.

Mayor Pam Hemminger suggested the town remain flexible in how it defines “affordable housing,” so long as employees find housing that costs around 30 percent of their household income — the threshold recommended by financial experts.

The grant would be forgiven after five years, Vinas said. Recipients who leave town employment or sell their home sooner would have to repay 20 percent of the grant amount for every year they didn’t work for the town.

“We value affordable housing, and I can’t think of anyone I’d want to welcome more and provide affordable housing for than our own employees, people who work in our community,” Hemminger said. “We can’t be a community who has everyone who works here come from the outside. That’s not community; that’s a vacation community.”

Job incentives

Employee housing is a growing incentive for attracting workers to local governments, private companies and universities, Vinas said.

In Vail, Colorado, for instance, some public employees live in town-owned, affordable rental housing, while others can get loans for market-rate rental housing or to purchase a new home. The town also maintains six deed-restricted homes for sale to police officers, firefighters, bus drivers and other “critical” employees.

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While rental assistance helps Chapel Hill employees get in the door of an apartment, council members were concerned that it doesn’t help them keep up with the monthly rent, which averages nearly $1,000 a month in town.

In the long term, Vinas said, a partnership with apartment complexes could help the town negotiate discounts or a reduced rent for employees, similar to the master leasing program that Grubb Properties has implemented at Glen Lennox.

The Glen Lennox program — a partnership with the Chapel Hill-Carrboro Chamber of Commerce — allows housing agencies to lease apartments at market-rate prices and then sublease the apartments to qualified tenants at a reduced rate.

The Grove Park apartments and townhouses are under construction between Martin Luther King Jr. Boulevard and Hillsborough Street in Chapel Hill. The town will lease six townhouses in the redeveloped complex for sublease at a lower rate, potentially to town employees. Tammy Grubb tgrubb@heraldsun.com

The town also has six affordable townhouses in the pipeline at the Grove Park apartment complex, which is being redeveloped. The developer plans to lease each townhouse to the town for $1 a month for 25 years. The town will sublease the units to a tenant at an affordable rate.

Council member Michael Parker encouraged staff to think long-term about how many employees could be helped and how that could be funded, since additional funding sources would be needed after the first year.

“If we’re really trying to have an effect on many employees who don’t live here now moving in, that it’s going to need to be a more robust program and clearly substantially more expensive than $50,000 a year,” Parker said. “While we’re testing out this pilot, we really need to start thinking ahead and think about what are our ultimate targets and how are we going to fund that.”

Grubb: 919-829-8926; @TammyGrubb