For years there’s been talk on Cape Cod regarding local businesses creating housing for their employees. The concept could be called an act of enlightened self interest, and I have little doubt that those who proposed or embraced the idea saw it that way
Every time I hear someone talking about businesses providing housing for their employees that old Tennessee Ernie Ford song, “Sixteen Tons,” starts bouncing around my brain, especially the ending where he slows down the tempo and his voice get all mournful as he sings “I owe-o my so-o-oul to the company store.”
The company store and the company town was (and still is in scattered parts of the country), just a few steps shy of servitude, with an entire town owned by one company and virtually the entire citizenry dependent upon that company for all their worldly needs.
For years there’s been talk on Cape Cod regarding local businesses creating housing for their employees. The concept could be called an act of enlightened self interest, and I have little doubt that those who proposed or embraced the idea saw it that way. But I always wondered if workers already dependent on their employer for their income and family’s health benefits might find themselves at a disadvantage if their housing also was dependent upon their keeping their job.
It was just theoretical until now. The Employer Assisted Housing Program changed that. The pilot program, initiated by the Massachusetts Department of Housing and Community Development, is similar to other such programs across the country. It is administered and marketed on Cape Cod by the Housing Assistance Corporation (HAC) with the state providing $250,000 in funding.
The way it works is this: a business that joins the program is able to offer a limited number of eligible employees the opportunity to buy a home. Anyone earning 110 percent of the area’s median income or less is eligible. Half the state funding will be made available to those earning 80 percent of the median income in order to assist them in obtaining affordable housing. The other 50 percent will be given to those who can obtain a standard mortgage
The employee is given a $5,000 loan from their employer and a matching state grant. The loan would give the employee the upfront money needed to make an offer on a house. Employers have the option of also providing loans for renting a house. Renters receive $2,500 from an employer with a matching amount from the state. The money can be used for first, last and security deposit. In all cases the house must be on Cape Cod. (In other parts of the state a home must be purchased in a specific neighborhood.)
The money does not have to be paid back as long as the employee remains with their employer for five years and continues to live in that home for that length of time. For every year the employee remains with their employer 20 percent of the loan is forgiven. After five years the entire amount is forgiven. But should they leave their employment before the five years are up, refinance, or sell their home, they must pay back the remainder of the loan at a 10 percent interest rate. While that sounds fair enough one has to wonder how that arrangement would affect employer/employee relations.
In these hard economic times when layoffs are a common occurrence, would having your employer invest in your family’s well being make you less likely to be laid off? Should an employee be laid off would the loan have to be repaid? (If so, having to pay back the loan with 10 percent interest as well as a monthly mortgage payment while out of work could be enough to cause a family to become homeless.)
We asked HAC Vice President of Operations Nancy Davison if a lay off constituted a breach in the agreement. Her answer was: “The agreement really doesn’t address a layoff. It would probably be up to the state to make a determination.”
Asked if the loan could give an employer too much power over an employee, Davison too referenced the “Sixteen Tons” imagery.
“Sort of like an ‘I owe my soul to the company store?”’ Davison asked, in response to the question.
“There were many discussions about that and there is some concern,” she said. “But we think that the good outweighs the bad in this program. And it’s proven that’s the case in areas like Chicago where it’s been running for over 12 years.
“But it’s always important to look at the full picture and that was the part of the picture that concerned us. And it’s one of the things that we will talk to people about.”
Davison’s answers point out the plan’s imperfections. That said, it still manages to strike a delicate balance that promotes loyalty to an employer while providing employees with a home whose ownership is not dependent on their having to remain with one employer, and I, for one, wouldn’t be surprised if the program succeeded.
You can call Joe Burns at 508-375-4936 or e-mail him at email@example.com