graphic of economic reasonsWhen communities take a moment to consider their most important assets, the items often mentioned include high-quality schools, access to parks and open space, a strong job base, and even a vibrant arts scene.

How often have you heard an ample supply of affordable housing mentioned as an asset? Instead, conversations about affordable housing usually focus on the cost to taxpayers and rarely take into account the fiscal and economic benefits that accrue when communities encourage the development of affordable homes.

As cities and counties try to bring their revenues and expenditures in-line and prioritize how to spend scarce resources, policymakers and planners should understand the benefits of well-designed affordable housing programs. Such programs are important now more than ever, as research demonstrates that housing affordability has worsened significantly in recent years.

While the provision of affordable housing involves important social and civic values, we believe it’s important to also focus on affordable housing’s economic and fiscal impacts.

Improving Worker and Employer Attraction and Retention

Many employers have reported that a lack of affordable housing makes it more difficult – and thus more costly – to recruit and retain employees. In a national survey of more than 300 companies, 55 percent of the largest respondents acknowledged an insufficient level of affordable housing in their proximity, and two-thirds of the same respondents believed that the shortage negatively affected their ability to hold onto qualified employees. A recent study revealed that retail salespersons could not afford to rent a typical one-bedroom apartment in 184 of the 210 markets studied.

From an employer’s perspective, a lack of affordable housing can put a local economy at a competitive disadvantage.

Increasing the Buying Power of Residents

Affordable rent and mortgage payments can significantly increase the residual income that households have at their disposal after meeting necessary housing costs – by $500 or more per month in some cases (source).

Research shows that low- and moderate-income households are more likely than others to spend this money on basic household needs such as food, clothing, healthcare, and transportation. Local businesses stand to gain from the increased buying power made possible by the availability of affordable housing.

Impact of Affordable Housing On Nearby Property Values

The Center for Housing Policy’s short report, Don’t Put it Here!, looked at the impact of affordable housing on nearby property values. Reviewing existing research, the authors found little evidence that affordable housing negatively affected the value of neighboring properties. They identified several key factors that appeared to have the greatest influence over impacts on the surrounding neighborhood:

Quality of property management and maintenance: While poorly-maintained housing depressed nearby property values, well-maintained and managed affordable housing was more likely to have a neutral or positive impact.

Project design and size: Attractive buildings that blended in with the surrounding neighborhood had a neutral or positive impact on the values of nearby properties. In addition, new affordable developments often helped revitalize blighted neighborhoods when included as part of a broader community revitalization strategy.

Existing neighborhood trajectory: Well-designed and located affordable housing was unlikely to negatively impact property values in strong neighborhoods.

graphic of housing costs

One-Time and Ongoing Job Creation and Spending

It stands to reason that building or rehabilitating affordable housing creates jobs in the construction field. Research by the National Association of Home Builders (NAHB) estimates that building 100 affordable housing units for families through the Low-Income Housing Tax Credit program can lead to the creation of more than 120 jobs, on average, during a project’s construction phase.

Even more importantly, long after the homes are occupied, the ripple effect from residents of these new units can support as many as 30 new jobs in a wide array of industries, including retail, healthcare, and local government. These employment effects are on par with building comparable market-rate units.


Fiscal Impacts for Local Governments

When affordable single-family homes are built or rehabbed, the funds flowing to cities and states can be considerable. Revenues can take the form of fees for permitting, zoning, and utilities, or they can reflect sales, income, or property taxes generated by construction-related economic activity. The NAHB estimates that 100 units of affordable housing for families generates the same amount of one-time revenue for jurisdictions as does a comparable market-rate property – roughly $827,000, on average – with more than half coming from permit/impact fees and utility user fees.

One persistent concern raised about affordable housing development is that it will flood local schools with children, increasing the demand for school facilities and educational services. Putting aside the need for our society to provide a solid education to all children, do lower-income households actually have significantly more children than upper-income ones? The answer is no. Today there is only a small difference in the average number of children per household when comparing income levels.

Another benefit is avoiding unnecessary, costly public expenditures by providing stable living situations for people experiencing homelessness in our communities as well as people with special needs.

Reducing Foreclosure Risks and Associated Costs

Recent research suggests that low- and moderate-income households who participate in affordable homeownership programs have a much lower risk of delinquency and foreclosure than similar buyers with prime or subprime loans.

Reducing foreclosures not only helps stabilize neighborhoods, but also yields significant savings for local governments that may otherwise have to absorb costs related to property maintenance, court and legal expenses, increased police and social services for the affected neighborhoods, and, in some cases, demolition of abandoned houses (source).

Even when vacant homes are spared from demolition, they can drain public coffers. Abandoned homes can decrease the property taxes, utility revenues, and other taxes and fees that jurisdictions typically collect. It is also well documented that vacancies can affect the value of nearby homes, further reducing property tax revenues (source).


In many ways our opportunities are strongly influenced by where we live, making affordable housing options in healthy communities critical. Children, older adults, veterans, people with disabilities – different generations and demographics have different needs. Where and how we live can have a profound effect on their lives.


Housing For All Walks of Life and For All Socio-Economic Levels Is Important

John Jackson, Ph.D., President, William Jessup University

photo of John JacksonWilliam Jessup University is a little ecosystem of its own from our perspective as a major employer in the area (we have about 150 full time and about 500 part time employees). The good news about that is that we have students and staff and faculty and administrators across the campus in a mixture of part and full time jobs from literally every sector of life including race, ethnicity and socio-economic background. The better news is that we have jobs that pay across the spectrum as well, including entry level and professional and career academic, and executive. The painful news? The painful news is that many of our committed employees are simply not able to afford a home in Placer County. We realize that if our employees are not able to afford homes, it makes it very difficult for them to make a long term commitment to the University.

Placer County is a wonderful community. I am so thankful to live here. I’m thankful for the wonderful amenities, the supportive business and government environments, and the amazing natural landscape of the created world around us. I’m also thankful that here in Placer we have a variety of economic levels in our community. My own children live here and we are hopeful that they will choose to remain here. However, both at an employer level and at a personal level, the availability of affordable housing is a challenge in our community. I know that for our community to thrive, access to affordable housing must be part of our long term sustainable economic strategy.

My hope is that Placer County will not only remain a wonderful and beautiful community in which to live, work and play, but that we will provide avenues for people from all walks of life and all socio-economic levels to participate in the robust and vital society we all long to help create.


Workforce Housing Vital for Employees

Dawn Clayton, General Manager of Thunder Valley Casino Resort

photo of Dawn ClaytonPlacer County is a thriving region in California and Thunder Valley is fortunate to be in the center of it,” said Dawn Clayton, General Manager of Thunder Valley Casino Resort. “Affordable housing is a big issue when it comes to attracting top-notch employees and we strongly support local development that keeps all income levels in mind.

Our 2,400+ workforce spans the economic arc, from introductory jobs to executive management, and it is important that our team members have the ability to enjoy the quality of life here in the foothills without having to endure a lengthy commute to find adequate housing. When it comes to Placer-area housing – policymakers, builders, and employers share an equal stake in securing a vibrant future and we welcome the opportunity to provide our support.


Living Near Your Work Is Important

Dave Fulton, Managing General Partner of Diamond Well Drilling

photo of Dave FultonOur employees are well drillers, pump installers, lab technicians, and clerical office workers. Of my 20 some employee pool, only two own houses in Placer County where our business is located. One of those is retired. One is close to it and they bought their houses 40 years ago when things were more affordable. Three others own houses, but far away in Yuba or Nevada Counties where again housing is a little more affordable.

The lack of affordable housing poses a large problem for me as an employer because it reduces the pool of people from which I can draw employees. We have an extreme labor shortage in the Auburn area because it is too expensive here for the people who want to fill the jobs we have to offer. They just cannot afford to live here and the result is they have to either commute long distances or rent really marginal apartments locally. Everyone is unhappy. The employees have to commute and pay for that. The employers have to pay higher wages and to cover that charge higher prices. And consumers are forced to pay those prices.


Entry-Level Home Buying Is Very Difficult

Sue Thompson, Owner, HomeTown Realtors

photo of Sue ThompsonSeptember’s average home sale price in the greater Auburn area is approximately $426,000. When you take a look at that from a financing perspective, 20% down if you went conventional, which is roughly $80K and which, if you have no debt, will require a minimum of $52K annual income. That’s with good credit and no debt. That means no car payments, no credit card bills and that’s, of course, dealing with one-third of your monthly income for your mortgage payment. That makes it pretty tough for entry-level buyers.

Affordability will continue to be an issue unless we have new construction adding to our housing stock. Even then, the high development and permit fees will make the cost of new homes even higher.

We see the demand for less than $400K but the problem is when it comes up it goes quickly, typically with multiple offers. That’s really hard to deal with for the average home buyer and if one doesn’t have cash it makes it even more difficult. In fact, a lot of people who are competing at that lower range (which used to be the upper range) they’ll even sign away their inspection contingencies when they submit their offer—just to be considered.

The fee structure is a key aspect to encourage developers to build more affordable, lower cost homes. Depending on where and what kind of utilities, somewhere between $40K to $80K in fees is required before you even drive one nail. That’s huge.

The development costs are also a concern. Let me give you an example. I was asked to do a study on a piece of property that was sub-dividable to see what had to be done—how much it would cost—to sell two properties instead of one. And my research found that it would cost close to $200K before you can get two parcels out of that—which includes required reports plus engineering and other fees that all added up (hard and soft costs). And the property itself would probably only sell for $200K anyway.

The people are ready, but our local government is not. The current building/development model is not relevant anymore – it’s behind the times and not current with the changes in the economy and in society. The system itself is working against the best interests of what we’re trying to accomplish for the people at large.

One example is the ordinance on second dwellings—where you cannot rent out a second dwelling on your property unless you live on the property. These things need to change.


Increased Calls For Affordable Housing

Jamee Horning, Executive Director of Seniors First

photo of Jamee HorningInformation and Assistance calls for housing have increased over the past five years. Five years ago housing calls were ranked number 8 out of top 10 reasons for contacting Seniors First. For the past three years however, calls for housing have increased, and now rank number 5.

The calls have become much more complex. People are being displaced due to the downturn in the economy, a spouse dying, issues related to family dynamics and people living longer. Also, migration of people from out of the area due to family living in Placer County. The cost of housing and lack of availability have both increased which has caused clients that are from Placer County to seek solutions out of our county.



For the Good of the City and the Family

Stan Nader, City Council Member, City of Lincoln

photo of Stan NaderIn our city’s general plan it calls for the city to ensure housing is available for all income types. So if we’re to honor our general plan, the city needs to be proactive in how we’re going to encourage affordable housing to be constructed. As a city we need to provide incentives for building housing that is affordable and meet the needs of our community.

On a personal note, because the price of apartments have doubled, my daughter and son-in-law can’t afford to rent an apartment in the area and they’ve been living with us for the past year. So you might say I also have a personal family reason as well to encourage the development of more apartments and affordable homes here.

I did some homework and checked with all of the apartments in our city and they all have long waiting lists. This is a very important matter for the community as a whole, and my goal is to try to get the city to be more proactively supportive in how we’re going to create more affordable housing for folks here.



Communities With a Range of Housing Options

Joanne Neft

photo of Joanne Neft“I always want to live in a community that is as diverse as possible. I do that by choice. We lived at Tahoe for 20 years until the early eighties and I really appreciated that every neighborhood was incredibly diverse. Everyone came to the area from a different background—all from diverse economic backgrounds living next to each other. That’s becoming harder to find today.

“Our lives are richer when we live in diverse neighborhoods and when we make housing available in our community for all. It’s the cooks, the people who serve you at the restaurant, the person who makes your drink at the bar—they want to live here too—and they should be able to do so. To make housing affordable for all who choose to live and work in our beautiful county is vital. And we all benefit as a result.”

The importance of developing mixed-income communities with a range of housing options

People who need long-term affordable homes are just like you and me, with many already living and/or working in your community. Clerical workers, restaurant workers, young working professionals entering the workforce, retail industry workers, bank tellers, and daycare providers typically don’t earn enough to afford current market rate rents or housing prices.

Most industries include positions that simply do not pay enough for those workers to afford average mortgages or rents in Placer County. Having an adequate supply of long-term affordable homes in your town will help ensure that these workers can shop at local markets, eat at local restaurants, and fully participate in your local economy.

Affordable housing is also critically important for people on fixed incomes like the elderly and people with disabilities. These residents need rents that they can afford now and that will remain affordable over time.


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