Orange County, Calif., Employers, Workers Battle Housing Costs
By Mary Ann Milbourn, The Orange County Register, Calif.
RISMEDIA, Nov. 8 – (KRT) – Mike Woolbright did the math, and it didn't add up:
Orange County's typical monthly mortgage payment, with taxes: $2,262. Median monthly rent: $1,317.
Monthly pay for the 12 full-time workers at his silk-screening company in Stanton: less than $2,000 each.
No matter how he worked the numbers, he knew it was a formula for disaster. He already had lost one worker because of the high cost of housing here, and he knew it was just a matter of time before others followed.
Then he hit on a solution: Buy property himself and rent it to his workers at below-market rates.
So far, it's working. He rents a house next to his Express Screen Press Corp. plant to one worker and is buying a nearby triplex that he hopes will take care of three other employees and their families.
But this is no act of charity. Woolbright sees it as a matter of business survival.
"Helping my employees helps me in the long term, because healthy, happy employees will want to work here," he says.
Recruiting and retaining workers is a problem more Orange County employers, large and small, are trying to come to grips with as housing prices have outpaced incomes.
Their solutions are as varied as the employers themselves: universities that build housing for faculty and staff, unions that partner with cities to create lower-cost housing, and companies that subsidize commuting costs from places where workers can still afford to buy homes.
High housing costs are a familiar problem in Orange County, which saw a similar price run-up in the late 1980s. But this time, overburdened freeways and shrinking availability of open land have clogged what used to be a pressure-release valve -- construction of new homes in undeveloped stretches of Orange County.
Business leaders are exploring ways to cope with the problem, but soaring housing prices are making it increasingly difficult to attract and keep workers.
The solutions aren't easy. Many of the traditional government responses to high-cost housing -- including rent control and housing projects -- are unpalatable to Orange County residents. Other initiatives, such as requiring a percentage of new units to be set aside for low- and moderate-income residents, often meet community resistance because of concerns about population density, traffic and lower-income neighbors.
The struggle with affordability also is spreading from traditional low-income households to middle- class workers such as teachers and police officers.
Stan Oftelie, chief executive of the Orange County Business Council, said he's recently heard of employers having difficulty attracting nurses and engineers in the $75,000-$125,000 pay range.
"We have a very good job market and have been the victims of our own success," he says. "But the high-quality workers we've attracted are not going to continue to come if people can't afford to live here."
While no one is predicting that the high cost of housing will be the death knell for Orange County's economy, experts say that, left unabated, rising costs will unalterably change the community.
As more people are unable to afford to live here, experts see a gradually receding middle class and the virtual disappearance of young families with children, leaving only the rich, the poor and the lucky -- those who bought before housing prices soared.
"Orange County will become a Baby Boom ghetto," says Joel Kotkin, a Los Angeles futurist who often writes about the changing dynamics of cities and suburbs.
The numbers are grim:
The median Orange County home cost $533,000 in September, up 24 percent in the past year, according to DataQuick. That's only off a little from the peak of $543,000 in August.
Chapman University economists say a single-family house now costs more than seven times the county's estimated $75,000 median family income, up from about five times the typical income in 1989, the last time housing prices peaked.
Last year, 54 percent of Orange County households were unable to easily afford the median monthly rent, according to the National Low Income Housing Coalition.
Woolbright isn't the only employer who is fighting back.
Following in the footsteps of UC Irvine, which built 700 houses for faculty, Cal State Fullerton recently embarked on a plan to provide affordable housing for its faculty and staff.
Ephraim P. Smith, vice president of academic affairs, said it has become critical, especially in attracting staff and younger faculty. The average beginning faculty member makes $60,000 for a nine-month academic year.
"One person (who was offered a job) came out and seemed very satisfied," Smith recalls. Then the house-hunting began. "He came back out with his spouse and called us on Monday morning and said, 'We've changed our minds.'"
In 2002, the university opened its first 86 homes and townhouses in University Gables, a joint project with the city of Buena Park on county land. Townhomes and houses ranged from $150,000 to $252,000.
Availability of the CSUF housing proved the difference in Robert McLain's decision to move to Orange County.
The British new imperial history expert says Fullerton was the best fit for his career plans. "But the question was, can we afford it?" recalls McLain, 39, who has a wife and 5-year-old son.
McLain was able to buy a three-bedroom, 21/2-bath detached house in the university's complex for $220,000.
"The fact we could buy into University Gables is what allowed us to come here," he says.
Bill Dickerson, head of CSUF's housing authority, says the school hopes to build about 300 additional units -- apartments and homes -- on two other sites in Fullerton in the next two years.
While colleges have been on the forefront of providing housing for their workers, organized labor is now getting involved. The International Brotherhood of Electrical Workers Local 441 in Orange hopes to become the model for joint ventures in building affordable housing for union members with a project it's planning in Santa Ana.
Doug Chappell, the local's business manager, says the need is critical.
"The guys who do the work in Orange County -- especially the apprentices -- don't make enough to buy here," Chappell says. The average electrical apprentice earns $12 an hour. Journeymen make $35 an hour but often have jobs for only seven to eight months of the year.
"Some are driving two hours each way -- four hours a day -- before they've ever done any work," Chappell says.
The union and the National Electrical Contractors Association is teaming with John Laing Homes and the Santa Ana redevelopment agency to build affordable homes on a site the IBEW owns on Lyon Street. The First American Credit Union and Fannie Mae are going to help union members with credit counseling and financing.
Chappell said similar joint projects are being pursued in Anaheim, Garden Grove, Stanton and Westminster.
Not every enterprise can build or buy employee housing, so some employers are trying to make it easier for their workers to commute from areas with lower- priced homes.
SHURflo LLC, a pump manufacturing company, uses a van- pool program as an employee recruitment and retention incentive.
When the company moved from Garden Grove to its new facilities in Cypress three years ago, company officials were concerned about how to get their workers, many of whom lived in low-cost housing within walking distance of the old plant, to the new facility. Van-pool service from the central county to Cypress filled the transportation gap.
Since then, however, the vans have become more important for workers who commute from outside the county. The company's Inland Empire van-pool program has grown to three 10-, 12- and 15-passenger vans. SHURflo leases the vans; the employees split the gas and FasTrak toll- road pass.
Besides helping to retain current employees, the program is a recruiting tool, says Janet Scott, SHURflo's vice president of human resources.
"I had one person from Lake Elsinore who came here because of the van program," she says.
While many employers are feeling the pinch that housing prices present for their work forces, not every business is hurting.
"We have a lot of people from all over the place who are willing to commute," says Marybeth Sosa, human-resources director at Greenlight Financial Services in Irvine.
She acknowledges, however, that a more competitive labor market could change that.
"When the (job) market is good and everyone wants people, then it could be a problem," she says.
Employers and experts in communities such as Silicon Valley, where the median home price tops $600,000, warn Orange County employers not to be complacent.
It doesn't take much, they say, before the middle-class workers who provide the backbone of the community begin to abandon a region that imposes high housing costs and long commutes.
"How long is it going to be before that teacher, who is commuting one hour each way, is going to say, 'I could just teach in Gilroy' or wherever they live?" says Shiloh Ballard, housing director for the Silicon Valley Manufacturing Group, which represents 175 employers. "We've ended up training the teachers (in Santa Clara County) and then they move to Fresno."
The Business Council is working on several fronts to improve the situation here. It is teaming up with First American Corp., the Santa Ana title company, to pinpoint areas where homes are under the county's half-million- dollar median price. The project is aimed at showing prospective employees that Orange County still has affordable housing for middle-class workers.
It has also joined with Merrill Lynch and Neighborhood Housing Services of Orange County to establish a revolving fund that will help pay engineering and planning costs for affordable housing.
Kotkin, the futurist, says mixed-use developments that combine retail at the street level with housing above could also be part of the answer for Orange County. Brea, Orange and Anaheim are among the cities already experimenting with the concept.
"There are a lot of options for Orange County that can make this situation work," he says.
SEEKING AFFORDABILITY: Orange County isn't the first place to have struggled with the high cost of housing. Here are some of the approaches communities and employers have taken:
Merrill Lynch recently provided a $1 million loan to be administered by the Orange County Affordable HomeOwnership Alliance and Neighborhood Housing Services of Orange County to help jump-start early engineering and other planning for low- and moderate- income projects. They hope other businesses also will contribute to make more funds available.
Anaheim, Brea, Fullerton, Orange and Tustin are among local communities planning mixed-use developments that have retail at street level with residential units above.
Some employers, such as the St. Regis Hotel in Dana Point, offer housing subsidies. The hotel teamed with the Mary Erickson Community Housing Foundation to provide monthly subsidies of $200 to $600 so workers can live in Orange County.
Local colleges, including UC Irvine and Cal State Fullerton, have built faculty and staff housing.
Buena Park Councilman Art Brown advocates housing near Metrolink stations so families can give up the cost of having more than one car for transportation.
Los Angeles, New York City and Santa Monica impose rent control to keep housing costs down.
California requires communities to include affordable housing in their planning, although they often fall short of goals.
The federal government offers Section 8 rent subsidies to make apartments more affordable to low-income residents, although the demand far outstrips supply.
Housing projects, a popular affordable-housing solution during the middle of the last century, have fallen from favor after many deteriorated into crime-ridden slums.
RISMedia welcomes your questions and comments. Please send e-mail to editorial@rismedia.com.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment