The Chapel Hill Town Council recently heard an update to its two-year pilot program for incentives for employee housing. The Homeowner Assistance program allowed town employees to apply for one-time down payments if they are seeking housing within town limits. Now, the program expanded eligibility to help more employees live where they work.
In 2018, the Chapel Hill Town Council approved a pilot program to help town employees live in or close to Chapel Hill.
To be eligible for housing assistance, permanent employees must have a household income at or below 115 percent of the area median income – for a four-person household this is just less than $100,000. Additionally, applicants must be seeking housing within the town limits, require assistance with down payments or closing costs and must attend a homebuyer or budget counseling program.
Nate Broman-Fulks, the affordable housing manager for Chapel Hill, said the program met town goals which lead to improved employee retention and recruitment and helped facilitate greater connection in the town among employees.
There were two major incentives to the program – the first Broman-Fulks said, was for homeownership and closing costs assistance up to $7,500 for purchases of homes within Chapel Hill.
“We did receive 11 applications from employees although none have received the homeownership assistance yet,” Broman-Fulks said.
Of those 11 applications, seven have yet to purchase a home in the town due to affordability. Three others chose to purchase homes outside of the eligible area for assistance and one person left town employment altogether.
The other incentive the town program offers is for rental housing. This assistance ranged from $1,500 to $2,000 depending on bedroom size. For the rental incentive, 13 employees applied and seven received assistance.
Broman-Fulks said the key findings of the study showed a majority of town employees want to live in or near Chapel Hill. He said affordability, however, remains the greatest barrier as there’s limited availability for housing that fits employee needs.
“We heard comments like the only properties I could afford were student rentals or weren’t in great shape,” Broman-Fulks said. “What we heard a lot of was that employees were really interested in homeownership and having a yard and space.”
Only about 200 single family homes sold in 2020 were affordable to eligible employees. Megan Culp, the community development programs manager, said this number could increase with the expansion of the geographic area to all properties within 5 miles of Chapel Hill town limits.
“This both meets the original goals of the program of helping employees live closer to work, reducing commute times, increasing job satisfaction and encouraging engagement in the community,” said Culp, “but also increase the potentially available housing stock enough to make a difference.”
Photo via Town of Chapel Hill
According to Culp, the geographic expansion would double the number of affordable rentals and more than quadruple the number of homes for sale at affordable price points.
Another change approved by the Chapel Hill Town Council was to increase the incentive amounts and broaden eligible uses. For rentals, the assistance received would equate to 2.5 times the fair market rent adjusted each year. Culp said this would be roughly equivalent to first and last month rent for a unit and utility connection fees.
“We also recommend allowing future rent payments as an eligible expense so that after covering deposits, the balance of the maximum incentive could be used as a one-time upfront payment to the landlord that the employee could budget out over the year to reduce their monthly rent,” Culp said.
For homeownership, the assistance would equate to $12,500 for employees purchasing a four-person home in Chapel Hill or $7,500 for a purchase of a four-person home elsewhere within the expanded eligible area.
“The lower amount would go further in those outlying areas, with there being more available stock in the expanded area,” Culp said.
The pilot program was originally budgeted for $50,000. Of that, $43,000 remains which town staff said could aid two employees with homeownership and five to seven with rental assistance. After this, future funding for the housing program would need to be built into the Chapel Hill general fund budget.
These updates to the employee housing program will begin in winter 2022.
To learn more or apply to the program, click here.
Lead Photo via Town of Chapel Hill
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