For years, businesses in San Luis Obispo have had difficulty retaining employees because housing is simply too expensive.
Now Peoples’ Self-Help Housing is pursuing a new way to address this problem — partnering with local companies to provide $30,000 to $50,000 per unit to help build 40 townhomes off Broad Street that would be sold to their employees.
The companies wouldn’t have an ownership stake in the housing. But through the partnership, they would be able to offer their employees a home for sale at a rate that’s lower than market value.
Peoples’ Self-Help expects to file its development permit application with the city by mid-August, proposing to build the project on a 1.3-acre parcel at 3720 Broad St. across from the Damon Garcia sports complex. The goal is to start construction by January and finish in December 2018.
“We’ve been polling local employers,” said John Fowler, president and chief executive officer of Peoples’ Self-Help Housing. “They say they often lose good employees because of the housing situation. Workers are tired of rent and housing prices going up. This would serve a definite need.”
The project’s home prices would fall loosely within “workforce housing” guidelines, limiting the annual mortgage payment to about one-third of the total salary of the qualifying household, Fowler said.
People’s Self-Help is targeting buyers who earn between 80 and 160 percent of the median income. The current median household salary for a household of four is $83,200. So a family of four could earn between $66,560 and $133,120 to qualify for one of the homes.
The nonprofit has built hundreds of affordable housing units on the Central Coast, subsidizing costs for low-income, seniors and other special needs groups. This project would be different in that local employers would help pay for the project.
“If this works for employers and employees, this could be a model that gets used elsewhere,” Fowler said. “I’m hoping this idea will spread.”
Fowler believes the employer-partnership concept could be used by schools, hospitals and other institutions that want to retain employees and reduce their costs from employee turnover.
Project units are envisioned to be between 900 and 1,100 square feet. The proposal calls for 28 two-bedroom, four one-bedroom, four studio units and four “live/work units.”
The live/work units would consist of 1-bedroom units above an approximate 400-square-foot ground floor commercial space. Residents of these homes would work in the commercial space.
Specific employers that might participate haven’t been identified, but Fowler hopes to line up between five and 10 large and small companies. They would select which employee gets to buy a home they help fund, use a lottery system or assign the task to Peoples’ Self-Help.
Under the proposal, employees who buy and then move or leave their company would be required to sell the home with restricted appreciation, likely between 3 and 5 percent per year. Another employee then could buy the home or Peoples’ Self-Help could buy back the home and partner with a new employer.
Peoples’ Self-Help would manage the home sales transactions as well as the development.
“We want to make this as easy as possible for businesses,” Fowler said. “Most companies don’t want to be in the housing business because it’s not what they do. But it’s what we do.”
Fowler said the proposed site is near the Marigold shopping center (including a Von’s supermarket), Damon Garcia park space, public transportation and commercial areas.
The Housing Authority of San Luis Obispo is building a mixed-use housing project at a neighboring parcel at 3680 Broad St. Its 46 homes, designated as affordable housing under city guidelines, are designed for households making between $18,000 and $50,000 a year. That project is expected to be completed by next summer.
Scott Smith, HASLO’s executive director, said he’s curious to see how the adjacent People’s Self-Help Housing project will work.
“The goal is very good,” Smith said. “It gets a conversation going with the employers about what’s needed. We need housing for a lot of different income groups.”
Jeff Eckles, executive director of Home Builders Association of the Central Coast, said that the idea “speaks to the critical nature of the housing crisis” and the need for a variety of creative solutions to meet housing demands.
“We need to be creative and to have more solutions for housing,” Eckles said. “I like that it’s innovative and it houses people.”
The Peoples’ Self-Help project would be built by professional contractors without using “sweat equity,” or labor from future residents to help build the project, as the organization has done on other jobs.
“I’m personally watching and monitoring this every single step of the way,” Fowler said. “It’s a very aggressive schedule.”