County opens doors to homeownership

Published June 26, 2006

by JOANNE WOJCIK

jwojcik@BusinessInsurance.com

REDWOOD CITY, Calif.--Escalating San Francisco Bay Area housing costs are shutting an increasing number of San Mateo County employees out of the market.

Lack of affordable housing also has made employee recruitment and retention more difficult.

San Mateo County Benefits Manager Paul Hackleman took a two-pronged approach to address this problem: He worked to develop a county employee homebuyers assistance program and arranged for employees who live in more affordable but remote locations to telecommute.

This year, he is attempting to persuade the county's retirement board to finance second mortgages for county employees seeking to buy homes closer to work, both to provide downpayment assistance and help them qualify for lower-cost first mortgages.

The county's Employee Homebuyer Education and Counseling Program, which started in 2000, is administered by First Home Inc. of San Francisco, and comprises educational seminars, workshops and counseling. Participants also learn about the region's public subsidy programs. In addition to county employees, staff members for nonprofit enterprises that contract with the county are eligible to participate.

The county retirement board balked when Mr. Hackleman approached it about investing in the program. The board was concerned about risk, particularly because the proposal came shortly after the "dotcom bust," said Mary Welch, director of employee and public services for San Mateo County. But housing prices haven't fallen since 2000-2001, so it would have been a good investment, she said.

So Mr. Hackleman and Walter Zhovreboff, president of First Home, enlisted the support of MeriWest Credit Union in San Jose, Calif. MeriWest agreed to provide a first mortgage for county employees and insurance for a second mortgage, which the retirement board would finance.

"That virtually eliminates the element of risk for the seconds," said Mr. Zhovreboff. "Now we're going back to the board and say, 'We've taken care of the risks, so let's talk about the returns and the structuring of the program."'

He and Mr. Hackleman will present the revamped plan to the board in November. The revised program is to include assistance for first-time home buyers from the California Housing Finance Agency, which is to help those with little or no downpayment obtain a loan using tax-exempt bond money.

Under the program, county employees would have to put 3% down, "which in this region is still pretty substantive," Mr. Zhovreboff noted. Single-family homes in the San Francisco Bay Area start, on average, at $650,000 and condominiums are $400,000, he said.

The program is directed toward individuals with salaries starting at $45,000.

"Paul had the insight from literally a phone call or a letter that I wrote him, which is really, really rare that an employee benefits manager or an HR director has that sort of insight, particularly going back five or six years," Mr. Zhovreboff recalled. The letter included a proposal for retaining employees amid rising housing prices, putting ownership out of reach for many.

A big part of the program is education about resources available to help them become homeowners. "What we found was the greatest deterrent to ownership is fear. So we decided we should start providing education and counseling," Mr. Zhovreboff said.

It began with workshops in county offices. Courses focused on financial self-sufficiency, including management of credit, savings, employment stability and family stability.

"One of the big benefits...was that some of these people who were not financially self-sufficient and were not managing their money all of a sudden had this goal, what they perceived to be a reachable goal, and started managing their credit and managing their finances," Mr. Zhovreboff said.

It also eliminated many of the financial tensions that employees often bring to work, which can affect performance, he said.

"One of the things that Paul and I have had numerous discussions about is not only are you creating homeowners, you're creating an overall more satisfied employee," Mr. Zhovreboff added.

Through the program, 10 county employees signed up for another local program sponsored by Redwood City, Calif., that offered up to $100,000 in down payment assistance to first-time buyers, Mr. Zhovreboff said.

For those employees who live farther out, Mr. Hackleman arranged a telecommuting program that also helped the county meet its statewide transportation system management obligations to reduce vehicle traffic and emissions. About 10% of county employees reside in East Bay, where home prices are less expensive.

Initially, Mr. Hackleman obtained office space at no charge from the Fremont Library for several employees. But, since then, the library needed the space back, and those county workers must telecommute from home.

For these workers, Mr. Hackleman developed an e-learning program that prepares them for telecommuting. Among other things, the program includes a safety checklist with recommendations from the California Occupational Health and Safety Administration, forms that telecommuters must complete and give to their supervisors, sample work schedules and home office requirements.