Particularly in urban areas, new college graduates often struggle to find housing they can afford. School districts regularly hire large numbers of young teachers, often in intense competition with other districts in a region. These pressures have led to innovative approaches to workforce housing.

To support recruitment‡ and retention, some districts are exploring innovative ways to make housing more affordable‡ while also fostering community vibrancy and stability.

Based on our conversations with municipalities, the same is true for them, particularly with respect to police officers. Municipal leaders recognize the benefit to the public of having police officers live within the community rather than commute to it. One implication is faster emergency response times by off-duty police officers. Another may be lower overall crime due to a more visible police presence.

Financing vehicles for workforce housing

One approach used in California and Florida—and now of rising interest in Texas—is the use of a financing vehicle to develop workforce housing in projects owned by a specially created non-profit entity. This structure may enable rent reduction of about 20% relative to market rates by eliminating corporate income tax, property taxes, and profit-sharing.

New college graduates tend to be single and, therefore, one-income households. In many locales, 20% potential rent savings is enough to make it possible for a young person earning, say, $55,000-65,000 per year to live in the community he or she serves. Local leaders may see value to the community in having teachers be part of the social fabric. School administrators may see even more value, as attractive housing opportunities could mean the difference between hiring enough candidates and failing to.

Joint projects between school districts and municipalities offer opportunities to create multi-departmental housing solutions. A municipality might see benefit in a project that promotes local residency of police officers, but that project may be too small on its own. A joint project with a school district—which has an ongoing pressing need to hire young people—may be a cross-departmental win-win.

Repurposing old school buildings

School districts may find opportunities to repurpose existing structures, such as closed or underutilized schools. By transforming vacant buildings into attractive and affordable workforce housing, school districts can demonstrate a commitment to sustainability and historic preservation while addressing a pressing need for workforce housing.

Many of these structures are in urban settings, which could appeal to young professionals, particularly with added amenities such as fitness centers and coffee shops. The right project at the right time has the potential to support neighborhood stabilization and renewal, as industry professionals explain‡.

Control and communication

In pursuing these projects, municipalities must strike and maintain the right balance between maintaining control over the development process and allowing developers flexibility to design and build projects that meet the needs of the target audience.

Another potential challenge is addressing concerns from community members. School districts and municipalities should engage in open and honest dialogue, addressing concerns and emphasizing the benefits that workforce housing can bring to the community—such as teacher recruitment and retention, neighborhood enrichment (or even revitalization), and lower emergency-response times.

Learn more about how UMB Bank, n.a. Public Finance can support your organization’s financing and capital needs, or contact us to be connected with a public finance specialist.

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