May 26, 2014

Hartford employers’ $10K stakes put workers right at home

HBJ Photo | Gregory Seay
HBJ Photo | Gregory Seay
Melvyn Colon, who runs the nonprofit Southside Institutions Neighborhood Alliance, in front of one of 10 houses SINA built on Hartford’s Colonial Street, in the shadow of the Learning Corridor. One was sold under a SINA homeowner incentive program co-sponsored by two nearby hospitals and Trinity College.
HBJ Photo | Gregory Seay
Colon: HIP adds value to sponsors and neighborhoods.

English professor Katherine Bergren and her husband had settled on buying their first Connecticut home in Hartford's Charter Oaks-Zion neighborhood, in the shadow of Trinity College.

But then her employer, Trinity, made her an offer she and Justin Eichenlaub didn't refuse: She collected a $10,000 forgivable loan toward their purchase in return for committing to stay there for the next five years.

The money, Bergren, 31, said, allowed "us to purchase a home sooner than we would have otherwise.''

The Bergren-Eichenlaubs are the first to take advantage of Trinity's participation in a fledgling Hartford "homeowner-incentive program" (HIP) aimed at encouraging working, first-time buyers of existing homes to live in several surrounding inner-city neighborhoods.

Aetna was the first to complete a sale in the program a year ago, and since then Hartford Hospital and Connecticut Children's Medical Center combined have staked their workers' purchases of more than a half dozen dwellings.

Though participation from employers and buyers is meager to date, boosters say they expect HIP employer enrollment to double from five to 10 within the next year. Also under deliberation is a similar program targeting workers of small city businesses, they say.

Recently, state lawmakers committed $20 million in state bonding for a separate incentive program through the state Department of Housing that would finance eligible buyers of newly built or converted dwellings in Hartford, New Britain, Bridgeport, New Haven and New London.

One of HIP's biggest benefits beyond buyers getting upfront equity toward their purchase, supporters say, is the lift that it gives to the city's historically anemic ratio of property-ownership among working families.

It, too, observers say, is another example of Hartford's private sector promoting first-time and diverse home ownership in some of the city's least wealthy neighborhoods.

"It's a slow but sure process to give people the opportunity to live in the city,'' said Nelson "Oz'' Griebel, CEO of the MetroHartford Alliance, the city-based business lobby that was the concept's catalyst four years ago.

It stemmed from the city's ongoing efforts to boost its 27 percent homeownership rate, the lowest in Connecticut and among the nation's worst, said Julio Concepcion, who researched the idea as MetroHartford's public-policy liaison between the business community, city and its neighborhoods.

The aim, Concepcion said, "was to try to incentivize people to live in the city. We saw people who were ignoring the city when they were looking at housing.''

Trinity is but the latest participant. Coordinating through their sponsorship of nonprofit Southside Institutions Neighborhood Alliance (SINA) Hartford Hospital and Connecticut Children's Medical Center have committed to offering the same $10,000 home-buying carrot to their workers.

Mostly two-family dwellings have been bought under SINA's HIP, at a $230,000 average price; the handful of single-family buyers averaged a $160,000 price, said Dean Iaiennaro, SINA's director of real estate development.

SINA's sister, the Northside Institutions Neighborhood Alliance (NINA), covering the Asylum Hill and Blue Hills neighborhoods, too, administers a similar program in which Aetna and St. Francis Hospital participate. NINA's HIP is just off the ground, with one home purchase pending so far, authorities say.

To date, Hartford Hospital is the pacesetter, putting up $100,000 the past two years to put six employees into their own homes through the program, with a seventh in the closing pipeline, said Yvette Melendez, the hospital's vice president for government and community alliances.

Following legislative action that allowed SINA and NINA to serve as HIP administrators without being classified as "lenders,'' Hartford Hospital was the first to sign on, said SINA Executive Director Melvyn Colon.

Connecticut Children's Medical Center has committed $50,000 to the program but of the handful of applications so far, only one employee is about to close on a Hartford dwelling to house his immediate family and his parents, said Steve Balcanoff, CCMC's community liaison. The nonprofit caregiver will evaluate its participation before deciding to commit more, he said.

"The value of wanting to help our employees and the city is something we hold true to,'' said Balcanoff, one of three CCMC administrators seated on SINA's board.

Hartford's HIP concept began as an offshoot of the "LiveHartford'' initiative that promotes the city's neighborhoods as viable options for those looking to rent or buy, said Concepcion, a West End resident.

He started with a close look at Yale University's 20-year ownership incentive model that has invested $25 million to put 1,084 faculty and staff into New Haven homes, and MassMutual's five-year-old program promoting Springfield home ownership to its employees.

"The thing that resonated was the impact [Yale and MassMutual's programs] had on individual neighborhoods'' in those cities, Concepcion said.

Like their suburban counterparts, urban homeowners, he said, typically are more active vs. renters in activities and institutions that impact their neighborhoods, including schools, crime prevention, and engagement in local government and community-support organizations.

Colon said SINA's three corporate partners generally support house purchases in the surrounding Frog Hollow, Sheldon Oaks-Charter Oak, Barry Square and South Green sections.

But Hartford Hospital, for instance, specifically bans purchases in downtown and the affluent West End. The reason, Melendez said, is that dwelling prices in those areas don't match the median incomes for the hospital's eligible employees in such frontline jobs' as foodservice, pharmacy aides and administrative assistants.

CCMC, meanwhile, extends loan eligibility to all its workers, except upper management and its physicians, Balcanoff said.

At CCMC, the process works this way: be Employees in good standing on job performance after at least a year at work and who commit to living in their Hartford home for at least five years. They also must submit a commitment letter from a lender. Once accepted into the program, they must close on their home within 60 days.

Indeed, to ensure compliance with the residency period, the $10,000 loan is structured so that each year the worker lives there, 20 percent of the debt is forgiven, overseers say. However, to comply with state and federal income-tax guidelines, borrowers are taxed on $2,000 worth annually.

In the case of the Trinity professor, Bergren says she forfeits an extra $15 to $20 a month in tax withholding to reflect the $2,000 annual "income'' from her loan.

The Connecticut Housing Finance Authority and Webster Bank are among lenders who have staked mortgages to buyers in the Hartford homeownership incentive program, authorities say.

SINA also assists buyers in finding a lender, and completing all the associated paperwork and documentation, Colon said.

Insurer MassMutual initiated a $5,000 homebuyer incentive program in 2002 — lifted to between $7,500 to $10,000 in 2008 — that has dispensed $850,473 in forgivable loans to 123 takers, eligible after working there five years and committed to live at least five more in Springfield, its headquarters. Those who buy in one of six specific city neighborhoods qualify for the full $10,000.

MassMutual has major operations in Enfield, but a spokeswoman said the insurer hasn't tracked whether there were any Connecticut takers who have since moved over the border.

David Horrigan, NINA's HIP administrator since the launch, says Aetna and St. Francis each are committed to doing five HIP transactions a year. Asked about potential downsides, Horrigan paused.

"I don't know that there is a downside,'' he said. "We're encouraging people to live in Hartford. We're giving them $10,000 to do it and they get a beautiful house and a wonderful place to live.''

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