: OC housing :-(

November 7, 2004

Sunday, November 7, 2004

Housing hurdles

O.C. employers and workers struggle with living costs

Mike Woolbright did the math, and it didn't add up:

Orange County's typical monthly mortgage payment, with taxes:

$2,262. Median monthly rent: $1,317.

Monthly pay for the 12 full-time workers at his silk-screening

company in Stanton: less than $2,000 each.

No matter how he worked the numbers, he knew it was a formula for

disaster. He already had lost one worker because of the high cost of

housing here, and he knew it was just a matter of time before others

followed.

Then he hit on a solution: Buy property himself and rent it to his

workers at below-market rates.

So far, it's working. He rents a house next to his Express Screen

Press Corp. plant to one worker and is buying a nearby triplex that

he hopes will take care of three other employees and their families.

But this is no act of charity. Woolbright sees it as a matter of

business survival.

" Helping my employees helps me in the long term, because healthy,

happy employees will want to work here, " he says.

Recruiting and retaining workers is a problem more Orange County

employers, large and small, are trying to come to grips with as

housing prices have outpaced incomes.

Their solutions are as varied as the employers themselves:

universities that build housing for faculty and staff, unions that

partner with cities to create lower-cost housing, and companies that

subsidize commuting costs from places where workers can still afford

to buy homes.

High housing costs are a familiar problem in Orange County, which

saw a similar price run-up in the late 1980s. But this time,

overburdened freeways and shrinking availability of open land have

clogged what used to be a pressure-release valve - construction of

new homes in undeveloped stretches of Orange County.

Business leaders are exploring ways to cope with the problem, but

soaring housing prices are making it increasingly difficult to

attract and keep workers.

The solutions aren't easy. Many of the traditional government

responses to high-cost housing - including rent control and housing

projects - are unpalatable to Orange County residents. Other

initiatives, such as requiring a percentage of new units to be set

aside for low- and moderate-income residents, often meet community

resistance because of concerns about population density, traffic and

lower-income neighbors.

The struggle with affordability also is spreading from traditional

low-income households to middle- class workers such as teachers and

police officers.

Stan Oftelie, chief executive of the Orange County Business Council,

said he's recently heard of employers having difficulty attracting

nurses and engineers in the $75,000-$125,000 pay range.

" We have a very good job market and have been the victims of our own

success, " he says. " But the high-quality workers we've attracted are

not going to continue to come if people can't afford to live here. "

'A BABY BOOM GHETTO'

While no one is predicting that the high cost of housing will be the

death knell for Orange County's economy, experts say that, left

unabated, rising costs will unalterably change the community.

As more people are unable to afford to live here, experts see a

gradually receding middle class and the virtual disappearance of

young families with children, leaving only the rich, the poor andthe

lucky – those who bought before housing prices soared.

" Orange County will become a Baby Boom ghetto, " says Kotkin, a

Los Angeles futurist who often writes about the changing dynamics of

cities and suburbs.

The numbers are grim:

The median Orange County home cost $533,000 in September, up 24

percent in the past year, according to DataQuick. That's only off a

little from the peak of $543,000 in August.

Chapman University economists say a single-family house now costs

more than seven times the county's estimated $75,000 median family

income, up from about five times the typical income in 1989, the

last time housing prices peaked.

Last year, 54 percent of Orange County households were unable to

easily afford the median monthly rent, according to the National Low

Income Housing Coalition.

FIGHTING BACK

Woolbright isn't the only employer who is fighting back.

Following in the footsteps of UC Irvine, which built 700 houses for

faculty, Cal State Fullerton recently embarked on a plan to provide

affordable housing for its faculty and staff.

Ephraim P. , vice president of academic affairs, said it has

become critical, especially in attracting staff and younger faculty.

The average beginning faculty member makes $60,000 for a nine-month

academic year.

" One person (who was offered a job) came out and seemed very

satisfied, " recalls. Then the house-hunting began. " He came

back out with his spouse and called us on Monday morning and

said, 'We've changed our minds.' "

In 2002, the university opened its first 86 homes and townhouses in

University Gables, a joint project with the city of Buena Park on

county land. Townhomes and houses ranged from $150,000 to $252,000.

Availability of the CSUF housing proved the difference in

McLain's decision to move to Orange County.

The British new imperial history expert says Fullerton was the best

fit for his careerplans. " But the question was, can we afford it? "

recalls McLain, 39, who has a wife and 5-year-old son.

McLain was able to buy a three-bedroom, 2 -1/2-bath detached house

in the university's complex for $220,000.

" The fact we could buy into University Gables is what allowed us to

come here, " he says.

Bill Dickerson, head of CSUF's housing authority, says the school

hopes to build about 300 additional units - apartments and homes -

on two other sites in Fullerton in the next two years.

A JOB AND A HOME

While colleges have been on the forefront of providing housing for

their workers, organized labor is now getting involved. The

International Brotherhood of Electrical Workers Local 441 in Orange

hopes to become the model for joint ventures in building affordable

housing for union members with a project it's planning in Santa Ana.

Doug Chappell, the local's business manager, says the need is

critical.

" The guys who do the work in Orange County - especially the

apprentices - don't make enough to buy here, " Chappell says. The

average electrical apprentice earns $12 an hour. Journeymen make $35

an hour but often have jobs for only seven to eight months of the

year.

" Some are driving two hours each way - four hours a day - before

they've ever done any work, " Chappell says.

The union and the National Electrical Contractors Association is

teaming with Laing Homes and the Santa Ana redevelopment agency

to build affordable homes on a site the IBEW owns on Lyon Street.

The First American Credit Union and Fannie Mae are going to help

union members with credit counseling and financing.

Chappell said similar joint projects are being pursued in Anaheim,

Garden Grove, Stanton and Westminster.

EASING THE COMMUTE

Not every enterprise can build or buy employee housing, so some

employers are trying to make it easier for their workers to commute

from areas with lower- priced homes.

SHURflo LLC, a pump manufacturing company, uses a van- pool program

as an employee recruitment and retention incentive.

When the company moved from Garden Grove to its new facilities in

Cypress three years ago, company officials were concerned about how

to get their workers, many of whom lived in low-cost housing within

walking distance of the old plant, to the new facility. Van-pool

service from the central county to Cypress filled the transportation

gap.

Since then, however, the vans have become more important for workers

who commute from outside the county. The company's Inland Empire van-

pool program has grown to three 10-, 12- and 15-passenger vans.

SHURflo leases the vans; the employees split the gas and FasTrak

toll- road pass.

Besides helping to retain current employees, the program is a

recruiting tool, says Janet , SHURflo's vice president of human

resources.

" I had one person from Lake Elsinore who came here because of the

van program, " she says.

NOT EVERYONE IS HURTING

While many employers are feeling the pinch that housing prices

present for their work forces, not every business is hurting.

" We have a lot of people from all over the place who are willing to

commute, " says beth Sosa, human-resources director at Greenlight

Financial Services in Irvine.

She acknowledges, however, that a more competitive labor market

could change that.

" When the (job) market is good and everyone wants people, then it

could be a problem, " she says.

Employers and experts in communities such as Silicon Valley, where

the median home price tops $600,000, warn Orange County employers

not to be complacent.

It doesn't take much, they say, before the middle-class workers who

provide the backbone of the community begin to abandon a region that

imposes high housing costs and long commutes.

" How long is it going to be before that teacher, who is commuting

one hour each way, is going to say, 'I could just teach in Gilroy'

or wherever they live? " says Shiloh Ballard, housing director for

the Silicon Valley Manufacturing Group, which represents 175

employers. " We've ended up training the teachers (in Santa Clara

County) and then they move to Fresno. "

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