Collaboration is the key to solving the workforce housing crisis

Contrary to popular belief, the United States isn’t dealing with an affordable housing problem.

It’s dealing with an affordable housing crisis.

The distinction is important, as are the facts surrounding the dilemma. To begin, the U.S. needs five million more homes than it currently has. And even those who have homes are struggling, as 40% of renters are cost-burdened, while housing prices are rising faster than wage growth in 80% of U.S. markets.

These issues collectively form the crux of America’s workforce housing crisis, which was the topic of a presentation that we recently gave to the Wisconsin Economic Development corporation. The combination of Don’s housing development knowledge and Jolena’s public sector specialization offered a unique perspective on the issue and the path toward a potential solution.

People may disagree about what that path looks like, but we all agree that it needs to revolve around collaboration. The federal government, state governments, local jurisdictions, the private sector, not-for-profit organizations – there is plenty of opportunity to work together to manage the housing crisis. Yet, there is no one-size-fits-all solution. There is no federal workforce housing program that governs the entire nation. So, collaboration between the housing industry and all levels of government remains the key to determining a tailored solution to the housing emergency facing each individual community.

Examining a critical connection

One of the most important points as it relates to this topic is that there is a clear connection between the workforce housing crisis and local economic development. Understanding the relationship between the two is key toward ultimately coming up with a resolution.

At a high level, cities need affordable, available housing in order to entice workers to come to their community in the first place. A city can have hundreds of schools, daycares, entertainment complexes and restaurants, but if the workers have nowhere to live nearby – particularly the blue-collar workers – then there will always be a workforce shortage. And taking another step back, it isn’t easy to construct buildings and facilities in the first place if there is no affordable housing nearby for the construction employees and other trade workers who are pivotal to the completion of these projects.

In short, if communities do not have sufficient housing for their workforce, then it will always be difficult to develop critical construction projects and, therefore, it will be challenging to achieve economic growth.

The workforce housing crisis, as we see it.

Baker Tilly has the advantage of being able to view the workforce housing crisis from two distinct perspectives. To begin, we have a public sector practice that allows us to not only specialize in government-related issues, but also to understand and empathize with communities that are rapidly trying to come up with answers amidst a complex situation. Additionally, our firm’s housing development practice allows us to realize that the solution to the crisis isn’t nearly as simple as “just build more houses.” On the contrary, we understand all the complexities related to housing development, including project financing, tax credits, construction risk management and every aspect of real estate.

In our presentation, we addressed the intersection of these firm specializations as viewed through a workforce housing crisis lens, specifically the solutions that housing professionals and economic developers can employ to create a road map for long-term success.

These solutions broadly fall into two categories: (1) solutions centered around understanding the specific issues within your community and (2) communication-based solutions.

Solutions centered around understanding the specific issues within your community

1. Recognize that housing is part of economic development. This might sound simple, but while most people in the economic development industry are focused on growth strategies and re-development planning, it is common for people to lose sight of the housing element. Yet, as we noted earlier, this is a big mistake, as the housing situation is tied directly to the local workforce.
2. Engage with your employers. An underrated strategy for creating jobs in your community is to organize a workshop, or an ongoing working group, that encourages local businesses to talk about what they need, where their employees are commuting from, where their children go to school, what they are looking for in a community, and other important life- and housing-related questions.
3. Study the housing market. A thorough housing assessment (including a gap analysis) should help further highlight the current state of the region while determining what the community needs to do from a housing standpoint (including types, size and location of housing required).
4. Establish a housing taskforce. This taskforce should include representatives from both the public and private sector, as well as not-for-profit organizations. Together, in consultation with research on the housing market, the taskforce should form an action plan with specific strategies that the local government and housing developers can take to turn the community’s issues into potential steps toward solutions.
5. Determine the funding options. Configuring your ability to leverage different funding options is like solving a puzzle. You have to get creative, and you need to examine every alternative. Obviously, there are federal, state and local elements to consider as you work with various funding sources to figure out the funding opportunities. But considering every perspective will help you maximize your funding options.
6. Prepare the developers for success. Sometimes zoning is an easy fix. Depending on the community, there are ways that zoning codes, or zoning alterations, can help set the stage for successful housing development. Unfortunately, this isn’t always the case. Zoning can be done sloppily, or incorrectly, or the zoning may be outdated, any of which can complicate the process. But these issues typically are fixable on the way to a successful workforce housing journey.

Communication-based solutions

1. Community awareness. Housing professionals need to run a bit of a public relations campaign. They should be sounding the alarms throughout the community, making it clear that a lack of workforce housing will ultimately result in fewer jobs and less growth in the community. They need to make sure that the message about workforce housing – and its connection to economic growth – is heard loud and clear.
2. Strategic networking. Staying connected with economic developers is a simple, yet important, step. If you make a concerted effort to bring them into your community through roundtables, summits and social events, you’ll quickly find that workforce housing professionals and economic developers have many similar interests and a long list of common goals.
3. Connect with statewide housing agencies. Statewide housing agencies are an important resource for connecting the state and local governments with the economic developers in the region.
4. Conduct a developer summit. For instance, Baker Tilly recently hosted its annual DevelUP affordable housing workshop for underrepresented developers throughout the U.S. These developers gathered in Atlanta this year to network, learn from experienced professionals and acquire best practices for conquering the real estate market.

Next steps

These are basic ideas of how to get started, but obviously the workforce housing dilemma isn’t going to be solved with easy answers or simple steps. We are available if you would like to discuss some tailored solutions for your community and the specific ways that Baker Tilly can help you address your workforce housing challenges.

For more information on this topic or to learn how Baker Tilly specialists can help, contact our team.