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SBJ Economic Growth Survey: The New Workforce

Affordable Housing: Key Economic Driver of Workforce Development (Sponsored Content)

Sponsored by Prosperiti Partners

Posted online

The dearth of affordable housing as it relates to a robust workforce is a key concern among many business and community leaders. That’s reflected in Springfield Business Journal’s 2020 Economic Growth Survey, where 67% of respondents said affordable single-family housing is most needed for Springfield to remain competitive in the next five years.

Another 33.3% say the same about multifamily housing. And in the city’s recent Forward SGF report, key community concerns identified by focus groups were “lack of affordable housing options,” along with “low wages” and “workforce development.”

Titus Williams, president of Prosperiti Partners LLC, says the three issues are closely related.

“To grow our community, we have to have housing,” he says, “and it has to be marketable to the clientele that lives and works in our community.”

He’s heard it suggested that Springfield may be overbuilding, but Williams doesn’t think so.

“Springfield needs to embrace the concept that we are the commerce epicenter,” he says. “And we need to build multifamily units to cater to people from outside of our community to come to Springfield – to find a place and set some roots.”

When too few properties fit a variety of income, location and family size needs – whether unattached single-family homes or duplexes and multifamily units – it can impact businesses and compromise their workforce, says Sally Payne, the city’s interim director of Workforce Development.

People miss training opportunities or may be absent from work because their basic home needs aren’t being met.

“And it’s extremely difficult for someone to look for a job or to start a job when they don’t know where they are going to lay their head at night,” she says.

Williams’ renovated properties – including dozens purchased in disrepair from 417 Rentals – primarily house low- to middle-income residents who work in service industries. He knows the market is tight because nearly all his available units are rented.

A July 2020 report by CoStar Group (Nasdaq: CSGP) bears that out. According to the report, multifamily vacancies in Springfield are at historic lows, currently 5.2%. In addition, rents have increased roughly 2.8% annually overall and 6% for four- and five-star rated properties. Low vacancy rates can contribute to higher rents.

“We always qualify a stabilized asset as being 90% occupied and 10% vacant,” Williams says.

Low vacancy rates and rising rents make it harder for low- and middle-income workers to secure homes they can afford. The CoStar report notes the number of likely renters (primarily ages 20-34) has grown 7% since 2010, which factors into the outsized demand.

Springfield has grown by 10,000 people over the last 10 years, according to World Population Review. If the market grows by 1,000 a year, by Williams’ rough calculations, the community needs 250 new multifamily units a year when factoring in home ownership and two or more people living under the same roof. The report forecasts fewer than that for 2021 and 2022 – another sign, according to Williams, that Springfield is not overbuilding.

According to a 2020 report by the National Low Income Housing Coalition, the fair market value rent for a two-bedroom apartment in the Springfield area is $746.

To pay rent and utilities on that apartment at no more than 30% of income, a worker must earn an hourly wage of $14.35, the report says. The area’s estimated mean hourly wage is $13.40, according to the report, and Missouri’s minimum wage is $9.45. According to NLIHC and CoStar, 35%-43% of households in Springfield and Greene County rent.

Williams has worked with local organizations to ensure properties he’s renovating don’t price people out their range of affordability.

Michelle Garand, vice president of affordable housing and homeless prevention at Community Partnership of the Ozarks, says “forward-focused developers” like Williams are trying to help solve the problem. Garand agrees that affordable housing is an economic driver and key to workforce development.

“If you have your very basic needs met and you feel safe and secure in your housing, then everything else builds from that,” she says, calling affordability the foundation of every community sector.

“The stronger our housing stock, and the more diverse our housing stock in the community, the better we can respond to any company or any business that is coming in to provide services and jobs.”

The lack of affordable housing is not just about rental rates, she says. Having decent, safe and accessible homes correlates directly to attracting people who want to live, work and do business in the community. Quality housing also helps retain college or trade school graduates.

“We’d love to see more people stay here, but that means entry-level employment – which means you have to have some moderately priced housing. Right now, I don’t feel like we have that,” Garand says.

She and Payne say affordable housing should matter to the entire community. Williams agrees.

“As a community of people, we should embrace the opportunity of having a diversified class of people living in our community,” he says.

“It takes multiple levels of society for the society to function, and it takes every type of person for us to succeed together.”

If you have your very basic needs met and you feel safe and secure in your housing, then everything else builds from that. Affordability is the foundation of every community sector. The stronger and the more diverse our housing stock in the community, the better we can respond to any company or any business that is coming in to provide services and jobs.

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