The soaring cost of rent and homeownership in St. Petersburg is pricing some employees out of the city they serve – even though their residency is a requirement for employment – while also hindering recruitment and retention efforts.
During Thursday’s Housing, Land Use and Transportation Committee meeting, James Corbett, neighborhood affairs administrator, unveiled new concepts to members of the city council that could help St. Petersburg’s cost-burdened employees. According to the Department of Housing and Urban Development, someone spending over 30% of their household income on housing – rent or mortgage plus utilities – is considered cost-burdened. Hundreds of city employees fall under that category.
Following several years of discussions and employee surveys, help is on the horizon. Committee Chair Brandi Gabbard said the previous work came together along with an administration that is friendly to the idea of instituting employer-assisted housing programs for city employees.
“Obviously, affordable housing is one of their (city administration’s) top priorities, as well as taking care of our employees,” she said. “So, I’m very glad that we are back here today with this topic.”
Over 20 city positions encompassing about 250 employees fall under a residence requirement, including sanitation workers, mail clerks and library assistants. The average pay for those employees is $36,702, and they should pay less than $917.55 of their monthly income for housing to avoid cost-burdened status.
According to city documents, the median rental in St. Petersburg is approximately $1,500 per month, leaving a nearly $600 gap in either their wages or rent affordability to avoid becoming cost-burdened. The topic of increasing wages to meet the rising cost of rent and homeownership was not broached during the meeting, although the city recently raised its minimum wage for all employees to $15 an hour.
According to a January 2021 survey with 241 respondents, 28.2% of city employees rent, 58.5% own a home and 13.3% are either currently looking to purchase or are interested in buying a home. When asked what obstacles to home buying they face, the overwhelming majority said cash for a down payment. A vast majority also said it was “extremely important” to live close to their place of employment – the City of St. Petersburg.
Corbett relayed that 74% of employees stated their annual income was above $50,000, which indicates most survey respondents did not fall into the aforementioned classification.
“The employees that responded to this survey earned a higher income than the average income of all city employees,” said Corbett. “That would also speak to why there were a higher number of employees that indicated they owned homes.”
Corbett first unveiled plans for a rental assistance program for city employees earning less than $48,000 annually. He based that amount on the maximum salary for 98% of employees with a residency requirement. Under this proposal, the city would make payments directly to landlords to ensure employees’ spent less than 30% of their income on rent. Corbett said current plans call for the rental assistance program to last two years.
“We envision this program to be somewhat of a recruitment tool and not to last forever,” he said.
Corbett explained that if the city follows through with the program and all 246 employees that qualified apply, the city will need to allocate $1.47 million in funding annually.
Regarding homeownership, the city recently expanded its down payment assistance program to $60,000. Corbett called that “an awesome benefit” to residents but noted challenges. The purchase price limit is $311,890, and he found the average listing price for a home in St. Pete is now about $411,000.
The city would offer its employee program to those unqualified for the previous assistance. Corbett said the plan is to provide $10,000 in down payment assistance to employees buying their first home and earning less than $60,040. He said the maximum purchase price is $450,000.
Corbett added that the city could use South St. Pete Community Redevelopment Area (CRA) funding for homes purchased in that area. Homes outside of the CRA would require general fund dollars.
“But again, we have not identified any funding sources for this,” he told the council.
Councilmember Gina Driscoll said the council’s patience on the matter has paid off, as both concepts make sense and provide meaningful assistance. She said many people would like to buy a home but need to strengthen their financial acumen first, such as raising their credit score and saving money. However, she said those actions are difficult when you are a cost-burdened renter.
Driscoll proposed providing rental assistance with the condition the employee undergoes financial literacy training for two years.
“Because we’ve been helping with rent, they’ve been learning how to save, manage finances and learning how to be ready to buy a home,” she said. “So, at the end of that two years, they would be ready to go.”
City Administrator Rob Gerdes noted past concerns about prioritizing city employee housing needs over those of the general public. He said that over the last four or five years, a shift occurred where employee retention and recruitment became a primary issue for St. Petersburg.
Gabbard said it fills her with pride to see how much the city cares about its employees.
“I hope that if they’re listening or the word spreads – this is a council that is very committed to doing whatever it takes to make sure that their quality of life is worthy of the work that they do,” said Gabbard. “And housing is a major piece of that.”
After receiving strong support from the city council for the proposed employee housing assistance programs, Gerdes said the next step is engaging with the city worker’s union and holding discussions with the mayor and other members of the administration on potential funding sources. Gabbard asked Gerdes to return to the committee in June with an update.