Employer Assisted Housing: Providing Tax Incentives for Employers
Congressional Briefing - February 21, 2006
EAH Case Study
Saint Mary's Employer Assisted Home-Buyer's Program (Saginaw, MI)
INTRODUCTION:
Saint Mary’s is committed to the revitalization of the community and the neighborhood that surrounds the main medical campus. This neighborhood is known as the Cathedral District. Saint Mary’s is also committed to the Associates who provide the much-needed services for the patients who come to Saint Mary’s for healthcare. The commitment to both has inspired the program now known as the Employer Assisted Home-Buyer’s Program. This program makes funds available to Saint Mary’s associates to purchase and refurbish or build a home in the Cathedral District.
PURPOSE:
The purpose of this program is to assist potential homebuyers with the purchase of a house in the neighborhood surrounding Saint Mary’s, by providing Associates with funds for a down payment, closing costs, home improvements (only on a purchase), or new construction. Purchase and improvements are intended to make the property more marketable in the future.
Here’s how the Saint Mary’s Employer Assisted Home-Buyer’s Program works:
ELIGIBILITY:
The program is available to all Saint Mary’s associates who meet the following eligibility criteria:
- Completion of 1 year of service with Saint Mary’s.
- Current employment in good standing at Saint Mary’s, at a current minimum schedule of 60 hours biweekly.
- Eligible for mortgage financing through a lending institution.
- Agrees to occupy the residence for a minimum of five (5) years following purchase.
- Must occupy the residence within two (2) months of receiving the first payment.
- Benefit ceases if the participant ends occupancy.
If there are multiple Saint Mary’s associates in the same household, only one benefit will be awarded.
DESCRIPTION:
The benefit consists of eligibility for five (5) annual payments. The first payment is $7,000, which consists of a first payment of $2,000, plus an additional $5,000 bonus. The remaining four (4) annual payments are $2,000 each. Maximum sum of payments awarded in the inaugural year of the program will be $50,000; this amount will be subject to budgetary review and adjustment on an annual basis thereafter, based upon available funds and participation in the program.
Note: Benefit payments are classified by IRS regulations as ordinary income for income purposes. Saint Mary’s is required to withhold all applicable taxes (federal, state, and social security) from the lump-sum benefit payments, and report such payments and withholding on the participant’s annual Form W-2. Federal income tax withheld by Saint Mary’s is normally off set when the participant takes a tax deduction for the mortgage interest on his or her annual federal income tax return.
In order to receive the benefit, the participant must be an eligible Saint Mary’s associate (see “Eligibility” above) and must purchase and occupy a single family dwelling within the Cathedral District. Awards will be made on a “first come, first served” basis from among those applications received, until the annual program award maximum is reached.
The $5,000 “bonus” portion of the first payment will be provided to the participant and closing agent at the time of closing if it is needed for the closing. The remainder of the first payment will be made upon verification that the participant has acquired and moved into the home. If program funds are not needed for the closing, the entire first payment will be made when the participant has legally assumed occupancy of the residence. The remaining annual payments shall be made on the anniversary date of the first payment, subject to verification that the participant: has continued to meet the eligibility criteria, continues to occupy the home as their primary residence, and remains in good standing in their financial obligation to their mortgage lending institution (if applicable).
If the Associate’s employment with Saint Mary’s is terminated for any reason, or he/she otherwise fails to meet the criteria for continued eligibility during the period of their participation in this program, no further payments will be made to the associate under the program.
DEFINED NEIGHBORHOOD TARGET AREA:
The target area is the Cathedral District Neighborhood (see map provided with Application). The boundaries are defined as Janes Street to the north, Park Avenue to the east, West on Hoyt to Weadock, Weadock South to Martha, West on Martha to Cornelia, South on Cornelia to Garey, West on Garey to Jefferson, North on Jefferson to East Holland, West on East Holland to Washington, and North on Washington to Janes.
ELECTION PERIOD:
The option to apply for the Homebuyer’s Program will begin with home purchases made on or after July 1, 2004, and ends with home purchases made on June 30, 2005. Participants must commit to own and reside within the home for at least five (5) years from the date of closing to qualify for the benefit. Benefit ceases if the participant ends occupancy.
PROGRAM INFORMATION:
The program is administered by and application forms may be obtained from the Human Resources Department.
Note: Prior to executing a purchase agreement on a home within the program’s designated area, contact the Human Resources Department to ensure your benefit application and supporting documentation have been received and have received program approval.
