The housing bonus

Nivaldo Tro only lives like a millionaire. The 40-year-old, who teaches chemistry at Westmont College in Santa Barbara, lives in a home that could fetch $1 million in today’s market.

But thanks to housing perks offered by the small liberal arts college where Tro teaches, he bought the house in 1996 for $160,000.

Tro, his wife, Ann, and children Michael, 10, Alicia, 8, and Kyle, 2, could never have afforded the home on Tro’s $70,000 annual professor’s salary.

“Just do the math,” he said. It would be tough to work in California without the housing help, Tro added.

Because of the high cost of purchasing a home in Southern California, where the median price in May was a record $312,000, some employers offer housing incentives to entice potential employees into jobs and to help them stay put once they’ve committed. Without such assistance, living in Southern California wouldn’t even be an option for some.

The only downside, according to those lucky enough to have such arrangements, is not being able to build full equity in today’s rapidly appreciating residential market.

Westmont’s program of developing homes for faculty near campus started in 1995. Thirty such homes -- ranch-style one- and two-story models from 1,700 to 1,850 square feet -- are completed, with 11 more planned. The houses are offered to faculty for a current price of $195,000.

The buyer secures a loan for the purchase and can live there until he or she retires or leaves the position. Westmont then buys the home back for resale to another new faculty member. The price is set by the college using a formula based on inflation and faculty salaries, not real estate market conditions. Whatever equity has accumulated is for the departing staff member to keep.

The homes, collectively called Las Barrancas, have made a huge difference in recruiting, according to Ron Cronk, vice president of finance for the college, who said, “It has been night and day.”

Before, he said, potential employees would balk at the thought of trying to live in Santa Barbara. The median price for a single-family residence in May was $710,000, according to DataQuick Information Services, a La Jolla-based research firm. For condominiums, the price was $449,500.

Cronk remembers one faculty candidate who wouldn’t even come for an interview because of the housing costs. To afford Santa Barbara “when you are making entry-level money -- under $50,000 -- it’s just impossible,” he said.

The University of California offers a variety of housing assistance programs including affordable rental, flexible mortgage financing as well as affordable for-puchase housing to attract and retain top-notch faculty and staff.

UC Irvine offers faculty and staff members discounted prices on nearly 700 homes near campus in an area called University Hills. The homes range from 900 to 2,900 square feet and are sold at $125,000 to $550,000. The university and the homeowner share in any equity growth when the employee decides to sell or leaves the university.

The homes would sell in today’s real estate market for $200,000 to $700,000, according to Chuck Hayward, president of Irvine Campus Housing Authority. “What we are trying to do is to have continued affordability.”

UCLA offers 58 manicured, Mediterranean-style townhomes five miles from campus, near Mulholland Drive and Beverly Glen Boulevard. The median price for a single-family home in that area is $965,000 and for condos, $897,000.

But the university offers the homes to faculty for $350,000 to $450,000, according to Brad Erickson, director of Campus Services Enterprises at UCLA.

“They tend to sell immediately,” Erickson said. “To find that kind of livable home on the Westside under $500,000 is very difficult.”

When a faculty member wants to sell, UCLA determines the new selling price based on the change in either the consumer price index or an index of faculty salaries during the time the faculty member owned the home, whichever is greater. A new price is set, the calculated amount is added to the original selling price and, if there has been appreciation, the seller keeps the equity.

Fuller Theological Seminary takes a different approach. The Pasadena-based seminary has co-invested in residential real estate with select faculty members for the last 15 years.

The seminary puts up cash for the home -- no more than $100,000 -- to reduce the home’s mortgage.

“It’s a reasonable investment,” said Lee Merritt, Fuller’s vice president for finance. “It’s a win-win.”

When a faculty member decides to sell, prices are determined by market conditions. Fuller gets back its initial investment, and any equity is shared between Fuller and the seller based on an arrangement negotiated upfront.

Fuller attracts job candidates from, among other places, England, Australia, Korea, the East Coast, the Midwest and Central California, where home prices and the cost of living are often less, according to Merritt. “People can be a bit intimidated by the home values here compared to the home values they are leaving and their quality of life,” he said.

Although some colleges and universities in the Southland offer housing benefits, those for blue-collar professions and executive positions are few and far between. No such allowances exist for the Los Angeles Police Department or the California Highway Patrol. In the entertainment industry and at law firms, while there will always be a smattering of housing incentives for top-level executives, they just aren’t needed in this job market, with so many more job candidates than there are jobs.

Professional recruiting firms report that while housing assistance for executives has increased in Northern California, in part because housing is priced higher there, the practice has slowed here overall.

“A few years ago in Southern California, during the boom, there were more housing perks offered to executives,” said Daniel Margolis, a spokesman for Korn/Ferry International, a Los Angeles-based executive search firm. “But that has subsided in the last couple of years.... There are still times when housing perks are offered, but we have seen it less. It has not picked up significantly since the economic downturn.”

Of 250 common jobs surveyed by Les Krantz, author of “The Jobs Rated Almanac,” those most likely to offer housing benefits are generally professions in which people are away from home for long periods of time, such as astronauts, archeologists, geologists and hotel managers.

But there are fewer perks offered in the business world today, according to Krantz, in part because of recent concerns about corporate greed.

“If a company is losing money and the top executive has a mansion, it doesn’t sound very good,” he said.

One such problem with appearances exists in Palos Verdes Estates. There, the city manager, the assistant city manager, the police chief and some city staff live in seven city-owned homes situated on a bluff overlooking the Pacific.

The city has owned the homes since 1987, when it was forced to buy out homeowners after a city storm drain failed. Comparable homes in the area have sold for $1.4 million to $3.9 million in the last few years.

The issue has been a point of contention within the small community the officials serve. However, those occupying the free homes are unable to build any equity.

Not owning a home for its investment growth potential is the biggest problem with free housing, according to Patricia Greig Bennett, of Trinity Episcopal Church in Fillmore.

Bennett said she otherwise loves the free Tudor-style, 1,700-square-foot, three-bedroom, two-bath home next door to her church.

The priest, who has been at Trinity since September, said that, without the rectory, she would not have been able to afford to live near the church on her limited income and would have had to commute from her small apartment in downtown Los Angeles.

“It’s like genteel poverty,” she said. “You have no money, but you have a nice house.”

Allison B. Cohen can be reached at a.cohen@ix.netcom.com.