Child Care and Affordable Housing - A Potential "Win/Win" for Residents and Owners

person A.J. Johnson today 01/02/2022

A "gray rhino" is a highly probable, high-impact yet neglected threat. These are not random surprises but occur after a series of warnings and visible evidence. The bursting of the housing bubble in 2008, the aftermath of hurricanes, and the fall of the Soviet Union are examples of gray rhinos.

Jill Schlesinger, a CBS News business analyst, recently wrote an article making the case that childcare should be added to the list of gray rhinos.

Some of the data Schlesinger outlined relating to childcare costs is stunning.

  • A report from the U.S. Treasury stated, "The average family with at least one child under age 5 would need to devote about 13% of family income to pay for childcare, a number that is unaffordable for most families."
  • The Department of Health & Human Services (HHS) considers childcare affordable when it costs no more than 7% of household income. With a U.S. median household income of $67,521, affordability is less than $100 per week. Childcare at this price is almost impossible to find.
  • The average childcare cost in a daycare center is $340 per week, which means an annual income of more than $250,000 is needed to consider the care to be "affordable."

A 2021 Care.com annual cost of care survey found that 57% of families spent more than $10,000 on childcare in 2020.

Finding care is also a problem. Thousands of centers closed due to COVID-19. The low-paid workers of these facilities are now finding other - better paying - jobs.

The median annual pay for daycare workers is $25,460 (12.24 per hour - if they work 40 hours per week). This is not a livable wage.

The impact of all this is that parents (mainly women) are being forced to leave the workforce to care for their children. In September 2021, nearly 300,000 women left the labor force. Since the pandemic began that number is 3 million.

The Build Back Better Plan of the Biden Administration would cap childcare costs at 7% of income for kids up to age five on a sliding scale, depending on the state of residence. In today’s political climate, the chance of passage is close to zero.

This lack of affordability presents a potential opportunity for forward-thinking owners of affordable housing. Among the possible ways to improve childcare affordability for residents is

  1. Partner with local daycare organizations to negotiate rate breaks for residents, in return for advertising the daycare facility at your property;
  2. Offer community space to local daycare operators to set up onsite care for children of the community; or
  3. Set up a childcare facility as a community amenity.

This third option requires an analysis of the financial feasibility of the operation, as well as a determination of required local approvals. Despite this, such an operation is feasible and already exists in a number of properties across the nation. The following analysis indicates the method an owner may use as a starting point for determining feasibility.

  • Assume that demand is such that 15 households at a property would consider onsite daycare if it was affordable.
  • To pay for a full-time and part-time daycare worker ($18 per hour & $15 per hour:
    • Full-time salary: $37,440
    • Part-time salary (assume 20 hours per week): $15,600
    • Employee benefits of $17,680 (Insurance, paid leave, health care).
    • Total annual employee cost: $70,720
  • If 15 children are cared for at $100 per week for 50 weeks, income is $75,000.

Childcare at apartment communities would be considered a resident amenity - not a profit center. A simple break-even outcome may make consideration of this option worthwhile.

Regardless of whether apartment owners determine that acting affirmatively regarding childcare is something to be initiated, the childcare crisis is real - and only getting worse. Thinking about how this burden can be eased for our customers seems like good business.

Latest Articles

The Affordable Connectivity Program Can Increase Internet Access for Low-Income Households

There is a new federal subsidy program that can help low-income families pay for Internet service. The Affordable Connectivity Program (ACP), offered through many Internet service providers, gives households $30 per month to cover the cost of internet service and a one-time payment of $100 for computer devices for eligible households. Families on qualifying Tribal lands are eligible for up to $75 per month. ACP is a $14.2 billion program made possible by the Infrastructure Investment and Jobs Act that was signed into law in 2021. A household is eligible to receive ACP support if a member of the household meets at least one of the following criteria: Has an income that is at or below 200% of the federal poverty guidelines (for a family of four this is $55,500);Participates in certain assistance programs, such as SNAP, Medicaid, Federal Public Housing Assistance, SSI, WIC, or Lifeline (the FCC program to make communication services more affordable for low-income consumers);Participates in Tribal specific programs, such as Bureau of Indian Affairs General Assistance, Tribal TANF, or Food Distribution Program on Indian Reservations;Is approved to receive benefits under the free and reduced-price school lunch program or the school breakfast program in the current or immediately preceding school year;Received a federal Pell grant during the current award year; orMeets the eligibility criteria for a participating provider s existing low-income program. Public housing and Section 8 residents are eligible for ACP funding based on their receiving housing assistance, and based on the qualifying income limits, many residents of LIHTC housing without rental assistance will also qualify. HUD has determined that this assistance does not count as income for housing program purposes. Owners of affordable housing properties are encouraged to make residents aware of this subsidy since it can increase their internet connectivity without added expense. ACP enrollment opened on December 31, 2021. Eligible households may enroll through a participating broadband provider or by (1) going to ACPBenefit.org to submit an online application or print a mail-in application, and (2) contacting their preferred broadband provider and selecting a plan. Additional information about the ACP is available at www.fcc.gov/ACP or by calling 877-384-2575 between 9 AM and 9 PM.

A. J. Johnson Partners with Mid-Atlantic AHMA for June Training on Affordable Housing - Including an In-Person HCCP Exam

During the month of June 2022, A. J. Johnson will be partnering with the MidAtlantic Affordable Housing Management Association for one live webinar and two in-person training sessions intended for real estate professionals, particularly those in the affordable multifamily housing field. Following the in-person training sessions, AJ will be providing a review of testable areas and in-person administration of the Housing Credit Certified Professional (HCCP ) exam.  The following sessions will be presented: June 14: Intermediate LIHTC Compliance (In-person training in Richmond, VA) - Designed for more experienced managers, supervisory personnel, investment asset managers, and compliance specialists, this program expands on the information covered in the Basics of Tax Credit Site Management. A more in-depth discussion of income verification issues is included as well as a discussion of minimum set-aside issues (including the Average Income Minimum Set-Aside), optional fees and use of common areas. The Available Unit Rule is covered in great detail, as are the requirements for units occupied by students. Attendees will also learn the requirements relating to setting rents at a tax credit property. This course contains some practice problems but is more discussion-oriented than the Basic course. A calculator is required for this course. June 15: Advanced LIHTC Compliance (In-person training in Richmond, VA) - This full-day training is intended for senior management staff, developers, corporate finance officers, and others involved in decision-making with regard to how LIHTC deals are structured. This training covers complex issues such as eligible and qualified basis, applicable fraction, credit calculation (including first-year calculation), placed in service issues, rehab projects, tax-exempt bonds, projects with HOME funds, Next Available Unit Rule, employee units, mixed-income properties, the Average Income Minimum Set-Aside, vacant unit rule, and dealing effectively with State Agencies. Individuals who take both two days of training will be provided with study materials and a practice exam to assist in preparation for the HCCP exam, to be administered on June 16. June 16: Review of testable areas and administration of the Housing Credit Certified Professional (HCCP ) exam (In-person exam in Richmond, VA). Following the two days of intensive and comprehensive LIHTC training, AJ will provide a review of program requirements and will administer the HCCP exam in person. June 28: The Verification and Calculation of Income and Assets on Affordable Housing Properties (live webinar)- This five-hour live webinar (there will be a 1.5-hour lunch break) provides concentrated instruction on the required methodology for calculating and verifying income, and for determining the value of assets and income generated by those assets. The first section of the course involves a comprehensive discussion of employment income, along with military pay, pensions/social security, self-employment income, and child support. It concludes with workshop problems designed to test what the student has learned during the discussion phase of the training and serve to reinforce HUD required techniques for the determination of income. The second component of the training focuses on a detailed discussion of requirements related to the determination of asset value and income and is applicable to all federal housing programs, including the low-income housing tax credit, tax-exempt bonds, Section 8, Section 515, HOME, and HOPE VI. Multiple types of assets are covered, both in terms of what constitutes an asset and how must they be verified. This section also concludes with a series of problems, designed to test the student s understanding of the basic requirements relative to assets. These sessions are part of the year-long collaboration between A. J. Johnson and MidAtlantic AHMA that is designed to provide affordable housing professionals with the knowledge needed to effectively manage the complex requirements of the various agencies overseeing these programs. Persons interested in any (or all) of these training sessions may register by visiting either www.ajjcs.net or https://www.mid-atlanticahma.org.

Maine Human Rights Commission Files Case Against Assisted Living Facility for Transgender Discrimination

In what may be the first case of its kind in the United States, on March 14, 2022, the Maine Human Rights Commission issued a finding of reasonable grounds that Sunrise Assisted Living violated state nondiscrimination protections when it denied a 79-year-old woman a room because she is transgender. The Commission s action followed an investigation of the complaint that was filed by GLBTQ Legal Advocates & Defenders (GLAD) on behalf of Marie King. It is the first known discrimination complaint filed in the country by a transgender older adult against a long-term care facility. In the spring of 2021, a social worker at Pen Bay Medical Center contacted Sunrise on behalf of Ms. King, who was a patient at the hospital. The facility initially said there was an available room, but when they learned that Ms. King is transgender, Sunrise informed the hospital they would not admit her because they were concerned she wanted to reside in a room with a female roommate. The Commission made a finding of reasonable grounds that Sunrise discriminated against her on the basis of her gender identity, transgender status, and her sex, all protected under the Maine Human Rights Act. The Commission will now bring the parties together to attempt to resolve the matter. This process must happen within 90 days and there is no appeals process. Failing that, the case may be brought to court. It is worth noting that other recent cases have indicated that discrimination based on sexual orientation and gender identity may be considered discrimination based on sex, which would also violate the federal Fair Housing Act.

A. J. Johnson to Host Webinar on Development of Affirmative Fair Housing Marketing Plans - AFHMP

A. J. Johnson will be conducting a one-hour webinar on May 4, 2022, on Requirements Regarding the Development of Affirmative Fair Housing Marketing Plans (AFHMP). The Webinar will be held at 1:00 PM Eastern Time. The Fair Housing Act requires federal agencies to administer all programs and activities relating to housing and urban development in a manner that "affirmatively furthers fair housing. This means that it is not enough to prevent segregation - the government must encourage "integration. Each owner who participates in HUD or Rural Development multifamily housing programs must develop and provide a description of the Affirmative Fair Housing Marketing Plan (AFHMP) for the property to comply with the requirements of the Law. A cornerstone of an AFHMP is the requirement to market a property to those "least likely to apply. This course outlines the basic requirements of an AFHMP, including marketing strategies, the meaning of "least likely to apply, and updating the Plan. Completion of the course will assist managers in a full understanding of how to comply with HUD rules regarding these important plans. Those interested in participating in the Webinar may register on the A. J. Johnson Consulting Services website (www.ajjcs.net) under "Training.

Want news delivered to your inbox?

Subscribe to our news articles to stay up to date.

We care about the protection of your data. Read our Privacy Policy.