Need for Infrastructure Worker Housing on Orcas Island
A Project of the Orcas Research Group*
December 2004

The Problem

In San Juan County, our working families are increasingly being squeezed between low wages and high cost of living, especially by the high cost of housing. In 1990, roughly 30% of our population was between the ages of 25 and 44, typical of the USA. Today, while our population has grown by 47%, this group has declined to 20%. Our working families are leaving the islands and are not being replaced. This, we believe, is the most serious economic problem facing San Juan County.

We believe that the cost of housing is a major factor in causing this decline. Our research has indicated that a gap exists between existing affordable housing that focuses on family incomes up to 80% of median housing cost and practical financing for many middle income families with incomes between 80% and 120% of median housing cost. Basically, for projected HUD guidelines based on 2004 estimates this is:

Family Size: 1 2 3 4 5 6
80% Median Income $33,656 $38,464 $43,272 $48,080 $51,926 $55,773
95% Median Income $39,967 $45,676 $51,386 $57,095 $61,663 $66,230
100% Median Income $42,070 $48,080 $54,090 $60,100 $64,908 $69,716
120% Median Income $50,484 $57,696 $64,908 $72,120 $77,890 $83,659

We consider affordability estimates to be based on housing of a quality equivalent to that on the mainland sufficient for a family of that size, financed at a fixed rate of 6% and cost of housing not to exceed 30% of income.

A Focus on Infrastructure Workers

This problem is most severe for the workers who maintain our essential services such as teachers, fire fighters, paramedics, law enforcement, medical, and utility workers. This report is based on a survey of the employers of infrastructure workers on Orcas Island. Our objective is to quantify the need. A questionnaire (Appendix A) was provided to each of the employers and this was followed by an interview. Additional clarification was then requested when needed.

While the scope of infrastructure workers might be defined broadly, we limited the survey to government and non-profit organizations that are clearly part of our island infrastructure. Consequently, the results of this survey should be considered to be a minimum housing requirement.

The organizations and individuals surveyed were:

School Administration – Supt. Barry Acker
Fire Department – Chief Mike Harris
Law Enforcement – Sheriff Bill Cumming
Public Works – Jon Shannon
OPALCO – Randy Cornelius
Medical – Dr. David Shinstrom

Findings

For these six organizations we identified 146 infrastructure employees on Orcas Island. Of these,

Approximately 70% presently own their own homes
24% are renting
6% have other arrangements including living with family or living on a boat.

Employee turnover is not particularly high, especially with organizations that provide benefits. Retirements, however, are expected to increase in the near future and most organizations interviewed cited this as a problem. Overall, there is a need for 27 to 43 new hires expected in the next 5 years or 18% to 29% of this workforce. Typically administrative staff is hired on-island and professionals hired from off-island. There is a wide range of salary for these jobs from $17K to $80K. The high end is engineers. The low end is administrative personnel. Most of the jobs identified are in the $30K - $50K range.

Everyone that we interviewed agrees that housing is a major problem in hiring skilled staff. One employer offered that it is not yet a crisis, but is likely to become one. All but one employer felt that it was necessary to compete with off-island housing to attract qualified employees. A few cases were cited where cost of housing was a contributing factor in losing an employee. While not specifically asked for in the questionnaire, financial difficulty was also cited as a cause of attrition.

All these employers were limited in what they could do to offset the high cost of housing. The most that any could do is to offer a slightly higher salary. Only one employer has employees with specialized skills who commute from the mainland. Generally commuting is not considered to be a viable option.

There was enthusiastic support for establishment of a housing trust, either public or private, to help address this problem. There was also universal willingness to serve on a steering committee if a housing trust were to be formed. There was general support for a half percent excise tax on home sales to provide assistance in solving this housing problem.

We uniformly found that we are not only losing these workers due to attrition and retirements, but we are increasingly unable to compete with the mainland to hire critical skills. As our working population ages and retires we are losing not only our workforce, but also the institutional memory of how things are done on the islands.

We conclude that there is a minimum demand for 10 to 20 houses in the next 5 years that cannot be met with current efforts. The need to address this is critical.

Next Steps

The primary need is to address the gap between existing affordable housing efforts, and those families who can afford conventional financing. Our studies seek to find approaches to address this problem using private financing. We are led to the conclusion that we must remove the cost of the land in order to solve this problem.

Specifically, we propose the establishment of a land trust that would permanently own land under housing reserved for this group of working families. We will look for opportunities to work with these families to purchase existing housing and also to undertake promising opportunities to develop properties that might become available. In addition, we will examine the feasibility of implementing the half percent real estate excise tax to help address this problem. Our objective is to not only make these properties affordable now, but for the future. We would look to a panel of infrastructure employers to oversee the trust.

Comments and constructive criticisms of this paper are encouraged. Please contact the principal author, Paul Losleben, at losleben@rockisland.com with any feedback

* The Orcas Research Group is a private, non-profit organization that is focused on preserving the quality of life on Orcas Island through efforts to stabilize the local economy. For further information, see our website at <http://orcasresearch.org/>.

Appendix A

Housing Questions for Infrastructure Leadership

Current Employees

How many employees are in your organization?

How many currently own their own homes?

How many are living in rentals?

How many have other arrangements?

Commuting off-island?

Living with family?

Other?

Need for New Employees

How many attritions or retirements do you anticipate in the next five years?

What are your current plans for hiring additional or replacing current employees?

When you hire new employees, do you typically draw from the current island population?

Do you have waiting lists for your positions?

How many new or replacement employees will have to be hired from off-island?

What will be the approximate salary range of those hires?

Housing Needs of Your Employees

Have you lost employees due to the high cost of housing on Orcas Island?

Do you anticipate difficulty in attracting new employees to the island, given the current cost of housing?

Do you consider the cost of housing a major or minor problem?

Do you have the ability to obtain funds, or other assets, such as land, to help support housing for your employees?

Do you have access to public or private funds to help support employee housing?

Are you able to guarantee bank loans, mortgages or obtain favorable interest rates for such employees?

Do you support the use of a ½% excise tax on new property purchases to help provide housing for infrastructure employees?

What suggestions do you have to help provide housing for infrastructure employees?