4 ms·

I don't understand this, I guess. Is it more cost-effective for the IA to buy a house and rent it to its employees at low rates, than it would be for the IA to

by azakai 12y ago

I don't understand this, I guess. Is it more cost-effective for the IA to buy a house and rent it to its employees at low rates, than it would be for the IA to increase its workers' salaries who would then pay market rates for housing? If it is more cost-effective this way, why don't all companies do it?

cauterized 12y ago
As an employee, I'd be wary of this -- does leaving/losing your job mean losing your home at the same time? 100-150 years ago, corporations used to do this a lot, and along with the "company store" there's a reason they got a bad reputation.
- toomuchtodo 12y ago
  As long as it has COBRA-esq provisions, where you can pay the same rate for 3-6 months after your employment is terminated or you quit, and as an employee you know of this lease provision, I don't believe it poses a problem.
- zo1 12y ago
  I'm sure it'll all be in the contract. It's not like people wouldn't know what they're getting into?
driverdan 12y ago
It also reduces choice. I'd rather have higher pay and select my housing than have lower pay and be forced into this limited selection of subsidized housing.
- zorpner 12y ago
  It also reduces choice. I'd rather have higher pay... This is the part of your comment where you're already choosing not to work for a non-profit. Non-profits are nearly always unable to compete on salary -- they offer increased benefits, often with positive tax implications, as incentive.
  - driverdan 12y ago
    Instead of subsidized housing the money could be used to increase salaries.
xn 12y ago
The employer may be expecting that employees can treat the housing subsidy as non-taxable.
zippy 12y ago
I am not a tax lawyer, but here's what I imagine are the benefits to the IA over increasing salary. By owning property, a foundation benefits by having an asset that increases over time, as well as collecting rent (below-market, but enough to cover expenses). - Paying more to employees sends your money elsewhere. - Buying property and renting it to your employees sends your money back to yourself, covers the expenses associated with that asset, all while enjoying the increase in value of that asset
- azakai 12y ago
  I see, thanks. That makes sense. Why don't all companies do this, then, I wonder? It seems like companies offering people an opportunity to work in SF, plus affordable housing, would be a huge attraction?
  - bane 12y ago
    I once worked for a startup that happened to have owned some property in downtown SF right at about the cusp of things really taking off in the latest bubble. We didn't use the space and ended up renting it out to a couple other companies. The rent we charged was a couple times what our payments on the property were -- and quickly going up. At one point the rent we were receiving was greater than our own revenue. We joked about taking our investment dollars and buying up commercial property around the Valley instead of doing our main business. I believe our board forced us to sell it in order to liquidate the cash rather than go in for another round...I can only imagine what it's worth today.
  - prawn 12y ago
    Distracts from core business, lock in with employees could be an issue, risk if housing market drops away, etc. Same reason many big businesses contract out cleaning and similar services rather than have dedicated staff performing those functions.
    - azakai 12y ago
      Sure, but then why does it make sense for IA to do this? My question is, why is IA doing this and no one else - what makes them different? Or are other companies doing it and I haven't heard about it?

by azakai 12y ago

cauterized 12y ago

As an employee, I'd be wary of this -- does leaving/losing your job mean losing your home at the same time? 100-150 years ago, corporations used to do this a lot, and along with the "company store" there's a reason they got a bad reputation.

toomuchtodo 12y ago
As long as it has COBRA-esq provisions, where you can pay the same rate for 3-6 months after your employment is terminated or you quit, and as an employee you know of this lease provision, I don't believe it poses a problem.
zo1 12y ago
I'm sure it'll all be in the contract. It's not like people wouldn't know what they're getting into?

driverdan 12y ago

It also reduces choice. I'd rather have higher pay and select my housing than have lower pay and be forced into this limited selection of subsidized housing.

zorpner 12y ago
It also reduces choice. I'd rather have higher pay... This is the part of your comment where you're already choosing not to work for a non-profit. Non-profits are nearly always unable to compete on salary -- they offer increased benefits, often with positive tax implications, as incentive.
- driverdan 12y ago
  Instead of subsidized housing the money could be used to increase salaries.

xn 12y ago

The employer may be expecting that employees can treat the housing subsidy as non-taxable.

zippy 12y ago

I am not a tax lawyer, but here's what I imagine are the benefits to the IA over increasing salary. By owning property, a foundation benefits by having an asset that increases over time, as well as collecting rent (below-market, but enough to cover expenses). - Paying more to employees sends your money elsewhere. - Buying property and renting it to your employees sends your money back to yourself, covers the expenses associated with that asset, all while enjoying the increase in value of that asset

azakai 12y ago
I see, thanks. That makes sense. Why don't all companies do this, then, I wonder? It seems like companies offering people an opportunity to work in SF, plus affordable housing, would be a huge attraction?
- bane 12y ago
  I once worked for a startup that happened to have owned some property in downtown SF right at about the cusp of things really taking off in the latest bubble. We didn't use the space and ended up renting it out to a couple other companies. The rent we charged was a couple times what our payments on the property were -- and quickly going up. At one point the rent we were receiving was greater than our own revenue. We joked about taking our investment dollars and buying up commercial property around the Valley instead of doing our main business. I believe our board forced us to sell it in order to liquidate the cash rather than go in for another round...I can only imagine what it's worth today.
- prawn 12y ago
  Distracts from core business, lock in with employees could be an issue, risk if housing market drops away, etc. Same reason many big businesses contract out cleaning and similar services rather than have dedicated staff performing those functions.
  - azakai 12y ago
    Sure, but then why does it make sense for IA to do this? My question is, why is IA doing this and no one else - what makes them different? Or are other companies doing it and I haven't heard about it?