Steven Kuruzovich works for his dad’s business designing, repairing and installing garage doors. He asked City Limits: Bloomington what the elected officials in the City of Bloomington and Monroe County think affordable housing is.
And what, he asked, do they think a single parent with two kids should earn to afford decent housing?
Kuruzovich fits that description - a divorced dad with two kids. He said he earns about $16 an hour - $24,000 a year after taxes. He commonly sees rents of $800 a month.
“If you’re living paycheck to paycheck $600 a month is close to what you can afford,” he said. “But there’s nowhere in Bloomington where you can get a two-bedroom for $600. Nowhere.”
Having a good credit score and being able to make rent consistently on time have, in the past, also been challenges to finding affordable housing.
Guidelines and calculations governing federally subsidized affordable housing programs are complex. The City of Bloomington and the Bloomington Housing Authority both use income limits set by the federal Department of Housing and Urban Development for eligibility. HUD calculates the area’s median income for the fiscal year and then calculates a percentage of that median to create three tiers of what it considers low income.
(U.S. Department of Housing and Urban Development Income Limits chart with area median income)
These parameters help determine eligibility for federally subsidized housing programs such as the city’s Section 8 housing, or a program through the Bloomington Housing Authority. Or, one of the affordable units found in a few mixed-use developments across the city.
Bloomington’s Housing and Neighborhood Development director, John Zody, said the rent charged in these subsidized affordable housing programs varies, based on what percentage of the $76,300 area median income you actually make. Those who earn lower amounts get more of a subsidy to help pay the rent.
HUD considers households to be “cost-burdened” if they are spending 30% or more of their income on rent and utilities. Those spending more than half of their income on these expenses are considered “severely cost burdened.”
Kyle Arbuckle of the non-profit National Low Income Housing Coalition estimates that in Indiana, 72% of extremely low-income households are severely cost burdened.
“In Monroe County, where Bloomington is, it’s 86%, so it’s even higher proportionately,” he said.
The NLIHC estimates a Monroe County household needs to bring in a little more than $35,000 annually to afford a two-bedroom rental.
It is worth noting that the Monroe County figure is higher than the coalition’s calculation for the rest of Indiana.
Home ownership can be even farther out of reach. The city’s 2020 Bloomington Housing Study states that rising home prices may lead to a shortage of housing priced below $200,000.
For illustration, let’s say Kuruzovich has his eye on a $200,000 house. With a down payment of 10% and a 30-year fixed rate mortgage (using an interest rate available on April 27), his mortgage payments could be about $840 per month. That is an amount he has said he cannot afford in a rental. And he would still have to figure out how to come up with $20,000 for the down payment.
Using the federal 30% rule of thumb, Kuruzovich would need to make more than $18 an hour – or more than $38,000 annually - to afford the mortgage without being cost burdened. That calculation does not factor in any of the other associated costs of home ownership, like ongoing taxes and mortgage insurance. Nor does it factor in any other expense of daily life with kids.
Bloomington City Council member Susan Sandberg understands affordability involves more than just making the rent. As a member of the Bloomington Affordable Living Committee, she co-authored a report titled “Working Hard, Falling Behind” published in 2019.
“You may have a full- time job, you may have more than one job,” she said. “But it's still not enough to pay for everything, food, housing, childcare, all the costs of living.”
Kuruzovich knows this juggling act well. Even when he was married with two incomes in the household, sometimes there wasn’t enough money for necessities – like shoes for the kids. He said a modest wage increase doesn't mean he can afford more in rent. It might cost him in other ways.
“Okay, I make 17 to 18 dollars now. That is too much money for any type of insurance or assistance through any type of government program. I don't qualify for HIP (Healthy Indiana Plan/Medicaid) so I have to get my own insurance. Yeah, so car insurance, regular insurance, cell phone… like, I can afford $600 a month, but barely.”
Sandberg refers to this as the “cliff effect” often faced by the working poor.
“That cliff effect was a really interesting thing that we heard from a lot of people,” she said. “‘We try our best to get better education, we try to get a better job but then the more we make, then we lose our childcare voucher, or we lose something else.’ And so it's … two steps forward, and then three steps backward.”
County Council member Geoff McKim also takes issue with the various guidelines, and the idea of spending 30% of household income on housing.
“People hear that and they’ll say well that isn’t affordable to me. And you know, of course, they’re right. It sometimes makes government officials appear kind of insensitive,” he said. “It might work well for middle income, middle and higher incomes, but at the lower end of the income scale, you know, many families, even if they are able to find housing that costs 30% of their income, that doesn't necessarily leave enough to cover many of the other things they need, including the reliable transportation to actually get them to and from work, and school and schooling expenses. And things can be different, depending on whether you have children, if you have children with special needs, how old the children are.”
Monroe County government does not have a housing department or affordable housing programs. But in 2018, the county created an Affordable Housing Advisory Commission, and officials recently passed a resolution acknowledging housing as a human right.
“It doesn’t have teeth by itself, but I think it lays in front of us the challenge. It challenges us to put words into action,” McKim said of the resolution.
McKim hopes to see the county uses the tools it has available – for example, purchasing land and streamlining its zoning code – to support the development of more affordable housing.
As for Kuruzovich, he has stable housing now, and he feels fortunate. A relative rents to him for $600 a month plus some money for internet. She doesn’t need his credit score and can be flexible about when she receives the rent. Still, he thinks building affordable single-family housing should be a priority with the city - not more apartment complexes.
