Lawmakers are exploring potential fixes to Kentucky’s housing shortage. One model addresses infrastructure, which accounts for 30 percent of the cost of building a house. Officials from the Indiana Finance Authority recently presented their loan program to Commonwealth legislators.
Seiwert said the program helps communities pay the costs of getting areas ready for homes to be built through low-interest loans.
“From a traffic light to the purchase of the land necessary for the development. Most of it, however, goes for streets, curbs, sewers, that type of infrastructure. Not very sexy stuff but it is very needed for housing development,” Seiwert said.
Seiwert said in their program, developers do not directly qualify for assistance. The loan application must come from the county or city.
“We think this provides an opportunity for local communities to have some skin in the game and to be a part of the residential development growth. So, they have to demonstrate need,” Seiwert said. “They submit a market study that has been completed within the last five years.”
Seiwert said communities then submit engineering plans that outline residential infrastructure needs and their costs.
If approved, the Indiana Residential Infrastructure Fund provides a loan at a three percent interest rate, which is at least five percent less than most private lenders. Seiwert said the branch has granted 17 loans so far, accounting for over $60 million and 2,700 housing units. She said developers will have saved $25 million in interest fees when compared to standard private market loans.
Seiwert added 70 percent of the funding is set aside for rural communities which they define as having a population less than 50,000.
Lawmakers questioned how much it would cost for such a program to operate in the Commonwealth. Seiwert said it is up to the state budget but notes Indiana has committed a $50 million investment and $25 million more a year up to 2027.