Morehead, Ky. (Morehead State Public Radio) — Kentucky lawmakers are considering ways to ease the state’s housing shortage, including a program that helps communities fund residential infrastructure, which can account for 30 percent of the cost of building a home.
Officials from the Indiana Finance Authority presented their loan program to state legislators as a potential model. The program provides low-interest loans to communities to cover costs for roads, curbs, sewers, and other infrastructure needed for new housing developments.
“From a traffic light to the purchase of 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,” said Seiwert, an official from the Indiana Finance Authority.
In this program, developers do not apply directly. Instead, county or city governments must submit the loan applications, demonstrating local need through a recent market study and engineering plans outlining infrastructure requirements and costs.
If approved, the Indiana Residential Infrastructure Fund offers loans at a three percent interest rate, at least five percent lower than most private lenders. So far, the program has funded 17 loans totaling over $60 million, supporting the construction of 2,700 housing units. Developers participating in the program have saved $25 million in interest fees compared to standard private loans.
Seiwert noted that 70 percent of the funding is reserved for rural communities, defined as those with populations under 50,000.
Lawmakers asked about the potential cost of implementing a similar program in Kentucky. Seiwert said it would depend on the state budget, pointing out that Indiana has committed $50 million initially, with an additional $25 million per year through 2027.
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