Lenders seek fund to expand home buying

The Journal staff

Waukesha A privately financed $2 million to $3 million fund intended to expand the supply of a scarce commodity in Waukesha County moderately priced homes is being proposed by a group of Waukesha County lenders.

The Waukesha County Lenders Consortium, a group of 17 private lenders, gave the green light Thursday to its Executive Committee to work out a plan for creating the fund, which would be a first for the county.

A market study prepared for the lenders by The Wisconsin Partnership for Housing Development Inc. found there could be at least 9,500 more moderately priced homes in the county those selling for $128,000 or less to meet current demand. In 1990, the median home sale price was $140,000, according to the report.

The gap in affordable rental units is even wider, with a shortage of about 13,300, according to the report. However, most of the fund would be earmarked for home ownership, not renters. Pennsylvania Model

The fund, modeled after ones established in Pennsylvania, would be created from investments by lenders, employers and others in the private sector who would get a return on their investment. For example, in Bucks County, Pa., a 7% return is possible in some cases.

As proposed, the development fund would provide loans to both non-profit and for-profit parties who plan to develop housing that includes at least some affordable homes.

Susan Dreyfus, executive assistant to County Executive Daniel M. Finley, cited as an example a recently approved subdivision in Hartland that included a designated number of less costly homes among more expensive ones. In that case, federal Community Development Block Grant funds helped finance some of the up-front costs.

Finley has made the issue of affordable housing a theme of his administration.

"The issue of housing affordability in Waukesha County is clearly an issue that impacts our work force and our ability to attract and retain a high-quality work force," Dreyfus said Thursday. "We are delighted about the prospects for the development fund," in which the private sector would take the lead, she said. Not a Quick Process

Despite Finley's advocacy, progress on the affordable housing front has been slow, with many municipalities skittish about adding such housing to their stock.

"Please don't call it low-income," Dreyfus pleaded to a reporter, indicating just how sensitive the administration is to that label.

The market study surveyed many stakeholders in the housing debate: 17 lenders, 6 employers, 5 non-profit housing developers, 13 for-profit developers, 7 professional government planners, 203 elected planning representatives, 6 social service agencies and a number of low- and moderate-income housing consumers.

Many of them cited economic discrimination as one of the most formidable barriers to affordable housing, along with restrictive zoning and building laws that make many homes beyond the reach of moderate-income families.

Creation of the development fund would provide a way to spread the risk of developing such homes, the study found. Benefit for Developers

As recommended, the fund would offer to both for-profit and not-for-profit housing developers:

Predevelopment loans, which could finance costs at the earliest stage of a development project, before construction financing has been obtained. Many non- profit organizations do not have the money to start a project, and many for-profit developers do not want to risk their money.

Construction loans secured by mortgages. Such loans might be the primary source of money for non-profit agencies unable to get funding elsewhere, or part of a joint financing venture for the for-profit developer.

Permanent financing for projects. For example, a loan could be made to a developer during construction and passed to the home buyer when the home is sold.

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