CHEYENNE -- The state's new housing infrastructure pilot project hit a snag when legislative leaders recently rejected rules adopted by the Wyoming Business Council.

That means revised rules must be sent out for a second public comment period, and it may be March before the Business Council can accept applications.

The law, adopted by the Legislature last winter, created the framework for an affordable housing loan program and allocated $1 million for a pilot project.

"We're delayed at least a year," Senate President John Schiffer, R-Kaycee, said last week.

"I had hoped that the program would be up and running and we would have a chance to see the rules and get a grasp on how it will work," he said.

The Legislature's short budget session opens Feb. 11 for 20 days.

Schiffer said he had hoped legislators could see some applications for the pilot project during the session so they could decide on a "reasonable" amount of money to allocate for the affordable housing program.

The original bill, sponsored by the Joint Minerals, Business and Economic Development Committee, called for $35 million in grants or loans to help communities to construct housing infrastructure, such as sewer and water lines and streets.

The housing program is intended to ease the shortage of housing for workers in the state.

The delay doesn't mean the housing program will "go away," Schiffer said. The issue is destined to come before the Legislature in February because the Business Council is asking for $10 million in grants for the housing program.

Contractors said earlier that $1 million was inadequate.

Steve Achter of the Wyoming Business Council said the Legislative Service Office was concerned whether a couple of things in the rules reflected legislative intent.

The rules set a minimum interest rate on the loans at 1.5 percent to cover a loan-loss reserve. The LSO said there was no legislative authority to set a minimum interest rate, only a maximum which is in the state law. The law ties the maximum to the prime interest rate in a formula set by the state treasurer.

The LSO also thought the income caps to quality were too low given that workers in boom areas receive higher pay.

The LSO recommendations have been forwarded to the attorney general and the governor's office.

To speed up the process, the LSO, Achter said, has agreed to look at the revised rules before they are sent out for public comment.

"I'm hoping by March 2008, we will have applications," Achter said.

Some legislators last winter were concerned that people would buy houses and then "flip" them by selling them for a quick profit.

The rules the Business Council adopted July 13 specify that each project demonstrates a method to prevent speculators from buying a house in order to quickly sell it at a profit.

One way would be to require the homeowner to live in the house for at least five years to get the lower interest rate.

Capital bureau reporter Joan Barron can be reached at (307) 632-1244 or at joan.barron@casperstartribune.net.