CHEYENNE - The Wyoming Business Council says it needs 10 times what it received from the Legislature to encourage construction of affordable homes for Wyoming's growing work force.

The council is seeking $10 million to help communities finance the cost of sewer, water and streets needed for new housing as part of the Workforce Housing Infrastructure Program.

The 2007 law allocated only $1 million in loans only for housing infrastructure as a pilot project. The $10 million request is predicated on the expectation the Legislature next February will modify the program to include grants.

Sen. Grant Larson, R-Jackson, the chairman of the Senate Committee on Minerals, Business and Economic Development, said he believes it will take grants to local governments for the infrastructure before developers will be willing to build affordable housing.

The builders are reluctant because they can make more profit constructing higher-priced housing, he said.

"I think the No. 1 problem in Wyoming is work force, and you can't get a work force if you don't have the housing," Larson said during a telephone interview last week.

He said he is concerned that some constraint be imposed to discourage home buyers from "flipping" their houses to make a quick profit and take advantage of rising housing values.

"I don't want to stop people from making money on their house, but I don't want to turn it into real estate speculation," Larson said.

Proposed rules that the Wyoming Business Council adopted July 13 specify that each project demonstrate a method to prevent unduly enriching a developer and to prevent speculators from buying a house in order to quickly sell it at a profit.

The project, the rules say, may require the homeowner to live in the house for at least five years to get the lower loan interest rate.

If the home buyer sells before the five years are up, the interest rate would then be calculated at the same rate as the first mortgage.

Gov. Dave Freudenthal said he generally agrees with Larson, as long as the grants go to cities, for example, and the cities own the infrastructure.

Freudental said he has been "harping" on the need for housing to increase the work force for three years.

"It takes a couple or three years for things to finally register with the Legislature," he added. "At least they're getting it, and maybe we'll get something done."

The $10 million housing program request is part of the Business Council's nearly $53 million budget request for the 2009-2010 biennium. It also includes an additional $12 million specifically for construction of child care facilities in the state.

Currently child care grants come from the same pot of money that pays for all of the Business Ready Communities Program projects, aimed at helping communities grow and diversify their economies. The council is concerned that the child care projects compete with the traditional types of projects paid for by the program.

The budget request estimated that four to eight child care projects could be financed with the $12 million without jeopardizing traditional program grants. The Legislature last winter rejected a similar request for a separate account for child care facilities.

Lack of child care stands next to lack of housing as a serious impediment to growing the state's labor force, officials say.

The proposed rules for the housing program have been sent to the attorney general's office for review. From there, they will go to the governor's office for certification, and then on to the Legislature's management council to see if they conform to the state law passed last winter.

The rules go into effect when they are filed with the secretary of state's office.

To get a head start, the council plans to solicit applications for the loan money with the caveat that the applicants will have to alter information if there is a change in the rules. The council has to report Dec. 1 to the Legislature's Joint Interim Committee on Minerals, Business and Economic Development.

"We're trying to as best we can get applications in hand so we can report on what we have in place," said Steve Achter, director of the council's Investment Ready Communities program.

The applicants must have specific projects, because the law requires the program to end up in construction.

"They have to be working with the developer, the builder, when they bring a project to us," Achter said. "We want to see that it's ready to go and that this isn't some speculative deal where a developer or builder comes in and says they want to build some lots."

The proposed rules defines "affordability" to mean that monthly mortgage payments including taxes and insurance do not exceed 30 percent of the homeowner's monthly gross income.

Work force housing is defined as "owner-occupied, residential dwellings priced to be affordable to families that have a gross income at or below 120 percent of the area median income."

Eligible work force housing infrastructure includes rights of way; sewer and water distribution projects, storm water control, streets, roads, bridges, curbs, gutters, sidewalks, lift stations, traffic signals and street lighting.

The rules say the infrastructure will be publicly owned.

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