Too many worthwhile urban core projects never get off the ground because they can’t get startup loan funds, community development advocates said Wednesday.
So now, the Local Initiatives Support Corp. is teaming with the Kauffman Foundation and other philanthropic groups and area governments to create a loan fund of up to $4 million that would help pay for such “soft costs” as architectural drawings, financial and environmental studies, legal fees, community engagement and other pre-development work.
“We have been trying to accomplish something like this for years,” Councilman Scott Wagner of Kansas City said Wednesday in endorsing the idea.
LISC officials outlined the loan program’s goals Wednesday before a joint City Council housing and neighborhoods committee meeting. The committee endorsed the program, and it goes to the full council for a vote Thursday.
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The fund would consist of $2 million from the Kauffman Foundation, $1 million from LISC, $500,000 from Kansas City government, $250,000 from the Hall Family Foundation and $250,000 from the Unified Government of Wyandotte County and Kansas City, Kan. The Unified Government has not yet voted on its contribution.
The $500,000 from Kansas City would come from a dormant Maintenance Reserve Corp. fund that was set up decades ago but is no longer used, so the money was available, explained John Wood, the city’s director of neighborhood and housing services.
The city’s funds would be used within low- to moderate-income areas. The money would be paid back over time and recycled to new projects.
The average loan would be for about $250,000, with an interest rate of no more than 4 percent, said Steve Weatherford, LISC senior program officer for community lending. LISC would use its underwriting and would choose the projects.
Weatherford said finding money for pre-development activities can be a major impediment, so this money will be crucial to getting good projects to the point where traditional lenders will fund construction.
He said it could help jump-start projects such as grocery stores, housing, community gathering spaces, retail and health facilities.
Councilwoman Katheryn Shields applauded the intent but said she feared some people might use the money for demolition, and she did not want this to be a vehicle for people to shop for funds for projects that the council wouldn’t otherwise support.
“I won’t support this if it’s used to tear down historic buildings,” she said.
The committee clarified the ordinance to prevent the use of city money for demolition of historic properties.