Kentucky has a housing shortage, and lawmakers want more affordable homes built in the state.

Business leaders say they'll pony up some of the financing to make that happen.

Our June Lefler tells us more in this legislative update.

Recent years have brought economic growth to Kentucky.

There are more than 2 million jobs in the state, something unheard of before 2023.

But are there enough homes for these workers?

If a major economic announcement of a thousand jobs was announced in your community tomorrow, do you think your region could sustain or be positioned to solve this demand?

Of those people surveyed, 90% of the folks said they could not.

A huge, huge issue though the need is there.

Developers have plenty of reasons not to go all in on affordable housing, explains this lawyer for Kentucky's banks.

But when you look at where this was based off of the NB statistics for challenges from, for the building industry for 2025, the two largest ones expected for 2025 are based off of interest rates, high interest rates and buyers expectations that interest rates will decline if they wait.

Which leaves the banking industry uniquely able to help and assist in this area of housing because we directly affect interest rates.

Kentucky banks say they can nudge developers to build more by putting up $20 million in financing specifically for affordable housing.

Again, banks can address the interest rate challenge.

And what we have is a $20 million commitment from banks to go towards a revolving fund, which would essentially address a lot of this housing crisis, which this is about creating new doors.

It's not about refinances.

It's not about, you know, flipping things out.

This is creating new housing to really tackle the crisis.

These would be loans at slightly lower interest rates to reassure developers, the banks are asking the state to offer matching tax credits, giving developers another reason to start building.

So will this be limited as far as how much one entity, could or one area could take, you know, say geographically limited.

How will you how can we make sure that'll be spread across the state?

I think the goal is to spread it across the state.

And that's, you know, with 153 member banks located throughout this Commonwealth, they want their their communities impacted.

You know, it's we have banks in every county, and they want to see it come to their area as well.

I guess it was something that had to be included in our budget because there's an expense involved, right?

There would be courts.

Again, we're talking not earning the credit until the project is is constructed and put in service.

So, you know, theoretically, three years down the road, the General Assembly would need to sign off on this deal or any other public private fund.

State lawmakers will hammer out their next two year budget at the beginning of 2026.

For Kentucky Edition, I'm June Leffler.

The Kentucky Bankers Association says it wants to help fund housing for working class Kentuckians and more on housing.

Today, the Interim Joint Committee on Local Government talks about how state and local leaders can work together to build more housing units.

State Senator Rob Mills discussed Senate Bill 50, which he sponsored during this year's legislative session.

While the bill didn't pass, it looked to create residential development districts across local communities.

When completed, at least half of the area be covered by residential housing.

It will have a development plan.

It will describe the infrastructure the developer anticipates is necessary for the development and given estimated costs for the infrastructure and, most importantly, the proposed rate of the special assessment to be imposed.

Senator Mills said he plans to file that bill again during the 2026 legislative session.

Lawmakers also heard about ways they can cut down red tape when it comes to housing development.

On the local level.

If you require smaller frontages, essentially that's less infrastructure per house and brings down the cost of land.

That's a major factor in housing costs, minimum lot sizes are key.

One of the main drivers of the cost of a home is the land.

And I often hear local elected officials say, well, we can't build any more housing because we've run out of land.

At a certain point, you can reduce this cost by allowing developers to use land more efficiently.

Third party inspections where you allow a credentialed professional, although not necessarily employed by the local government to perform inspections instead of waiting, perhaps, you know, six months or four months or two months, they could get the inspections done in two weeks.

The speaker said it is possible to develop starter homes that are affordable for the average Kentuckian, but state and local leaders will need to clear red tape so builders can meet that demand.