Developer Seeks Lenders for Low-Cost Housing Projects

Hoping to fill a gap in construction lending as Southern California’s real estate market slows, developer Donald H. Williams Jr. is trying to raise money to finance construction of low-cost homes.

Williams, of Anaheim Hills, has filed a preliminary prospectus with the Securities and Exchange Commission seeking approval to sell 400,000 limited partnerships to raise up to $200 million under the name Hill Williams Secured Income Fund.

Williams is especially interested in funding affordable homes--in the range of $120,000 to $190,000--in San Bernardino and Riverside counties, said David Colton, president of Colton Financial Inc. of Newport Beach, whose firm is the lead underwriter for the offering. Williams may also invest in other parts of California, Colton said.

With real estate prices in the dumps, now may not appear to be the right time to invest in home-building. But Colton said there is opportunity for home builders even in a slow market.

“A lot of developers who would normally be developing cannot finance their projects, but that’s not because the projects don’t make economic sense,” Colton said. “It’s the new regulations on financial institutions.

The limited partnerships are projected to pay a 12% return on the investment, according to the prospectus.

In 1985, Williams formed Hill Williams Development Corp., which has built homes, attached units, office buildings and shopping centers valued at $96 million, all in California.