Russia's current nationwide housing shortage and the additional strains that will occur as freedom of movement grows among the population have become the impetus of a World Bank program to build single-family and low-rise dwellings in five major cities.


But far from solving the problem single-handedly, the $790 million Russian Federation Housing Project is an ambitious attempt to create a housing market using a three-pronged method -- land development, creation of construction financing and development of a building materials industry.


In for a dime, in for a dollar, the World Bank has waded in with $400 million in loans for the project.


"This project should help the Russian government and cities to change existing rules ... concerning the marketing of land," said project director Sergei Istomin, describing the program as a massive demonstration project.


"This project is most important from a fundamental, political standpoint," he said.


The project, already a three-year endeavor of Russia's Ministry of Construction and the World Bank, has to date involved picking five cities out of an original list of 20 for participation, finally settling on Barnaul, Nizhny Novgorod, Novgorod, Tver and St. Petersburg, which has two housing sites.


Also, city governments have been developing housing plans outlining the type of structures that are best for them, the importance of maintaining energy-conservation and environmental standards, and how to set up financing mechanisms.


The response has been positive, according to Ted Liebman, land development manager in charge of auctioning off parcels of land to developers.


"This is the pride and joy of these cities," he said. "Everyone has participated."


Infrastructure work already has begun on the sites, the cost of which will help set the minimum bid prices when auctions begin for developers in the spring.


Some domestic developers have seized on the energy and environmental issues with gusto, Liebman said.


"Russia is not a typical country," he said, referring to the scientific background of many in the business community.


"One guy showed me 138 environmental criteria that they focused on while looking at a certain site," he said.


The land development component seeks to build about 4,000 units on six sites, subdividing each site depending on how large a development a builder undertakes.


Purchasing a structure will include the land beneath it or, in the case of an apartment, percentage ownership with a homeowner group.


Although the housing is supposedly aimed at middle-income families, World Bank staff said the houses will be sold for whatever the market offers.


Simultaneously with the land development phase, project officials will establish another component to provide up to $80 million in medium-term construction financing, to be disbursed by participating Russian banks.


The money will be allocated to the banks on a first-come-first-served basis, and lending is at the banks' discretion.


The money is not only directed toward financing construction of the Housing Project sites, but also for other, similar developments, rehabilitation of private apartment buildings, completion of unfinished units and site-specific infrastructure.


There is no minimum amount to the loan, and up to $10 million per project can be awarded to finance up to 75 percent of construction costs, with terms ranging from six months to four years.


The project's third component, the development of a building materials industry, is broader in scope and pertains to any company within Russia that is working to develop energy-efficient housing materials, as well as retailing, warehousing and distribution of building products.


Under the program, the Housing Project will match funds from a business, up to doubling the amount of equity with loans ranging from $500,000 to $10 million with payment terms of between two and 10 years.


By limiting development to low-rise and townhouse-style developments, Liebman said he sees a future where communities are neighborly and which reflect their owners' pride, yet can hold a large number of people.


His comparisons envision U.S. East Coast townhouses and single-family suburban dwellings.


As for the scope of the project and the awesome task set by those involved, he shrugs and notes that it is a learning process.


Should a city mis-market a site, the results could still be positive.


"Suppose no one bids on it. There will probably be as much learning from that failure as from all the winners," Liebman said.


"There may be a criterion that was overlooked that will never be overlooked again," he added.