The Gazette covers City Hall, now a flood-damaged icon on May's Island in the Cedar River

Flood victims in newly purchased homes may not lose their down-payment assistance after all; city looks at using local-option sales tax revenue to help

In City Hall, Jim Prosser on June 25, 2009 at 1:53 pm

City Hall is investigating the possibility of providing targeted help to flood victims who received state Jumpstart down-payment assistance on a new home and now have learned that the amount of assistance will be subtracted from any buyout payment on their old home.

The local Jumpstart office two weeks ago said 383 homeowners had received Jumpstart down-payment help to date at a cost of $8.8 million or about $23,000 per home.

Initially, it was unclear if that money would be considered a “duplication of benefits” subject to deduction from a homeowner’s buyout settlement. However, the down-payment assistance is now considered a duplication of benefits.

City Manager Jim Prosser brought up the issue at Wednesday evening’s council meeting as he and the City Council talked about how much money the city will need to buy out some 1,300 flood-damaged homes and other properties.

There seems a growing likelihood that the city will have enough money to do the job.

The Federal Emergency Management Agency will pay to buy out a first group of about 170 flood-damaged properties that sit in a proposed greenway area along the river.

Additionally, the state of Iowa has proposed setting aside $245 million of a latest round of $517 million in federal Community Development Block Grant funds for buyouts statewide. And the city has made a request for $175 million of that amount to pay help for buyouts of another 1,150 or so homes and other properties.

The city also is now collecting a 1-percent local-option sales tax, which could raise $80 million or more over five years for use in buyouts and other housing issues related to flood recovery.

It is from this last batch of money, the local-option sales tax revenue, that Prosser said the city is looking to draw to provide some relief to those who stand to essentially lose their Jumpstart down-payment assistance on a newly purchased home once the city buys out flood-damaged homes.

Prosser said such a use of sales-tax revenue was needed for those who bought a home not unlike the one they lost in the flood only to find that they do not have sufficient income to support mortgage payments on the newly purchased home.

The city has expected FEMA and CDBG money to carry much of the load on buyouts, but Prosser said the city always knew there would be funding “gaps” for which local-option sales tax revenue could be used.

Those who stand to lose their down-payment assistance may be one of those gaps, he said.

On Thursday, Prosser said his staff is still looking into how many properties might be involved and how much the city might be able to steer to help those who had gotten down-payment assistance.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: