City Hall has firmed up what it expects to seek for some 1,300 flood-disaster buyouts: $148 million in CDBG funds to go with an expected $27 million in FEMA money

The Iowa Department of Economic Development is finalizing plans for what it intends to do with the state’s latest disaster-related infusion — $517 million — of federal Community Development Block Grant funds.

In its initial draft, the state agency proposed using $245 million of the CDBG pot to buy out flood-damaged properties in the state.

For now, the $245-million figure is a good working one for the city of Cedar Rapids, which has firmed up what part of the pot it intends to request to help the city buy out about 1,150 flood-damaged properties, reports Jennifer Pratt, the city’s development coordinator.

Pratt says the city will seek a total of $148 million in CDBG for buyouts. Of that total, $66 million will be used to purchase 554 flood-damaged properties in what is expected to be the construction zone needed to build the city’s proposed new flood-protection system. Another $82 million will buy out an estimated 600 additional properties that are defined as “beyond reasonable repair.”

Most of a group of another 192 properties, which are heavily damaged and closest to the Cedar River, will be purchased using $27 million in Federal Emergency Management Agency funds to make way for a “greenway” along the river between the water and a new levee.

The city also is seeking funds from other parts of the $517-million CDBG pot, which will be designated for business recovery, infrastructure repair and housing rehabilitation.

City Hall confident on buyout money; but when it arrives, the legal hurdles will take a few to many months to jump, city reminds people

News elsewhere in Iowa of small-sized buyouts of flood-damaged homes does not mean that the first round of buyouts in Cedar Rapids using funds from the Federal Emergency Management Agency is not on track, Jennifer Pratt, the city’s development coordinator says.

Pratt on Wednesday said the city still expects to hear in August from FEMA on funds to buy out 167 properties closest to the Cedar River to make way for a riverside “greenway.”

The city intends to buy out ten times as many properties as the 167 in the greenway — 554 in a construction area needed to build a flood-protection system; and about 600 considered “beyond reasonable repair” that sit outside the greenway and construction area. The city will use federal Community Development Block Grant funds and revenue from the city’s local-option sales tax for those purchases. And every expectation is that there will be sufficient money to do the job, the city has said and Pratt repeated on Wednesday.

“It’s been so nerve-wracking getting to this point,” she said. “We just hope everything works out smoothly.”

Having said that, Pratt made clear a central point that she said those awaiting buyouts have been told and need to remember: No buyout check is going to show up in the mail quickly in any event.

Pratt said every buyout amounts to a “legal land transaction,” which can be slowed down by title problems and other legal issues.

In the best circumstances, she said it will take 60 to 90 days to get any property’s legal documentation in place before the buyout actually takes place once money arrives.

In worst cases, the entire process could take nine months, she said.

Included in the paperwork transaction is the need for each purchase to appear in front of the City Council on two separate occasions, Pratt said.

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

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.

Deadline for news on huge pot of federal buyout money has passed; City Hall upbeat that good news will arrive soon

It’s been something of the Great Waiting at City Hall.

State officials who have come to Cedar Rapids in recent weeks, and city officials themselves, have said that the federal government would make a crucial disaster-funding announcement by the end of April on how it intended to divvy up a huge, $4-billion pot of national disaster relief.

It’s May 7.

These federal Community Development Block Grant funds are the ones that City Hall intends to use to pay for most of the buyouts of 1,300 flood-damaged Cedar Rapids homes. The city has put the cost at about $175 million.

In a talk yesterday, May 6, council member Justin Shields and Sue Vavroch, the city’s treasury operations manager who doubles as a key legislative point person for the city, both noted that they and others at City Hall were sitting on the edge of their chairs on Friday, May 1, expecting an announcement on the crucial federal funds.

Shields said there were “wild rumors” circulating. But nothing came.

Shields and Vavroch said the expectation now is that the announcement will come within the next couple of weeks.

“We are frustrated that we haven’t heard. But we are very hopeful,” Vavroch said.

Shields said he remains upbeat and confident that the dollars will come in.

A big concern of City Hall’s and of the state of Iowa’s has been the way the U.S. Department of Housing & Urban Development dispensed an earlier allocation of CDBG disaster funds last year. The thought is that Iowa got shortchanged in favor of former President George Bush’s state of Texas, Cedar Rapids and Iowa officials have suggested.

This week, Shields and Vavroch said that it was likely that the federal formula used to divide up the latest $4 billion in CDBG money will be more favorable to Iowa.

City Manager Jim Prosser characterized the arrival of the expected new round of CDBG funds as “huge.”

He noted that the city has been busy putting into place a buyout registration system so that it can begin the process of buyouts as speedily as possible once money arrives.

Vavroch emphasized that the announcement of the new allocation comes first. Actual allocation of funds will take another couple months at least, Prosser said.

Buyouts in the proposed greenway along the Cedar River – there are 192 properties there – will be made with flood-mitigation funds from the Federal Emergency Management Agency. Those funds are expected to arrive in the next few to several months, city officials have said.

Council wrestles over hiring local firm vs. hiring “more responsive” one and sides, 5-4, with the Minneapolis outfit

Do you hire a professional firm because it’s a local one with a less expensive proposal even if a City Hall review team has concluded another firm from out of state has a better proposal and brings more horses to the task?

That was the central question this week that provoked a spirited debate among City Council members, who, in a rare 5-4 vote, awarded the contract to ProSource Technologies Inc., Minneapolis, Minn.

The city will pay ProSource an estimated $516,400 over six months for the firm to provide data required by the Federal Emergency Management Agency on the estimated 1,300 flood-damaged homes and other flood-damaged properties that the city hopes to buy out.

The contractor will obtain right of entry to properties, verify ownership, document the property’s legal description, check an owner’s insurance coverage at the time of the flood and notify lien holders of the intent to demolish a property.

ProSource’s proposal charges the city $380 per property while a bid by AllTrans Inc. of Cedar Rapids would have charged $350 per property for the work.

The City Hall’s review team concluded that ProSource and a third contractor, JCG Land Services of Cedar Rapids, were the top two of four proposals based on of the four contractors’ overall proposals, experience, method of approach to the project and cost.

Council members Tom Podzimek, Monica Vernon, Jerry McGrane and Pat Shey voted to award the contract to AllTrans Inc., while Mayor Kay Halloran and council members Brian Fagan, Kris Gulick, Justin Shields and Chuck Wieneke supported the city staff recommendation to award the contract to ProSource.

Podzimek argued that the council has spent some time over many months discussing what steps it might take to purchase more products and services from local companies. It didn’t make any sense to talk about buying locally if the city wasn’t, too, going to look at hiring locally as well, he said.

Podzimek said this contract related to property acquisitions was a chance to use a local employer with local employees and a chance to give a young, local firm the opportunity to build skills that the firm then could use to bid on other jobs. The city would be using its disaster recovery, he said, to help beef up the resume of a local firm for other disaster recovery projects.

The inference was that the Cedar Rapids firm then could become the out-of-state consultant – the council here as gotten some criticism for hiring out-of-state consultants – that other cities in other states might hire.

On the other side of the debate, council member Shields used the example of a boiler and said he didn’t want anyone building a boiler under the theory that, let’s give this person the job, “You got to learn sometime.” Cedar Rapids needed to hire “the very best,” he said.

Disagreeing with Shields, council member Vernon – she and Shields have been a one-two punch in recent weeks in trying, unsuccessfully, to arrange to have a new flood-recovery chief sidestep City Manager Jim Prosser – said the contract to assess properties for buyouts was a “great opportunity” to buy local and award the contract to the low-cost bidder. She said the contract involved “basic things” for which previous like experience might not be as important as other work the city needs to be completed.

Both Rita Rasmussen, the city’s senior real estate officer, and Prosser emphasized that the local firm did not provide a “detailed scope” of plans of how they would deliver the service.

Rasmussen told the council that the city’s proposal review team had concerns about whether AllTrans had the capacity to do the work in a timely manner. AllTrans did not address “capacity issues,” she said.

Council member Kris Gulick asked, specifically, about “adequate staffing,” and he wondered how many staff members AllTrans would bring to the job and how many ProSource would. Rasmussen said AllTrans listed four employees while ProSource said it would bring many more than that to the job.

The 5-4 council vote backed a resolution awarding the contract to the Minneapolis firm ProSource because it had submitted the “most responsive and responsible” proposal.

In hiring professional firms, cost is only one of several variables that jurisdictions look at in a competition for a city contract.

In matters involving price bids — street contracts, for instance — jurisdictions must pick the lowest responsible bidder.