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 and state celebrate funding that will help put people into 177 new residences by year’s end

Sometimes a city needs a dog-and-pony show.

At least the case could be made for the one — for the news conference — on Thursday in which state and local officials met in a new housing development in northwest Cedar Rapids to celebrate a significant infusion of federal dollars designed to help build 177 owner-occupied residences here by the end of the year.
Of the 177, 94 will be single-family homes and 83 will be condominiums.

In total, the Iowa Department of Economic Development and the Rebuild Iowa Office are steering about $7.5 million in federal Community Development Block Grant funds into Cedar Rapids for the new construction. Statewide including in Cedar Rapids, a total of $17 million is being spent on the program, which will result in a total of 343 new owner-occupied residences, Mike Tramontina, director of the state economic development agency, noted at Thursday’s news conference.

Lt. Gen. Ron Dardis, who heads up the Rebuild Iowa Office, said the homebuilding is part disaster recovery and part economic stimulus that will fill a need for affordable housing in Cedar Rapids that existed before the June 2008 flood and exists even more now.

Those purchasing the 177 new residents can qualify to receive up to 30 percent of the cost of the home or condominium as down payment assistance on new homes worth $180,000 or less. The new owners must have a household income at or below the average median household income and they must be able to support a mortgage on the new residence.

Dardis said the program’s down payment assistance will open up some of the homes to those who lost residences in the flood, and as a result, will allow some flood victims to regain “a sense of neighborhood.” It’s hard to measure the extra value of that, Dardis said.

Thursday’s news conference on Moose Drive NW in the Wilderness Estates Edition took place almost directly in front of the basement of Rick Davis’ new house.

Davis, an active member of the Northwest Neighbors, lost his house in the Time Check Neighborhood, and he said he Thursday he would not be preparing to move into a new house on the edge of town except for the down payment assistance in the program that was being celebrated on Thursday.

A lover of the Time Check Neighborhood, Davis said he did not want to live there now because he didn’t trust the river.

“I’m out in the country now,” he joked. “I’ve got corn instead of the river.”

Ben Busch spoke at the news conference and said the program was allowing him, wife Jenna and their two young children to move out of apartments and into not just their first house, but a new house.

City Manager Jim Prosser noted that 20 local builders are involved in building the 177 new residences that are part of the down payment assistance program. He called the funding program a “signature” one and he said it has been well-designed to provide needed housing in an efficient way.

Prosser pointed to a January 2009 survey of the city’s flood-recovery housing needs, and he said the 177 new residences plus another 20 new homes being build in the Oakhill Jackson Neighborhood have put the city well on the way to meeting a goal of seeing 300 or so owner-occupied residences built as part of the city’s flood recovery.

Local home builders already have been inquiring about the prospects of a second round of funding for the program, and the state’s Tramontina did not rule out such a prospect. He said it would depend on money and actual housing demand in Cedar Rapids.

Kyle Skogman, president of Skogman Homes, left Tramontina with an idea. Skogman said the state of Iowa should consider similar housing incentives in the years ahead as the city buys out and demolishes flood-damaged houses and has lots, in some instances, on which new homes can be built.

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.

A gush of praise: Another top Iowa official comes to Cedar Rapids to say the city is doing a great job in disaster relief and the state is, too

Two big cheeses from Iowa’s state government in Des Moines have to come to two of the last three City Council meetings here with the same message: city leaders are doing a great job in flood recovery; the state is, too; it’s the federal government that’s slowing disaster relief down and dispensing it unfairly.

The council and City Manager Jim Prosser couldn’t hire important people — this week it was Michael Tramontina, head of the state’s Department of Economic Development, and two weeks ago it was David Miller, head of the state’s Division of Homeland Security and Emergency Management — to say such nice things about them.

That was no truer than when Tramontina, like Miller before him, went out of his way to praise the use of outside consultants to help with flood recovery.

Of course, no issue at City Hall has garnered nearly as many hoots as the use of a stable of costly consultants to help in the city’s flood recovery.

“Consultants are invaluable,” Tramontina said in his lengthy presentation in front of the council, a meeting that the city tapes for rebroadcast on local cable TV.

He said the state of Iowa, in his case, simply did not have the number of employees or employees with disaster experience to figure out how to deal with a disaster as large as the flood disaster of 2008.

“You need someone who has been through it,” he said. “You need consultants to find your way.”

He, like others, rated Iowa’s flood disaster as one of the top ones in terms of damage to public buildings and infrastructure in the nation’s history. He put it at number five.

He said Iowa, to date, has received a total of $282 million in federal Community Development Block Grant funds to help with the disaster, an amount, he, too, said was less than Iowa should have had coming.

Talking about Iowa’s share of federal disaster funds is not so unlike talking about the state’s ethanol industry. It’s pretty easy to get a steady dose of the home team’s position.

Tramontina said much work from Gov. Chet Culver on down has gone into cajoling and arm-twisting the U.S. Department of Housing and Urban Development to come up with a better formula when it shells out $4 billion more dollars among 30 states that had natural disasters in 2008.

The state of Iowa believes the HUD formula should take into account the amount of damage to public buildings and infrastructure as well as things like population.

At minimum, Iowa should get $250 million of the next HUD money, which could be coming by month’s end, he said. Iowa should get $800 to $900 million if Iowa’s version of the distribution formula wins out, Tramontina said.

He was particularly complimentary of the city of Cedar Rapids’ hiring of a third-party administrator to handle the way state Jumpstart and federal CDBG money flows through what he described as a swampland of federal regulations to flood victims.

The local bureaucratic apparatus will do the city well when the federal auditors show up to see how much has been handed out inappropriately, and so, how much money must be returned, he said.

It has been something of a slow go, Tramontina said, in delivering funds. But they are flowing now.

As he was making that point, he had his associates and city staff stand in front of the room and hold up long sheets of paper comparing Iowa’s much quicker progress in delivering disaster funds than hurricane-hit Texas’ progress of a few years ago.

It took Texas 608 days even with Texas resident George Bush in the White House, he said.

Of note, Tramontina’s high praise this week stood in contrast to reports that City Council members like Justin Shields and Jerry McGrane have brought back from lobbying trips to Des Moines. Both council members have said they were told there that Cedar Rapids city government is dysfunctional, and as McGrane has put it, full of a bunch of nincompoops.

Tramontina’s oratory had little impact on the few flood victims and neighborhood leaders who came to the council microphone and chewed on the council once the state official sat down.

Cautionary letters from Army Corps and state of Iowa suggest a City Hall not in idle, but one pushing to open doors for flood-disaster help

Two letters with a similar cautionary tone arrived at City Hall in the last few days. One was from the U.S. Army Corps of Engineers; one from the Iowa Department of Economic Development.

As much as anything the letters portray a Cedar Rapids City Hall unwilling to sit by and wait for state government or Uncle Sam to show up with big bags of money on the day or time upon which they decide.

Instead, the letters suggest that Cedar Rapids city government is testing the limits and the rules and working to convince the federal and state governments to use some creativity to try to give the city of Cedar Rapids the ability to buy out flood-damaged homes faster than the rules now allow.

The city’s central request is that it be allowed to use an expected large infusion of Community Development Block Grants to buy out 550 or so flood-damaged homes that now sit in a proposed construction area where the Corps is expected to build a new levee system and where it is apt to need space to move some streets and to add a series of pumping stations.

The federal rules now say that those property cannot be bought out until the Corps has its flood-protection feasibility study approved, which isn’t expected before June 2010.

What City Manager Jim Prosser is pushing for is for the city to have the ability to use CDBG funds from the U.S. Department of Housing & Urban Development to buy those homes out, and then to have the Corps reimburse the city for those funds (or give the city credit toward money it must provide as a local project match) as the Corps moves ahead with its levee-building project.

“I would like to make you aware that the Federal Government does not encourage land acquisition” prior to the completion of the Corps’ feasibility study and the Corps subsequent notice-to-proceed agreement with the city, Ron Williams, acting chief of the Corps’ Partnership Support Branch, Rock Island, Ill., says in a letter to the city.

Williams then talks of the “risks” to the city. Chief among the risks is that Congress at the end of the day might not fund the city’s proposed flood-protection system. In that event, there would be no Corps’ money to pay for the buy outs that might already have occurred.

At the same time, Michael Tramontina, director of the Iowa Department of Economic Development, writes to Cedar Rapids’ Prosser on a related front about the city’s plan to use city funds to pay for disaster housing relief with the anticipation that CDBG funds will be coming to reimburse the city.

“We share the goal of providing assistance as quickly as possible to eligible applicants,” Tramontina states. But he continues: “The decision to use city funds until the federal funds become available … is a risk-benefit decision for the city to evaluate.”

On Tuesday, Prosser said the letter from the Corps and the letter from the Iowa Department of Economic Development represent bureaucracy in a good sense at work. The letters put the positions of the state and federal agencies down on paper, which Prosser said helps document the issues that need resolved.

The heart of the problem, he said, is that federal programs used in disasters –- by the Federal Emergency Management Agency, the Department of Housing and Urban Development and the U.S. Army Corps of Engineers — are not designed for the quick actions that are needed and that people expect in a disaster.

In particular, Prosser said the city is attempting to make the case that all of the money involved is federal money whether it is CDBG funds that should be available quickly or Corps funds that won’t be available for some time.

The argument, he said, is that the federal government will save considerable money by using CDBG funds in the near-term to buy out homes in the construction area instead of waiting for the Corps to complete its flood study in the next 15 months or so. And Prosser said it also makes good public policy sense to buy out homes more quickly. Why keep people in an ongoing “indeterminate state?” he asked.

Prosser said the city is pushing ahead with “policy papers” on the matter and will be asking Gov. Chet Culver to get directly involved. Some legislative changes in Washington, D.C., might be required to allow an exception to the Corps of Engineers’ current protocols, he said.

“Certainly, they are looking for us to make a case on why there should be exceptions,” Prosser said. “The bigger problem is we’re asking them to do stuff they haven’t done before. It’s not like they are necessarily philosophically opposed to it as much as they don’t have a system in place to support the urgency that we’re pushing ahead with.”

Just a week ago, FEMA announced its willingness to provide funding support for the demolition of more than 300 more flood-damaged houses that the city has concluded are too unsafe to enter. The city is currently in the process of taking down a first group of 72 homes at FEMA expense, but it required the city to make the case to FEMA before the agency agreed to add the larger number of homes to the demolition coverage, Prosser said.

The exceptions the city is now pushing for on buyouts in the proposed levee construction zone is similar to the FEMA decision on demolitions in that it requires the city to make a case to get its way.

“Although with the buyouts, the stakes are much higher, the dollar amounts are much higher and the creativity approach is pushing the limits of what the federal government has done before,” Prosser said.

He said the federal government is willing to allow for certain property acquisition in the building of a highway even before the final approval for the highway project is made.

That model is one the city is trying now to push for buyouts to make way for a levee.

Long-in-coming help for flood-hit landlords is on the way

Help is nearly here for landlords of flood-damaged properties.

The City Council this evening is expected to hire a local firm, Transitions Made Better Inc., to administer housing rehabilitation funds for landlords with flood-damaged properties.

Paula Hinzman Mitchell, supervisor in the city’s Housing Services office, said the city expects the state Department of Economic Development to begin to release Community Development Block Grant funds to help flood-affected landlords soon once the city has its program to administer the funds in place.

To date, more than 500 landlords with a total of 874 rental units have applied for help from the program with the cumbersome name, Rental Rehabilitation – Small Projects Disaster Recovery Assistance Program.

Hinzman Mitchell said it would cost about $22 million if each of the units received the maximum rehabilitation award of $24,999. An additional $12,500 per unit is also available to cover added project costs, which include lead-based paint remediation in instances where it is necessary.

Landlords have been agitating for housing rehabilitation help for many months as both state Jumpstart funds and federal CDBG funds have come into the city for homeowners and small businesses.

The landlords have argued that they were a major provider of affordable housing in the city’s flood-damaged neighborhoods and that getting their properties renovated was the quickest, cheapest way for the city to reestablish affordable housing lost in the June 2008 flood.

“Certainly one of the goals of the CDBG program is to provide decent affordable housing, and so this activity will be consistent with that overall major goal,” Hinzman Mitchell said.

The landlord program is open to those with seven or fewer rental units, and the assistance will come in the form of five-year forgivable loans.

Hinzman Mitchell noted that city had invited several entities to submit proposals to administer the landlord assistance program, but only Theresa Bornbach, president of Transitions Made Better Inc. in Cedar Rapids, submitted a proposal. Bornbach has experience administering state Jumpstart funds for local businesses, Hinzman Mitchell said.

The firm will receive an administrative fee of up to 2 percent to administer the program.

Keith Smith, president of Landlords of Linn County, told the City Council last night Bornbach has earned his respect in the way she has advocated for small businesses during the flood recovery. He said landlords were confident Bornbach would “meet our needs.”

Bornbach is founder/CEO of Corridor CoWorks Inc. and The Corridor Institute, and she is a former Alliant Energy vice president.

State development chief says unraveling “mystery” necessary for fair share of fed’s disaster relief

Michael Tramontina, director of the Iowa Department of Economic Development, was in Cedar Rapids on Tuesday and stopped by The Gazette for a chat.

It’s nice to see a genuinely enthusiastic guy. He was reading the front page of the Tuesday Gazette, excited about the prospects of the federal stimulus package providing funds to upgrade the nation’s electrical delivery system. Such investment will get Iowa’s wind power to market and help the emerging wind power industry in the state, he said.

He imagined, too, that the federal government might find money to build an ethanol pipeline to get Iowa’s ethanol speedily to market.

But Tramontina stopped by to field questions on the federal government’s delivery of disaster relief funds to the state, and in particular, the U.S. Department of Housing & Urban Development’s delivery of Community Development Block Grant funds to Iowa.

Tramontina said the latest stab at quantifying the state’s unmet disaster needs are $900 million in housing assistance, $900 million in assistance to business and then some untold amount for public infrastructure.

He didn’t think all the losses that Iowa businesses sustained to disaster in 2008 would ever be recovered.

Most interesting was Tramontina’s discussion about the amount of CDBG money that Iowa has seen to date.

It has become something of a statewide and Cedar Rapids-wide truth that Iowa has not gotten all the CDBG funds it should have from the federal government.

In the shortest of shorthand, Tramontina noted that the federal government dispensed $85 million and then $72.5 million to Iowa from an initial disaster relief allocation made on June 30. The money has now arrived.

A second Congressional appropriation at the end of October called for spending $6 billion on disaster relief, with about one-third of it to be allocated in short order.

One great thing had changed from June 30 and Oct. 30, Tramontina said: Only a few states were included in the first pot of money; now more than 30 are as a result of hurricanes on the Gulf Coast, wildfires in California and much more.

He said HUD nicely explained to the state of Iowa some months ago how they determined which states would get what from the first Congressional allocation for disaster relief last summer.

In the second allocation, in which Iowa is slated to receive $125 million of the first $2 billion of $6 billion in relief, the formula for allocating the money is what Tramontina calls “totally a mystery.”

SEE who got what at http://www.hud.gov/news/release.cfm?content=pr08-179.cfm

To date, Iowa has not received any of the $125 million in the second allocation, thought Tramontina said the federal procedure is moving ahead on that. He said HUD must publish a Notice of Funding Availability (NOFA), the state must submit an action plan for its share of the funds, and then HUD approves the plan and begins to make funds available. The NOFA has not yet been published, but it is expected to be shortly. Iowa intends to file its action plan with HUD before that.

Tramontina used the analogy of an ATM machine. HUD doesn’t simply write Iowa a big check, but it puts money aside for the state. The state then accesses it, case by case, he said.

Any decisions about how the remaining $4 billion in disaster relief will be parceled out to states remain in the future.

Tramontina said Iowa’s Congressional delegation, including its senators and Congressman Dave Loebsack and Bruce Braley, are working hard to make sure that the HUD formula used for the next $4 billion in relief uses factors that are fair to the state of Iowa.

Asked what the state of Iowa was doing to lobby Iowa’s Congressional delegation about HUD’s CDBG money, Tramontina said, in truth, “They don’t need to be lobbied.”

“The Congressional delegation is working real hard,” he said.