Latest grant paperwork demands vex flood-affected businesses

Some 600 flood-affected Cedar Rapids businesses that received JumpStart assistance checks more than a year ago are being told to sign more disclosures, agreements and paperwork or pay the money back.

The businesses have in most cases already spent the JumpStart I Business and JumpStart I Rental Assistance payments they received in 2009 to help them recover from the June 2008 Cedar River flood.

Jennifer Pratt of the City of Cedar Rapids Planning Department said the need for the documents was flagged in an ongoing HUD audit of the JumpStart program, which flowed through the Iowa Department of Economic Development to the city. The number and type of documents businesses have been asked to produce vary.

Alan Lucas of Phalanx Technologies, 425 2nd St. SE, was among the recipients of the certified letters from JumpStart demanding the documentation and signed agreements by the end of February.

Lucas was directed to fill out and sign a subrogation agreement promising to repay the JumpStart money if he receives funds to cover the same expenses from any other source. He also was asked to fill out a release allowing the state to share non-public personal information for the purposes of determining if his business was eligible for the grants, and provide other documentation that he was in business before and after the flood.

Lucas said he's not planning to return the confidential records release or the subrogation agreement. He believes JumpStart can't force the requirements at this stage, but he believes many businesses will be intimidated into compliance.

“They're threatening us,” Lucas said. “They're saying, “you enter into this contract or we'll make you repay the money.”

Pratt said she believes based on reports from the program's local administrator, Transitions Made Better, that the vast majority of businesses will comply. She said the paperwork demands were minimized in the JumpStart I program in order to get money to the business and property owners, which were struggling the year after the flood, immediately.

The same kind of documents now being required by HUD for the JumpStart I program have been required before checks were issued in the subsequent JumpStart II business recovery grant program, Pratt said.

Jumpstart II was used by  most of the same flood-affected businesses as JumpStart I, Pratt said, and it was assumed that they would file the needed information with their JumpStart II applications. As a result, she said, it was decided to wait until the JumpStart II program was over to begin asking for the documents from the JumpStart I recipients who hadn't sent it in as part of either program.

Pratt said it's extremely unlikely that the subrogation agreements would require any businesses to pay back JumpStart funds at this stage. She believes JumpStart can demand the return of the JumpStart I funds if the documentation isn't supplied, however

Cedar Rapids Small Business Recovery President Gary Ficken said the oddly-timed demands are just the latest in a long string of bureaucratic hurdles flood-affected businesses have faced. The JumpStart rental assistance grants were for up to $50,000. Being forced to repay the JumpStart grants at this stage would likely force some businesses to fail, Ficken indicated, especially if they had to pay it back in one lump sum.