As popular ROOTS housing program ends, Cedar Rapids explores Des Moines housing model

CEDAR RAPIDS - The Cook family is among the hundreds of young families who got a leg up in the Cedar Rapids housing market thanks to a post-2008 flood housing rebuild program called ROOTS. But with the program's end fast approaching, city officials are working to establish a new housing initiative to harness at least some of the momentum built in revitalizing the city's core.

Tony Cook, 28, wife Natalie, 29, and daughters Colbie, 3, and Callyn, 5, were living in a 100-year-old home riddled with a steady stream of issues - such as a heating bill exceeding the mortgage one month - when they decided it was time to move in 2014.

'We really wanted to stay in Cedar Rapids, so it looked like we'd move back into an apartment or a semi-nearby area,” said Tony Cook, who works in Cedar Rapids as a software analyst. 'I never thought we'd be moving into a new home at this point in our lives.”

The ROOTS - or Rebuilding Ownership Opportunities Together - program has been a major win for Cedar Rapids on a few fronts, officials say, but the federal money fueling the program is drying up. City officials say they are committed to filling the gap, at least in part.

The program encourages private investment in flood-affected neighborhoods by providing incentives for developers worth up to $12,000 per lot, which helps reduce the risk of rebuilding near the river. Millions of dollars in lost property values has been restored through the program, and hundreds of millennials and those in slightly older age brackets have been enticed to stick around, bolstering a young base in the workforce, city officials said.

ROOTS homes - models priced at $150,000 or $180,000 were built - have been available to those earning less than 80 percent of the area median income. If the buyer stays in the home for at least five years, 25 percent of their home loan is forgiven. Among the ROOTS homes, 52 percent were sold to homebuyers no older than 29, and 83 percent were sold to those no older than 39.

'It really did live up to its name,” said Jennifer Pratt, director of community development for Cedar Rapids.

The program launched in 2009 through a partnership with the city of Cedar Rapids and the Iowa Department of Economic Development to replace homes lost during the 2008 flood. The program leveraged $44 million in federal community development disaster recovery funds and $84 million in private investment over four distribution rounds to construct 867 homes. Initially, the program was focused on just flood-affected areas but eventually expanded benefiting other parts of the city.

For the Cooks, the deal worked out financially, gave them a home with working appliances, fresh paint and a flat, big backyard, and also helped create a vibrant, young neighborhood in the northwest quadrant near Ellis Boulevard.

'It's a win-win to repopulate the areas affected by the flood, and also get people affordable housing,” Tony Cook said. 'We have a lot of nice neighbors, a lot of people in the same phase of life just starting a family.”

The money behind the program is expected to be gone by the end of the year. Three homes are still available - call the city housing services department at (319) 286-5872 if interested - and another four units have yet to be constructed but are under a purchase contract.

The city's community development officials have been exploring ways to fill the void, possibly ready to roll out a new program in the spring.

'We are committed to make sure we continue the investment in our core neighborhoods,” Pratt said.

A housing finance model similar to the Neighborhood Finance Corp. in Des Moines has gotten the most attention, although another program could be selected, Pratt said. The Finance Corp. is an independent entity formed to oversee the program and loans for homebuyers.

That model does not construct new homes, nor are the giveaways as lucrative as ROOTS, but it encourages buying older homes and investing in updating, such as a new bathroom, kitchen or siding. Creating an environment in which those upgrades can be made, benefits the home value and ultimately the property tax base in the city.

'The goal is improved properties,” said City Council member Scott Overland, who has championed the idea. 'It gives a little shot in the arm, an incentive maybe, for a young family to invest in the home and make it affordable to move into.”

Erika Kubly, a housing redevelopment analyst, explained the Des Moines model to the city's development committee this summer. A group of participating lenders commit money to the Neighborhood Finance Corp., which then distributes loans to applicants agreeing to certain updates in qualifying neighborhoods. The loans works like traditional loans, but a portion is forgivable.

In Des Moines, the city and Polk County contribute $1.8 million annually to cover the forgivable portion.

Overland envisions perhaps $10,000 as the forgivable portion of the loan in Cedar Rapids. Overland advised starting in targeted, stable neighborhoods to get the program off the ground and eventually, if successful, expanding to more challenging neighborhoods and perhaps microtargeting rundown blocks here and there. The program, at least as Overland sees it, would not be income restricted.

Overland, who is a vice president of investments at Cedar Rapids Bank & Trust, has been finding interest in his first two meetings with local lenders who could partner in the program, and he plans to continue expanding that outreach. The hope is such a program pays for itself by preventing property values from deteriorating and improving housing values, he said. As Overland explains it, the program could have an added benefit of positive peer pressure to inspire neighbors not in the program to make repairs or invest in their homes.

'In five to 10 years, you will see a significant impact as we get money back from property taxes,” Overland said.

l Comments: (319) 339-3177; brian.morelli@thegazette.com