Most of pot of $12 million to help flood-hit Cedar Rapids landlords is going unused

CEDAR RAPIDS - The state of Iowa has made $12 million in federal Community Development Block Grant funds available for use by Cedar Rapids landlords to renovate their flood-damaged residential property.

The city of Cedar Rapids can't find a way to spend the money, the City Council's Budget Committee learned this week.

To date, only 214 landlords have signed up to draw down on the pot of money, which can provide them up to $24,999 in rehabilitation costs per rental unit plus additional money for lead-paint abatement.

The city figures it can handle those requests with $3 million of the available $12 million in funds. Most of the 214 landlords in the program, don't need as much as is available to make their repairs, Drew Westberg, special assistant to the city manager, told the council committee.

The committee – Mayor Ron Corbett and council members Chuck Wieneke, Don Karr and Kris Gulick – were trying to learn why more landlords weren't signing up to use the money.

Landlords, after all, were one of the vocal groups who campaigned for Community Development Block Grant money after they were denied access to early disaster funds from the Federal Emergency Management Agency.

Westberg on Tuesday said 662 landlords have inquired about the program. In addition to the 214 who have signed up, another 208 have opted out and 240 are positioned to have the city buy out their properties.

He said many of the 208 who have opted out do not believe they can live with the restrictions that come with accepting the CDBG funds. In particular, the landlords dislike that they must rent their units that use CDBG funds to those with household incomes of 80 percent of the area median income. For a one-person household, that is $37,850 a year, Westberg noted. There also is a limit to what landlords can charge in rent on the units.

Karr said many landlords don't think they can make any money with such requirements, and so they are not signing up for the program.

Corbett noted that an official with the U.S. Department of Housing and Urban Development will be in the city on Friday, and he said he will ask if it's possible to get a waiver on some of the program restrictions.

The city is trying to get rental stock back on line using a federal program designed for affordable housing, the mayor said.

The council committee also talked about using local-option sales tax money to try to help get some of the flood-damaged rental units back on line.