Cedar Rapids council hears plan to subsidize new homes

Federal money to date has provided most of the subsidies for housing that has been built or is in line to be built here with the hope of replacing affordable housing lost in the June 2008 flood.

Now the City Council is wrestling with a new matter: Using city taxpayer dollars to subsidize some of the cost of most of the homes in a proposed 81-home development, homes that council member Chuck Wieneke, for one, isn't sure any flood victim will be able to afford even with taxpayer help.

In a debate Wednesday night about trying to provide new housing for flood victims, council member Pat Shey said the city easily could end up subsidizing new homes for farmers coming to town to retire or older college students who need a housing deal that they can quickly turn for a profit after getting their degrees.

In the end, though, even Shey said he would be willing to work on a plan by local developer Darryl High to help subsidize High's proposed 81-home development, called Sugar Creek, off Zika Avenue NW across from the Ellis Golf Course.

When the debate ended Wednesday night, it seemed as if High might get some version of his plan approved, perhaps in as little as two weeks.

High has asked the City Council to provide a subsidy of $31,000 for each lot, which will allow builders to sell houses for between $90,000 and $130,000. Most of the council discussion centered on the $130,000 figure.

A city consultant has recommended just a $26,500 subsidy per house - $17,500 to be used by the buyer to buy down the cost of the house so its cost is no more than $130,000; and $9,000 for High to put in the development's infrastructure.

Under the High proposal, 20 of the homes would be built as rent-to-own homes, an idea most on the council said they liked and that would make those homes meet an “affordability” standard.

Council member Brian Fagan, a mayoral candidate, talked about the idea of a voucher system, which would give vouchers to people, for instance, whose flood-damaged homes were slated to be bought out and demolished. Those people could put the voucher value toward the purchase of a home, whether it was in High's development or not.

High said, if he could, he'd like to see all 81 homes go to flood victims, but wasn't sure how that could be accomplished. He said his proposal adds housing stock to a city that's lost a lot of it. And he said some who buy the homes might not have been impacted by the flood, but they might be moving from $80,000 homes that flood victims then could purchase. Many of the council members wondered where the money would come from if the subsidy High was requesting was paid for most of the 81 homes.

After last night's meeting, Fagan said one value of a voucher system is that the city might be able to use local-option sales tax revenue designated for flood-related housing to pay for the vouchers since the vouchers would go to flood victims.

Council member Tom Podzimek suggested the city might be better off to scatter the subsidies so new homes could fill in older neighborhoods with empty lots. He said he knew of four lots near Daniels Park in northeast Cedar Rapids.

Wieneke noted that the city soon would be taking control of a large number of lots once buyouts and demolitions begin. Shouldn't the city subsidies be used there? he asked.

Council member Monica Vernon pushed sufficiently hard for the High proposal that she seemed to turn the tide of the debate. She said she wanted to see some homes built.

There were several mentions of 20 replacement homes that have been built by Skogman Homes in the Oakhill Jackson Neighborhood, which also have used local tax incentives.

Each of those homes received a $35,000 incentive, but the subsidy was part of a program that existed before the flood. The incentive there was seen as necessary to build in a neglected neighborhood where no developer had been willing to build.