Landlords will get hefty share of local-option sales tax revenue

CEDAR RAPIDS - Landlords may get about one-third of the total pot of local-option sales tax revenue for flood recovery after an action taken last night by the City Council.

The council action will steer up to $25 million in the sales tax revenue to landlords to renovate their flood-damaged rental units.

Mayor Ron Corbett said on Tuesday that the funds are going for the housing rehabilitation of rental homes and apartments that had been a key to providing affordable housing in the city's flood-hit neighborhoods.

The local-option sales tax money will allow for 200 to 300 properties to come back to life, which, otherwise, would turn into blighted properties in the middle of neighborhoods on the mend, Corbett said.

About half of the flood-damaged properties in the Time Check Neighborhood were rental properties, and so it makes sense, the mayor said, to spend money on rental properties.

“In the end, it's a house and in the end a house can become someone's home. And when you have homes, you have neighborhoods,” Corbett said.

Landlords and their organization, Flood Impacted Landlords or FILL, long have complained about their inability to access flood-disaster funding.

At the same time, the City Council in recent weeks learned that many landlords have turned their backs on $12 million in federal disaster funds for Cedar Rapids because they feel the funds come with too many strings attached to their use. In particular, using the federal money dictates the maximum a landlord can charge in rent and requires the tenants to meet income guidelines.

Nonetheless, about 200 landlords have used about $3 million of the $12-million in federal funds. Another 200 or so have rejected the funds and another 200 are awaiting buyouts.

FILL has helped city staff write the standards for use of local-option sales tax revenue for landlords.

“This action will go a long way in rebuilding flood impacted communities by restoring those rental properties that have not yet been rebuilt as well as bringing much needed financial relief to those landlords that have rebuilt,” FILL said in a statement on Wednesday.

The one-percent, local-option sales tax began to be collected on April 1, 2009. It will continue in place until June 30, 2014. The tax is expected to bring in about $90 million in revenue, 90 percent of which must be used to buy and/or rehabilitate flood-damaged homes.