Cedar Rapids council falls short in 110 percent buyout bid -- for now

Three newly elected Cedar Rapids city council members, including Mayor Ron Corbett, along with member Monica Vernon, failed last night in a move that had the feel of revolt to get some 1,300 flooded property owners more buyout money in the city's property buyouts.

Corbett, Vernon, Don Karr and Chuck Swore wanted to raise the amount property owners get in the buyouts from 100 percent of a property's pre-flood value to 110 percent, but, at last night's meeting, the other five members rejected the idea for now.

In short, the council majority rejected the idea for being long on sentiment and short on facts.

Karr made the motion for the additional money, noting that Vinton, Elkader, Coralville, Iowa City and Mason City all paid their owners of flood-damaged property 110 percent or more of value.

He also suggested that the city had access to enough federal dollars to easily pay more than 100 percent of pre-flood value for each property buyout.

This is ground that had been covered many months ago by the prior City Council, and City Manager Jim Prosser explained last night that both the Federal Emergency Management Agency and the U.S. Department of Housing and Urban Development have told the city that it can make buyouts based on only 100 percent of the pre-flood value of property, not more.

Prosser and his city staff have said for months that the reason for that is the city had completed a thorough assessment of its residential property just before the flood and some of the other cities with flooded homes had not. Thus, Cedar Rapids' pre-flood assessments were in line with market value, while they were not in other cities, he and city staff have said.

Karr, in particular, did not seem to believe that last night.

The federal government has sent to Iowa sufficient federal dollars for some 1,300 property buyouts in Cedar Rapids, but Prosser emphasized that the money is not Cedar Rapids'. Cedar Rapids only can access the pot of money as it follows the rules set out by the federal government.

Karr did some of his own mathematics and suggested that the city had $150,000 or so in federal dollars per buyout available to it. Prosser said the program doesn't work that way.

A key unknown, Prosser and his staff said last night, is the possibility that, if the City Council decided to pay 110 percent of pre-flood value, the federal government would penalize the city's buyout owners for the extra 10 percent by simply withholding that amount of federal and state dollars in the buyouts.

In other words, the city could use a piece of its local-option sales tax revenue to pay the extra 10 percent - Prosser estimated that would equal up to $20 million, probably less - but the federal government would subtract that from the total buyout money it provided the city.

Council member Kris Gulick called on Corbett and Karr to wait until the city could get a new, firm answer on buyouts, and he said he didn't want to essentially hand over $20 million in local-option sales tax revenue to the federal government. But Corbett pushed ahead on the vote, only to lose it, 5-4.

Afterward, Karr said he wanted to hear more about why other cities have paid more than 100 percent of pre-flood value and Cedar Rapids cannot.

Swore asked Prosser to see if the city could figure out some creative way to pay the 110 percent of value without getting penalized.

Prosser noted that the city's buyout plan now being used to purchase a first group of properties allows for extra money over and above the 100 percent of value for those who buy a new home.

In rejecting the 110-percent proposal, the council also rejected for now the administrative plan needed to begin the largest share of buyouts. The council will revisit it once it gets more answers to the 110-percent question.

Council member Chuck Wieneke said delaying the plan with the 100-percent buyout figure in it would only slow buyouts for people.

Corbett said the 110-percent amount will encourage more people to voluntarily agree to a buyout.