City buys first house that doesn't need renovating or demolishing

CEDAR RAPIDS - To date, the city has purchased 1,105 flood-damaged residential properties in a buyout program fueled primarily by federal disaster dollars.

Most of the houses have been demolished and the best-of-the-rest are part of a city-backed renovation initiative.

For the first time on Tuesday, though, the City Council had to figure out what to do with a house bought out in the city buyout program that doesn't need renovated or demolished and has been used since the flood.

At the request of its owner, the house at 816 E Ave. NW was purchased in the city buyout program in March for $154,375 at the buyout rate of 107 percent of the property's pre-flood value. It's owner, Frank King, obtained down payment assistance via another government disaster program and now lives in a replacement house. Volunteers helped renovate the E Avenue NW house, King has said.

Rita Rasmussen, the city's senior real estate officer, last night asked the City Council to sell the now-city-owned E Avenue NW property via the city's "standard" sealed-bid process it uses to dispose of property, which the council agreed to do. The council did so noting it can reject the bids if they are too low or otherwise unacceptable.

An appraiser hired by the city has put the current market value of the property at $106,000.

King told the council Tuesday evening that the house was worth much more than the $106,000 of the recent appraisal and he suggested the council figure out a way to sell it for more so the sale wouldn't drive down the values of other homes on the block. Rasmussen said the other homes are of somewhat lower value now.

Council member Chuck Wieneke said he wanted to protect against a speculator getting the property for bottom dollar, and council member Chuck Swore said he preferred a buyer who would live in the house rather than rent it out.

The city used a similar sealed-bid process, for instance, when it sold what had been a former DOT license station on 16th Avenue SW in July. In that instance, an appraisal for the city set the value of the property at $510,000, but a sealed bid brought a price of $750,000 from the Kum & Go LLC.

Joe O'Hern, the city's flood recovery and reinvestment director, last night said the city at this point did not anticipate another residential case like this one, though Rasmussen said she expected some commercial properties involved in the city's buyout program to face the need for case-by-case consideration.

Gulick said the sealed-bid process will determine the market value of the house regardless of whether the latest appraisal of the property is too low.