Cedar Rapids leveraging influx of federal aid to invest in housing, social services

CEDAR RAPIDS — An influx of federal funding to aid recovery both from the COVID-19 pandemic and 2020 derecho largely will support housing development or rehabilitation projects in Linn County.

Cedar Rapids is preparing to make its second-round of allocations of federal American Rescue Plan Act money, in part in coordination with Linn County through a competitive proposal process.

With over $46 million in federal disaster recovery funds on the way to assist with post-derecho needs, city staff members are working to strategically leverage the massive influx of resources — both of these funding sources combined — to address community needs.

The City Council this week approved putting $3 million into a joint pool with Linn County to help fund affordable housing and social service initiatives.

Of the $28 million in ARPA funds Cedar Rapids received, $15.8 million will support affordable housing and social services. The city already has allocated $1 million to the PATCH program to repair derecho-damaged homes and $3.1 million through an initial Linn County joint process. Those proposed initiatives that did not receive funding in that round will be considered again now.

For the rest of the $15.8 million, Community Development Director Jennifer Pratt told the council this week that staff are proposing $2.5 million go toward a rehabilitation of the former Colonial Center into housing, $4 million toward the west-side Ladd Library and Opportunity Center and $2.25 million set aside to leverage and match with Community Development Block Grant for disaster recovery “as the needs arises” for funding.

The federal block grants disaster funds are allocated to the Iowa Economic Development Authority through the U.S. Department of Housing and Urban Development. Linn County will receive 80 percent of the overall $57.6 million, while the other 20 percent — about $11 million — will be used in Marshall, Tama and Benton counties. The IEDA will have six years to fully spend the funds, Sara Buck, city housing services manager, recently told the council’s Development Committee.

In the draft action plan from the state, Buck said the estimated proposed funding breakdown for Linn County is as follows:

Housing

For new housing activity, Buck said there will be a competitive application process where any Cedar Rapids projects will go through the city, and projects in the rest of Linn County will go through the East Central Iowa Council of Governments. Money is funneled through these entities because they previously have used Community Development Block Grant funding.

The maximum sale price for single-family units would be $175,000. There is a $100,000 per unit amount awarded to the developer, $25,000 for disaster mitigation and the buyer would get up to 100 percent of the closing costs paid for, as well as 5 percent in down-payment assistance. There is $70,000 in funding for infrastructure such as water and sewer available for each housing unit as well.

For example, on a home that costs $315,000 to build, Buck said, subtract a total $175,000 for the developer, mitigation and infrastructure costs — that leaves about $120,000. The home can be sold at that price or up to $175,000, plus the buyer gets the closing and down payment assistance.

“It really makes it affordable, especially with the interest rates that have gone up,” Buck said.

For the new multifamily units, developers would get up to $75,000 per unit, $15,000 for mitigation and $70,000 for infrastructure. Of these new units, 51 percent must be reserved for households under 80 percent of the area median income.

Owner-occupied rehabilitation funding was increased to $50,000 per unit instead of $24,999 per unit for low- to moderate-income households because of rising construction costs, so more dollars are needed to make derecho-damaged homes livable again, Buck said.

At least 70 percent of that funding must go toward households below 80 percent of the area median income, and the rest can go toward households with urgent needs, which Buck said could allow the city to help those who are slightly above the income threshold. Recipients must stay in the unit for at least two years.

Infrastructure

Funding can support either tree stumps or tree planting on public property or right of way, Buck said, at an estimated $600 per tree or stump.

IEDA is seeking to cover costs for two years of watering trees to help them thrive, Buck said. This mitigation effort helps protect natural areas and prevent future storm flooding, she added.

As for the generators, Buck said, shelters, schools and library buildings are among the places where generators could be installed. Solar panels with a battery backup also could be funded instead of a generator.

She said the city would work with nonprofits and social service agencies that would apply for this funding. The derecho showed the necessity of keeping these critical facilities up and running to keep people fed and medical devices charged, Buck said.

Administrative costs

Administrative costs are estimated at over $2.3 million.

In July, Cedar Rapids plans to have a developer information session. The city anticipates HUD will approve the action plan in August or September, then IEDA would take applications around September or October.

Comments: (319) 398-8494; marissa.payne@thegazette.com