Cedar Rapids to use some American Rescue Plan Act funds to aid nonprofits

CEDAR RAPIDS — Local nonprofits soon will have an opportunity to tap into a city funding stream that dried up for a couple of budget years in the COVID-19 pandemic as Cedar Rapids allocates its share of federal stimulus money.

The City Council on Tuesday approved a resolution authorizing city staff to create a grant program for eligible nonprofits that would have received a slice of the city’s hotel-motel tax revenue in fiscal 2021 — the budget year that ended June 30 — but did not as the pandemic upended travel worldwide, reducing the cash Cedar Rapids reaped from a tax on overnight guests.

This program will use a maximum of $750,000 of Cedar Rapids’ nearly $28.2 million allocation of federal American Rescue Plan Act relief funds. In the past, organizations that have received a share of the tax funds included the Cedar Rapids Museum of Art, Brucemore, Indian Creek Nature Center and the African American Museum of Iowa, to name a few of the cultural attractions, recreation programs and institutions that have benefited from the tourism tax.

“This is really great news for so many of our area nonprofits,” Mayor Brad Hart said. “We recognize how important those nonprofits are to our community … This funding I know will play a really important role for so many of those nonprofits and keep our community vibrant and moving forward.”

In fiscal 2021, the hotel-motel tax revenue stream generated $1 million less than budgeted, coming in at $2.8 million. City Finance Director Casey Drew said the criteria for the new grant program include, among others:

Because the city had fulfilled obligations for the first two budget years in its three-year grant cycle, eligible organizations are only those nonprofits that already had been selected to receive funds from fiscal 2019 through 2021.

The council in recent years has been able to allocate more than $1 million annually to local not-for-profits — approximately $2.67 million combined over the 2019 and 2020 budget years.

Drew said city staff will put together a document for the organizations to complete. City staff will review the requests and bring them to the council once a month for approval. He anticipated starting this process next week.

Some of the hotel-motel tax revenue funds other city commitments. In fiscal 2022 — the budget year that ends June 30, 2022 — $3 million will cover debt payments, the Cedar Rapids Tourism Office (the main driver of overnight guests), the ImOn Ice Arena and a contribution to the Prospect Meadows baseball complex near Marion under a 10-year agreement.

Council member Dale Todd asked about having some sort of clawback provision where the city could revoke hotel-motel funds for organizations found to have given inaccurate financial statements.

“We don’t want to micromanage, but we do have an obligation in the dispersion of the citizens’ taxpayers funds to at least have some accountability,” Todd said. “ … If somebody’s not being honest, the community has a good conscience and we find those things out over time. The question is what do we do next?”

In future allocations, council member Ashley Vanorny mentioned a number of considerations she would like to see that were in line with previous finance committee discussion points. That included weighing a nonprofit’s finances to ensure hotel-motel tax contributions were not a group’s largest income source, shortening the grant cycle from three years and reviewing some sort of statement of the organization’s goals.

As part of the financial review, Vanorny also said she would like to see tax returns, and that those are filed on time and are accurate.

“I do agree and want to maintain what we have now, hold our promises that we’ve had, but going forward I do want a different relationship,” Vanorny said.

Council member Ann Poe, who sits on the finance committee, expressed interest in seeing a public list of an applying organizations’ board of directors as part of the verification process. “I think it’s great that maybe we know who they are … but for the rest of the community who may want to reach a board member, they don’t know who to contact,” Poe said.

Rescue plan allocations

This allocation falls under one of the four main buckets the city has identified for spending American Rescue Plan funds: affordable housing and social services, workforce training and education, west side flood control and revenue losses.

Cedar Rapids officials on Monday announced they planned to dedicate $10.2 million of the federal aid toward two west-side flood protection projects. The council approved half of that allocation Tuesday, on the first project, planned to start in 2022, to reconstruct part of O Avenue NW to go over a levee.

The city received its first half of the overall federal allocation in spring 2021 and the other half will be allocated in spring 2022.

So far, Community Development Director Jennifer Pratt said the breakdown of city spending on the first round of federal funds is 40 percent affordable housing and social services, 11 percent nonprofit revenue loss, 14 percent city revenue loss and 35 percent west-side flood control.

Pratt said the council at its Oct. 26 meeting will consider allocations for a workforce training initiative as well as a joint request-for-proposals process with Linn County for affordable housing and social services projects.

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