HUD to award Iowa $516.7 million in recovery aid

A $516.7 million award of federal funds represents a "huge step forward" in meeting Iowa's disaster recovery need," according to Gov. Chet Culver.

"This is great news," Culver said about the fourth round of Community Development Block Grant (CDBG) funding U.S. Department of Housing and Urban Development Secretary Shaun Donovan will announce in Cedar Rapids later today. Wednesday, June 10.

Federal funds have helped Iowa rebuild "piece by piece and block by block ... (but) we are far from full recovery. Sen. Tom Harkin said.

"There are still significant areas that still show signs of devastation and have a very damaged local economy," the Iowa Democrat said.

The latest infusion of disaster-relief funds will help put the state and hard-hit cities like Cedar Rapids "on the road to recovery and rebuilding," U.S. Rep. Dave Loebsack, D-Mount Vernon, said.

HUD has now awarded Iowa nearly $800 million to fund the recovery from 2008 floods and tornadoes. CDBG funds can be used by the state and community for a broad range of activities. Culver and local officials say home buyouts will be a priority.

He estimated the state's disaster-related housing needs amount to about $950 million.

"So this really puts us on track," Culver said. "It will give communities like Cedar Rapids and others more certainty about buyout plans, for example. We've been waiting to see how generous cities can be with their home buyouts and this should really allow them to do a lot more to help victims deal with housing problems.

For example, he said it's not unrealistic to think Cedar Rapids could get $175 million to buy about 1,300 homes.

State officials have been anxiously awaiting his announcement for months. The delay, according to a senior HUD official speaking on background, was because the agency was responding to concerns of state officials and Iowa's congressional delegation.

"It was important to Sen. (Tom) Harkin, Congressman Loebsack and Gov. Culver that we get it right," he said. Part of that was getting the allocation formula right.

Loebsack said he and others had worked hard to convince HUD to change a formula it used in November to divide disaster relief among some 30 states. In November, Iowa received $125 million or 5.8 percent of $2 billion handed out then. The $516.7 million in new disaster relief coming to Iowa is about 13 percent of the total.

 To Iowa's benefit, HUD took into account the unmet needs in terms of housing, infrastructure damage, and lost business, the HUD official said.

In addition, Donovan took into consideration that not every disaster is the same. Some disasters, he said, have a greater degree of severity and concentration. With that comes an increased risk to recovery. HUD used that risk as a factor to increase, in some cases, the amount of money available, the adviser said.

In Cedar Rapids case, Culver said, HUD's recognition of the concentration of damage means the community will get a larger share of the $516.7 million.

HUD also created the Disaster Recovery Enhancement Fund - a $311 million set-aside for states like Iowa and communities like Cedar Rapids that are planning to take steps to mitigate against future disaster, Donovan's adviser said.

Loebsack said Donovan told him that Iowa scored well in the "unmet needs" category. Culver said Iowa will file an application for those funds as soon as the rules are known.

The funds can be used for buyouts and raising structures above flood levels, he said. In some cases, the state and cities can get a dollar-for-dollar match to cover those costs.

The money chase doesn't end with this round of funding.

"We're going to keep working to make sure we get the assistance that we need and we're going to continue to need," Loebsack said.

State Sen. Rob Hogg, D-Cedar Rapids, chair,am of the Senate Rebuild Iowa Committee, said the funds, "if used wisely, will get us through the next steps in our recovery. But the amount it's going to take to recover and flood-proof our state will, ultimately, be higher than that, but this will keep us going."

It's too soon to know how quickly Iowa and communities will see the latest round of CDBG dollars, but the HUD spokesman said it could be relatively quickly. A Department of Economic Development spokeswoman said the first round of CDBGs was announced Aug. 4, 2008, the action plan was submitted Sept. 11 and HUD approved it Sept. 23.

"It might be faster this time because we've been waiting on this allocation for several months," Erin Seidler said, adding the agency has a meeting planned tomorrow to begin work on the action plan.