Cedar Rapids' 2009 LOST vote approved spending flexibility

In the run-up to the March 2009 vote that put the 1-percent local-option sales tax in place here for 63 months, the first question at a City Hall forum in the flood-hit Time Check Neighborhood came from a flood victim sure the City Council would divert most of the tax revenue to anything but flood recovery.

Nearly five years later, Gary Ficken says it's not surprising now to hear questions about how the council actually has spent the money.

"Obviously, on anything like that, is everybody going to agree on how every dollar was spent? No. Not everybody agrees on anything," said Ficken, who is the owner of Bimm Ridder Sportswear, a flood survivor and someone who has played three crucial roles in the life of the city's current sales tax.

Ficken helped craft the 2009 ballot language along with city officials and others, which spelled out how the tax revenue could be used. He led the Vote Yes! For Our Neighbors campaign to get the tax measure approved.

And he chaired the City Council-appointed LOST Oversight Committee after the tax was put in place.

Many Cedar Rapids residents long ago forgot the exact wording of the ballot question put to voters on March 3, 2009, which they approved by a 59-41 percent margin.

At the same time, only 25 percent of eligible voters voted, so some residents likely never knew what the language said in the first place.

The language stated that revenue from the tax would be used this way: "10 percent for property tax relief"; ... "90 percent for the acquisition and rehabilitation of flood-damaged housing caused by the flooding of 2008, and matching funds for federal flood dollars to assist with flood recovery or flood protection."

The city estimates that the 1-percent tax will have brought in about $92 million over the course of the 63 months when the tax expires on June 30, 2014.

And how the City Council has spent that money matters because the council is asking voters on Nov. 5 to extend the tax for 10 years to fix streets.

According to data that has been updated and made public by the city's Finance Department on an ongoing basis since the sales tax was first put in place, the city had spent $65.8 million of LOST funds as of the end of September on the flood-related component of the tax and $7.6 million on the tax-relief component - though much of the latter has been spent on flood-related matters, too.

The latest city estimate projects that $13.1 million, if not more, may be available as matching funds for future flood protection needs when the tax expires in eight months.

The city's financial accounting breaks the flood-related component of the ballot language - the 90 percent portion - into the three specified areas: housing acquisition-related programs; housing rehabilitation-related ones; and spending to match federal disaster dollars.

A majority, $40.1 million, of the $65.8 million spent to date in flood-related programs, falls in the category of "matching" dollars.

Of that, the most, $21.1 million, has gone directly to flood victims to replace personal possessions lost in the flood. Each homeowner qualified for up to $10,000 and each renter for up to $4,000.

To date, another $19 million in matching funds has gone to fill gaps on an assortment of projects to rebuild or replace city government buildings damaged in the flood, all of which received federal disaster dollars to pay part of the project cost.

The most vocal City Hall critics, including mayoral candidate Greg Hughes and District 1 council candidate Ajai Dittmar, have said spending LOST dollars on city buildings should not have happened.

At a recent mayoral candidate forum, Hughes said LOST money was intended for "flood victims." He declared, "I think some people ought to be going to jail."

Mayor Ron Corbett shot back: "Learn the facts."

"You're misleading the voters," Corbett said.

Ficken and City Council members Chuck Wieneke and Tom Podzimek, both of whom were on the council at the time of the flood and in the first half of the city's recovery from it, all remembered the few months leading up to the March 2009 tax vote and how little was still known about the amount of federal and state help that might reach the city for housing and commercial buyouts, housing rehabilitation and many other flood-recovery needs.

"At that point, we were still doing triage," said Podzimek, who along with Wieneke chose not to seek re-election in 2011. "The city hadn't gotten any money for buyouts. Nothing."

"We were still unsure of a lot of stuff into 2010," Wieneke added.

It wasn't until months after voters put the tax in place in March 2009 that the city began to realize the enormity of the federal disaster dollars that would be coming to Iowa and to Cedar Rapids to shoulder the flood-recovery housing burden that the city sales tax was designed, in part, to carry.

For example, to date the city has bought out 1,330 properties at a cost of $100.1 million, all paid for with federal or state funds.

In addition, there has been $31.7 million in non-local dollars spent on demolitions, $23 million on housing rehabilitation, $13.7 million on mortgage and down payment help, $9.5 million in help to landlords and $103 million for new residential construction, according to city figures.

By the time Corbett entered office in January 2010, little of the LOST money from the first eight months of the tax's collection had been spent because it was becoming clear that federal dollars would be caring a big part of the housing load.

"We had an opening there," said Wieneke, who represented the hard-hit northwest Cedar Rapids neighborhoods. "We saw it all (the LOST funds) wasn't going to be for housing."

"The federal government ended up putting in much more in the buyout piece that we expected," Ficken added.

In spending LOST dollars, it's important to note that there was both the exact ballot language and "the talking points" around the ballot language that were used to convince voters to put the sales tax in place to help in the wake of the flood, Ficken recalled.

Beyond the exact ballot language, he said, the City Council tried to make it clear that housing would be the first priority.

"But I think, in general, it was to bring the city back," he said. "And as a whole, that included homeowners, landlords, and I don't think it was too far a stretch to start including city infrastructure and city services."

Ficken disagreed with those who suggest that the 2009 ballot language came with too much flexibility. It needed some wiggle room, he said.

"Cedar Rapids was going in a direction it had no experience with," he said of the time of the 2009 tax vote.

"Throughout the flood recovery, new programs were put in place, arguments were made and some rules became more flexible. … If you go into the unknown with a strict sense of rules, you might pay the price for it in the end.

"My personal view, I don't think the language was all that flexible. But it covered enough bases that you could go after a number of different funding gaps, especially when those gaps weren't defined at the time."

Ficken said there were some heated discussion over the ballot language, and he said what emerged was a good compromise.

"Everybody who was involved was well-meaning. This conspiracy theory, there's absolutely no truth to it," he said.

Ficken said the component of the ballot language to allow the use of LOST funds to fill in gaps on projects to match federal dollars was in the language from start to finish, and Podzimek said part of the reason was so some of the LOST funds could be used for flood-damaged city infrastructure, too.

"It was to provide help to individuals and help to the city as far as how are you going to fund this (recovery)," Podzimek said.

Ficken was the chairman of the city's LOST Oversight Committee for most of the city's flood recovery, and Wieneke attended all the meetings as the council's liaison to the committee.

Ficken said the committee tried to make sure the city was spending LOST funds first on housing needs before it spent the funds on other items. But he said the council made it clear that the committee's role was limited. The elected officials would make the decisions on spending, not the committee.

Some on the committee personally did not think some spending was a good use of LOST money. They voted at times at the committee-level based on that and not whether the spending fit the ballot language, Ficken said.

Upon taking office in 2010, Corbett was displeased that so little of the LOST funds had been dispensed and, as a result, he devised a program - direct payments to flood victims to replace personal possessions lost in the flood - that had not been foresee at the time of the 2009 LOST referendum.

Corbett, though, argued that the payments would "match" dollars given to flood victims by the Federal Emergency Management Agency early on after the flood and so fit the ballot language.

In the end, the Iowa State Auditor was asked to weigh in, and concluded that such payments technically satisfied the definition of the word "match," even if the match wasn't needed to secure federal dollars that had been paid out months earlier to flood victims.

Council member Wieneke said the use of LOST money to replace personal possessions wasn't envisioned at the start, but he said it made sense because it was help that got to those hit by the flood. Podzimek still questioned this part of the spending, saying there was little accountability to show what people had lost.

By December 2010, the City Council made its first decision to use some LOST funds - $4 million - to support a city flood-recovery building project, the $45-million downtown library project. It was the recipient of a large amount of federal disaster dollars and private donations as well.

However, it wasn't until April 2012 - almost four years after the flood - when the council moved to use more remaining LOST funds to fill gaps in other city building projects. The new public works facility will get the most, $10.9 million, with the new Animal Care and Control facility receiving $3.55 million.

No LOST money went to the city's convention center, arena and hotel project.

"We had all the people taken care of, and the library was for all the people," Wieneke said. "Animal control. Public Works. Those are public things that the city runs that help everyone in the city."

Ficken said the top priority of the LOST revenue - people - has never changed. Much effort, he said, was made by city officials, City Council members, neighborhood representatives and flood victims to identify gaps in housing that had not been met with the large amount of federal disaster support.

"I mean, when you reflect on this, was everything to help owners and landlords and the housing sector done that could have been done?" Ficken asked. "I just always hoped the answer to that was, ‘Yes,' before money went into brick and mortar. If the answer to that is ‘Yes,' then I'm going to trust my elected officials to spend the money as they feel important to the city."

It is only natural, he said, that the emotion that came with providing funding for people who had lost homes and belongings to change when the discussion turned to city buildings.

"And yet Cedar Rapids isn't just people," Ficken said. "Cedar Rapids is people and homes and schools and businesses and government and infrastructure. And all of those things were damaged."

Ficken said his is confident that people can look at how the LOST money was spent and in what order it was spent, and they will see that homeowners came first.

"I don't agree that anybody went into this trying to hoodwink anybody," he said. "… I think everybody was trying to do the best they could to have Cedar Rapids come back quick and better than it was."

Ficken easily can take himself back to the weeks leading up the March 2009 LOST vote, when he was heading up the Vote Yes! For Our Neighbors campaign and the city still had no idea to what extent the federal government would help in the city's flood recovery.

In one way, he said his focus wasn't to secure LOST dollars to match any federal disaster dollars, but it was the other way around.

"It was hard to lobby politicians who were not from here unless we were willing to put chips on the table ourselves," Ficken said. "And that's what I felt the sales tax was: We will put a tax on ourselves so we have some skin in the game, and we would fight for everybody else to match that."