Cedar Rapids fills housing holes with free land, housing breaks

How appealing is a big smile with a bunch of missing teeth?

That, said City Council member Pat Shey, is what the flood-hit core neighborhoods here likely would resemble for years without some gap-filling help from City Hall.

That help has begun to arrive, 3 1/2 years after the city's historic 2008 flood, as construction has started on the first of dozens and perhaps 200 or more new homes that are slated to be built with public subsidies on vacant lots where flood-damaged homes once stood.

The city's infill home-building program - called ROOTS for Rebuilding Ownership Opportunities Together - has $11.1 million in federal disaster funds to help provide an attractive 25 percent discount on the sale price of a new home to homebuyers who meet affordable-housing income guidelines. The sale price also is lower than it would be because the city is providing each home a free lot.

In trade, the buyers agree to move into new homes in the old neighborhoods where the property values have dropped and where the ability for property values to stabilize and grow remains an unknown. The buyers also agree to stay in their newly purchased homes for five years to enjoy the full sale-price subsidy, which will average about $30,000 per home.

“If I was younger, I'd be all over something like this,” Shey said. “It's a heck of a deal.”

Valerie Vaage, a 27-year-old administrative assistant at a local medical clinic, and her partner, Chad Hale, 31, a laid-off wind-energy technician now attending school full time, are among buyers of the first new homes now going in the city's flood-impacted neighborhoods.

Vaage said she feels particularly fortunate to be building at 1030 10th St. NW because the site is about the farthest from the river as any of the lots on which the new homes will be built. All the lots are outside the 100-year flood plain and outside the construction zone set aside for the city's new flood-protection system, but Vaage's new house is on the edge of the 500-year flood plain, she said.

Her decision to invest in a new home on 10th Street NW came with some pause because Vaage didn't find the neighborhood three blocks from Ellis Boulevard NW all that appealing what with some of the homes torn down and a scattering of vacant lots. But the lot next to the one on which her new home is going up also is getting a new home as are two others in the block.

“That kind of brought me some peace of mind,” she said. At the same time, she said she also she supports the idea of rebuilding a neighborhood.

“I felt I could contribute to that just by building a home there, and I really liked that,” Vaage said.

Caleb Mason, housing redevelopment analyst for the city of Cedar Rapids, reports that there are a handful of new homes in the early stages of construction as part of the ROOTS initiative.

About 18 approved builders - including four non-profit groups - have been awarded 126 vacant or soon-to-be vacant lots, most in northwest Cedar Rapids, some in southwest Cedar Rapids and a few in southeast Cedar Rapids neighborhoods.

The funding should support the construction of 200 to 215 new homes, Mason said, though some of the builders, including Kyle Skogman and Jim Sattler, say the funding will support the building of more than 300 new homes.

Skogman and Sattler suggest that the housing market in the older, flood-impacted neighborhoods might not be able to attract 300 new buyers, but the City Council's Development Committee wants to focus on the core neighborhoods, Shey said.

The ROOTs program is the third round of federal disaster funding that has provided subsidies to income-qualified buyers who have purchased more than 400 residential units, nearly all in developments closer to the periphery of the city. In the program's first two rounds, the city's buyout program of flood-damaged homes had not progressed far enough to have lots available. Now the city has those lots to help replace affordable housing lost in the 2008 flood.

A few vocal City Hall critics have questioned the idea of giving away lots that the city has acquired through the federal buyout program, though the federal government supports such a program if it achieves what the city's Mason calls a “national objective.”

He said ROOTS does that in two ways - by providing affordable housing to those with low-to-moderate incomes; and by addressing “slum and blight.”

All the new owners must have household incomes at or below 100 percent of the area's median income and 51 percent must have household incomes at 80 percent of below the area's median income. At the same time, builders must submit itemized prices and limit their profit margins to 15 percent of cost.

Builders like Skogman, Sattler and Bob Vancura, president of Premier Developers in Marion, doubt much new building would take place in the flood-impacted neighborhoods that the city wants to revitalize without the incentives.

“If you don't have some incentive to get people back down there and to invest, you wouldn't see much activity there,” said Sattler. “It's just a fact of life.”