Cedar Rapids offering deals on new homes

City Hall is set to promote a new-home deal likely worth $35,000 or more per home in an effort to lure back families who left the city after the June 2008 flood and to attract those who have never lived here but are willing to give the city a try, Mayor Ron Corbett said Thursday.

The inducement is needed, the mayor said, to help the city repopulate some of its core neighborhoods, which he said are still working to get back on their feet after the flood.

At the same time, the city finds itself in an odd spot. It needs to promote the housing incentives to those not now living in Cedar Rapids because the city has access to more federal disaster dollars for new housing than there is demand from local residents to use it. The city needs to create demand, Corbett said.

The home deal, which has income requirements and is also available to current Cedar Rapids residents, features a 25-percent down payment and a free lot for homes that Corbett said will mostly sell in the price range of $135,000 to $150,000. With the lot and down payment assistance, it's not hard to imagine a buyer having $35,000 if not more in equity in the new home the day they move in, the mayor said.

The lots in the incentive package are ones the city is taking ownership of as it buys out flood-damaged homes and demolishes them. Many are smaller lots in the Time Check Neighborhood in northwest Cedar Rapids, but there will be lots in other parts of the city, too. All the lots sit outside the 100-year flood plain and outside an area beyond the 100-year flood plain set aside for the city's new flood-protection system.

“There are pockets in these neighborhoods where you're seeing signs of life again,” Corbett said. “But we need widespread life back in the neighborhoods. We need families back in the neighborhoods with kids.”

Corbett pointed to the Time Check Neighborhood and noted that Harrison Elementary School located nearby currently has a post-flood student population of about 255 compared to 400 before the flood. Getting more families back in the neighborhood can help keep the school open, he said.

The down payment assistance comes as part of a program called the Single-Family New Construction Program. The program is funded by federal disaster dollars sent to the city - the city of Iowa City, for one, also has received this funding - through the Iowa Department of Economic Development.

This is actually a third round of such funding. Two previous rounds, designed to replace housing stock lost in the flood, have been used for the construction of new residential units primarily on the perimeter of the city where developers have had lots available on which to build. A first round of funding provided incentives for 184 residential units and the second round for 254 more. Only 144 of the second-round homes, though, have buyers.

The third round of funding of $11.7 million is expected to support the construction of 235 more residential units, primarily homes and duplexes, adding $44 million in total value to the city. However, Corbett said the City Council has emphasized it wants these units built in the city's core neighborhoods. It is a directive, he added, that the city can try to deliver on now that the city's buyout of some 1,200 flood-damaged properties is well under way.

The mayor said developers and builders have expressed concern about bringing too many similarly priced homes on the market at the same time, particularly at a time of recession and tighter credit and with a housing-incentive program that comes with income guidelines for those who buy the new homes.

Corbett said an aggressive promotional campaign can help solve the problem. He's planning media ads, and says the federal funds cover such promotional costs.

“We want people to know they can live the American dream, and they can do it right here in Cedar Rapids,” the mayor said. “It's a great incentive program. We want people to hang their sign over the door that says, ‘Home Sweet Home.'”

Jennifer Pratt, a planner in the city's Community Development Department, noted Thursday that state of Iowa's rules allow construction in the third round of funding to start as late as Dec. 31, 2012.

Even so, a second City Hall program is giving away certain flood-damaged homes to developers and builders if they renovate them and sell them to owners who live in them. This adds more homes to the market.

However, Pratt reported this week that only 25 to 50 percent of the 143 homes identified for possible renovation are apt to be fixed up.

Then, too, the successful, non-profit Block by Block program continues to renovate homes in the flood-hit neighborhoods. To date, it has sold eight renovated homes and currently has six on the market with another five set to come on the market by spring, Jim Ernst, president/CEO of the Four Oaks family services agency that is a partner in Block by Block, said Thursday.

Ernst said he shared the concern of developers about the market's ability to fill 300 new and renovated homes in the city's core neighborhoods in too short a time period, and he said spacing some of that work over a couple years would make more sense. At the same time, he said it can't hurt for City Hall to advertise the availability of the homes.

In the wider view, Ernst, who headed up the city's Replacement Housing Task Force soon after the 2008 flood, said he could foresee the time when areas of the city's flood-impacted neighborhoods outside the 100-year flood plain will be populated like they were before the flood with a mix of new homes, renovated homes and rent-to-own homes.

“In two to three years, we'll be in pretty good shape,” Ernst predicted.

Those interested in the city's housing program can call 286-5872.