Panel adds options to C.R. flood aid plan

DES MOINES - Ideas to include “non-public” investment and local-option sales tax revenue in a state financial assistance plan for Cedar Rapids flood protection are gaining traction with a legislative task force.

The task force considering how the state may help Cedar Rapids finance a $375 million system to protect both the east and west sides of the river has begun culling the best ideas from five proposals.

Four proposals presented at a task force meeting Thursday incorporate parts of the city's original Growth Reinvestment Initiative that would allow Cedar Rapids to capture $200 million in future sales tax growth to cover the city's cost of building flood protection along the Cedar River through the downtown area.

Most of the proposals would require Cedar Rapids, or any community seeking similar assistance, to spend local-option sales tax funds as criteria for obtaining state money. Sen. Merlin Bartz, R-Grafton, took it further, calling for private sector investment as another criteria for state funds.

His plan wouldn't necessarily require direct investment in the flood protection, but a commitment from private sector companies for business expansion or job creation.

Rep. Tyler Olson, D-Cedar Rapids, compared it to the Iowa Values Fund, which requires cities or counties to sign a contract with the state regarding the retention and creation of jobs.

That might open the door for Cedar Rapids to incorporate the redevelopment of properties such as Swiss Valley and Norwood Souvenir that closed a following the 2008 flood, said Sen. Rob Hogg, D-Cedar Rapids.

Rep. Kirsten Running-Marquardt, D-Cedar Rapids, advised the panel to proceed cautiously given that simply reopening after the 2008 flood was a major commitment by many small businesses.

“It's good to have private businesses say they're in it for the long haul, but some businesses are still trying to just hang on,” she said. “We have to be sensitive to how much we're asking of them.”

One idea that didn't gain support was Sen. Tom Courtney's proposal to allow communities to increase their existing local-option sales tax to 8 percent.

“It's just an idea,” the Burlington Democrat said. “It's my feeling it might fly better than some other proposals” requiring the use of state funds on a project in a specific community.

However, other lawmakers suggested that might be punitive and make economic recovery from a disaster even harder.

“It distorts the economy to say this little island pays higher taxes because it had a disaster,” Hogg said.

Tax policies affect business decisions, said Sen. Bill Dix, R-Shell Rock, “and asking Cedar Rapids to raise its taxes could make matters worse.”

There was consensus a community should have to raise funds, probably through a local-option sales tax and use at least half of the revenue for the disaster-related projects.

A plan from Rep. Nick Wagner, R-Marion, was a variation on that, allowing communities to spend revenue from either an existing local-option tax or a new local revenue source. In return, the community could retain either existing sales tax revenue or, as Cedar Rapids has proposed, a portion of the growth in sales tax revenue generated by the community.

Committee members, who have been meeting privately with Linn County and Cedar Rapids officials, plan to meet again April 12.