City Council set to use $6 million in local flood funds to help contract sellers

CEDAR RAPIDS -- The City Council on Tuesday evening approved using an estimated $6.9 million in local-option sales tax revenue to fill flood-recovery “gaps.”

Of that total, the city estimates it will need about $6 million to buy out owners of about 100 flood-damaged homes who had been selling the properties on contract at the time of the June 2008 flood. Rules attached to federal buyout funds do not permit contract sellers to receive pre-flood value for their properties, so the council will use the local sales-tax revenue to pay that amount.

The council also is expected to use an estimated $550,000 in local-option sales tax revenue to pay about 110 owners on average about $5,000 for flood-insurance premiums they paid for five years prior to the flood.

Another $130,000 is being set aside to provide up to $500 for owners who want a new appraisal of their property prior to a buyout, while $200,000 will be used to buy out and pay demolition costs on two properties that were demolished after the flood but before the buyout program was put in place.

Earlier, the council set aside local-option sales tax revenue for three other needs: $3 million for home rehabilitation being done by local neighborhood programs; $1.25 million for rehabilitation reimbursement; and $20,625 for loan mediation services.

The city began collecting a 1-percent local-option sales tax since April 1, and it will continue to do so through June 30, 2014.

The tax is expected to raise about $90 million, 90 percent of which must go for flood-recovery needs.