Persistent developers still trying to get city subsidies to help with 81-home development on Zika Avenue NW across from Ellis Golf Course

Three local developers/builders are still at it, and they will try to convince the City Council on Wednesday evening to take up to $2.35 million in local tax dollars to subsidize the construction of streets and other infrastructure and 81 homes along Zika Avenue NW across from the Ellis Golf Course.

The request comes in the context of the council's interest in replacing affordable housing lost in the June 2008 flood.

At its meeting on Aug. 5, though, some council members wondered if they were being asked to subsidize market-rate housing masquerading as “affordable” housing or wondered if they would be setting a terrible precedent by providing developer Darryl High with part of the overall subsidy to install streets and other infrastructure in the development he calls Sugar Creek.

In the end, though, most on the council sounded as if they would back some kind of subsidy, even though they seemed to conclude that there was no way to guarantee that anyone who lost a home to the June 2008 flood would be among those benefitting.

If the council agrees to subsidies, a financial consultant for the city has recommended that they be no higher than $26,500 for each of the 81 homes. High, president/CEO of High Development Corp. of Cedar Rapids, is seeking $31,000 per property.

Those who also have been involved in the matter are T.J. Berthel Enterprises Development, which owns the land, and Kyle Skogman, president of Skogman Homes, who plans to build some of the 81 homes.

In its Aug. 5 discussion, the council all but ignored a fact that council member Chuck Wieneke pointed out – the City Planning Commission, on a 4-3 vote, rejected the site plan for the 81-home development because of concerns about water runoff and the number of homes on the site.

The commission is a recommending body.

On its agenda Wednesday evening, the City Council will first address what the commission earlier addressed and consider whether it supports a preliminary site development plan for the Sugar Creek development and then whether it supports a major preliminary plat for the development.

If those two steps win council approval, the council then will discuss the subsidies for the project and where the city tax money for them might come from.

One idea for subsidies is to do what the city has hesitated to do in the past – create a special tax-increment financing district or TIF that applies to residential property. The city has several TIF districts in place, but usually residential property is not included in the special taxing arrangement.

One exception is in the HAND – Housing and Neighborhood Development – district in the Oakhill Jackson Neighborhood. There the city provides city tax subsidies for housing as part of a pre-flood initiative to attract developers to build homes in what had been a core city neighborhood long in decline where no one was willing to build.

Since the June 2008 flood, Skogman Homes has taken advantage of those city incentives to build 20 homes in the HAND district, 19 of which have gone to those affected by the flood, Kyle Skogman has reported.

Also on Wednesday evening's council agenda, Skogman is requesting a subsidy of $132,964 so he can build four more homes in the HAND district. A few other builders also have received subsidies for individual homes in the HAND district, and Land, Logs & Timber also Wednesday evening is seeking a subsidy of $27,000 for one home in the HAND district.

Other than the HAND program, most the post-flood subsidies for replacement housing have come from the federal and state government.

One program in particular provided down-payment assistance for 177 new homes in Cedar Rapids in an amount equal to 30 percent of the cost of a home up to $60,000 per home.

Back in 2007 over on Zika Avenue NW where the 81-home Sugar Creek development is now proposed, the City Council approved an earlier housing proposal to build 67 cottage-style homes with no need of subsidies. That project, called Somnolent Grove, never was built.