Derecho takes more than $133 million toll on some Cedar Rapids businesses

City Council to use survey data to help address business needs

Gov. Kim Reynolds (center) reacts Aug. 25 to seeing the damage and reconstruction efforts at Cafe Saint Pio during a tou
Gov. Kim Reynolds (center) reacts Aug. 25 to seeing the damage and reconstruction efforts at Cafe Saint Pio during a tour of small businesses in the Czech Village affected by the Aug. 10 derecho. (Andy Abeyta/The Gazette)

CEDAR RAPIDS — A sampling of 111 Cedar Rapids businesses have told the city they lost a combined $133.4 million because of the Aug. 10 derecho that pummeled Eastern Iowa with hurricane-force.

About half of the companies responding to a city survey reported they expected insurance to cover the costs of storm damage, but some City Council members said Tuesday the results will prompt a look at ways the city could step in to boost a local economy already hampered by the COVID-19 pandemic.

“Now we’ve got to figure out what role the city can play in helping our economy recover,” Mayor Brad Hart said.

Businesses representing a variety of industries including service, retail, industrial, nonprofits and wholesale responded to the survey, and the sample also encompasses small, medium and large companies.

Ninety percent of the losses come from three categories, according to the survey — structural and property damage ($69.3 million), lost revenue from missed sales ($41.4 million) and unpaid wages ($9.1 million).

Council member Marty Hoeger noted the differences in insurance coverage between the 2008 flood and the 2020 derecho — both natural disasters but ones that have different requirements for coverage.

“In 2008, a lot of businesses did not have insurance to cover them,” Hoeger said, asking whether the city had identified any particular gaps in insurance coverage for the losses from the derecho.

City Economic Development Specialist David Connolly said the city received little feedback about that, but the claims process was ongoing as the city was asking for data immediately following the storm.

The storm — which downed hundreds of trees and caused extended power outages, disrupted internet and cellphone service and initially made some roads impassable — resulted in lost days in operation for local businesses. Of the respondents, 32.1 percent reported losing two weeks or more and 22.6 percent lost more than one week. The others lost a range of one to five or six days, except for about 1 percent that remained open.

The survey found the storm’s impact on employment levels to be minimal, Connolly said.

The questionnaire asked whether companies planned any layoffs or job reductions in 2020. Only about 16 percent of the companies that responded — or a total of 17 or 18 companies — indicated changes to staffing were likely. Companies reported fewer than 75 positions overall would be negatively impacted because of the derecho.

The minimum loss figure, calculated from responses to the storm loss questionnaire developed by the city Economic Development Services Division, does not include losses in the public sector or among homeowners. It is intended to provide a scale of damage to implement programs and establish priorities to address business needs moving forward.

Cedar Rapids officials in October estimated city losses from the derecho to range between $60 and $80 million, not including the cost to replenish the lost tree canopy on city lands. The city expects to be on the hook for about 15 percent of the reimbursement-eligible costs with the Federal Emergency Management Agency, with the state covering the rest.

The National Oceanic and Atmospheric Administration estimates the derecho took an economic toll ranging from $7.5 to $10 billion across the Midwest, making it the most costly thunderstorm in U.S. history.

The report, acknowledging uncertainty about the impact of potential storms in the future, said “one of the most effective, long-term mitigation actions any local government can take is to continue to strengthen and diversify the local tax base.”

“Taking action to support the feasible provision of infrastructure and utility services within planned growth areas, combined with economic development policy supporting increase in the number of businesses and jobs present in the community, helps to sustain the financial resources necessary to effectively manage the cost of any future natural disasters,” the report stated. “High quality growth also adds to public facility and public service capacity to help with future disaster recovery as well.”

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