IOWA DERECHO 2020

Cedar Rapids estimates derecho recovery will cost at least $60 million

Cost does not include replenishing lost trees

A tree is seen still standing Sept. 24 despite severe damage after the Aug. 10 derecho on William Court NW in Cedar Rapi
A tree is seen still standing Sept. 24 despite severe damage after the Aug. 10 derecho on William Court NW in Cedar Rapids. The city estimates it will cost at least $60 million to repair damage from the storm — not including the cost to replace all the lost trees. (Andy Abeyta/The Gazette)

CEDAR RAPIDS — City officials expect the cost to fix damage from the Aug. 10 derecho’s hurricane-force winds will range from $60 million to $80 million — not including the cost to replenish the city’s lost tree canopy.

While much of the city’s costs will be covered through the federal and state governments, City Council members contemplated how to balance maintaining the city’s long-term financial health while financing other high-cost initiatives in addition to long-term storm recovery and minimizing taxpayer burden.

City Finance Director Casey Drew told the council’s Finance and Administrative Services Committee on Thursday that the city will be on the hook for about 15 percent of the costs eligible for reimbursement by the Federal Emergency Management Agency, amounting to $9 million minimum. Right of way debris pickup likely will cost $30 million, of which the city would pay $4.5 million, he said.

This disaster doesn’t reach the threshold of the 2008 flood’s damage, when Drew said the federal government covered 90 percent of the costs and the state covered the other 10 percent.

The city incurred costs that were not eligible for FEMA reimbursement, Drew said, ultimately contributing about $200 million from Cedar Rapids’ coffers of the flood’s overall $1.2 billion cost.

Private insurance will cover things like facility damage with a $100,000 deductible, Drew said. This storm is estimated to have caused damage to facilities ranging from $12 million to $16 million — affecting the Cedar Rapids Kernels Stadium and parking structures, for example. That deductible can be submitted for FEMA reimbursement, he said.

The city has a 32 percent to 33 percent general fund reserve balance, Drew said, but the city tries not to dip below 25 percent of its reserves, so Cedar Rapids’ contributions to cover storm damage will need to maintain that balance.

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Drew said the city could eventually consider issuing debt to replenish reserves, but the final price tag for damage still needed to be firmed up.

“We will do all those analysis to figure out what makes the most financial sense” before determining how to fund storm recovery, Drew said.

Council member Scott Olson questioned whether derecho recovery could be financed using 20-year general obligation bonds instead of tapping into the reserves. He didn’t want to risk a downturn in the city’s strong bond rating, an indicator of financial health, by depleting the reserve fund too much.

Council member Ann Poe raised concerns about the public’s perception of their tax burden and noted the city raised the tax levy rate to fund flood control projects.

And in 2023, she noted the city would need to ask voters to extend the local-option sales tax — which went into effect July 1, 2014, and expires June 30, 2024 — to add another 10 years to the Paving for Progress program to fund street repairs.

“Nobody would have expected a hurricane, and I just don’t know what the public sentiment would be for us increasing our tax levy rate again to pay for this — maybe they would,” Poe said.

Council member Scott Overland, who chairs the Finance and Administrative Services Committee, said he “was not advocating for a levy increase,” but wanted to consider all options.

Poe said the 15 percent of costs that the city will cover “just seems like an awful lot to me compared to what we did in 2008, so I get disasters are different, but dang, that seems like an awful lot when the state’s only doing 10.”

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But Olson said this information will help people put into context the scope of devastation caused by the derecho.

“ … We still are getting 85 percent from FEMA and the state — (it’s) still a big number for us to recoup that,” Olson said.

Comments: (319) 398-8494; marissa.payne@thegazette.com

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