Government

Flood loan relief: Cedar Rapids may have to repay feds $6 million instead of $41 million

Temporary flood protection is seen to shore up the construction area for a permanent flood wall at the Quaker facility along the Cedar River in northeast Cedar Rapids, Iowa, on Wednesday, Sept. 5, 2018.  (Jim Slosiarek/The Gazette)
Temporary flood protection is seen to shore up the construction area for a permanent flood wall at the Quaker facility along the Cedar River in northeast Cedar Rapids, Iowa, on Wednesday, Sept. 5, 2018. (Jim Slosiarek/The Gazette)

CEDAR RAPIDS — Cedar Rapids may need to repay as little as $5.85 million, or 5 percent, of the $117 million in federal money intended to guard the east bank of the Cedar River against inundations as bad as the 2008 flood, according to a letter from Iowa’s federal delegation to city officials.

The value of the federal contribution came into doubt this week after the revelation of an Aug. 8 letter from Cedar Rapids officials to the congressional delegation questioning the details of the disbursement.

Officials from the Army Corps of Engineers, which is ultimately releasing the money, had told city officials the $117 million was an upfront payment, but part of it was ultimately a loan, according to the Aug. 8 letter.

The framework was identified as a 35 percent-65 percent cost share, with Cedar Rapids ultimately having to repay $41 million over 30 years as a low-interest loan.

This arrangement was similar to a 2017 Army Corps plan, which outlined an $117.48 million east bank project to include $76.3 million in federal costs and $41.1 million in non-federal costs.

However, that contrasted with July announcements from Iowa elected officials of $117 million in federal aid — with no mention of repayment.

A Friday letter from U.S. Sens. Chuck Grassley and Joni Ernst and U.S. Rep. Rod Blum, all Iowa Republicans, to Cedar Rapids Mayor Brad Hart and City Manager Jeff Pomeranz attempted to clarify the arrangement.

“After a decade of bipartisan efforts, 100 percent of the City of Cedar Rapids project will now be provided up front so construction can start promptly and be completed as fast as possible,” the letter stated.

The letter continued to say “any applicable lands/easements and the like that the city has to provide will be credited against the $41 million non-federal cost share, as would any work-in-kind. It is our understanding that most of the non-federal cost share will be covered by credits for lands/easements or for design and construction work already underway.”

A minimum 5 percent cash contribution from the city is required by law, which is where the $5.85 million figure comes from.

It would be up to the city whether to repay that amount up front or finance it over a period of time after the project is completed.

The city would have to continue negotiations with the Army Corps over how much of the city’s expenses qualify as “in-kind” payment, but the letter noted “most ... will be covered by credits.”

“We appreciate the clarification,” Pomeranz said Friday. “This drastically reduces the cash match we have to come up with, but the exact amount still is being negotiated.”

Cedar Rapids is working on an estimated $550 million flood protection system, which would include a series of berms, walls, gates and pumps lining the east and west banks of the Cedar River. The city has committed to completing the west side of the system although the federal government will not help pay for that protection.

Inflation could bring the total to $750 million over the next 20 years, which is how long the system is expected to take to build.

ARTICLE CONTINUES BELOW ADVERTISEMENT

The 2008 flood caused an estimated $5.4 billion in damage and loss in the city, and the 2016 flood cost $10 million to install temporary measures to largely avert disaster.

l Comments: (319) 398-8310; brian.morelli@thegazette.com

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.

CONTINUE READING

Give us feedback

We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

Or if you have a story idea we should look into? Tell us here.