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 Todd DormanTodd Dorman is a columnist for The Gazette. His blog has been bringing smiles to readers' faces since November 2007. |
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One penny, three legs, no guarantees
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Photo: Dull Penny
It’s the question about the local-option sales tax extension I get most often — what happens if we approve LOST for flood protection in Cedar Rapids and efforts to secure needed state and federal funding fail?
A good question. We’ll start by checking on the three legs of the proverbial stool.
There’s the March 6 leg, when local voters will decide the fate of a 10-year, penny-per-dollar sales tax extension that would, over a decade, raise roughly $180 million to $200 million for flood protection on both sides of the Cedar River.
That money would provide a sizable local match for leg No. 2, potential state funding, which could come from a bill making its way through the Legislature. It cleared the Senate Appropriations committee unanimously this past week with broad bipartisan support. It still has a long way to go, but its prospects for passage, at this point, are bright.
The bill would provide $30 million annually, likely for 20 years, to communities across Iowa for flood mitigation projects. No community could receive more than $15 million yearly, and state assistance can’t exceed the local contribution. So basically, Cedar Rapids’ project could get significant state help, perhaps in the neighborhood of $150 million over 10 years. A state board would be created to consider applications and hand out dough.
But there’s a big catch. The bill requires that at least 20 percent of the total project, or $30 million, whichever is less, come from the federal government. It’s a curious provision, considering that the whole reason we’re talking about state help is because the feds aren’t coming through in the clutch. But lawmakers want state bucks to be last money in.
And I’m not going to sugarcoat it. The federal leg looks downright rickety. The federally blessed east-bank protection project has not yet received even enough money for engineering and design, let alone construction. President Obama’s 2013 budget released this past week has no money for the project. Funds may still be found, but likely only a fraction of what’s needed.
On the bright side, if the local tax passes, it won’t take effect until July 1, 2014. That gives local leaders more than two years to push for federal help. Economic and political conditions may change.
So, yes, tax approval carries risks, no doubt about it. The basic risk is $18 million to $20 million. That’s the amount of tax that could be collected in one year of an extension before voters can legally repeal it. If outside funding collapses, and voters want out, a repeal vote could be called by a petition drive, just like the one that put the extension on the ballot. The money collected before repeal wouldn’t be lost, and local leaders could spend it on another priority.
Still. that’s a lot of risk, clearly. But I think it pales in comparison to the dollars risked by homeowners and owners of businesses big and small who decided to reinvest in the city’s historic core neighborhoods, based, in part, on city promises that flood protection would be a community priority. Voting “yes” vastly improves the chances of keeping that promise.
Concerns about federal funding are prudent. But, in reality, a “no” vote could actually make Cedar Rapids more reliant on federal generosity. If the local tax and state legislation pass, the city could potentially craft a funding structure for flood protection on both banks that includes as little as $30 million in federal assistance. If it fails, more than $60 million will be needed just to finish east bank protection. And you can probably forget about the west bank.
So if you’re looking for ironclad guarantees of success, you’re not going to find them. But if you think both-banks flood protection should still be a community priority, it’s tough to see how it happens without a local tax extension.
It’s important that we lead the way in protecting our own city. The local match is crucial step to make sure this never happens again. Vote yes for CREST Mar. 6!
Too bad the local match has already been made, but deception is keep to its passage
I disagree with the idea that people reinvested in the damaged areas because of some sort of implied promise to them. They are and should be taking the risk themselves with no guarantees.
Think outside the box a little. To me it almost seems more reasonable and easier to take the money generated by the tax and invest it. Then IF another flood occurs use the proceeds to pay for repairs. 200 million from the tax, another 150 from the state and 30 from the fed and we have 380 million plus interest to pay for any future damage by any future flood. Realistically, the flood protection we so ‘desperately crave’ won’t be effective within the next ten years anyway, and by not spending money on design, cost over runs, etc. we save even more. Imagine how much money would be available in 20, 30 years or more? How about another 80 years since that’s about the time span between the two floods of any significance anyway. I’d vote for a 1% tax if it was invested against a POTENTIAL need instead of automatically spent for something we may NEVER need. We all know the cost will go up anyway, so these numbers are realistically insufficient. If Cedar Rapids never had another flood of the magnitude of the one in 2008 imagine what just the interest of such a fund could do for something more realistic. Like street repairs.
Mr. Suchomel,
Your not alone that building in flood zones is complicated, risky and must comply with HUD’s rules. Mr. Joe Hern the City’s Disaster Person told the council what you are say and informed the council they MUST sell the CDBG obtained properties and return the money to HUD but, did the council listen, NO !!!
They were too busy trying to eliminate their opposition.
Here is the Document that proves it:
https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B5K8lqegvoL0ZmM0N2IzYjQtNWVkMy00NzcyLWI0OTAtNTBiMDk5ZjQwNWMx
Now, if the city is required to sell at fair market value and doesn’t do it, What are they doing /? (Crimes)
I believe that the state and federal pieces of the pie will come together if we do our part first. I’m going to vote yes and I believe that it will all come together so that others can help share our burden and we can get the protection we need.
“…others can help share our burden…”
Something about this bothers me Mike. It sounds… selfish.
Anyway, I’m no civil or hydraulic engineer, but the thing that bothers me is that when I look back at the amount of water and the area it covered at the peak of the flood, I just can’t help but believe that a wall along both sides of the river is going to solve the problem. Sure, it may be high enough keep the water coming from upstream contained, but what happens to all the water behind the wall with no place to go? Remember – we had massive rainfall amounts during this time. The ground was already saturated and all that water headed towards the river. I just can’t understand how the volume of water that stretched from Mercy Hospital at 10th st east to the train tracks at 9th street west is going to fit between the flood barriers along the river. I suspect that’s why the Corp of Engineers proposes to protect only the east side because they can’t see a practical way to do both. Something or someone will have to sacrifice something one way or the other. By the time this is all over we’ll be renewing the option tax for decades to come because of all the previously ‘unforeseen’ problems that arise. Not to mention that the view and the ambiance of the river will essentially be destroyed. All that downtown beautification for what?
*hydro engineer*
They had their chance at Matching the East Side CORPS protection for almost 3 years now and “City Hall”
chose instead to invest $100 Million in to a Convention Center Complex and build it in a Flood Plain. Which is insanity at best !!
If you build in a flood plain why should the rest of us have to pay an additional “sales tax” to protect such insane propositions ?
VOTE NO March 6, 2012
“I think we were surprised and very disappointed. Honestly, we haven’t even started picking up the pieces. They are still falling. We are still sorting out what happened,” said City Councilwoman Monica Vernon, the mayor pro tempore of Iowa’s second-largest city.”
http://www.rothcpa.com/archives/006946.php
We were told last year’s LOST vote was for flood protection, roads and property tax relief. Quiet downtown railroad crossings , a fancy new bus depot, a Chamber of Commerce Entrepreneurial Center, how the pieces did fall after the City was told no last year.
Cedar Rapids has no guarantee of outside money for a levee system, nor even a clue as to the amount. Once built, there is no absolute certain guarantee that a major flood will be contained by any levee system. Until there is some idea of what resources are available, we have no idea what to venture against the odds to reduce risk.
What we do know for certain is Cedar Rapids City government will never have enough of our money to do all the Chamber of Commerce wants done downtown.
Could you please explain the repeal option again? If the money is bonded, which it will be by the Council’s own admission, you can’t repeal the tax. Will they wait until 2014 to bond the money? Doubtful.
If CREST/Council/Chamber of Commerce can throw together an election in less than year after being defeated, why can’t they throw one together after the state legislature/Congress passes funding and show people what they are voting for, rather than asking them to sign a blank check for an unfinished/unfunded plan.
If you obligate the tax money to issue bonds, you can’t repeal it, that’s true. But I doubt a bond sale could be initatied before all the necessary funding sources are in place – local state and federal. Local tax collections could be used for design and engineering work, but you wouldn’t need bonds to pay for that.
One of the three sources has to go first. I understand there is disagreement on which one should. But I do think that the passage of time matters with rergard to this vote. All the stuff I’m hearing now about how the flood was a fluke and protection really isn’t necessary suggests to me that the severity and scope of the disaster is already fading from memory. Moving on is healthy, but it also dulls our sense of risk.
Oh, by the way, the money the city gave to Quaker for their flood wall, counts as part of the local match for the east side wall. Two more years of the LOST could also be set aside for this purpose, but my guess it is already gone.
Mary I thought the city planned to refund the quaker money, I missed where the city gave them the money could you point me in the right direction as to where I can find the details
This is what I based my statement on. http://thegazette.com/2011/03/10/cedar-rapids-will-accept-over-9-million-in-disaster-funds-to-help-pay-for-new-flood-protection/
Action voters can take regarding bonding. Please correct, if this is in error and give specific proofs.
Voters have power, but they have to use it, like CREST and those who signed the ballot petition.
Iowa Code Chapter 384 – 384.25 GENERAL OBLIGATION BONDS FOR ESSENTIAL PURPOSES.
Setion 3
b. If at any time before the date fixed for taking action for
the issuance of the bonds, a petition is filed with the clerk of the
city signed by eligible electors of the city equal in number to
twenty percent of the persons in the city who voted for the office of
president of the United States at the last preceding general election
that had such office on the ballot, asking that the question of
issuing the bonds be submitted to the registered voters of the city,
the council shall either by resolution declare the proposal to issue
the bonds to have been abandoned or shall direct the county
commissioner of elections to call a special election upon the
question of issuing the bonds. Notice of the election and its
conduct shall be in the manner provided in section 384.26.
c. If a petition is not filed, or if a petition is filed and
the proposition of issuing the bonds is approved at an election, the
council may proceed with the authorization and issuance of the bonds.
Link to this information: http://coolice.legis.state.ia.us/cool-ice/default.asp?category=billinfo&service=iowacode&ga=83&input=384#384.28
Beginning of chapter 384: http://coolice.legis.state.ia.us/cool-ice/default.asp?category=billinfo&service=iowacode&ga=83&input=384
Similar information applies to 384.26 GENERAL OBLIGATION BONDS FOR GENERAL PURPOSES.
Iowa Code 362.4 – PETITION OF ELIGIBLE ELECTORS.
http://coolice.legis.state.ia.us/cool-ice/default.asp?category=billinfo&service=iowacode&ga=83&input=362#362.4
The bonds that would be issued are not General Obligation bonds, Tony. Different bonds, different rules.
Tony Read Iowa Code Chapter 423B. I can answer any of your questions if needed.
Rob
Mary,
If this is the case, regarding a different type of bond that employs a different type of process (or not), please site the bond type and the Rules that would apply under the Iowa Code. I think many would like to know, if I have misunderstood the application of what I have stated or what the other application (bond type/process to stop or not) would be. I would like any additional information regarding this matter, pertaining to the Iowa Code. At the least provide additional information and I will investigate it further. Looking forward to reply about the bond type.
It appears that the gazatte reporters have been given a new set of marching orders, this article demonstrate’s that they have moved from general optomism to out right delusionalism. The corp’s plan of 104 million, of which 65 million will come from the fed’s, 9 million for a prior award for quaker, leaves about 30 million to complete the east side’s corp recommended plan. The reporter has concluded after study at Crest’s, the city council, downtowners and the Chamber’s school of Flood mathimatics that we can get 150 million from the state for this 30 million match/shortage on the east side. Funds for the west side would not be possible by the gazatte writer’s own report as a federal match is required. And the corp has already determined that there will be no federal funds available for the west side. It is just crazy thinking to believe that the other 99 county’s 10-12 large city’s sitting on major waterways like the Mississippi, the Cedar, the Missouri or Des Moines river would let Cedar Rapids have 1/2 of the funds allocated by the state. I guess when you don’t have the facts you just make it up.
I wrote that the city could, conceivably, get $150 million over 10 years, from what would be a $600 million program (30 million/20 years). That’s one-fourth, not one half. Potential federal funding, the $65 million you mention, for east side protection, would count as the federal match for state assistance. The local tax covers the local match. Federal funding would go to east side protection, but State and local could be spent on both sides of the river.
Silly me, Must be flood math again, the state requires a city and fed match, the lost is for 10 years, 15 mil /year max which is half of 30. It appears that Crest, the gazatte, the council and Chamber has plans for another 10 years of the Lost program.
The state program would be 20 years, $600 million total. If Cedar Rapids gets $150 million, that is not half of the state money.
If the state program is 600m for 20 years and CR is counting on 150m over ten years, then it’s half the state money for that ten years, no? 600 / 20 = 30. 10 x 30 = 300 300 / 150 = 2 150 m would be half of the 300 m available from the state in the first ten years. That leaves only 15m per year for the rest of the sate to fight over until year 11 when, presumably, CR no longer wants 15m per year anymore. Like that’s going to happen.
I said it was conceiveable they could get that much over 10 years, under the rules of the exisiting legislation. I’m not saying that’s exactly what the city will seek or be awarded. I used the 10-year timeframe because it’s the length of the local tax. It’s entirely possible that state help for CR could be structured to be spread out over 20 years. Regardless of those details, without the local tax, state assistance won’t be arriving in any form.
he likes you best
“without the local tax, state assistance won’t be arriving in any form” Why? Why can’t the city make better use of the money they currently have? I believe the state program being on the table right now is for 10 years (at $30 million a year maximum, not guaranteed), so it would total $300 Million max, of which Cedar Rapids could potentially receive $150 million, which is half. Next time the state budget is done, could they not allocate anything? Where would that leave Cedar Rapids then? What about the federal leg?
They should have been absolutely clear in the ballot language regarding state and federal contribution allocated and funded before the tax is implemented.
http://thegazette.com/2012/02/08/iowa-senate-panel-approves-bill-creating-flood-mitigation-fund/
In my opinion, approval by a 3 member sub-committee on a proposal doesn’t constitute the state leg of the stool.
The mayor said on WMT today that the corp has already approved the 65 million, WOW and I thought they couln’t approve funding for things.
The Senate bill currently calls for a 25-year program. I’m told it will likely be amended down to 20 years. It’s passed the full Senate Appropriations Committee, unanimously, not just the three-member subcommittee. I didn’t say its passage is assured, but I think it’s chances are good. And we’ll probably have a clearer picture by March 6. I also said the federal leg is shaky, clearly. I think there’s some mistaken notion on this thread that I’m telling people how to vote. I’m just explaining the funding situation as I see it, based on what I’ve learned through interviews, etc. Vote any way you want. But understand that if this tax fails, it won’t make the hotel disappear or undo unpopular city decisions or force the newspaper to shut down. All it will do is deal a serious, I think likely fatal, blow to the prospects for flood protection on both banks. That’s my opinion. Take it or leave it.
Repeal cannot happen until the tax has been in effect for 1 year, and no bonds have been issued against its anticipated revenue. In the case of this proposed exstension, voters would have to wait until 2015 and the city council would have to hold off bonding the money. Would thathave realistically happen? This link also verfies it is legal for the city to adopt a.franchise fee for utilities so the LOST 1% is not collected and the franchise fee goes to the genetal fund. http://www.iowa.gov/tax/educate/78601.html
Mary,
You have not stated the type of bond you think this is – vs – what I stated above. Do you desire the readers to remain in ignorance for some reason or will you supply us with the type of bond you think it is, that did not meet the Iowa Code sited earlier in my first comments. I agree on your comment, “Repeal cannot happen until the tax has been in effect for 1 year,” , but this does not mean action cannot be started regarding a petition to repeal and that information turned in to the proper officials for review.. Would you like to present more facts using the Iowa Code and answer the question of the type of bonding you feel this is covered under.
Local option sales tax bonds are covered under section 423b of the Iowa code.
Oops, I hit enter too soon. 10 days public notice is required before the authorization of issuance of bonds. Not sure if you can start the petition before that or not.
While there is significant risk involved, I support the sales tax extenstion so we can continue to invest in our City.
Mary, thank you for providing the information on 423B bonding procedures. Under this chapter (section 423B.9, subsection 4, a.) the voters have the right to a10 day notice of the action of a meeting for the “proposal of the issuance”of a bond, and before or after the “proposal of the issuance”, but before the actual “date fixed for taking action for the issuance” of the bonds, the voters can petition for election on the matter. I have found nothing at this time regarding a time frame of when the petition could be started or against a petition being started, before the meeting to announce the “proposal of the issuance” in anticipation of a meeting to announce this, but this has to be done before the date set for taking action for the issuance. It takes 3% of the voters on a petition to move the matter to an election or the city can abandon the matter, as stated according to this chapter and section (423B.9, subsection 4, a.):
4 a. …….If at any time before the date fixed for taking action for the issuance of the bonds, a petition signed by eligible electors residing within the jurisdiction seeking to issue the bonds in a number equal to at least three percent of the registered voters of the bond issuer is filed, asking that the question of issuing the bonds be submitted to the registered voters, the governing body shall either by resolution declare the proposal to issue the bonds to have been abandoned or shall direct the county commissioner of elections to call a special election upon the question of issuing the bonds.
The proposition of issuing bonds under this subsection is not approved unless the vote in favor of the proposition is equal to at least sixty percent of the vote cast….
This information is to the best of my understanding and here is a link to information used: http://coolice.legis.state.ia.us/cool-ice/default.asp?category=billinfo&service=iowacode&ga=83&input=423B#423B.9
The ballot language has not changed from last year.
“Flood Protection System” on both sides of the Cedar River.
Flood Protection could be a very large pump to inject $150 of LOST funds in to downtown
Any Questions ?
VOTE NO !
A hint of honesty. http://thegazette.com/2012/02/22/braley-talks-student-loans-deficit-flood-relief-in-cedar-rapids/
“Linn County voters’ approval of a proposed local-option sales tax extension March 6 would have little direct affect on the city’s case in Congress, but it couldn’t hurt, Braley said.”