Voluntary Property Acquisition (Buyout) Process

Overview
After the Flood of 2008, the City of Cedar Rapids created a Voluntary Property Acquisition process to reduce the loss of life and property in future disasters. An estimated 1,300 significantly flood-damaged properties along the Cedar River are eligible for a buyout through this process.

Each individual land transaction will take at least four months and up to nine months to complete, including clearing title objections and legal documentation. All acquisitions in this process are based on the pre-flood assessed value of the property. This is a voluntary program and no one is required to participate. Property owners may choose to withdraw from the process at any time before the closing.

The Voluntary Property Acquisition process is open to anyone who owns property in three flood-impacted areas of the city: the Greenway Area, the Construction/Study Area and properties beyond reasonable repair in the Neighborhood Revitalization Area.

To learn more about this program, call JCG Land Services, the City’s contractor, at (319) 362-3507, extension 210, or (319) 286-5521, extension 210.

          Registration
          Timeline
          Process Steps
          Appeals
          Maps & Address Lists
          Related Documents
          Related Media Release
          Frequently Asked Questions

Registration
Any Cedar Rapids resident that owns flood-impacted property is eligible for the Voluntary Property Acquisition program. To register, the property owner must call JCG Land Services, the City’s contractor, at (319) 362-3507, extension 210, or (319) 286-5521, extension 210.

The property owner must also sign a “statement of voluntary transaction” form. Property owners already registered for a buyout are receiving a monthly letter that provides updated information about the process.

To prepare for a Voluntary Property Acquisition, please take the following steps:

1. Clean the property by removing debris from the land around the structure. 
2. Locate the abstract for the property. If you cannot locate the abstract, please do not spend money to update it or create a new one. 
3. Check your credit report to identify potential claims against the property. This information can be accessed free of charge through the Linn County Recorder’s Office or through many free credit report services.

Timeline
For properties in the Greenway Area:

• August 19, 2009 - Funding award announced (FEMA Hazard Mitigation Grant Program)
• September - October 2009 – Duplication of benefits checks completed by the State and Offers to Purchase prepared
• November 2009 – January 2010 – Offers to Purchase presented to property owners and title documents updated/prepared
• February – March 2010 – Closings conducted, scheduling based on gaining clear title
• March – June 2010 – Demolition of acquired properties

For properties in the Construction/Study and Neighborhood Revitalization Areas:

• November 2009 – Funding award announced (HUD Community Development Block Grant Program)

• March 2010 – Begin verifying and confirming duplication of benefits checks

• May 2010 – Begin to mail Offers to Purchase to property owners and update and prepare title documents

• July 2010 – Closings begin on the 1,200 properties.  Timing will be based on gaining a clear title for your property

 Process Steps
Each voluntary acquisition is a legal property transaction which includes clearing title objections and legal documentation. This process will take at least four months and up to nine months to complete on each individual property.

When the City receives funding for the buyouts, registered property owners will be asked to participate in the following steps:

1. Duplication of Benefits Check - When the City receives funding for voluntary property acquisitions, the City will verify Benefits received by property owner with the State of Iowa for each property. This is estimated to take one to two months.
   
2. Offer to Purchase – Upon confirmation of the Benefits check, the official Offer to Purchase will be drafted and presented by mail to the registered property owner. The offer will include to owners at the time of the flood the pre-flood assessed value of the property with the following types of funds subtracted because of Duplication of Benefits restrictions: National Flood Insurance Program and FEMA Individual Assistance.
   
3. Preparation for Closing - Once the Offer to Purchase has been accepted and approved by the City Council, preparation for the closing on the property may take anywhere from 2 months on up, depending on the status of the property title. Titles with liens, objections, judgments, etc. will take longer to process.
   
4. Closing - After the title and legal work necessary to acquire the property has been conducted and title is readied for transfer, a closing date will be scheduled and conducted just like any other real estate transaction.

 Appeals

The City is providing an appeal process for property owners (sellers) if they believe the City’s offer price is incorrect due to factual errors and/or can present information directly relating to the pre-flood market value.

To appeal, the seller must present written notice to the seller’s designated acquisition agent within 30 days of the City’s Offer to Purchase. An appeal must be based on the appraisal of the property by a certified or licensed appraiser. The scope of the appraisal will be to estimate the property’s pre-flood market value. The seller will be responsible for choosing a certified or licensed appraiser and securing an appraisal of the property.

If the seller chooses to appeal the City’s Offer to Purchase, the City will pay for an appraisal from a licensed appraiser based on the following stipulations:

• If the certified appraised pre-flood valuation exceeds the assessed value provided in the City’s offer, the City will pay up to a maximum cost of $500 of the appraisal fee.
• If the valuation does not exceed the assessed value provided in the City’s offer or the appeal is withdrawn by the property owner, the City will pay 50% or up to $250 of the actual cost of the appraisal fee.
• Repayment of the 50% to City is captured from the net proceeds at the closing of the property.

Promptly after the hearing has been concluded, the appeal board will provide a written decision within 30 days after the hearing. A copy of the decision will be mailed to the seller and provided to the designated acquisition agent.
           List of Local Licensed Appraisers

 Maps & Address Lists

The Cedar Rapids City Council adopted a strategy for voluntary property acquisitions in December 2008. City staff worked with a team of experts to prepare this strategy, including the US Army Corps of Engineers, Iowa State Homeland Security and Emergency Management, the Federal Emergency Management Agency and the River Corridor Redevelopment Plan consultant group.

This strategy divides the flood-damaged properties into three specific areas, based on location, land purpose and availability of funding:

1. Greenway Acquisition Area – This is the unprotected area between the Cedar River and the proposed structural flood management system. The 192 properties in this area are eligible for voluntary property acquisition through FEMA’s Hazard Mitigation Grant Program. Parcels acquired through this program must remain open space forever.
             List of Eligible Addresses
             Map – View Yellow Area
   
2. Construction/Study Area – This area is identified for the potential construction of structural flood management measures, such as floodwalls and levees, including the slope of the levee, safety zone for construction and potential relocation of utilities, streets and infrastructure. The size and location of this area is based on the US Army Corps of Engineers’ experience with similar flood management projects.

There are 554 properties in this area eligible for voluntary property acquisition through HUD’s Community Development Block Grant Program. Not all properties in this area will be directly impacted by construction activities.
           List of Eligible Addresses
           Map – View Green Area

3. Neighborhood Revitalization Area (all flood-damaged neighborhoods) – Some properties in this area have been determined to be beyond reasonable repair. That means that these houses are significantly damaged and it is not financially feasible to rebuild them. Of the 6,452 parcels located in this area, 600 are estimated to be damaged beyond reasonable repair. Those properties are eligible for voluntary property acquisition through HUD’s Community Development Block Grant Program.
             List of Eligible Addresses

 All of the areas mentioned above are mapped on the City’s interactive 2008 Flood Viewer.

 
Related Documents

• Administrative Plan for the Voluntary Property Acquisitions funded under the Hazard Mitigation Grant Program

• Replacement Housing Allowance Policy for Voluntary Property Acquisitions under the Hazard Mitigation Grant Program

• Administrative Plan for the Voluntary Property Acquisitions funded under the Iowa Department of Economic Development (IDED) Community Development Block Grant Program

• Sample Form - Offer to Buy Real Estate and Acceptance

• Additional information available on the Corridor Recovery website

• City Proposes a Preferred Property Acquisition Strategy (December 5, 2008)

• City Council Confirms Housing Buyouts & Rehab Priority (February 20, 2009)

• Voluntary Property Acquisition Registration Receives More Than 300 Calls on First Day (April 28, 2009)  

• City Council Approves Plan for More Voluntary Property Acquisitions (January 21, 2010)

 Frequently Asked Questions

What is the Voluntary Property Acquisition process?

The City of Cedar Rapids’ Voluntary Property Acquisition process includes several steps and approximately 1,200 properties at a total estimated cost of $175 million. Voluntary acquisition is available to owners of flood-damaged property located in the Greenway and Construction/Study Areas, as well as properties beyond reasonable repair in the Neighborhood Revitalization Area. Each voluntary acquisition is a legal property transaction which includes clearing title objections and legal documentation. This process may take four months and up to nine months to complete on an individual property.

How will these voluntary property acquisitions be paid for?

FEMA’s Hazard Mitigation Grant Program (HMGP) funding is approved for the acquisition of 117 parcels located in the Greenway Acquisition Area and in the 100-year floodplain. The HUD Community Development Block Grant (CDBG) program funds are approved for the acquisition of parcels in the Construction/Study Area, parcels in the Neighborhood Revitalization Area that are beyond reasonable repair and remaining parcels in the Greenway Area. Local option sales tax revenues may also be used to fund acquisitions that do not meet federal requirements or other identified funding gaps. These are the only funding sources available for property acquisitions at this time.

What will I get paid for my flood-damaged property?

The City will offer a property owner the pre-flood assessed value to purchase their flood-damaged properties included in the Voluntary Property Acquisition process less (minus) duplication of benefits. These owners must have owned the property at the time of the flood. A post-flood owner will be offered post-flood assessed value. This applies to properties in the Greenway and Construction/Study Areas, as well as properties beyond reasonable repair in the Neighborhood Revitalization Area. Please note that the recent post-flood reassessments do not impact the pre-flood assessed value.

Is the fair market value 100% or 107% of Pre-Flood Assessed Value?

Based on a recent announcement, the City of Cedar Rapids will be able to provide 107% of pre-flood assessed value for the Voluntary Property Acquisition Program.  To be awarded the additional funding, the City had to demonstrate the assessed valuations were not equal to the fair market value at the time of the flood.  Based on new technology, the City Assessor’s Office has been able to refine the original analysis of pre-flood values which has been approved at the federal level. 

Will my buyout payment be affected by other government funding I’ve received?

Yes. By law, federal FEMA Hazard Mitigation Grant Program (HMGP) and the HUD Community Development Block Grant (CDBG) dollars cannot duplicate funds received from other government sources, such as FEMA repair assistance, flood insurance benefits or property acquisition funds. This is often referred to as Duplication of Benefits restrictions. This verification will be completed with the property owner and State of Iowa before the Offer to Purchase can be presented.

For those property owners who received Jumpstart Down Payment Assistance above $25,000.000, the remaining net proceeds from the acquisition may be required to pay on the forgivable loan. This is not required in all situations and will be addressed with each property owner during the individual consultation meeting. See next question.

Am I eligible for Replacement Housing Assistance Allowance of up to $25,000?

You are eligible for up to $25,000 in Replacement Housing Assistance (RHA), if you are participating in the voluntary property acquisition program and are income qualified (less than 100% Annual Median Income based on household size). Note:  Any previous Down Payment Assistance through the Jumpstart Housing Program will count towards this maximum amount.  During your meeting to confirm the duplication of benefits, the agent will determine your eligibility and qualified amount. Income information will be required for this consultation.

Will the City charge me for demolishing my property?

No. Federal funding will pay for the demolition of the structures participating in the Voluntary Property Acquisition Program.

Is the City going to force me to sell my property?

No. This is a VOLUNTARY property acquisition process. When using FEMA Hazard Mitigation Grant Program (HMGP) and Community Development Block Grant (CDBG) funds, the City is not allowed to use eminent domain to acquire properties.

When will the City’s flood management system (floodwalls & levees) be finalized by the Army Corps of Engineers?

The US Army Corps of Engineers is expected to finalize and approve its feasibility study for the City’s Flood Management System (floodwalls and levees) in 2012. If the US Army of Corps of Engineers identifies a project, construction of the floodwalls and levees is expected to begin in another five to eight years.

Is such a large Construction Area necessary for the floodwalls and levees?

Yes. The City worked with the US Army Corps of Engineers to designate a general area typically impacted by the construction of a flood management system, based on similar flood management projects. This area was expanded to include potential relocation of City streets and utilities. Not all of the properties within the Construction/Study Area will be impacted by the proposed floodwalls and levees.

Why did the City of Cedar Rapids hire a firm to conduct the one-on-one consultations with property owners?

Due to the large number of participants and in order to perform the property acquisitions in a timely manner, the City has contracted with firms that specialize in property acquisitions and experienced in land transactions. The selected firms have demonstrated high quality customer service in similar projects.

Do I still have to pay taxes on my flood-damaged property?

Yes. All property owners are obligated to pay taxes and keep their property in compliance with City Codes, until the sale of the property is finalized and ownership changes hands. This is true for all flood-affected properties throughout the City. For more information about any tax abatements, please contact Linn County at (319) 892-5550.