Moody’s blesses Cedar Rapids’ flood spending plan

Gazette (Cedar Rapids, IA)

Sept. 21--CEDAR RAPIDS -- A leading investor service has given a mostly positive review to a $342 million borrowing package to pay for Cedar Rapids flood protection through bonding and corresponding tax increases.

The plan approved Sept. 11 by the City Council included issuing $20 million per year in general obligation bonds for 10 years, from 2020 to 2029, and an additional $8 million in bonds from 2022 to 2029. Taxpayers are expected to see a 22-cent annual property tax rate increase during this period, although the amount could vary from year to year based on a number of factors.

"While the project will modestly increase the city's debt burden, it is credit-positive because it will reduce the city's primary environmental risk and costs associated with potential future flooding," Moody's Investor Service wrote in a report Wednesday.

The city's debt burden -- or full debt as a percentage of full value over the next five years -- is projected to see a "modest increase" to 2.6 percent by 2023 from its current level of 2.4 percent, according to Moody's.

The report notes the heavy investment that has been made for flood protection and response. This includes $820 million in the past 10 years on emergency protection measures and recovery efforts related to the 2008 flood. While state and federal grants covered the lion's share -- 94 percent -- the 6 percent borne by the city "is still considerable compared to the city's annual general fund revenues of around $107 million," the report stated.

"It is reassuring to know that Moody's evaluates the decisions communities make to determine the overall impact on finances," Cedar Rapids City Manager Jeff Pomeranz said in a statement. "It is fair that Moody's concluded the plan will modestly increase the city's debt burden but notes it will also reduce the city's exposure to economic and financial disruptions caused by flooding."

The report also noted the project still could face a $78 million funding shortfall at the end of 10 years, which the city said it plans to fill with a mix of local debt and other funding, according to the report.

Cedar Rapids is working on a 20-year, $750 million plan to protect properties on the east and west sides of the Cedar River in the downtown area.

The council unanimously approved the spending plan, saying now is the time to get it done given recurring flooding threats and the likelihood of limited state and federal support.

"As we look at the impact of natural disasters across the country, as well as what Cedar Rapids has experienced from flooding, it is clear that the plan we are putting in place is critical to the long-term economic health of our community," Pomeranz said.

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