CEDAR RAPIDS, Iowa (AP) — High inflation and construction cost spikes are prompting city officials to study the impact of growing expenses on its permanent flood control system.
The Gazette reports that as originally envisioned, the city’s massive infrastructure project of flood gates, levees and pump stations is estimated to cost $750 million over an approximately 20-year time span — a figure already adjusted for inflation from the initial $550 million estimate.
But City Manager Jeff Pomeranz recently said during a City Council session on the fiscal 2024 budget that the city will have to assess how the economy has affected costs to build the flood control system.
The inflation rate currently sits at 6.4 percent — roughly double the long-term average of nearly 3.3 percent — but it has hit highs of about 9 percent since the COVID-19 pandemic began.
“We will be having discussions with the City Council about some revision in the expenditure plan based on the kind of increases we’re seeing for a number of these projects,” Pomeranz said.
The Public Works Department and other divisions of the city are drafting a plan that will be submitted to the council, likely within the next six months, Pomeranz said.
“We’re deeply committed based on everything the city’s doing to protect this community from flooding, but it’s an expensive project,” Pomeranz said.
A mix of funding sources fuel construction of the system.
The Iowa Flood Mitigation Board is slated to contribute up to $269 million. The Army Corps of Engineers is providing $117 million toward work on the east side of the river; of that federal contribution, $41 million is a loan.
Under the Army Corps’ cost-benefit formula, the west side was not eligible for funding. The cost of construction there exceeds the value of the buildings it would protect.
In 2018, the city council approved borrowing $264 million in general obligation bonds to fund a system protecting both sides of the river. That plan relies on a property tax levy increase of 22 cents per $1,000 in taxable value each year through fiscal 2029.
West-side protection received a boost when the council allocated $10 million in federal American Rescue Plan Act money, speeding up flood control work in the northwest quadrant.
The city also has received at least $15.5 million so far in grant money and continues to seek more.
For instance, to support reconstruction of the Eighth Avenue Bridge, city officials have resubmitted for a $22 million federal RAISE grant for the 2023 cycle. Cedar Rapids also has applied for a $50 million grant through the federal Bridge Investment Program.
The dollars Cedar Rapids has secured won’t go as far as first planned, though, because of inflation, prompting the examination of where the unfunded gap stands today. That gap has likely grown beyond the initially projected $95 million.
Pomeranz said the city would look to see whether additional dollars are needed, assess the design of projects and the scope of work remaining and continue efforts to secure more funding.
Public Works Director Bob Hammond said city staffers are working to ensure projects being built in the next decade or so will stay within the budget.
“We’ve looked at hundreds of projects, and part of that is to also determine when should we stage and phase these in order to get the best return on cash flow, bonding, on cost of construction,” Hammond said. “So we might accelerate some of these projects a little bit when we’re through with that.”
The timeline for specific projects and the overall system will be clearer once the revised estimates are tallied, Hammond said.
As an example, Hammond said, a flood wall without any additional improvements costs an estimated $4,500 per foot. Adding in other items — such as road improvements and trails — adds thousands of dollars per foot, so that’s the level of detail being considered in revised estimates.
Plus, as the overall project remains years from its finish line in the 2030s, Hammond said, with many projects still in the planning or design phases.
“The west side, in particular, have just been planning concepts, so we really need to understand what these costs are really going to be,” Hammond said.
Other funding streams still may materialize.
Language included last year in the Water Resources Development Act — a federal bill that provides a framework for projects done by the Army Corps — may unlock another $50 million for flood control.
The bill accounts for updates to the design of Cedar Rapids’ east-side flood control system, authorized by Congress in 2014, that were needed to accommodate plans for west-side flood control. The Army Corps’ east-side plans were approved before the west-side plan was developed.
While the bill does not appropriate money, the modified language allows the Army Corps to participate in the cost of the additional improvements on the east side.
Hammond said this might help the city use more federal dollars on projects that were previously ineligible, such as a Cedar Lake pump station or a tie-off on the east side.
Council member Tyler Olson, who chairs the council’s Flood Control System Committee, said during the meeting, “We’re building probably what will turn out to be a $1 billion infrastructure project in order to protect the community.”
With at least seven or so years left to go on construction, he said, that’s what he estimates the final cost will be once inflation is factored in. He emphasized that’s his opinion and the no one from the city has recalculated that end cost.
In fiscal 2024 — July 1, 2023, through June 30, 2024 — the city has budgeted $64.8 million on flood control construction. That’s the most Cedar Rapids has spent in a single budget year since the work began.
As the funding streams kick in, the city’s five-year flood control spending plan through the 2028 budget year calls for $199 million in expenditures. That would add to the $221.6 million that was spent from fiscal 2014 through fiscal 2022.
“I think we’re doing more projects than we ever have,” Olson said. “It’s going as well as planned, and we’re going to keep plugging away for the next six to seven years. We’re committed to getting it done. We’ll just see how much it costs to get there.”