Extra: Buyout questions - KWWL - Eastern Iowa Breaking News, Weather, Closings Extra: Buyout questions


by Jenn Jarvis

WATERLOO (KWWL) - The promise of buyouts has many homeowners hopeful. But officials are sending a message saying it is a complicated process with no guarantees.

Right now there are more questions than answers. Mostly because the buyout process involves local, state and federal officials and hinges on a series of decisions that will be made over the next few months.

The Purpose

It will be 3-4 months before we know how much money will be available for buyouts in Iowa. FEMA will determine the amount available for buyouts by taking a percentage of the total amount of money distributed in the state through Individual Assistance and Public Assistance. 

Since 1993, the Federal Emergency Management Agency has paid just over $43 million to buy more than 1,500 properties.

The buyout program is designed to save the goverment money. It is actually viewed as a mitigation plan to avoid future damage, instead of an assistance program that provides immediate help. Everything about the program is designed to weigh the immediate cost against possible future costs.

The state estimates $50 million was saved in current flood damage as a result of buyouts since the 90's.

The Process

Right now, local governments are in the first phase of the buyout. Almost every city and county affected by the flooding is eligible to apply. Local governments must submit a list of potential projects, called a Notice of Interest, to the state by Sept. 12.

To help with that, many cities are asking for imput from residents. Cedar Falls and Iowa City both have several hundred homeowners who have expressed an interest in having their properties purchased.

The state will review the proposals from local governments and within about a month will ask local governments to fill out a formal application with very detailed information about how the money will be used.

The state will then perform a cost benefit analysis on each of the proposed project. Basically they want to figure out how much money they could save in the future by buying the property compared to how much it will actually cost. They will also weigh how prone the land is to flooding. For example, property in a 100 year flood plain will likely take precedence over a that in a 500 year flood plain. The willingness of residents in the area to participate in the buyout program can also play a role.

After reviewing every project, the state will prioritize and decide how many projects they actually have the money to pay for. After the approval from FEMA, the money will be released to the state, and in turn to local governments.

Cities and counties will be responsible for directly working with individuals.

Frequently Asked Questions

Can I apply to participate in the buyout program?
Individuals cannot apply directly to the state for buyouts. If you are interested you need to contact your city or county. Some local governments are choosing not to participate because they cannot afford to pay their share of the bill. FEMA is only funding 75 percent of the buyouts, with the state supplying 10 percent and local governments responsible for 15 percent.

Do I have to participate in the buyout program?
If you express interest in a buyout, you can change your mind later. Participation is completely voluntary.

How much will I receive for my home/property?
It's up to local governments to decide the value a property when they apply to the state. Many cities are choosing to use the pre-flood assessed value. Some cities are choosing to adjust that amount based on current market values.

When will I receive the money if I participate in the buyout?
Local governments will receive the money in 12-18 months. They will disburse it after that.

If I've received money from FEMA already and participate in the buyout, do I have to give that money back?
No. As long as the money was used properly and there are receipts to document how it was spent, the money will not need to be paid back. If the money was designated for repairs on the home, which is later demolished during the buyout, the money does not need to be paid back as long as it was used for repairs and properly documented. However, loans through the Small Business Administration (SBA) will still need to be paid back.

Once a deal is reached with the city, who will pay for moving costs?
The city will usually pay for normal costs like the appraisal and closing costs. But just like any typical move, the homeowner is responsible for mortgages and liens and all relocation costs of personal property.

FEMA: Property Acquisition Projects

Online Reporter: Jenn Jarvis

Powered by Frankly