How a Midwestern City Bounced Back From Its Own Harvey

By Shayndi Raice

CEDAR RAPIDS, Iowa—This once-bustling city was facing all the challenges of former manufacturing hubs across the country when it wrote a 25-year plan to revive its business and residential life.

The plans didn’t go very far, though—until the Cedar River flooded in 2008. Judged at the time to be one of the worst natural disasters in U.S. history, the flood left 10 square miles, or 14% of Cedar Rapids including City Hall and much of downtown, underwater.

In the years since, the city has worked with businesses, charitable foundations and nearly $1 billion in federal, state and local funds to transform itself, trading in dilapidated buildings and meatpacking plants for new office towers, loft-style condos, trendy coffee shops and bike lanes.

“Many, many people in our community will say they would not wish a flood like that on anyone, but it’s the best thing that happened to us,” said Chuck Peters, chairman of Folience, an employee-owned holding company that owns the local newspaper, The Gazette.

Natural disasters like Hurricane Harvey in Texas and Hurricane Irma in Florida are happening with increasing frequency. Houston, an energy hub with a rapidly changing economy, is expected to bounce back from Harvey; New Orleans struggled for years after Hurricane Katrina in 2005 to fully recover. Cedar Rapids was able to use its disaster as a springboard into its future as a modern, more vibrant metropolis.

Two factors were critical to the transformation, local officials say. Cedar Rapids had a plan ready that it could quickly put in place, and the city was willing to jump in ahead of the private sector, despite a developing financial crisis, to get things started.

Cedar Rapids was a late 19th- and early 20th-century hub for food processing, steel manufacturing and technology. Aviation tech firmRockwell Collins got its start here as Collins Radio in 1933 and is still the city’s largest employer. The scent of Crunch Berries cereal wafting over downtown on certain days is a reminder that Quaker Oats has been here since 1873.

But by the turn of the millennium, Cedar Rapids was in rough shape, battered by the late-1990s telecom bust and the long-term U.S. manufacturing slump. Downtown was all but dead on evenings and weekends; young people fled for bigger cities.

Snow melt after a harsh winter and heavy spring rains caused the Cedar River to flood, cresting at over 31 feet on June 13, 2008 to surpass the previous record of 20 feet and overwhelm the city’s flood defenses. The flood affected 4,766 homes and caused an estimated $6 billion in damage, according to data provided by the office of the city manager.

Investments from the private sector, coupled with disaster relief funds, have paid off. Gross domestic product for Cedar Rapids, Iowa’s second-largest city with a population of some 131,000, has grown by nearly 40% to $18 billion in 2015, the most recent year available, from $13 billion in 2007, the year before the flood, according to Bureau of Economic Analysis data.

The number of area businesses has grown 25% since 2007, and downtown now has 674 residential units, a 62% jump, according to the Cedar Rapids Metro Economic Alliance. Total property values have risen 18%, the city says.

“We had an opportunity with a lot of federal and state money to really transform the place,” said Doug Neumann, executive director of the economic alliance. “We did 25 years of development in five years.”

The city bought up old, blighted properties and sold them, in one case becoming a developer itself. It rehabbed a dilapidated hotel in the center of downtown and added an entertainment and convention center next door for around $138 million.

In total, the city used $147 million in local, state and federal disaster relief moneys to purchase 1,375 properties. It has sold 428 so far. Any proceeds from the sale of land went to repay disaster relief funds, according to Caleb Mason, an economic development analyst with the city of Cedar Rapids.

With the global economic crisis just kicking in, city leaders said they had to take the lead on rebuilding. “There was an apprehensive feeling from the private sector,” said Mayor Ron Corbett, who was elected in 2009. “If you’re not willing to invest, why would others?”

The approach, coupled with corporate tax incentives, has led a string of big employers to move downtown.

“We somewhat stuck our neck out for the community and said we wanted to go downtown,” said Duane Smith, chief executive of insurance firm TrueNorth Cos. Since moving downtown, TrueNorth has doubled its size to 300 employees.

The neighborhood south of downtown office towers now offers something Cedar Rapids has long lacked—a trendy arts and culture district.

The area, called NewBo, was once a haven for Czech immigrants, then home to abandoned meatpacking plants. After the flood, the city built a large farmers market there; private developers followed.

 Joe Ahmann, a local developer, says he has invested about $40 million in NewBo, building and developing multiuse projects around the market with coffee shops, an irreverent T-shirt store, day spas and apartments. He hopes to add a music venue.

In 2015, Mr. Ahmann paid the city $50,000 for land that was formerly the Iowa Steel and Iowa Ironworks factories and built a commercial and residential project called The Depot.

The city’s attitude toward developers changed after the flood under Mayor Corbett and a new city manager, Mr. Ahmann said. “It’s running the city like a business,” he said. “The developer is your customer.”

Ben Kaplan, a 30-year-old photographer has lived and worked in NewBo for six years. Before the flood, the neighborhood had bars, he said, but they mostly attracted rough-edged bikers. “Now, it’s full of cyclist bars, and it used to be full of biker bars,” said Mr. Kaplan. “They replaced leather with Lycra.”

Some in Cedar Rapids think their story could provide hope for others. “There definitely is that sense in town that Cedar Rapids is a better place now than it was after the flood,” said Clint Twedt-Ball, executive director of Matthew 25, a community-development corporation that rebuilt homes. “I think that will be true in Houston.”

Source: Wall Street Journal, Appeared in the September 19, 2017, print edition as “After Disaster, City Booms,” available online.