Iowa City council reallocates $1 million for affordable housing, staff says

Tracy Heitzsche, a staff member with Neighborhood Development Services, told the Housing and Community Development Commission that the Iowa City Council approved reallocating $1,000,000 for affordable housing at its July 14 work session.

Heitzsche said the funds were freed up after the city experienced funding losses that took effect July 1 and described how the council directed the money. “We allocate $1,000,000 for our affordable housing fund,” she said.

The staff member outlined the distribution approved by council: $650,000 to the housing trust fund; $200,000 for security deposits administered by Community Crisis Services; and $100,000 to expand a landlord risk mitigation fund run by Shelter House. Heitzsche said the landlord risk mitigation fund will provide a guarantee to participating landlords of up to $7,500 for damages to tenants in rapid rehousing and mainstream emergency voucher programs. “We’ve assisted 25 people to date. No claims have been received,” she said, adding that national experience suggests about 15% of guarantees are used and that the current funding could cover guarantees for about 42 tenants.

Heitzsche also said the city maintains an opportunity fund of roughly $600,000 and will not add to that fund in fiscal year 2027; the council allocated $50,000 for emergent housing needs and staff will reevaluate allocations in fiscal year 2028. She described emergent needs as site-development displacements and short-term rehabs, citing a past example at Forest View.

The announcement was presented as an informational update; commissioners did not take a formal vote on program design at the meeting. Staff indicated the allocations and program administration details (which agencies will run specific programs) were set by the council and will be implemented through existing program administrators.