WATERLOO -- The city is rejecting potential flood recovery grants to help construct new apartment buildings.

Waterloo City Council members voted 4-3 Monday against applying for multi-family rental housing grants through the Iowa Department of Economic Development.

Council members Carolyn Cole, Harold Getty, Quentin Hart and Reggie Schmitt voted against applying for the funds, while councilmen Bob Greenwood, Ron Welper and Steve Schmitt voted in favor of seeking the grants on behalf of interested developers.

Community Development Director Rudy Jones said the program was adopted by state officials to encourage the construction of new rental units in communities that lost apartment buildings due to the June 2008 floods.

"We didn't have any documented loss of multi-family rental units that would compel us to apply for these dollars," Jones said, noting several multi-family rental projects already are in the works using other funding sources.

Council members supporting the grant application noted the new construction would be good for the local economy and would help improve the overall rental housing stock.

But Jones said the program would put additional burdens on his staff, which is currently struggling to keep up with a variety of disaster, economic stimulus and mortgage crisis grants passed down from the state and federal government. Community Development also will be charged with handling flood buyout programs, which are set to begin.

"Our workload is more than we can handle currently," he said.

Seven projects, ranging from a combination of duplexes to several 12-plex apartment buildings, were submitted by local developers hoping to get up to $60,000 per unit in construction subsidies. In return, the apartments would have been required to have rent controls and be available for low-income tenants for the next five years.

Brent Williams, who submitted an application for four duplexes on Black Hawk Road near the Oriole Avenue intersection, was disappointed with the council's decision.

"Bringing that kind of money in with the new construction in this economy ¦ I sure wish you guys would reconsider this," he told council members, noting the city would get $5,000 per unit to administer the program.

Mayor Tim Hurley said the city would have to hire staff if any of the grants were awarded.

"I don't want council to take opportunity away from anyone," he said. "(But) we've got a giant buyout program coming around the corner."