WATERLOO -- The city will borrow $3 million from the federal government instead of private investors to help rebuild downtown Cedar River flood walls.

Waterloo City Council members voted 5-0 Monday to approve the loan notes from the U.S. Department of Housing and Urban Development to pay for a portion of the current dam and river wall reconstruction project. The loan will be repaid using the annual $1 million windfall the city receives from landfill profits through the Black Hawk County Solid Waste Management Commission.

Council members previously authorized selling general obligation bonds to finance the downtown project. By borrowing the money from HUD's Section 108 program instead, the city will receive about $725,000 in Brownfield Economic Development Initiative grant revenue to help improve neighborhoods around the former Rath Packing Co.

The city received the grant award in October 2002. For every $4.11 the city borrows from the Section 108 program, up to $8.2 million, it receives $1 in BEDI grants.

Community Planning and Development Director Don Temeyer said it is unlikely the city will be able to utilize the full program amount unless HUD agrees to extend the deadline, currently September of this year.

The city already borrowed $2.1 million for street improvements in the Rath area, repaid with local option sales tax dollars. The remaining $3.2 million to be borrowed was to come from an economic development loan pool for projects in designated brownfield areas.

"With the economy the way it is now, we probably won't get all of that (loan pool) used," said Temeyer, meaning the city would miss out on the related BEDI grant funding.

Assuming the city is able to fully utilize the Section 108 loan, the BEDI grant was initially to be disbursed to the following projects: $500,000 for the riverfront trail project; $75,000 for the interest on the street work; $425,000 for demolition at the former Rath Packing Co. site; $500,000 for owner-occupied home rehabilitation; and $500,000 to make improvements at Lafayette Park.

In other business, council members unanimously approved:

Mayor Tim Hurley's appointment of City Planner Noel Anderson to fill the community planning and development director position when Temeyer retires from the post March 31. Senior Planner Aric Schroeder was promoted to the city planner's position.

A change order adding $73,674 to the library window replacement project being constructed by Failor-Hurley Construction of Hudson.

The additional work is part of a computer room being constructed with a grant from the Black Hawk County Gaming Commission, which is unrelated to the original $242,000 window project.

A change order adding about $19,000 to the current $373,000 contract with D.W. Zinser Co. to demolish part of the former Chamberlain Manufacturing Co. site. The extra cost is for additional asbestos removal not included in original plans.

Another $24,000 was authorized for Howard R. Green Co. to handle inspection and oversight on the demolition project.

Contact Tim Jamison at (319) 291-1577 or tim.jamison@wcfcourier.com.