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New Steam Plant Ready to Heat St. Luke's Hospital and Coe College

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CEDAR RAPIDS, Iowa - The flood of June 2008 wiped out an inexpensive steam system used by the vast majority of downtown businesses in Cedar Rapids. But two large institutions that once depended on that Alliant Energy system and steam pipes throughout the downtown decided to save money by sharing.

On Tuesday, both Coe College and St. Luke's Hospital unveiled a nearly $5-million dollar shared steam production plant. And officials from both institutions expect to save a lot of money over the long haul with their cooperative venture.

A $4.65-million dollar grant from the U.S. Department of Commerce's Economic Development Administration picked up nearly all the construction costs. The plant began steam production in mid July and both the school and hospital celebrated the formal completion with a ribbon-cutting ceremony Tuesday morning. The steam plant, located on hospital property, features four 700 horsepower generators fired by natural gas. There's also a diesel generator system to keep the steam going is case of disruption. Both Coe and St. Luke's use steam to heat buildings and provide hot water. The hospital also uses steam to sterilize equipment.

Businesses saw increases of four to five times pre-flood costs when it became necessary to switch to temporary steam plants. Coe and St. Luke's will never get back to the cost of Alliant Energy steam before the flood. But St. Luke's President and CEO Ted Townsend said the switch to a shared facility will make the current costs more manageable.

"It'll be over a million dollars a year savings to us, " Townsend said adding "It's a big deal, the opportunity the Economic Development Administration gave us with grant funds to create this plant as quickly as we could and recover those dollars was a huge opportunity."

Coe College President James Phifer said it's hard to overestimate just how many financial problems the lack of a central steam system created. "The financial impact on the school in that year (2008-09) was enormous. It turned us upside down for a period of time," Phifer said.

But downtown building owner Scott Olson can only dream of the kind of assistance both Coe and St. Luke's received from the U.S. Department of Commerce to replace a steam system to serve both.

Olson and other owners of the downtown Higley Building paid more than $175,000 last fall for a new gas-fired boiler system to convert from the defunct Alliant piped downtown steam system to an individual building system. A federal Housing and Urban Development (HUD) program was supposed to pick up half the cost of conversion for Cedar Rapids building owners forced to change due to the flooding.

But Olson said so far, for most owners, there's lots of paperwork and bureaucratic setbacks—but few recovery checks.

"There have been very few checks issued and all of them are having the issues I'm having—new regulation and requirements that are occurring after the work's done. But yet you need to meet them," Olson said.

The city's flood recovery director said 126 Cedar Rapids downtown businesses once on the central steam system are eligible and applied for the HUD assistance. But so far only 19 checks total from HUD have gone out. The total amount sent to businesses to help pay for converting from steam to other heating and cooling systems is $610,000. However, HUD did not sent another $350,000 to those recipients because the federal agency determined there was a duplication of benefits.

Greg Eyerly said the city is still having its own problems convincing FEMA to pay for new heating systems in flood-damaged public buildings. A second appeal of FEMA's most recent denial is due October 1st.

But Eyerly said the city is also concerned about getting the promised HUD money to business that paid to convert to new heating systems. Cedar Rapids Mayor Ron Corbett and city staffers are traveling to Washington, D.C. on Thursday for face-to-face meetings with a top HUD official about the delays.

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