The economic fallout from the derecho that swept across Iowa in August resulted in Cedar Rapids businesses losing more than $133 million, according to a new report released by the city.
The National Oceanic and Atmospheric Administration named the Aug. 10 derecho as the most costly extreme thunderstorm in history. Cedar Rapids and eastern Iowa suffered the most severe hardships from the storm.
In Cedar Rapids, the worst financial losses came from structural damage, totaling $69.3 million.
Downed powerlines, debris and the lack of internet and phone communications forced businesses to temporarily close, resulting in $41.4 million in missed sales and lost revenue.
Unpaid wages to workers made up $9.1 million in losses, according to the report.
Only half of the 111 businesses that responded to the city’s survey said insurance would reimburse economic losses.
“Without a doubt, 2020 has been a challenging time for business on multiple fronts,” according to the report by Cedar Rapids’ economic development division. “It is perhaps no surprise that about three in 10 companies participating in the storm loss survey reported a need to take on additional debt in the current fiscal year.”
Out of the businesses that responded, 20% said they expect short-term funding challenges in the next four to six years. Business owners in the service and retail sectors especially said economic hardships from the derecho have been compounded by the pandemic.
About 60% of small businesses that responded to the survey reported a median loss of $8,000 each, according to the report.
For the future, the report recommends Cedar Rapids “continue to strengthen and diversify the local tax base” by supporting policies that create jobs and businesses, which will strengthen the city’s financial resiliency and its ability to endure the economic pains of future natural disasters.
“When reviewing derecho costs and impacts found in this report, it becomes clear that forward-looking perspective should not underestimate the likelihood of extreme costs and volatility of outcomes associated with future weather-related natural disasters of all types,” according to the report. “In this context, one of the most effective, long-term mitigation actions any local government can take is to continue to strengthen and diversify the local tax base.”