Linn County aims project to local contractor

CEDAR RAPIDS - Linn County supervisors envision the county's new public health and youth development services building as showcasing energy efficiency and honoring revered community icons Dr. Percy and Lileah Harris.

Its construction also would be a nod to local contractors - and, as such, marks a major departure in the way the county intends to approach the project.

That approach does not include the typical seeking of bids from a broad array of contractors, nor the public's approval of up to $31.5 million - supervisors say it will be millions less - of bond debt financing.

Instead, the Board of Supervisors could choose next week to pursue a lease-purchase agreement for the new building in southeast Cedar Rapids - the first time the county has used that financial technique.

As proposed, supervisors plan to finance the construction with general obligation bonds - a loan, likely at 2 percent interest, they have said. They've also said the building's final cost is likely to be closer to $20 million, with the higher estimate intended to cover architectural fees and all contingencies.

A traditional general obligation bond of that size typically requires voter approval with a 60 percent supermajority required to pass.

But supervisors plan to finance the new building using a state-approved, 'reverse-referendum” rule instead.

The rule allows the county to borrow for construction in an urban renewal district without voter approval. But voters could petition to hold a vote on the bonds - thereby being a 'reverse referendum.”

'If you do a lease-purchase and it's structured properly, then a public vote is not necessary, and that's where it can maybe get contentious or controversial,” Jeff Schott, director of the University of Iowa's Institute of Public Affairs, said Friday in an interview about the process.

While supervisors say a lease-purchase agreement is the best way to pursue a locally built project, County Auditor Joel Miller - who is exploring a run for supervisor himself - argues the public should weigh in.

He has begun circulating a petition calling for a public vote, but does not hold out hope he'll be able to collect enough signatures in time.

The 55.000-square-foot building, which will be named for the Cedar Rapids civil rights leaders, is planned for county-owned land at 1019 Seventh St. SE. It will house the county's public health and child and youth development services departments, as well as a community center with a public gymnasium, playground and green space.

‘Turnkey' agreement

On Wednesday, supervisors will hold a 10 a.m. public hearing on the project - and possibly vote on it - during their meeting at the Jean Oxley Public Service Center, 935 Second St. SW.

While the county has pursued reverse-referendum funding models before, a lease-purchase agreement is new.

In the proposed 'turnkey” agreement, a contractor would assume any construction risks while building the facility. The county would lease-to-own the building and pay the project's preapproved price when construction is complete.

Marion used such an agreement in 2012 to have Miron Construction of Cedar Rapids build a police station. The Cedar Rapids Airport Commission in 2015 used it to have Kinze Manufacturing of Williamsburg build a hangar.

Linn County supervisors say one of the benefits of a lease-purchase agreement is that it allows the county to use local contractors - rather than a standard open bidding process.

The board earlier this month sent a request for proposals to Cedar Rapids contractors Miron Construction, Unzeitig Construction, Tricon Construction Group, Kleiman Construction, Ryan Companies and Rinderknecht Associates. The document calls for a contractor to be selected in February.

'Basically, who we decided to send the RFPs to were those contractors that built us out of the 2008 flood,” Supervisor John Harris said. 'They got preference.”

Harris in July expressed some concerns with using a lease-purchase agreement, saying it would delay construction and potentially add to the project's cost.

Ultimately, Harris was the only supervisor to oppose using the method.

The construction timeline was pushed back. It now has work starting March 1, with completion by September 2019.

Harris said he's been pleased with the transparency of the process so far.

'None of this was done in secret or behind closed doors.”

PETITION FOR VOTE

Per code, voters can force a public vote on the matter if a petition signed by at least 10 percent of the voters in the last general election - more than 11,710 signatures - is submitted to the county.

Auditor Miller this week began collecting signatures to call for a public vote. He said in a news release Thursday he isn't opposed to the Harris Building or its purpose, but rather to the process. He argued the board has not been transparent enough.

Still, Miller acknowledged that getting the required number of signatures on a petition before the meeting Wednesday is unlikely. He had more than 50 online signatures Friday afternoon.

'I'm going to submit them all, but do I expect to get 11,000? No,” he said. 'That's a pretty steep climb.”

l Comments: (319) 339-3175; mitchell.schmidt@thegazette.com