Government

Iowa House panel endorses changing lease-purchase law used by Linn supervisors

At issue is whether local government should be required to open bidding

This rendering shows the new Dr. Percy and Lileah Harris Public Health and Child and Youth Development Services building planned for 1019 Seventh St. SE in Cedar Rapids. The Linn County Board of Supervisors in January OK’d its construction in a lease-purchase agreement. (OPN Architects)
This rendering shows the new Dr. Percy and Lileah Harris Public Health and Child and Youth Development Services building planned for 1019 Seventh St. SE in Cedar Rapids. The Linn County Board of Supervisors in January OK’d its construction in a lease-purchase agreement. (OPN Architects)

DES MOINES — By handpicking only a handful of local contractors to make pitches for constructing a new public health building, Linn County supervisors can serve — if nothing else — as an “imperfect” example of how not to handle public infrastructure projects.

Lobbyists for a variety of interest groups made their arguments Monday for changing a longtime, but little-used, provision of state law that allows a local government like Linn County to have a developer build a project to its specifications and then buy the building at a predetermined price.

The Associated Builders and Contractors of Iowa weren’t aware of the “loophole” until Linn County invited only seven contractors to submit proposals for the 55,000-square-foot Dr. Percy and Lileah Harris Public Health and Youth Development Services building at 1019 Seventh St. SE, according to Sandra Conlin. The overall project is worth up to $31.5 million, with the building construction expected to account for about two-thirds of it.

Conlin acknowledged the law was intentionally written to allow the process the supervisors are using, “But Linn County has highlighted why the law should be changed,” she told a five-member subcommittee considering House Study Bill 568.

If passed, the proposal would require public entities to advertise bids for any lease-purchase project over $100,000. Iowa law already requires competitive bidding for most standard public projects over that threshold.

Projects should be awarded to the “lowest responsible bidder,” said Doug Struyk, who spoke for the Iowa Competitive Bidding Alliance.

Linn County’s use of the lease-purchase arrangement interjected subjective factors into the decision-making, critics said.

“Government doesn’t get the right to discriminate,” said Conlin, who characterized Linn County’s approach as rewarding “buddies and friends. Don’t kid yourself that this is an open process.”

To keep the project local and the work with contractors who had helped the county rebuild after the 2008 flood, the supervisors invited seven contractors to submit proposals. Lobbyists contended that more than seven contractors had been involved in the rebuilding effort and that there are many more contractors to consider in Linn County.

The lease-purchases approach eliminates many contractors that ate not in a position to finance such a large project from start to finish, which is when the county would begin to pay for the building. The financing process used also avoids the need for the public to approve a bond referendum.

However, Tom Cope, representing the city of Coralville, said the change would effectively eliminate use of lease-purchase arrangements because they would be less attractive to developers. Keith Saunders, representing the Board of Regents, agreed and said the proposal would throw out a law that is working, just to appease a few contractors who are complaining.

HSB 568, according to Struyk, “sets out exactly what Linn County should have done,” which is have a competitive bidding process for any qualified contractor interested in the project.

In that case, said Gary Grant, representing the county, “it’s our belief Linn County can be example of an imperfect process.”

He advised the subcommittee to leave the lease-purchases process in place, but make clear that any qualified contractor could submit a proposal and not just the ones invited by the supervisors.

Three Republican members of the subcommittee sent the bill to the full Local Government Committee. Two Democratic members declined to sign the bill.

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Committee Chairman Jake Highfill, R-Johnston, invited lobbyists to suggest amendments to HSB 568, but noted the House “funnel” deadline, which requires a bill to be passed by a committee to remain eligible for consideration, is coming up Feb. 16.

l Comments: (319) 398-8375; james.lynch@thegazette.com

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