Linn County's deal to build new health center draws ire

Key lawmaker on 'war path' to require broader bidding on public projects

The Dr. Percy and Lileah Harris Public Health and Child and Youth Development Services building would rise from what’s now a vacant lot at 1019 Seventh St. SE in Cedar Rapids. Linn County supervisors plan to select a developer for it in February. (Gazette photo)
The Dr. Percy and Lileah Harris Public Health and Child and Youth Development Services building would rise from what’s now a vacant lot at 1019 Seventh St. SE in Cedar Rapids. Linn County supervisors plan to select a developer for it in February. (Gazette photo)

CEDAR RAPIDS — Linn County’s novel approach to guaranteeing that local workers construct the county’s public health and youth development services building has sparked the possibility that lawmakers will ban governments from using the practice in the future.

Just two weeks after the Linn County Board of Supervisors approved the county’s first ever lease-purchase agreement — for constructing the Dr. Percy and Lileah Harris Public Health and Youth Development Services building — state Rep. Jake Highfill, R-Johnston, chair of the Local Government Committee, said he plans to fast track a bill that would ban public entities from sidestepping state competitive bidding rules when pursuing lease-purchase projects.

“I’m going to be on a war path,” Highfill said last week. “I have the votes and I plan on getting it through all the way to the governor’s desk pretty quickly.”

If passed, the proposed bill would force public entities to advertise bids for any lease-purchase project over $100,000, according to a draft of the measure. Iowa law already requires competitive bidding for most standard public projects over that threshold.

Sen. Robert Hogg, D-Cedar Rapids, said Wednesday he hadn’t yet seen Highfill’s proposal, but he cautioned against acting too quickly.

“Before the Legislature would act on something like that, we definitely should slow down, take our time and get the facts before we act, rather than just have knee-jerk reaction to a particular project in Linn County or anywhere else,” he said. “It’s not like this is the first time a city or county has ever considered using a lease-purchase agreement.”

Supervisors are unable to use a project labor agreement to construct the Harris building. Legislators last year banned that practice after critics said governments used the deals to exclude non-union contractors. So the supervisors earlier this month approved a lease-purchase agreement in an attempt to garner similar results.


With a lease-purchase agreement, the board can select a contractor to construct the 55,000-square-foot facility, at 1019 Seventh St. SE in Cedar Rapids, and then buy the building when complete at a predetermined price.

The county approved the use of general obligation bonds for urban renewal — not to exceed $31.5 million — to finance he project. The building itself has been estimated at about $21.5 million. That process does not require a vote of the public to approve the bond sale.

While lease-purchase agreements like this appear poised for debate in the Legislature, Linn County supervisors are staying the course.

“I don’t believe that we are going to modify our process to speed it along to short-circuit anything that the state Legislature might be thinking about,” Supervisor John Harris said. “I also don’t think there’s going to be a move on the part of the Board of Supervisors to slow things down to wait and see if the Legislature is going to do anything. We’ve got our job to do and we’re going to do it.”

Supervisors say a lease-purchase agreement allows them to open up the project only to a small group of local development companies, mainly those that helped on recovery projects after the 2008 flood. The Harris building would rise on vacant land that formerly housed another county facility before it was flooded.

The board has sent a request for proposals to Cedar Rapids contractors Miron Construction, Unzeitig Construction, Tricon Construction Group, Kleiman Construction, Ryan Companies and Rinderknecht Associates and Mortensen Construction, which has an office in Coralville.

Proposals are due this month and a contractor is expected to be chosen by mid-February.

“That recommendation will come from the board. We’ll decide on our own and discuss and debate on our own where the most merit lies with the proposals that we’ve received,” Harris said, adding that those will be public meetings. “None of this is going to be decided in private.”

However, opponents like Highfill argue the process itself lacks transparency and allows the board to play favorites with taxpayer dollars.


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“That’s our goal here — to make it open and transparent. To make sure this sort of thing doesn’t happen again. This has been happening across the state so we’re going to fix it,” Highfill said. “If you are not allowing the public to see where their tax dollars are going and open up a fair bidding process, then we have a problem.”

It isn’t clear if Highfill’s bill would retroactively end Linn County’s decision to use the practice, which passed Jan. 3 by a 4-1 vote with Harris opposed.

Hogg last year defended project labor agreements for public projects and this year argues in favor of local control for lease-purchase deals.

“At some level we’ve got to give our local governments the flexibility they need to address the circumstances that they’re in and all those decisions shouldn’t come from the golden dome in Des Moines,” Hogg said.

In addition to discussion at the Statehouse, officials with some of Iowa’s biggest construction associations — including Master Builders of Iowa and Associated Builders and Contractors of Iowa — also have cried foul on the county agreement.

Greg Spenner, president and chief executive of Associated Builders and Contractors of Iowa, called the county agreement an “affront to the taxpayers” and said he, too, was interested in possible legislation.

Spenner added that he and others are looking into the legality of the county’s agreement.

“Those conversations are taking place as well — a review of the options that might be available to us relative to this immediate issue,” he said.

Chad Kleppe, president and chief executive of Master Builders of Iowa, said in an email officials with the association had discovered “a number of areas that we feel conflict with existing Iowa procurement and financing laws.”


“It is unfortunate that there is potential for one proverbial ‘bad apple’ to spoil the whole bunch in this instance,” Kleppe said. “I have to believe that other Iowa cities, counties, schools and community colleges are hoping that any legislation does not hamper their ability to enter into lease-back agreements. It is the hope of (Master Builders of Iowa) that the county would step back and consider the collateral damage they could be potentially causing.”

Linn County Supervisor Brent Oleson, who earlier this month said he was gearing up for a legal fight over the county agreement, declined to comment for this article.

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