Iowa Senate bill would give counties more latitude to borrow money

Language in a large appropriations bill approved by the Iowa Senate could give Johnson County more freedom in borrowing money to put toward jail and courthouse improvements.

The provision, which faces an uncertain future in the Legislature, would allow Johnson County to borrow up to $1.2 million through a bond issue for a project of any size without going to voters.

Currently, the county and others its size cannot bond for projects involving public buildings that cost more than $1.2 million without holding a referendum.

The change would apply to all 99 counties, but Johnson County in particular could benefit in the near term after voters this week denied the county's request for a $43.5 million bond to pay for a justice center, which would have a new jail and expanded court space.

Johnson County Board of Supervisors Chairwoman Janelle Rettig said having greater authority would be nice, but $1.2 million would come nowhere close to meeting the overall jail and courthouse needs.

“I know this sounds terrible, but $1.2 million doesn't buy you much anymore,” she said.

Still, she and other county leaders have said there are critical jail and courthouse deficiencies that must be resolved if they are to remain in use. They have identified $3 million in jail repairs, including $1.6 million for new doors, locks and control mechanisms.

Sen. Bob Dvorsky, D-Coralville and chairman of the Senate Appropriations Committee, said with voters rejecting justice center plans not just this week but also last November, the county is going to have to explore alternatives.

“Since the justice center was defeated, unfortunately, that's something they may look at,” he said of the expanded bonding authority.

Johnson County Treasurer Tom Kriz said the county must consider a variety of options and this could be one of them.

A jail or courthouse project is eligible for what is known as general county purpose bonds. State code says counties can issue the bonds themselves as long as the “cost” of the project does not exceed financial limits based on population. For Johnson County, the ceiling is $1.2 million. It's $1.5 million for Linn County.

The new language would replace “cost” with “principal amount of the bonds,” meaning a project's price tag could be higher than the amount borrowed.

So, right now, bonds could not be issued for a $1.6 million project like what Johnson County says is needed at the jail without voter approval. But under the proposed bill, the county would be able to borrow $1.2 million and then cover the rest another way.

The county can always pay for such projects out of its general fund, but one of the advantages of bonding, Kriz said, is counties can collect a certain tax levy on otherwise-exempt properties in tax increment financing districts to pay off the bonds, spreading the expense more evenly among property owners in the county.

He said the proposed language in the bill would give counties more latitude in paying for projects.

“It certainly would be a shame not to do a project that's going to be $1.3 million or $1.6 million because of the restrictions as they are now,” he said.

Even for bond issues less than $1.2 million, the public can petition for a special election.

Dvorsky said he was not sure what chance the language, pushed for by Polk County, had in surviving the legislative process. He said the Democrat-controlled Senate inserted it in the standings appropriation bill, the Republican-controlled House then removed it and the Senate put it back in.

The bill,

Senate File 452, is in a conference committee of House and Senate members who will try to reach a compromise on the wide-ranging piece of legislation.