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County pursuing Shueyville road repair loan

IOWA CITY — An improved 120th Street through Shueyville is one mile closer to reality, but don’t consider the project shovel-ready just yet.
During a Feb. 17 key issues work session, the Johnson County Board of Supervisors directed Executive Assistant Andy Johnson to continue discussion and pursue an agreement with the city of Shueyville to fund the work.
Striking a deal would bring much needed improvements to the heavily traveled, narrow and crumbling road. It would also come with a hefty price beyond the cost of the road work itself, as it would greatly limit projects for the city of Shueyville for the next 20 years.
Johnson told the supervisors it initially looked as though Shueyville did not have the constitutional authority to take on the level of debt the project would require. However, after a review of the city’s finances by Robert Josten, an attorney with Dorsey & Whitney, it was determined the city could, theoretically, enter into an agreement with the county.
The City of Shueyville has wanted to work with the county on a reconstruction of the road since last summer, but 120th Street’s jurisdiction is a unique circumstance; other municipalities in Johnson County maintain responsibility of through-streets within their city limits, but when the Iowa legislature enacted a Transfer of Jurisdiction in 2003, Shueyville was below the law’s population threshold– too small to be required to maintain its Farm-to-Market routes. Therefore, both Curtis Bridge Road and 120th Street through Shueyville remain under the county for maintenance and repair until Shueyville’s population reaches 750 people.
Rather than continuing to patch the poor road, Shueyville requested help from the county for a $2.4 million reconstruction, with the intent of repaying the bond in increasing increments over the next 20 years.
Josten, in an e-mail Johnson shared with the board, said if Shueyville entered into such an agreement, “the city would have no ability to incur any more general obligation debt. And, their ability to incur more debt would increase only as they pay off their existing debt.”
Josten noted the city has $1,766,137 in debt capacity available. The county would bond the project at $2,400,000 over three years. The city of Shueyville would be obligated to repay roughly $1.7 million in increasing increments to the county over the next two decades.
Budget Coordinator Rich Claiborne, in putting together the bonding and payback proposal, noted a general obligation bond uses the debt levy, meaning all Johnson County taxpayers repay the debt. Claiborne proposed a revenue stream be set up in General Basic to receive the payments back from Shueyville.
Shueyville currently has an outstanding general obligation debt of $800,000 for a community center, which limits payback to the county until after 2018, when the center would be paid off.
Supervisor Janelle Rettig asked why it mattered if the city could pay the $1.7 million with the county securing the debt. Johnson said it was his understanding the city could not bind itself to such an amount, and would need to make an annual appropriation out of its budget.
Johnson added the city is legally able to sign an agreement saying what they intend to pay.
“But it’s my understanding from Bob (Josten) that at some point down the road, if the council chose not to pay it, the county would not have the legal recourse to force that (repayment),” Johnson said. Supervisor Terrence Neuzil also noted Shueyville would not be able to incur additional debt before repaying the county.
“That’s the teeth the county needs to ensure these folks are not going to take those future dollars and create future debt without first paying us back,” Neuzil said.
Supervisor Rod Sullivan said if Shueyville experienced rapid development or annexed a large area, the city might be able to make a lump-sum payment.
The proposed project is broken down into two phases, the first being a rural cross-section without curb and gutter, located from James Avenue to the west. Phase two, with an urban cross-section including curbs and gutters, runs from James Avenue east to Curtis Bridge Road.
Even if Shueyville annexes more roads, those roads still fall under county responsibility until the population level is met or exceeded, said County Engineer Greg Parker. Johnson County receives $12-13,000 per year for maintenance on the road, he added.
“That small amount really doesn’t cover expenses on that road,” he said.
Harney expressed his comfort with moving forward contingent upon having a guarantee of payback.
County Treasurer Tom Kriz said the agreement must be ironclad because “it will prohibit them from doing any projects at all for a period of time, up to what they’ve paid back.”
“If we can make this legally work, it really is a win-win,” Neuzil said, if the county would realize savings from less maintenance on the road and avoid $200,000 to $300,000 of needed repairs within the next few years. Neuzil also praised Shueyville as “a community that’s willing to step-up and say ‘we’ll pay you back.’”
As for a timeline, Parker said he was hopeful that bids could be let next year, around this time.
“It’s going to take about a year to design and get everything taken care of,” he said. “This is a pretty big project.”
Actual construction would not be expected until at least the summer of 2011.
“We’re paying this project off in FY 2013. They’re paying us back until 2028… that’s quite a commitment for the city of Shueyville,” Neuzil said. “But, if they’re willing to sign it, then they understand how important this project is to them.”