MINUTES OF THE INFORMAL MEETING OF THE JOHNSON COUNTY BOARD OF SUPERVISORS:
JULY 24, 2008
Chairperson Sullivan called the Johnson County Board of Supervisors to order in the Johnson County Administration Building at 11:24 a.m. Members present were: Pat Harney, Larry Meyers, Terrence Neuzil, Sally Stutsman, and Rod Sullivan.
County Attorney Janet Lyness said the City of Iowa City owns three properties directly east of the Sheriff's Office and south of the Courthouse on Harrison Street and Capital Street. The City of Iowa City contacted Johnson County this week because they are interested in selling the properties. They have also contacted the University of Iowa, even though the County asked them not to yet. Lyness said because of the location, it would be where the County might want to build a Justice Center. She said this is the County's chance and opportunity; if the University of Iowa buys those properties the County will never have another opportunity to get them.
Stutsman said the County should buy the properties. Lyness said the properties were recently appraised by Casey Cook. 510 South Capital Street is at $124,000, 504 South Capital Street is at $180,000, and the East Harrison Street is at $180,000. Lyness said they are currently being rented but the rental agreements run out on August 1, 2008. Meyers said the City of Iowa City is not going to renew the leases. Lyness said the rent for 510 South Capital Street has been $1,125, $1,760 for 504 South Capital Street because there are three units in it, and $1,645 for the two units on East Harrison Street. Lyness said if the County chose to buy the properties, obviously the rental agreements would be gone, but if the County is to do anything with the properties it could re-rent them. Meyers said he has worked in every one of those and the County does not want to get into any rental agreements because they are a mess. Harney asked Lyness when Cook had appraised the properties. Lyness replied very recently. Neuzil asked if the City of Iowa City gave a timeline at what they are looking at. Lyness said no, but because they are approaching the University of Iowa, she thinks the County should move quickly.
Neuzil said, obviously, the issue is timing and Lyness agreed. He said the other issue is where the County would come up with the funding for the purchases. He said if the County did pursue the three properties, he thinks the study of potential locations is a bit moot. Neuzil said obviously the County can try to resell the properties. Stutsman added the properties would be great resell properties. Neuzil said, originally, his thought was that wherever the County purchased property they would do so with a bond issue and not out of its fund. Stutsman said the purchases are small enough that the County could almost get it out of its reserve funds. Executive Assistant Mike Sullivan said the County could use its reserve funds because it has a little over $8,100,000 in cash reserve funds right now. M. Sullivan said an option is the County paying for the properties now and then doing a reimbursement resolution to reimburse the County out of the bond proceeds for the acquisition of the properties.
Harney said Meyers is right; he talked with Iowa City Parking Superintendent Tom Hansen some time ago and he told him not to rent the properties because they need so much upgrade that they are too costly for even the City of Iowa City to maintain for rentals. Harney said Hansen said the County is better off tearing the homes down than trying to upgrade them so they can continue to be rental properties. Stutsman said that is a lot of money the County is missing out on if the County doesn't rent them. Harney repeated that Hansen told him the County would have to put more money in the properties to fix them up to meet the criteria. Meyers said he has done an extensive amount of work in every one of the properties and the maintenance is going to be a significant issue. Stutsman asked how the City of Iowa City got by with it. Meyers said apparently the City has deeper pockets than the County. Meyers said the buildings are owned by the Parking Department and managed by the Iowa City Housing Authority. He said it has puzzled him over the years why the City of Iowa City would put that amount of money into them because there is a limit to how much rent one can get out of them. Meyers said it is not like a brand new downtown apartment; the houses are old and were never remodeled well. He said there are times he can't believe the City of Iowa City got someone to sign rental agreements on the places.
Harney said he thinks it would be in the County's best interests for the Board to look at purchasing the properties, but he is not so sure he'd want to pay the price the City of Iowa City is asking right now. Neuzil said he thought the prices weren’t too out of range. Stutsman agreed. Neuzil asked if the County would have an assessment done as well because the Board normally uses Cook anyway. Lyness said she thinks the Board could probably go with Cook's appraisal because it was done recently and it is an accurate appraisal. Stutsman said she wants to move quickly on this because not moving quickly enough has played against the Board in the past. She said she would be willing to bet the University of Iowa will try to grab the properties up as fast as it can. Stutsman said the University of Iowa is very aggressive in buying properties and these would fit in well with what it is thinking. Meyers said if the University of Iowa got the properties, then it really seals the fate of the current jail. Stutsman agreed. She said the Board doesn't have any options then.
R. Sullivan asked if the County is bidding against the University of Iowa. Lyness said apparently the University of Iowa has expressed some interest already to the City of Iowa City but she doesn't know. R. Sullivan asked if the County has first choice. Stutsman said no. Lyness said she tried to talk to the Iowa City Attorney and asked if they would let the County make an offer before they contacted the University of Iowa City. She said they chose not to. Neuzil said if the University of Iowa outbids the County, then it was the City of Iowa City's determination that they don't want the County's Courthouse. He said that is really what it is going to come down to. Lyness said she thinks the City of Iowa City may say, even if the University of Iowa offers more, that they are going to sell to the County.
R. Sullivan said he wants to go on record as saying that it makes him angry with the City of Iowa City after all the conversations he has had with the City of Iowa City staff and Iowa City Councilors about how important it is that the Courthouse stay right where it is and remain an integral part of downtown, and then they go and do this, without consulting the Board first and asking how it impacts them and their future plans. He said it just makes him angry. Harney said he was called a year ago saying the City of Iowa City is getting ready to sell the properties and wanted to know if the County would be interested. R. Sullivan said he is still angry at the upper level staff and the Iowa City Councilors. Meyers said he wonders how much they knew about it. Lyness said it may be more lower level staff too; she doesn't think the Iowa City City Council necessarily gave the direction to contact the University of Iowa. Neuzil and Harney agreed. Lyness said it may have been lower level staff. Meyers agreed and said they are in the Parking Department. R. Sullivan asked if the City of Iowa City can pull it back. Lyness said they could just decide they are going to sell to the County. R. Sullivan said in other words the City of Iowa City is not required to take the highest bid. Harney said he thinks the City of Iowa City wants to sell the properties because the parking funds purchased them and the funds have to go back into parking.
Neuzil said he thinks the Board would look at pursuing purchasing the properties using County reserves and potentially draft a resolution so the County will be reimbursed by bonds or sales tax. Neuzil said it would not jeopardize the study being done right now because the properties could always be resold if they decide not to put an annexation or a Jail there. Neuzil said he thinks it is still a good investment no matter what. Stutsman agreed. Meyers said if the Board decides to put the Jail in an entirely different location he is sure the University of Iowa would be right there. Stutsman said there is nothing saying the properties have to go to the University of Iowa; they could go to developers. R. Sullivan said there is nothing saying that the University of Iowa won't pay $1,000,000 right now for the properties, and then the County would be out of luck. Stutsman said if they do then the Board can put some pressure on the Iowa City City Council. Harney agreed. R. Sullivan said that pressure obviously didn't work because the Board has been talking with the City of Iowa City for years. Meyers said he isn't sure that it's because of the Iowa City City Council. R. Sullivan said then the City Council dropped the ball. Stutsman said some of the County's staff would never initiate that without running the idea by the Board.
Harney said the other thing the Board has to keep in mind is even if the County purchases the property they have two options; either they tear them down and pay for them at the County's expense or they try to rent them and put money back into them. Neuzil said or the County could just let them sit there. Harney said that would cause liability issues. Neuzil said there are houses that are sitting. R. Sullivan said they could board them up. Neuzil said he doesn't think the Board would want to do anything until they determine if it is the location for a jail. He said one would think the Board would have that decision made by the end of the year. Meyers said it probably wouldn't be much of an issue. R. Sullivan said the County has houses that it's taken back through tax issues that have sat for a year boarded up. Meyers said they wouldn't want to let them sit there for five or ten years. Harney said that the pipes could freeze during the winter.
Stutsman said if the County buys the properties, should the Board stop looking for another site and just say this is where the jail will be built. Neuzil said he thinks that it obviously gives it more weight, but he would hate to ruin the process that has taken place right now. He said he thinks it is fairly easy to argue that if they take the people's money and purchase the properties, that if the Board chooses not to put the jail in that location, the County will be able to get the money back. Neuzil said he thinks they are pretty hot pieces of property. M. Sullivan said, strategically, he doesn't think the University of Iowa would interfere with the County in acquiring the property if they knew it was going to acquire the property. He said he is confident that if the County acquires the property and the Board decides not to use it, the University of Iowa will purchase the property and the existing Jail. M. Sullivan said his personal feeling is either the County buys it or the University of Iowa buys it, because that is an area that people don't want a lot of private development going on. M. Sullivan said timing is everything when it comes to acquisitions.
Neuzil asked if M. Sullivan was recommending that the Board go ahead and direct Lyness to contact the City of Iowa City. M. Sullivan said yes. Harney said Lyness should see if the price is negotiable because it wouldn't hurt to ask. Lyness said she will do that. Neuzil said if the price goes up, he wants to rethink it because he doesn't want to get into a bidding war with the University of Iowa. M. Sullivan said the Board will have to go through that process anyway because there will be public hearing aspects. He said his strategic opinion would be that if the University of Iowa knows the County is serious about buying the properties, he doesn't believe they will come in and try to trump the County. M. Sullivan said he believes the University of Iowa knows that if the location doesn't work out for the County, they'll still have acquisition of the property.
R. Sullivan said, historically, there is a precedence that worked out really well, and it is the purchase of the land on Mall Drive. He said the County bought it; it didn't end up working out for the County, but it did end up working out great for the Iowa City Community School District and the public in general. R. Sullivan said the County lost a little bit of money, but not a lot. Stutsman said they lost the interest money. R. Sullivan said that was a case of the County being real forward thinking, and sometimes they have to be able to take those risks. M. Sullivan said again, timing was everything in that situation as well. Stutsman said she thinks it also said the Board can do it; take a chance, buy property, and think about building some buildings while getting things started.
Lyness said the assessed values are a little off. 510 South Capital Street is listed at $124,000 and was assessed at $121,460; 504 South Capital Street is listed $180,000 and was assessed at $163,640; and the Harrison Street property is listed at $180,000 and was assessed at $135,600. She said it may have to do with the conditions inside. Stutsman asked Lyness if she is sure there was no flood damage on any of the properties. Lyness said she hopes not since the properties are on the east side of the Jail. Harney said, as a general rule, 10% above that is what the actual property value probably is. M. Sullivan said when people are under the threat of condemnation, the figures really change and get elevated. M. Sullivan said there are a lot of reasons for that; some of it's legal and some of it is the market. He said it would be an agreement between two municipalities. Neuzil said as long as there is a resolution that the County can be reimbursed, it makes it a little more arguable.
R. Sullivan said he is hearing a couple different things in terms of moving things forward. He said the Board definitely wants Lyness to pursue it but wants to talk first about assessed values as opposed to what is listed. R. Sullivan asked if the Board wants to go ahead and give Lyness the authority to go ahead and make an offer at up to this level. Harney said he wants to find out first if it is negotiable. He said he would like to have Lyness and M. Sullivan working closely together. Neuzil said he also would like to see a resolution written. Stutsman said she just wants the Board to move as quickly as possible. M. Sullivan said that is what he was going to say; he thinks that is a big part of it. He said Lyness knows how to deal with those issues. Neuzil said purchasing the property does not mean the Board has made a decision yet. R. Sullivan asked if the Board is talking about spending up to $484,000 for the three properties. Lyness suggested the County contact the City to see what can be done. Neuzil said they should see if it it's negotiable.
Stutsman said they should go into executive session when the negotiations start. M. Sullivan said he will then be able to talk a little bit more about the financing aspects of it. He said the reserve issue was a time issue of the Board; if they decide they want to issue debt for the acquisitions down the road that is fine. M. Sullivan said he will just make a fact of a reimbursement resolution to do so; it will be the Board's call. He said using cash reserves allows the Board the flexibility to move quickly. Lyness said her understanding is the Board wants her to negotiate the best price possible with the City of Iowa City and to move as quickly as possible. Stutsman said yes. Meyers asked if the $180,000 was the appraised value. Lyness confirmed. Meyers asked if the City of Iowa City has set an asking price. R. Sullivan asked if the prices were the asking prices. Lyness said no, they are the appraised values. Harney said the Board needs to find out what the actual asking price is; and they need more information before they can say to go ahead with the plan.
Adjourned at 11:50 a.m.
Attest: Tom Slockett, Auditor
By Kaitlyn Dodds, Recording Secretary