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Streets project inches forward

By Lori Lindner
North Liberty Leader
NORTH LIBERTY– Visiting the city’s Streets Maintenance facility in North Liberty was once described as like being in third world country, due to its small, rustic and outdated office that became less functional as time went by.
But the streets department will soon be brought into the 21st century.
Last Tuesday, Jan. 10, the North Liberty City Council approved $2,603,000 to build a new facility for the Streets Maintenance Department at its current location off Front Street. The project amount includes a base construction bid of $1,931,000 for a 23,000 sq. ft. building for office space, shop space and storage of streets department vehicles and equipment; $290,000 for a vehicle wash bay; and $33,000 for a concrete practice pad for volunteer fire department training purposes. The approved amount also includes $238,000 for architects’ and engineering fees, plus $111,000, or five percent, in contingencies.
The construction contract was awarded to Garling Construction of Belle Plaine, the lowest of 11 bidders on the project.
Originally estimated at $2.3 million, city staff and design architects from Shive Hattery recommended an increase in the project budget to include the wash bay now, rather than later, as a cost-saving measure.
“The vehicle wash building is the highest priority for the streets department,” said Brian Gotwals of Shive Hattery. “Just keeping those vehicles clean is going to lower maintenance costs for the vehicles.” In addition, waiting to build the wash bay could result in increased costs of labor and construction materials, potential surcharges for a stand-alone project and premium pricing for smaller projects, common practices in the construction industry.
The council approved the contract, adding in the wash bay and concrete pad, in a 4-1 vote. Council member Terry Donahue offered the lone dissenting vote because, he said after the meeting, he didn’t agree with the wash bay add-in.
“I voted no on the contract very simply because a wash bay for washing trucks in amount of $290,000 seemed quite excessive,” Donahue said. “I feel it was something that did not have to be done at this point in time, and thought that other provisions could have been made.”
The project will be financed through a combination of funding sources. Approximately $1.8 million will be borrowed through a Road Use Tax revenue bond, $270,000 from the city’s Road Use Tax cash reserves, $33,000 from the fire department’s capital reserve, and $700,000 through general obligation bonds to be issued by the city later this year, for a total cost for the project and borrowing fees estimated at $2.8 million.
The city’s Road Use Tax fund is money distributed by the State of Iowa to cities and counties from taxes collected on gasoline, vehicle registrations and various motor vehicle use taxes. The state’s distribution to cities is based on population recorded in the national 2010 census.
City Administrator Ryan Heiar estimates that, starting in fiscal year 2012, North Liberty is expected to receive $1,136,790 in state Road Use Tax funding based on the state’s per capita distribution rate. The amount fluctuates from year to year, Heiar noted, depending on actual taxes collected by the state.
The council unanimously agreed to issue up to $2.2 million in revenue bonds to be paid back from the city’s Road Use Tax fund for the construction project; however, Donahue didn’t agree with Heiar’s funding formula, which left $700,000 to be borrowed through general obligation bonds.
“I’d rather take the entire project budget– the $2.2 million– out of the Road Use Tax fund,” said Donahue after the meeting. “In effect, by issuing $700,000 in general obligation bonds, we have to realize we are raising people’s taxes by that $700,000 too, instead of just taking it from the Road Use Tax fund.”
Donahue said he plans to keep pushing for the entire amount to be funded with the approved $2.2 million from the Road Use Tax fund.
“I am hoping to do the project with the $2.2 million, and not pass anything back to the taxpayer,” Donahue said.
Heiar said he was not sure the amount of reserves in the city’s Road Use Tax fund would support that much debt on top of regular Streets Department expenses and equipment financed through the fund.
“We are trying to be somewhat protective of that fund so that later in the decade, when expenditures are surpassing revenues, we have that reserve to fall back on,” Heiar told the council.
In a post-meeting interview, Heiar elaborated on his concern.
“We found ourselves at the end of this past decade struggling for cash in that fund to maintain operations, purchase needed equipment and to get projects done,” said Heiar. “The point is to protect that fund and build a surplus over the next five or six years, and use that surplus if we need it until a new census comes out. Of course, we can’t predict whether gas tax will increase, or what revenues might come in. It’s just a matter of making sure the resources are there for the Streets Department.”