Supervisors nix IFA loan application

Without taking a vote the Greene County board of supervisors said “no” Monday to a request that the county borrow $1 million to assist a foundering rental housing project in Jefferson.

The supervisors held a special meeting last Wednesday to hear a presentation from Greene County Development Corporation Ken Paxton, GCDC board member Sid Jones, and developer Duane Jensen of JCorp about the Iowa Finance Authority’s Workforce Housing loan program. The program will lend up to $1 million at 1 percent interest to cities or counties to support the development of rental housing.

The Workforce Housing program gives cities and counties flexibility in deciding to lend the borrowed money to developers or to provide it as grants.

Jensen, who has purchased property for the Water Tower rental housing project in northwest Jefferson, had hoped to access those funds to complete the financing package for the project. JCorp has been searching for alternative financing since a local investor backed out two months ago and the appraised value of the completed project came in 26 percent lower than the cost to build it.

JCorp proposed receiving $625,000 of the IFA money as a grant and $375,000 as a loan.

GCDC had approached the Jefferson city council about the loan on Oct. 13. At that time, the council gave the go-ahead to JCorp to complete the loan application, but comments from the council were mixed and no vote was taken about filing the application with the IFA. The council at its Oct. 27 meeting passed a motion not to approve the application. The full $1 million would have been calculated in the city’s total debt, regardless of provisions for JCorp or GCDC to repay it. That would have increased the city’s indebtedness to about 60 percent of its total debt capacity, something the council was not willing to do.

Because the IFA program is open only to municipalities and counties, JCorp and GCDC turned next to the county. The deadline for the application was Monday (Nov. 2) at 4:30 pm.

The supervisors discussed the proposed loan application in the early part of their Monday meeting before scheduled agenda items, and again as an agenda item. They summarized their previous conversation for Paxton arrived for the agenda item.

Their primary concerns were that without a signed agreement as to what parties other than the county would be liable for repayment, the county could end up paying the entire $1 million loan; the viability of the project when comparing the rents that would be charged and the prevailing wages of the jobs attracting newcomers; and the short timeline on the request.

“I don’t think we’ve ever been a board opposed to economic development, but my feeling is that with the time schedule, I’m not comfortable enough to support it from our side at this point,” board chair John Muir said. “I don’t make my best decisions that quickly, and we’re talking a large amount of money. Just right now today, I can’t support this.”

“I think it’s unfortunate that this got dropped on us at the last minute. It isn’t GCDC’s fault, but I know it’s a concern for everybody without having the time to look at everything and to decide what’s the best thing for us to do,” supervisor Guy Richardson said. Richardson lives in Jefferson and serves ex officio on the GCDC board. He walked a fine line Monday between promoting a project of high importance to GCDC and serving as supervisor.

“I worry about people being able to afford to live in these units at some of the wages that there are in the county. If they don’t get full, what happens then? I know no one has a crystal ball…” supervisor Dawn Rudolph said.

Richardson cut in – “I agree with you on that, and I think the unfortunate part of this is that had we been involved from the beginning, and asked to look at supporting this and doing this, we might have had more discussion on that and had more input given to us as far as knowledge, but now we just don’t.”

Supervisor Mick Burkett asked how much the city council was involved. Paxton answered that the city administrator was involved more in the project than the city council. He said that two weeks ago the city council supported it. “They came back two weeks later at the next meeting and said ‘Nope, we changed our minds. We’re not going to do it.’ That left us, unfortunately, coming to you guys and giving you no time and saying we had no clue this was coming. All of a sudden we’re shut out,” Paxton said.

“My feeling is that if Jefferson doesn’t want to support building in their city, why should we as representative of the county do that? What should the county do it if the city doesn’t want to?” Burkett asked.

“I understand all your points. You say ‘they can’t afford the rent.’ Well, if we don’t ever build them, we’ll never find out. If we keep trying to build low price housing forever, we’ll never expand our population. We’ll never have people in those kind of buildings. On top of that, all those managers who now don’t live in our county will be taken away from our county. And you’re right, it was the city’s responsibility. If GCDC could have applied for this loan, we wouldn’t have asked anybody,” Paxton answered.

Richardson told Burkett, “I don’t think it’s fair to say the city didn’t support development. I think the city has supported and does support development to a great degree…. I think it’s unfortunate that they waited as long as they did to go through the process of checking with their bonding people and finding out that their debt ratio was at a point where taking on a loan of this size was going to put them in a bad position. They should have known that going in. This whole discussion, if it had to take place with the board of supervisors, should have taken place a long time ago. That’s the unfortunate part of it. But I certainly don’t think we want this board to go on record that the city’s not in favor of development. I think they are. I don’t think it’s fair to say that ‘if the city’s not in favor of it, why should we be’.”

To open discussion on the agenda item, Richardson had made a motion to approve the loan application with a stipulation that should the county be offered the loan by IFA, GCDC and the developer would come to an agreement with the county about repayment before the county actually accepted the loan. There was no second on the motion prior to the discussion. At the close of the discussion, Muir asked again for a second to the motion. Hearing no second, the motion died. The supervisors did not approve the loan application but didn’t vote against it.

 

Print or share article:Print this pageEmail this to someoneTweet about this on TwitterShare on Facebook