Cary Conger debunks Adam Ledford's Sac City street improvement project explanation letter in the January 8, 2013

Sac Sun City Administrator explains the street project (rebuttal in italics is from Cary Conger) By C. Adam Ledford, City Administrator, City of Sac City In 2013, the City of Sac City is planning to begin a project to improve several streets throughout the community. Following is some information to answer some common questions. In 2007, the City began the process by hiring JEO, an engineering firm from Carroll, to perform street condition assessments. Based on those assessments, in 2011 the City hired I&S Group (formerly Kuehl and Payer, LTD) to serve as project engineers for a major street improvement project. I&S Group were hired, over a prominent Iowa firm who submitted a lower bid, because they were local. However, I&S Group are headquartered in Mankato, MN, and the project engineers work out of the Algona office. Per the local office, only thing done locally was finding location of street corners. The streets were chosen based on need as determined by the 2007 assessment. Among the streets chosen for this project are many of the oldest residential locations in the City. In 2012, I&S Group conducted core sampling of the targeted streets to determine the condition of foundations in order to make expert recommendations on the type of improvements needed. Those samples indicated that most of the streets were experiencing extremely deteriorated foundations. Based on the samples and the known age of the utilities (water, sanitary sewer, natural gas, storm sewer lines some older than 90 years), I&S Group recommended a need to perform several complete street replacements. I&S Group estimates the project will cost $3,092,538 to complete. However, the two bids received last year were $2,322,180 (25% lower) and $1,765,052 (43% lower)and they were solicited in the middle of the work season when bidding is normally higher. Not only did I&S Group engineers make numerous errors on estimated assessments, they also vastly overestimated the cost of the project based on the bids received last year. The City has 2 options on how to pay for most of the project: general obligation debt or a combination of general obligation debt and special assessment. The State of Iowa limits general obligation debt of a city. As of July 1, 2012, that limit is $3,768,696 for Sac City. The City currently has approximately $285,000 of outstanding debt obligation which reduces the available amount to roughly $3,383,696. This means, if the estimates are correct (and they sure were not last time), the City would have an estimated $250,000 bonding capacity remaining (actually $1,061,516 or $1,618,644 based on actual bids). If the City chooses to pay for the project fully with general obligation debt, it would increase property taxes by approximately $7.90 per $1,000 of taxable value for all properties in Sac City. A home with a taxable value of $70,000 (assessed valuation of $137,904) would experience an increase in property taxes of $553 over the 10 year repayment period. I dont why Adam chose such a highly valued home. According to the

2000 Census, only 38 homes in Sac City were valued above $100,000. 55.3% of Sac City housing was valued less than $50,000. The median valued home was $46,000 which today would have a taxable value of $23,349.60. That median valued home would experience an increase in property taxes of $184.46 per year over the 10 year repayment period. This option would significantly limit the Citys ability to address other community needs (like purchasing the Community Recreation Center or building a residential housing development similar to the one in Arcadia that Shirley Phillips and cronies would like to have done) or emergencies for a period of 5 years. Absolutely, the only emergencies I can recall a city in Iowa experiencing over the past 20 years are flooding and tornadoes. I cannot envision the Raccoon River flooding Sac City. In either case, the federal government would step in to help out affected business and homeowners. If the City chooses to use the combination method to pay for the project, property owners within close proximity of the improvements would be assessed 30.59% of the cost of the project (actually 40.74% or 53.6% based on last years actual bids) (based on the estimates $946,133). The remaining 69.41% (an estimated $2,146,405) (actually 46.4% or 59.26%) will be paid by the City using mostly general obligation debt. This means, if the estimates are correct (they were not; again, the estimates were 133% and 175% above the actual bids received), the City would have roughly $1,200,000 of debt capacity available for additional needs and emergencies. Special assessments may be paid directly at the conclusion of the project or over a period of time as along as 10 years at a nominal interest rate (usually 1% to 3%). Again, based on the actual bids received the City could pay for the entire project and still have $1,061,516 or $1,618,644 of debt capacity available for additional needs and emergencies. Historically, Sac City has used the combination method for street improvements. Historically, Sac City has been different than the vast majority of Iowa cities on natural gas service, garbage service, number of employees, employee wages and special assessments and it has cost the residents dearly. Its time to stop being different right now! According to the County Assessor, Bob Hawks, special assessments is the old way of paying for street improvements and it made sense when converting from gravel streets to paved streets with curb and gutter because that did, in fact, improve property values. Bob advises less than 10% of the cities in Iowa use special assessments. None of the other towns in the County used special assessments this past year when doing street improvements. Also, only two of the ten comparably sized cities in west central Iowa use special assessments to pay for street improvements. I would be happy to answer any further questions you may have at the City Office. Shirley Phillips would like the City to build a housing subdivision like Arcadia did. The fact is, the City of Arcadia had little to do with the building of that subdivision. The land for the 42 lot subdivision was donated. The 501.c3 non-profit Arcadia Betterment and Development Corporation had the City TIF (Tax Increment Financing) the land providing for all infrastructure in the subdivision to be paid for with the additional taxes generated by the sale of lots and construction of homes. The lots sell for $2,500 each. The homes are valued at $150,000 plus. There has been absolutely no cost thus far to

the City of Arcadia or its residents residing outside the subdivision. For verification, call Erin Sundrup at 712-689-2683.