What Now?

Last week's announcement that the Vision Iowa board will contribute $20 million to Davenport's $113 million riverfront-revitalization project was, with good reason, greeted with smiles all around the Quad Cities.

The project's major components include the Figge Arts Center, two parking ramps, a River Music History Center, expansion of the Adler Theatre stage, a skywalk bridge across River Drive, and an AgTech Venture Capital Center. Financing for the project is coming from a variety of private and public sources, and different components will be built or operated by the city, the DavenportOne Foundation, and Kaizen Company of America.

Yet it won't be until the end of the month that it becomes clear whether the multi-faceted River Renaissance on the Mississippi project will even get off the ground. The state money - from a pot of approximately $190 million set aside for culture and tourism projects - is contingent on a Scott County contribution of $5 million, which must pass at least one test this month, and perhaps an even tougher one this fall.

The county board has agreed to issue $5 million in bonds for Davenport's Vision Iowa project - approximately 4 percent of the total cost of the proposal's components - but a successful petition drive could bring that bond issue before county voters. And if 60 percent of voters don't support the bonds, both the county and the state money will probably disappear, and maybe River Renaissance with it.

A group of citizens led by Tom White and mayor candidate John Waddell are circulating petitions to force the bond issue to a ballot. If the group collects the more than 7,000 required signatures, the county board would either have to abandon the bonds or ask for a special election.

Rich Moroney, who is helping with the petition drive, said it's unlikely but possible that citizens will be able to collect so many signatures. "That's a ridiculous number," he said. "The process is flawed." (To get a countywide referendum, Iowa law requires a number of signatures equal to 10 percent of the number of voters in the last presidential or gubernatorial election.)

Moroney and others involved in the petition drive claim that they don't necessarily oppose the county issuing bonds for Vision Iowa; they just want voters to have a voice.

Paying off the bonds over 15 years would cost the owner of a $100,000 house an additional $5.12 a year in property taxes, and the owner of a 160-acre farm $13.10 a year.

"I'm not sure it [the petition drive] is necessarily directed at the $5 million," said Larry Minard, a member of the Scott County Board of Supervisors, "but at a variety of grievances and taxes in general."

Minard said it's possible that citizens are expressing displeasure that they have not had the opportunity to sign off on various elements of the River Renaissance project, particularly the city's investment of more than $25 million, including $3 million from current property-tax revenues. "The City of Davenport doesn't have to go to a referendum to sell bonds," he said.

Davenport Mayor Phil Yerington is clearly unhappy about the petition drive, and he's still selling the city's Vision Iowa proposal and speaking cautiously about the possibility that state and county funding could disappear. He argues that most of what's in the Vision Iowa proposal would still go forward without the $25 million from the state and county; it just won't happen as quickly.

At this point, however, people circulating petitions are racing against the clock. The county Board of Supervisors is expected on Thursday to schedule an August 30 public hearing and vote on the bond sale; petition signatures must be turned in and counted before that vote.

Mary Ellen Chamberlin, a Vision Iowa board member and president of the Riverboat Development Authority, said it's unfortunate that a ballot issue would require 60 percent approval. "Once it goes to referendum, it's no longer a fair fight," she said. "It's not as if majority rules."

But Moroney thinks the process is equally unfair to both sides. The number of required signatures puts a massive load on people leading petition drives, he said, so it makes sense that a referendum requires 60-percent approval to pass. "If we make it [by collecting the required number of signatures], they'll have the heavy burden," he said.

It's not clear what would happen to the state money if voters reject bonds for the $5 million contribution.

"I don't know what we'd do," said Michael Gartner, chairperson of the Vision Iowa board and owner of the Iowa Cubs minor-league baseball team in Des Moines. "One message is: The people don't want it."

Gartner said the Vision Iowa board would have options: It could withdraw the award, it could give the county an opportunity to schedule a second referendum on the issue, or it could give the county a period of time to come up with alternative financing.

But a referendum defeat, in practical terms, would result in the loss of Vision Iowa funds, Chamberlin said. If a referendum fails, "the $20 million goes away," she said. "If one piece [of the financing] falls away, the rest comes tumbling down." The award was contingent on significant participation by the county, she stressed.

And the county would be unable to come up with the money without issuing bonds, said Scott County Administrator Glen Erickson. "There's no other way to get this money," he said. In theory, the county could contribute its share over a period of years through the normal budget-allocation process. But that's not something to which the county board can commit. "There's no way to bind future county boards," Erickson said. "I don't think there's any way we can participate in the project without the bonds."


If enough signatures aren't collected - or, in the event that the petition drive is successful but voters approve the bond sale anyway - the next issue for Davenport becomes filling in the details of its contract with the Vision Iowa award.

The process of drawing up the contract, Yerington said, "is probably more important than the negotiations" to determine an award amount. This is the point at which the city will understand when and how much money will be coming its way, for what it can be used, and with what conditions and oversight.

Davenport has until November 7 to secure enforceable commitments for all financing for the various components of its Vision Iowa program. In the meantime, Vision Iowa will be negotiating with the city on its contract. Susan Judkins, Vision Iowa's program coordinator, said she expects Davenport's contract to be completed by the November 14 Vision Iowa board meeting. Yerington said he thought the pact could be done by September or October.

City officials involved in the Vision Iowa process said they don't know what contract provisions to expect. "We don't know what standard we're going to be held to," said Davenport Public Works Director Dee Bruemmer. "That question's a little early."

Some questions will have to wait for answers. The City of Davenport was the applicant for Vision Iowa funds, so it would make sense if it ends up being the sole recipient of state funds, which it would then disperse to subrecipients such as the DavenportOne Foundation.

Yet the Vision Iowa board drafted a contract for Dubuque's project with two recipients, meaning that Vision Iowa money will go directly to the organization working on each component. It's unclear how Davenport's contract will be structured.

But from the three Vision Iowa contracts that have been approved, some patterns emerge; the contracts for projects in Dubuque, Sioux City, and Council Bluffs all follow the same template.

The contracts set a quarterly disbursement schedule that's tied to the proportion of project expenses that have been paid for with Vision Iowa money. For example, the city-led portion of Dubuque's project is scheduled to receive $2.6 million on April 1, 2002, but only if 17 percent or less of project costs have been shouldered by Vision Iowa to that point.

"It ensures there is some local funding going into the project," said Nichole Warren, who will probably be monitoring Vision Iowa grants for the state.

The City of Dubuque's portion will have received $5.2 million from Vision Iowa before April 1; the 17-percent figure guarantees that local investment in the project will be more than $25 million at that point.

That requirement is just one of many safeguards built into the contract. Another contract clause states that if the estimated cost of completing any project or component changes by 5 percent or more, the grant recipient must alert the Vision Iowa board within 30 days. All cost overruns must be funded at the local level; the state won't chip in extra funds.

On the other hand, if a project comes in under its projected cost, the amount of the Vision Iowa award is reduced proportionally.

"These are public dollars," said Teri Hawks Goodmann, campaign coordinator for Dubuque's America's River project and development director for the Mississippi River Museum. "There are going to be serious requirements."

The contracts also specify that recipients within 20 days of a written request must give the Vision Iowa board all documents related to their projects, including agreements, invoices, receipts, statements, vouchers, and up-to-date budgets.

Gartner called the safeguards "more than adequate. ... It's terribly important to us that we watch very, very carefully not only the disbursement but the spending."

Vision Iowa money is to be "used primarily for constructing the vertical infrastructure" of a project, according to all three completed contracts. The Iowa code defines "vertical infrastructure" as "land acquisition and construction, major renovation and major repairs of buildings, all appurtenant structures, utilities, site development, and recreational trails. 'Vertical infrastructure' does not include routine, recurring maintenance or operational expenses or leasing of a building, appurtenant structure, or utility without a lease-purchase agreement."

Monitoring of Vision Iowa grants and loans will be done by the Iowa Department of Economic Development and the state treasurer. The rules governing Vision Iowa oversight are in the process of being written, Judkins said, but will be ready before bonds are issued in mid-September.

Most likely, though, they will be similar to the rules that outline oversight of the state's Community Attraction & Tourism (CAT) program, which is similar to Vision Iowa but with much smaller awards. (The Vision Iowa board also hands out CAT grants.)

Warren, who monitors CAT grants for the Iowa Department of Economic Development, said that rules of oversight for Vision Iowa are being adapted from CAT rules. She cited the requirement to inform the board about projected cost overruns as one taxpayer protection.

She said that she has not run into a situation in which a cost overrun has imperiled a project, but said the Vision Iowa board would probably help the grant recipient find new funding. The board would have the authority to demand that Vision Iowa funds be returned.

Gartner was unequivocal. "Then we get our money back," he said.

"They didn't bring the right people over"

Davenport can breathe more easily now that the $20 million award has been announced, but there were times when negotiations for the grant were going poorly.

"Everybody thought it was a good project," Gartner said. "Nobody was real excited about the economic corridor" featuring the AgTech Venture Capital Center, because it was outside the scope of Vision Iowa's mandate.

Vision Iowa, after auditing the city's and county's books but before negotiations began, settled on an award of between $15 million and $20 million for the City of Davenport, Gartner said. After some consideration, that number was pushed up to a range of $18 million to $20 million.

But negotiations got off to "a false start, a slow start," Gartner said.

The Vision Iowa negotiating team was satisfied with the level of private investment in the project; what was missing was more from the city and county.

"They didn't bring the right people over," Gartner said. "Chamber [of commerce] people and business people don't have the authority" to make governments change their priorities or issue bonds. "It took a long time to get that message across."

Gartner recalled a conversation that included DavenportOne's Dan Huber and Dana Waterman and the Quad City Development Group's Thom Hart. "This was a very, very long conversation, and at times contentious," Gartner said.

"I think these guys were saying, 'Look, you're never going to get anything out of the county,'" he added. Instead of talking about what the county might contribute, Gartner said, Davenport's negotiators focused on why the county wouldn't invest in the project, and on the financial details of other Vision Iowa projects. "If you don't have the power to negotiate, you're left with the power to argue," Gartner said.

Yerington said that he was told that all cities receiving Vision Iowa money made the same mistake - sending business leaders and city staff to negotiate. Gartner "likes to deal with the people who can make decisions," he said.

Vision Iowa initially offered Davenport $15 million. After negotiations, that number was pushed up to $18 million, contingent on the city securing an additional $15.8 million in financing, including $10 million from the county and $3 million from the city.

"We raised $10.8 million of that," Yerington said, including the $5 million commitment from the county, $3 million from the city, $1 million from the Riverboat Development Authority, and $1.8 million from the Rhythm City Casino.

Gartner said the Vision Iowa board felt a major contribution from the county was crucial to represent its support of what Davenport was doing. "It was important symbolically," he said. And without a big county contribution, Gartner said, the Vision Iowa board would not have given a smaller grant for a project reduced in scope. "There would have been no deal," he said. "We wanted the whole project to be done, and we wanted to be a partner."

Gartner and Yerington met for several hours on July 23 to discuss city and county finances, and Gartner said Yerington understood the importance of a county contribution and helped make it happen.

"The mayor played a huge role," Gartner said.

But even with a $5 million contribution from the county, the deal still wasn't done.

Gartner said Vision Iowa would up its award to $20 million if Davenport could scrounge up another $3 million, which it got from the Figge Family Foundation.

But Yerington's work could be for naught if people circulating petitions are successful. If enough signatures are collected and the issue is brought before voters, it will be difficult to get the required 60-percent approval to move the $5 million in bonds forward.

And that could be devastating to Davenport. The Vision Iowa program has resulted in an unprecedented amount of cooperation, work, and fundraising, and the energy and money behind these projects are surely once-in-a-lifetime partnerships.

As Teri Hawks Goodmann said of her town's project, "This is probably the biggest thing that's happened in Dubuque, Iowa, in 100 years."

And that's the kind of opportunity Davenport might be losing if the bond issue goes to voters and is defeated.

"There are very serious consequences," Minard said.

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