The Clinton Herald, Clinton, Iowa

August 20, 2013

City, county unsure how to split sale proceeds

Entities unclear as to what term 'sale proceeds' means

By Samantha Pidde
Herald Staff Writer

CLINTON — A decision must still be made on how much money Clinton County sees from the almost $1.1 million sale of railport property to RAIL.ONE.

“We’re here, really wanting to pay you. We just don’t know what to write the check for,” Clinton Mayor Mark Vulich said Monday.

The county loaned the city $6 million for the project, which must be payed back by Dec. 31, 2018. As part of the 28E agreement, the two entities will evenly split “sale proceeds” from each company buying land in the rail park.

Representatives of the city and the Clinton Regional Development Corp. attended the Clinton County Board of Supervisors meeting Monday to discuss exactly what the term “sale proceeds” means. John Frey Jr., attorney for the project, pointed out that if the document had said “purchase price,” there would be no discussion. However, it did not, leaving question on if the proceeds mentioned are based on the net or gross amounts.

Former Supervisor Dennis Starling attended the meeting to ensure the board did not modify the 28E agreement that he helped create. He said he felt the city was there to get the county and the taxpayers to pay for development into the industrial park, which was not the purpose of the agreement.

“Any modification of the 28E agreement would not be in the best fiscal interest of the county or the county taxpayers,” Starling said.

Frey pointed out that they are not trying to modify the agreement, only interpret the existing language. He explained that to him “sales proceeds” are what is left in someone’s pocket after necessary expenses.

Vulich and Frey explained that many expenditures went into securing the deal with RAIL.ONE. This included purchase of land, attorney fees, constructing a road, engineering and a water and sewer system. With these expenses the proceeds of the sale are closer to $700,000.

Supervisor Brian Schmidt felt that the county’s cut could pay for the purchase of the land, attorney fees and other sales expenses. He did not think it should be used to pay for development costs, such as the water system and roads.

Vulich explained that negotiation with RAIL.ONE was difficult and the company was unwilling to pay the $42,000 per acre with these amenities unavailable, offering $30,000 per acre instead. Instead of selling at a low price and setting a precedent for future sales, the city offered the company a credit for certain utilities, at the higher sale price. He emphasized that this means that even though the sale price is more than $1.1 million, the city will not see that much.

“It’s an ambitious undertaking which is under way, but still is going to require a lot of work,” he said.

County Attorney Mike Wolf told the board that while not a clear-cut issue, he felt the city had a good argument that these expenses were necessary.

“A partnership like this requires a lot of trust,” Wolf said.

Ultimately, the county has the final say. The board will consider the information and come back with a decision. Frey said they would have to accept whatever that is.

“This is a venture where the city and the county are working together and it’s coming together and we’re getting results. We want you to be happy and we want to move forward in a way that’s mutually beneficial,” Frey said.