Intergovernmental Agreements—Iowa Code Chapter 28E

 

Joint Exercise of Governmental Powers/ Iowa Code Chapter 28E

 

The adoption of Chapter 28E in 1965 provided political subdivisions with a great expansion of their authority for intergovernmental cooperation. The essence of this legislation was to permit any governmental agency to undertake any activity jointly with any other agency so long as each agency has the power to undertake that particular activity on its own. As an example, since cities, townships, counties, and schools can establish libraries, it became possible for a library to be a joint undertaking by a combination of these types of local governments.

 

“28E Agreement” has become a routine term used by many veteran city officials. It has had such extensive impact on government in Iowa. Very few cities provide all the services listed in the previous chapters. The public demand for some services may not be that strong or citizens may not be willing or able to pay. Cooperative or joint agreements with other public agencies is one way to cost-effectively provide these services. 28E agreements are a way of broadening the service area and sharing the costs.

 

“Intergovernmental entity” means any separate organization established in accordance with chapter 28E or established by any other agreement between an agency and any other governmental entity, whether federal, state, or local, and any department, division, unit or subdivision thereof. “Intergovernmental entity” does not include an organization established or agreement made in accordance with chapter 28E between state agencies.

 

In addition to expanding the possibilities for local cooperation, Iowa Code Chapter 28E also makes possible a broader spectrum of intergovernmental arrangements with agencies of the state and federal governments. It is also possible for governmental agencies to enter into cooperative arrangements with private organizations in certain situations. Since the legislation was enacted in 1965, there have been numerous modifications and additions to Chapter 28E.

 

The basic authority for these “28E agreements” is as follows:

     “Any public agency of this state may enter into an agreement with one or more public or private agencies for joint or cooperative action pursuant to the provisions of this chapter, including the creation of a separate entity to carry out the purpose of the agreement. Appropriate action by ordinance, resolution or otherwise pursuant to law of the governing bodies involved shall be necessary before any such agreement may enter into force.” Iowa Code, section 28E.4.

This broad grant of power has been clarified by several opinions of the state attorney general. Chapter 28E now “provides authority for the state and local governments to enter into agreements with one or more public or private agencies for joint or cooperative actions pursuant to” its provisions. Iowa Code, section 28E.1. This includes authority to allocate tax funds for implementing such plans or purposes. The authority to make agreements with private agencies is based on section 28E.4 of the Iowa Code. Note, however, that municipalities may not contract or otherwise delegate the selection, appointment, and retention of police departments to private concerns. They may enter into agreements with other governmental entities for joint exercise of such authority in accordance with Chapter 28E.

 

Joint and cooperative arrangements have proved to be an efficient and popular way of providing services at a reasonable cost. There are many “28E agreements” currently in force in Iowa and they cover virtually every area of public service. The Institute of Public Affairs has developed checklists on the preparation and contents of 28E agreements, which are included as Appendix G of this Handbook.

 

When somebody proposes a new or expanded city service, the old answer “we can’t afford that” is no longer good enough. Perhaps, the city alone cannot afford the request. However, a 28E agreement with other cities, a county, a school board, or some agency could make most projects possible.

 

You should look at agreements your city already has in place. Agreements should be reviewed frequently by all parties. As conditions change, the agreements may have to be updated. Some of these agreements call for creating a joint entity. You need to know who represents your city on that governing body and how they are appointed. You also need to make sure that your city is receiving the agreed upon services and that each entity is paying its fair share. When creating a new “28E entity,” it is very important to state in the agreement that a “public corporation” has been formed in order to minimize your city’s liability exposure.

 

Joint agreements provide an excellent opportunity for you to put your ideas about government action into practice. Examples abound of instances where intergovernmental cooperation through Chapter 28E has aided governmental units in providing services. These examples generally include:

 

     Councils of Government (COG)                              Economic Development

     Law Enforcement Services                          City Utilities

     Fire Protection/Prevention for Townships    Electric Power Generation

     Emergency Medical Response                                Public Works Equipment

     Sanitary Landfill Agencies                           Public Transit Authorities

     Data Processing                                                       Library Services

      Community Development                                         Housing Authorities

The Institute of Public Affairs has over 230 copies of 28E agreements covering 42 different topics or services.  Copies of these agreements are available for a nominal fee.

Consult your city attorney whenever you are involved in creating a new or modifying an existing 28E agreement.  There are key provisions that need to be stated in the agreement to minimize your city’s liability exposure.  A sample checklist on the preparation and contents of 28E agreements are included as Appendix G of this Handbook.

 

Contracts with State Agencies/Iowa Code 8F (Senate Bill 2410 of 2006):

 

Senate Republicans introduced the SF 2410 in 2006, in response to a pay scandal at the Central Iowa Employment and Training Consortium (CIETC).  The Senate amended the whistleblower provisions from the original version. This is strong accountability legislation that will ensure greater oversight of taxpayer dollars while providing more sunshine on 28E agreements.  The bill became the new Iowa Code 8F.

This bill only applies to service contract(s) entered into between an oversight agency and a recipient entity that exceeds $500,000 or exceeds $500,000 in the aggregate, during the oversight agency's fiscal year. Iowa Code §8F.2.

 

For purposes of this bill, “Service contract” does NOT mean any of the following: Iowa Code §8F.2.

 (1) A contract that involves services related to transportation or the construction, reconstruction, improvement, repair, or maintenance of the transportation system.

(2) A contract concerning the public safety peace officers' retirement system created under chapter 97A, the judicial retirement system governed by chapter 602, article 9, or the deferred compensation plan established by the executive council pursuant to section 509A.12.

(3) A contract for services provided for the operation, construction, or maintenance of a public utility, combined public utility, or a city enterprise as defined by section 384.24.

(4) A contract for dual party relay service required by section 477C.3 or for the equipment distribution program established under the authority of section 477C.4.

(5) A contract for services provided from resources made available under Title XVIII, XIX, or XXI of the federal Social Security Act.

(6) A contract for a court-appointed attorney.

(7) A contract with a federally insured financial institution that is subject to mandatory periodic examinations by a state or federal regulator.

(8) Any allocation of state or federal moneys by the department of education to sub-recipients on a formula or noncompetitive basis.

(9) A contract for services provided by a person subject to regulation under Title XIII of the Code.

(10) A contract for vendor services.

(11) A contract concerning an entity that has contracted with the state and is licensed and regulated by the insurance division of the department of commerce.

(12) A contract with outside counsel or special counsel executed by the executive council pursuant to section 13.3 or 13.7.

(13) A contract that is subject to competitive bidding for the construction, reconstruction, improvement, or repair of a public building or public improvement.

 

Contractual Requirements: Iowa Code §8F.3.

 

1.          As a condition of entering into a service contract with an oversight agency, a recipient entity shall certify that the recipient has the following information available for inspection by the oversight agency and the legislative services agency:

·        Information documenting the legal status of the recipient entity. In addition, the information shall indicate whether the recipient entity is exempt from federal income taxes under section 501(c), of the Internal Revenue Code

·        Information regarding the training and education of the organization’s governing body concerning the organization’s legal responsibilities

·        Procedures for the review of managers and managers’ salaries

·        Procedures for the review of Internal controls for accounting processes

·        Procedures for the review of compliance with applicable laws

·        Information about ethical standards adopted by the organization

·        Information about policies that prohibit adverse action against employees who notify an oversight agency about problems at contracting agency

 

2.          The certification required by this section shall be signed by an officer and director of the recipient entity, two directors of the recipient entity, or the sole proprietor of the recipient entity, whichever is applicable, and shall state that the recipient entity is in full compliance with all laws, rules and regulations.

 

3.          Prior to entering into a service contract with a recipient entity, the oversight agency shall determine whether the recipient entity can reasonably be expected to comply with the requirements of the service contract. If the oversight entity is unable to determine whether the recipient entity can reasonably be expected to comply with the requirements of the service contract, the oversight entity shall request such information from the recipient entity.

 

Reporting Requirements: Iowa Code §8F.4.

 

1.          As a condition of continuing to receive state or federal moneys through an oversight agency for a service contract, a recipient entity shall file an annual report with the oversight agency and with the legislative services agency within ten months following the end of the recipient entity's fiscal year.

 

However, the annual report shall not be required to be filed under any of the following circumstances:

 

(1) The recipient entity reports information otherwise required to be included in an annual report described in subsection 2 to the oversight agency pursuant to federal or state statutes or rules. The information otherwise required to be reported to the oversight agency shall be filed with the legislative services agency.

(2) The recipient entity is recognized by the Internal Revenue Code as a nonprofit organization or entity and provides a copy of the internal revenue service form 990 for all fiscal years in which service contract revenues are reported.

 

2.          The annual report required to be filed pursuant to this section shall contain the following:

·        Financial information relative to the expenditure of state and federal moneys for the prior year pursuant to the service contract. The financial information shall include but is not limited to budget and actual revenue and expenditure information for the year covered.

·        Financial information relating to service contracts with the oversight agency during the preceding year, including the costs by category to provide the contracted services.

·        Reportable conditions in internal control or material noncompliance with provisions of laws, rules, regulations, or contractual agreements included in external audit reports of the recipient entity covering the preceding year.

·        Corrective action taken or planned by the recipient entity in response to reportable conditions in internal control or material noncompliance with laws, rules, regulations, or contractual agreements included in external audit reports covering the preceding year.

·        Any changes in the information submitted in accordance with section 8F.3.

·        A certification signed by an officer and director of the recipient entity, two directors of the recipient entity, or the sole proprietor of the recipient entity, whichever is applicable, stating the annual report is accurate and the recipient entity is in full compliance with all laws, rules, regulations, and contractual agreements applicable to the recipient entity and the requirements of this chapter.

 

3.          A recipient entity shall be required to submit such information as requested by the oversight agency or the legislative services agency relating to the entity's expenditure of state and federal moneys.

 

Appendix G

28E Agreement Checklist

 

The preparation of a cooperative agreement for any governmental service merits a comprehensive review process.  The following is a step by step process that may be utilized in the preparation of a 28E written agreement or any cooperative agreement.  It is recommended the most current version of Chapter 28E of the Code of Iowa be reviewed prior to preparing a written agreement.

           

               1.   Clearly define the governmental service or cooperative effort to be undertaken.

               2.   Statement of Intent

               3. Approval/Authorization: signatures by the representatives of the respective parties confirm that the agreement has been approved and its execution authorized by the respective duly authorized officers or governing bodies of the parties.

               4. Statutory Authority/Governing Law: the agreement shall be governed by, construed and enforced in accordance with the laws of the State of Iowa; the agreement is made pursuant to statutory authority granted to the parties pursuant to Iowa Code section 28E.4 and other relevant Iowa.

               5.   Identify the governmental entities that will participate in the cooperative arrangement.

               6.   Prepare a “working draft” of the agreement that can be copied to all the governmental entities and request comments, suggestions, and questions.

               7.   Make the recommended changes and schedule a meeting with one representative from each governmental entity to review the “working draft”, make additional changes, and discuss the approval process.

               8.   Present the proposed agreement to legal counsel for review and comment.

               9.   Send copies of the agreement to the governing bodies, along with a model resolution approving the agreement.

               10. Circulate the approved agreement among all the entities for the appropriate signatures.

               11. File and record the agreement with the county recorder as stipulated in 28E.8 of the Iowa Code. Iowa Code § 28E.8[1]

               12. File a copy with the Secretary of State at the Capitol Building in Des Moines.

               13. Provide one originally signed copy to all the entities that participated.

 

The contents of the written agreement will vary depending upon the services provided, the entities involved, and the nature of the agreement.  The following is a listing of the required sections of a written agreement as authorized by Chapter 28E of the Code of Iowa:

 

               1.   A title that identifies the entities and the nature of the agreement.

               2.   The duration of the agreement. Iowa Code § 28E.5

               3.   The precise organization, composition, and nature of any separate entity created. Iowa Code § 28E.5[2]

               4.   The power delegated to any separate entity that is legally created. Iowa Code § 28E.5[3]

               5.   The purpose or purposes of any separate entity and a statement noting that a new public corporation has been formed. Iowa Code § 28E.5

               6.   The manner of financing the joint undertaking. Iowa Code § 28E.5

               7.   The manner of establishing and maintaining a budget for the separate entity. Iowa Code § 28E.5

               8.   The permissible method to be used to partially or completely terminate the agreement. Iowa Code § 28E.5

               9.   The permissible method to be employed to dispose of property in the event of a termination. Iowa Code § 28E.5

               10. Adequate space for the signatures of the authorized officials of the entities and the date of the signing of the agreement.

               11. A model resolution for use by the governing bodies that summarizes the intent of the agreement, the approval of the agreement, and the authorization for the appropriate officials to sign the agreement. Iowa Code § 28E.10.

               12. The effective date of the agreement.

               13. Provision for an administrator or a joint powers board responsible for administering the undertaking.[4]

               14. The manner of acquiring, holding and disposing of real and personal property used in the cooperative venture.[5]

               15. The name, address, and telephone number of the person, who prepared the agreement, should be noted on the cover page.

               16. Execution and Recording of the agreement: for example, upon execution the agreement the appropriate official shall file a copy of this Agreement with the Iowa Secretary of State and cause the same to be recorded, as required by Iowa Code Section 28E.8

               16. Any other necessary and proper matters. Iowa Code § 28E.5.

 

If the agreement does NOT establish a separate legal entity to conduct the joint or cooperative undertaking, the agreement must also include[6]: Iowa Code § 28E.6.


               1.  Provision for an administrator or a joint board responsible for administering the joint or cooperative undertaking. In the case of a joint board, public agencies party to the agreement shall be represented. Id.

               2.  The manner of acquiring, holding, and disposing of real and personal property used in the joint or cooperative undertaking. Id.

               3.  The entity created or the administrator or joint board specified in the agreement shall be a governmental body for purposes of Iowa Code chapter 21 and a government body for purposes of chapter 22 unless the entity created or agreement includes public agencies from more than one state. Id.

               4.  All proceedings of each regular, adjourned, or special meeting of the entity created or the administrator or joint board specified in the agreement, including the schedule of bills allowed, shall be published after adjournment of the meeting in a newspaper of general circulation within the geographic area served by the entity created or the administrator or joint board specified in the agreement. Id.

               5.  The entity created or the administrator or joint board specified in the agreement shall furnish a copy of the proceedings to be published to the newspaper within one week following adjournment of the meeting. Id.

               6.  The publication of the schedule of bills allowed shall include a list of all salaries paid for services performed, showing the name of the person or firm performing the service and the amount paid.

 

In addition there are other provisions that may be included in written agreements for governmental services sharing arrangements.  These provisions are not necessarily required by the Code of Iowa, but they are recommended and should be considered.

               1.   Detailed explanation of the financial plan of the entity.

               2.   Provision regarding the insurance coverage of the entity.

               3.   Compensation, if any, for the officers and staff of the entity.

               4.   Explanation of records and reports that need to be maintained and filed.

               5.   General review of the responsibilities of each entity or party to the agreement

               6.   The type of relationship, if any, that has been established as a result of the agreement.

 

 



[1] Before entry into force, an agreement made pursuant to this chapter shall be filed with the secretary of state and recorded with the county recorder. In counties in which the office of county recorder is abolished, the agreement shall be recorded with the county auditor.

[2] However, if the agreement establishes a separate legal or administrative entity, the entity shall, when investing funds, comply with the provisions of Iowa Code sections 12B.10 and 12B.10A through 12B.10C and other applicable law.

[3] Id.

[4] Note: If the agreement does not establish a separate legal entity to conduct the cooperative understanding, then the agreement must also contain reference to items number 13 and 14.

[5] Id.

[6] This subsection shall not apply if the entity or the administrator or joint board specified in the agreement includes public agencies from more than one state.