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The Dallas County Board of Supervisors has agreed to pay $4.4 million over 10 years to pave a section of gravel road that leads to the planned Microsoft Corp. data center in West Des Moines.

The supervisors made the commitment following a public hearing on an intergovernmental agreement with the city of West Des Moines.

The West Des Moines City Council is expected to vote on the agreement during its Nov. 3 meeting, said Jody Smith, the city’s director of administrative services.

The one-mile stretch of 88th Street, also known as Xenia Place and X Avenue, approaches the proposed Microsoft site from the south. Plans to pave another key stretch of the road south from Mills Civic Parkway remain in doubt.

Microsoft announced in August that it would build a $500 million data center on 42 acres near Booneville Road and 88th Street in West Des Moines. The site was part of the 821-acre West Grand Business Park owned by W & G McKinney Farms LC.

Microsoft purchased the property last month for about $5.5 million.

The Iowa Economic Development Board has awarded Microsoft an incentive package from the state and West Des Moines totaling more than $27.9 million, including more than $12 million in street and infrastructure improvements. The state will provide $2.1 million in construction sales tax refunds to the project, and West Des Moines will provide a $5.5 million match to Iowa Department of Transportation funds and property tax rebates of $2.8 million.

Dallas County’s participation is equal to the 10 annual payments of $440,000 it would have received beginning in July 2009 from West Des Moines as part of an intergovernmental agreement, also called a 28E agreement, that the two governments entered into in 2003 to promote economic development. Instead, that money will be retained by West Des Moines.

The collapse of Regency Homes earlier this year has complicated plans to pave another important segment of 88th Street.

As part of a development agreement with West Des Moines for the 345-acre Michael’s Landing development, Regency had committed $10 million to infrastructure improvements, including paving 88th Street from Mills Civic Parkway south to Booneville Road.

Three of the lenders on that project – First National Bank Midwest, Vantus Bank and Community Business Lenders – have filed lawsuits seeking to foreclose on various sections of the development.

A fourth lender, Freedom Financial Bank, could pick up an incremental part of infrastructure costs after acquiring properties in the development, Smith said.

Bankers Trust Co. recently transferred property in the development to a bank-owned holding company under a voluntary deed transfer approved by principals of the former home building and land development company.

Bankers Trust President Suku Radia said recently that development prospects for Michael’s Landing should be enhanced by the announcement that Microsoft will be a neighbor, as well as by the construction of Aviva USA’s North American headquarters nearby on Mills Civic Parkway.

The financial institutions continue to discuss development plans for Michael’s Landing, including the eventual paving of 88th Street and other issues, said Steve Dallenbach of Dallenbach & Larson developers, which was appointed receiver of property mortgaged to First National Bank Midwest.

“There’s been no resolution to 88th Street,” he said.

Dallenbach also said he doubted that the Microsoft and Aviva projects would help sell more homes in Michael’s Landing.

“If that were true, we all would have built houses for Wells Fargo (& Co.) people and we would have retired by now,” Dallenbach said.