HomeMy WebLinkAbout1993-08-31 Public hearing
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NOTICE OF PUBLIC HEARING
Notice is hereby given that a public hearing
will be held on August 31,1993, at 7:30 p,m,
In the Council Chambers, Civic Center, 410 E,
Washington Street, Iowa City, Iowa, Paragraph
403A,28, State Code of Iowa, requires this
Public Hearing prior to undertaking of a housing
project, The Iowa City Housing Authority
proposes to begin a program to sell units of
Public Housing to tenants and participants In
the Assisted Housing Programs,
Under Section 5(hl of the Housing Act, the
Iowa City Housing Authority may submit a plan
for the purpose of homeownership to the
Department of Housing and Urban Development
IHUD), The plan outlines the requirements for
purchase as well as the replacement of units to
maintain the number of assisted units, The
Iowa City Housing Authority would retain the
funds generated by this program, Funds for
the replacement of the units converted under
this program would be provided by HUD,
Proposed plans may be picked up at the
office of the City Clerk or at the Iowa City
Housing Authority, For additional information,
contact the Housing Administrator, 356.5400,
Published by order of the Iowa City Council
this 3rd dayof August ,1993,
- MARIAN K, KARR, CITY CLERK
hl.mtIB.31 h.g,nph
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IOWA CITY HOUSING AUTHORITY
MEMORAN'DUM
DATE:
August 25, 1993
TO:
City Council
Ron Hsndsrson, Housing Administrator ~
Public Hearing for Tenant to Owner Program,
FROM.
RE:
The Public Hearing on the agenda for August 31, 1993 was set for
public comment on the Tenant to Owner Program. In your paCket is
an outline for the program as well as a plan submitted to HUD for
the replacement of units should the City decide to embark on this
program. The information is provided so that you can familiarize
yourself with this program again. Staff will seek Council action
to implement the program on or about the 14th of September.
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IOWA CITY HOUSING AUTHORITY
410 E. Washington St.
Iowa City, IA 52240.1826
Phonol (SIO)SIl6-li400 · FAX: (SIO)SIl6-liOOO . TDDI (SIO) SIl6-li404
SYNOPSIS OF TOP
TENANT TO OWNWER PROGRAM
I. PROGRAM COMPONENTS
1. B2 UNITS
II. STRATEGY
1. SUBSIDIZE THROUGH A SILENT SECOND MORTGAGE,
III. PURCHASE PRICE
1, APPRAISED VALUE
2. FIRST MORTGAGE MONTHLY PAYMENT EQUAL TO 30% OF
TENANTS GROSS INCOME
IV. ELIGIBLE BUYERS
1. PUBLIC HOUSING TENANTS IN PLACE
2, PUBLIC HOUSING TENANTS WHO WISH TO MOVE TO OTHER
UNITS
3. SECTION B TENANTS
4, WAITING LIST OF ELIGIBLE APPLICANTS
V. MINIMUM MORTGAGE
1, $ 7,BOO (THE SMALLEST AMOUNT THAT POSSIBLE TO
MORTGAGE THROUGH LENOER)
VI, AMORTIZATION
1. 15 YEARS
VII. TYPE AND LENGTH OF MORTGAGE
1, FIXEO INTEREST RATE
2. 5 YEAR BALLOON
VIII,DOWN PAYMENT
1. NOT REQUIRED
IX. CLOSING COSTS
1. PAID BY PURCHASER (ESTIMATE $300)
X. TAXES AND INSURANCE
1. PAID BY PURCHASER BUT INCLUDED IN 30% LIMIT
XI, MAJOR MAINTENANCE GUARANTEE
1. 5 YEARS FROM DATE OF PURCHASE
a , ROOF
b. FURNACE
c. WATER HEATER
XII. SALE BY FIRST OWNER
1. SALE RESTRICTED TO QUALIFIED BUYER
2, SOME LIMITATIONS IMPOSED ON "PROFIT" OF SALE
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Page 2
TOP
Iowa City Housing Authority
XIII, DEFAULT
1. LOANS TO PURCHASER TO PREVENT DEFAULT
2, CITY REPURCHASE
XIV. CONTINGENCY FUNDING
1. DEFAULTS
2. GUARANTEES FOR MAINTENANCE
3, OTHER COSTS
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Homeownership Plan
Under
Section 5 (h) Conversion
For the
Iowa City Housing Authority
DRAFT DOCUHENT
FOR
INFORMAL REVIEW
July 27, 1993
Rev,2
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TABLE OF CONTENTS
TENANTS AND PROPERTY, ",., , , . , . , . , . ,
Description of Homeownership Program, , . . . .
Description of Residents/Potential Homebuyers.
Description of Resident Interest, , . . , . , ,
Description of Community Support, , , , , , , ,
Description of Homeownership Conversion Sponsor,
BUDGET. ........,.
Matching Contributions
Homebuyer Affordability
REQUIRED PLANS, """
Comprehensive Planning Section 305,
Rehabilitation Plan, '" , ,
Resident Selection Procedures,
Counseling. . , , , , , , , , ,
Description of Terms and Condition of Sale,
Replacement Plan. , , , .
Resident Relocation Plan,
Plan for Operation of the Project Upon Homeownership
Conversion. ....
Economic Development Plan.
CERTIFICATIONS,
SUPPORTING DOCUMENTATION,
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Homeownership Plan
under
Section 5 (h) Conversion
for the
Iowa City Housing Authority
The Iowa City Housing Authority (ICHA) through the Tenant to Owner
Program (TOP) proposes to convert public housing units to tenant
ownership, Using the provisions of Section 5 (h) of the Housing Act of
1937, the ICHA proposes to make available all public housing units for
purchase by tenants. The rate of conversion will be determined by the
number of replacement units made available by the Department of Housing
and Urban Development (HUD),
The Tenant to Owner Program allows Houeing Assistant program
participants to purchaee their own home. Many people are trapped in
the cycle of poverty and welfare because they do not see the
possibilities of obtaining different lifestyles, This program assists
the family in obtaining their own home and by doing so, creates within
the family the need to maintain their independence. The primary
guiding principle of this program is to insure that the number of
rental units available to very low income families is not diminished by
assisting other families to achieve homeownership,
1. TENANTS AND PROPERTY,
A. Description of Homeownership Program,
The homeownership program (TOP) will encompass the housing
stock of the ICHA, Under this portion of the program, an
initial group of twenty units or the number of units awarded
by HUD will be offered for sale. The following strategy is
incorporated as the basis for the program,
The ICHA is a legally constituted Housing Authority under the
Code of Iowa, The affordability of the homeownership program
is assured through the use of a silent second mortgage and a
first mortgage that represents a payment of 30% of the
monthly income of a participant, Local lending institutions
would provide first mortgage money to those tenants whom they
have qualified under this program, The participant would be
responsible for any closing cost and points involved at sale,
The first mortgage would be amortized for 15 years with a 5
year balloon, The second mortgage held by ICHA would be
reduced at each balloon payment that would occur at five year
psriods, The ICHA would hold a strong second position in
case of default by the purchaser, Assistance would be
available to prevent a default in the first five year period
and to prevent overwhelming maintenance costs,
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sale of TOP property would be conditioned to limit windfall
profit as well as to assure continued affordability, As the
program evolves, ICHA reserves the type of replacement units
that will be required,
This project will be limited to twenty units or the maximum
number of units allocated by HUD, There are 27 single family
units in the inventory of the ICHA, The specific properties
that will be converted will be identified as the resident
tenants identify themselves as participants in the program,
Property
Unit Size
Valuation
PROJECT 22 - 3
1900 F street
4-bedroom unit
$
74,100
1200 Highland
4-bedroom unit
66,300
PROJECT 22-5
328 Douglass Court
3-bedroom unit 60,000
3-bedroom unit 78,DOO
3-bedroom unit 60,000
3-bedroom unit 60,000
3-bedroom unit 60,000
3-bedroom unit 60,000
2308 Lakeside Drive
602 First Avenue
1316 Dover
1417 Franklin street
1215 Louise street
PROJECT 22-6
1927 Grantwood St
4-bedroom unit 84,000
3-bedroom unit 63,000
4-bedroom unit 85,000
3-bedroom unit 64,945
3-bedroom unit 75,000
4-bedroom unit 85,275
3-bedroom unit 61,201
3-bedroom unit 74,369
3-bedroom unit 85,258
2
924 Hudson st
2258 Russell Dr
/
617 Brookside Dr
1220 First Ave 5
3410 Shamrock Dr
2239 Union Rd
718 Highland Ave
801 south lawn Dr
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15 Amber Lane 3-bedroom unit 76,872
1702 California 3-bedroom unit 77 ,265
1218 Hollywood Blvd 3-bedroom unit 79,722
2344 Lakeside Or 3-bedroom unit 73,352
145 S Westminster st 3-bedroom unit 79,344
2709 Wayne Ave 3-bedroom unit 77,192
608 Eastmoor Or 4-bedroom unit 75,699
2311 Nevada Ave 3-bedroom unit 62,932
1508 Oover st 4-bedroom unit 78,000
1034 Sandusky St 4-bedroom unit 85,000
1702 Arizona Ave 3-bedroom unit 73,000
TOTAL 20 3-bedrooms $1,401,452
8 4-bedrooms $ 633,374
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28 units $2,034,826
Facilities and Services. The City of Iowa City has all
the services and facilities found today in major urban
centers with the added bonus of University of Iowa services
and facilities, Educational services within Iowa City range
from the expected public school system to the services
offered by the University, There is an area college branch
located within Iowa City offering high school completion
courses and vocational training, Adult education courses are
routinely offered by this school and by the Extension
Services of the State of Iowa,
There are both private and public schools available for
children through high school, Located close to Iowa City is
a private high school, The Iowa City Public School system
covers the area included in this conversion program,
Intercity busing is used to maintain racial balances, provide
specific educational services and to transport children who
reside outside of a two mile radius to their assigned school,
There is handicapped school transportation available to those
requiring this service.
Recreational facilities are located throughout the City both
indoor and out, citizens located in western Iowa City often
avail themselves of the recreational services of Coralville,
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which is a contiguous city, The Iowa City Recreation
Department provides classes, training courses and group
activities are offered that are available to everyone
residing in Iowa City, Fee schedules contain levels for
individual and families who are identified as lower income.
Many of the services and facilities are free,
8us transportation is a jewel in the crown of Iowa City,
Ranked by a professional journal, the bus system as ninth in
the nation for a city of this size, the system cooperates
with the University's free fare system and the City of
Coralville. The goal of the bus system is to route within
three blocks of any point within 85\ of Iowa City, The
system runs from 6,00 AM to 10,30 PM daily but does not
operate on Sunday, There are free and reduced pass systems
available to everyone in Iowa City that have need,
The Johnson County Transportation System provides services
for the handicapped, disabled and elderly population, This
area system provides door to door service on an appointment
basis, There is a fee schedule for service,
As the home of the University of Iowa, the City has a social
service delivery system that provides a plethora of services,
From family counselling to Hospice services, one would find
it difficult to discover an area of concern which is not
covered by a local agency,
8, Description of Residents/Potential Homebuyers,
The tenant population in the ICHA Public Housing Program can
be characterized as an educated, affluent poor, Johnson
county median income is one of the highest in the State of
Iowa, A recent survey of tenant rents indicated that 35 of
69 families had rent burdens in excess of the minimum monthly
mortgage payment under this program of $178, as shown on
page 7, While rents ranged from $0 to $741, 47 had wage
incomes and 4 had two wage earners in the family,
Potential homebuyers will be screened for stable job or
income capacity, It is expected that the homebuyer would be
employed or be receiving disability or retirement payments.
The potential buyer would be screened by the local lending
institution for residential loan capabilities. Potential
homebuyers would be counseled and assisted in removing any
impediments to obtaining a loan,
C. Description of Resident Interest,
Three years ago when this program was first proposed, 16 of
30 residents returning a questionnaire indicated an interest
in homeownership, Two complexes formed tenant groups to
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begin the process of forming condominium associations, While
single family units returned questionnaires, little was done
to stimulate this interest,
Marketing activities over the past two years has contained
elements of homeownership, Along with Family Self
SUfficiency, the information on homeownership has motivated
many high rent payers to maintain public housing as the only
realistic method of obtaining a home.
A formal questionnaire was mailed on July 20, 1993 to all
residents of single family dwellings, Informal responses
indicate complete acceptance by these tenants,
D, Description of Community Support,
A public hearing is scheduled to approve this program on
August 31, 1993, Public comments in the past have had a
mixed review of programming,
A Public Hearing held for the application of 20 units of
replacement housing received no public comments, Although
support for the project is unknown, there was no objections
voiced,
E, Description of Homeownership Conversion Sponsor.
The Iowa City Housing Authority (ICHA)
municipal housing authority, The ICHA
administering three major federal
programs, Section 8 Certificate, Section
Housing.
is, a state chartered
is the local agency
housing assistance
8 Voucher and Public
While the ICHA is part of the City of Iowa City, in many
legal aspects it is a separate quasi-unit of government,
Under Federal law, the ICHA may legally operate anywhere
within the State of Iowa and the United States, To be
practical, the ICHA limits its operations to the Johnson
County area, The ICHA does provide services in the
surrounding counties on a limited basis,
2. BUDGET.
A, Matching Contributions The preliminary costs for the
program will be borne by the ICHA, After the sale of the
first unit, this program will be self funding, All proceeds
from the sale will first be committed to the costs of this
program, to establishing maintenance, default and assistance
components of the program, Funds in excess of these needs
will be used to enhance economic development of the Public
Housing tenants, to increase the effectiveness of the housing
program, ultimately funds would be treated as reserve funds
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and atilized as such,
Indirect costs,
All staff time is contained under Public Housing
Budgeting, this program is seen as an extension of that
program and as such tracking this time is considered to
be administratively burdensome,
Direct Costs,
Appraisal
$ 250 per unit,
Repair and Maintenance $1,450 per unit,
Title opinion
and other legal
$ 300 per unit,
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Average Cost per unit
$2,000
B.
Homebll':,;;r Affordability,
STRATEGY. Simply, we must be aware that deep subsidies of
the cost of our units will have to occur. The TOP may be
limited to families who have incomes near or greater than the
50% of median income levels. They will not be able to meet
banking criteria for mortgage loans were we to attempt to
recover the value of the property immediately, Our strategy
will select a tenant for ownership of a specific unit, By
computing 30% of gross income as their housing cost, we can
by reverse calculation arrive at a dollar amount that could
be loaned by a financial institution. Our subsidy of that
unit would be a silent second mortgage, This subsidy would
be an amount equal to the difference between what can be
loaned and the actual valuation of the unit,
Example of Income to Mortgage Calculation
$12,OOO(Annual Income)
--------------------- = $1,000 x 30~ = $300 (Total Housing Cost)
12 mont,hs
$300 - $100(Estimated cost of taxes and insurance) = $200
$200(available for mortgage) per month = $199,89 payment of
mortgage for $20,000 at
8,75% interest over 15
years,
Second Mortgage Calculation
using an example of an $80,000 purchase price
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$80,000 - $20,000 = $60,000 (Second mortgage)
The second mortgage will be silent, in that no payments occur
until either the repayment of the first mortgage or sale of
the unit. On repayment of the first mortgage, the family
would take out another mortgage to pay a portion or all of
the second mortgage, A good credit record, their equity and
the inflation in the value of the property should enhance
refinancing, On sale, the second mortgage would be returned
as part of the sale of the unit, The following sale may
require that the second mortgage be continued at some level,
PURCHASE PRICE, The purchase price a unit under this
program will be the appraised value of the property as
derived by an independent certified appraiser, On resale and
all subsequent sales, the offered prices of the units will be
by appraisal of an independent certified appraiser,
3, REQUIRED PLANS,
A, comprehensive Planning Section 305,
This program is for single family dwellings,
B, Rehabilitation Plan,
The ICHA will review with the select homebuyer the condition
of the unit, While all units are inspected annually using
HQS, the units identified for this program will undergo the
same rigorous pre-sale examinations used in the acquisition
project underway at this PHA,
Rehabilitation and maintenance costs for this program will be
minimal with 20 of the 28 units offered just recently
acquired. The maintenance assurance program contained in TOP
will allow the ICHA and the homebuyer the protection from the
oversight of a major system problem.
C, Resident Selection Procedures,
ELIGIBLE BUYERS, The purpose of this program is to provide
home ownership opportunities for families who have low to
very low incomes and are presently in need of housing
assistance, A qualified buyer is a family who meets
financial guidelines that indicate a reasonable expectation
that home ownership will be successful. Further
qualifications, such as credit worthiness, the absence of
behaviors as proscribed by the Iowa Tenant Landlord Law and
willingness to participate in the care and maintenance of the
property, will be required,
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The offer to sell will also restrict future sale to buyers as
qualified under this program, The offer to sell each unit to
a family will be according to the following criteria:
In occupied units, to the tenant
tenant in residence wishes not
further offers will be made,
in residence. When the
to purchase the unit, no
When vacant, units will first be offersd to:
1, Residents in Public Housing who have identified a
desire to own a unit in a specific complex or single
family dwelling.
2. Families receiving Section 8 assistance who have
indicated a desire to become a home owner,
3, Families who are waiting for assistance as
recognized by their position on the waiting list of the
Iowa City Housing Authority,
D. Counseling, HOMEOWNERSHIP TRAINING, Eligible buyers will
be required to attend a training sequence that will focus on
the budgeting for homeownership, use of credit for household
costs/ legal responsibilities for home owners, insurance
needs of homeownership and general home maintenance, This
training will also be used in other HUD required community
development programs, Other training needs for specific
buyers will be offered as identified, Present plans call for
a cooperative effort by Area Education, Iowa State Extension
Services, University of Iowa Academic Programs and the ICHA
to construct an educational component from the needs of the
tenants, Costs for the initial training program will be
forwarded by the ICHA. After the first sale, funds will
become available for the continuation of the training
regimen,
E. Description of Terms and Condition of Sale,
AMORTIZATION, Amortization of the first mortgage will be for
15 years. This will allow the purchaser to gain in equity
during the first 5 year period, The decreased amount of
interest will also be to the advantage of the homebuyer,
T~PE AND LENGTH OF MORTGAGE. The fixed rate/ 5 year term
mortgage is a common contract and one that has the best of
both worlds for the lender and the borrower, This mortgage
will tie into the 5 year support systems for the homebuyer.
DOWN PA~MENT AND CLOSING COSTS, Down payments are the
major hurdles for most first time home buyers, The
recommendation is that a down payment not be required of the
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home purchaser.
Closing costs will be borne by the purchaser. The source of
this money may be by a gift or grant, savings or other non-
loan source, The amount should be less than $SOO and may
possibly be as low as $200,
TAXES ANO INSURANCE, Taxes and home owner insurance costs
will be borne by the purchaser. They will be included in the
computation limiting the purchase cost to 30% of the gross
incoms of the purchaser.
ESCROW ACCOUNTS. Due to the lower incomes of the home
purchasers, it may be unreasonable to expect them to be able
to pay their taxes and insurance premiums in the lump sums
that would be required. By requiring the lender to establish
escrow accounts for the psyments of property taxes and
insurance premiums, most purchasers should be successful in
meeting these obligations,
MINIMUM MORTGAGE, The minimum mortgage shall be $7,800 for
a family that can be a qualified buyer in this program, The
Code of the State of Iowa does not allow mortgages of less
than $2,SOO. Common practice by banks in the Iowa City area
varies but the range is $7,SOO to $8,000,
SALE BY FIRST OWNER, The resale of the house by the
original owner would be restricted so the unit would be
available to another very low income family and would
restrict the profit to the seller during the first five years
of ownership. Due to inflation in income dollars, the 30%
criterion may allow for a reduction in the second mortgage
subsidy upon sale,
The owner will participate in the increase in property
values, sweat equity and other occurrences that increase
property evaluation according to the following schedule,
First Year
Ot of increase
Second Year
2St of increase
Third Year
SO% of increase
Fourth Year
7St of increase
Fifth Year
lOOt of increase
As with all home purchases, the homeowner will maintain the
last position on sale, Any decreases in property value that
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generate a loss on sale will be the responsibility of the
owner.
F, Replacement Plan, The replacement of homeownership units
will be through awards by HUD, Initially, the replacement
units will be new construction semi-detached and detached
scattered site units, The ability of the City to absorb new
construction, the cost of new construction and the speed of
conversion will dictate the continuation of replacement
through new construction, Acquisition or section 8
Certificates or Vouchers remain as options for future
eegments of conversion,
G, Resident Relocation Plan, When the tenant in residence
wishes not to purchase the unit, no further offers will be
made, The tenant will not be asked to relocate and may stay
in their unit as a renter,
For those tenants, in complexes which are converting to
resident/ownership management, who wish to move, Section 8
assistance will be offered as governed in the policies and
procedures of the ICHA, Under no circumstances will the ICHA
require a tenant to vacate a unit under this program,
H. Plan for Operation of the Project Upon Homeownership
Conversion, This initial homeownership project is directed
toward detached and semi-detached public housing units, The
two larger complexes of the Iowa City Housing Authority are
not included in the present plan, The nature of this project
will not require ongoing administration once the conversion
is completed,
I, Economic Development Plan, The homeownership program (TOP)
is designed to be a part of the total programming at the
ICHA, conceptually, the TOP would be the culmination of a
resident or participants involvement with the ICHA, The
family would first seek assistance to resolve a housing
crisis, move toward self sufficiency and finally toward
homeownership,
While it is not required that a tenant or participant be
enrolled in the Family Self Sufficiency Program (FSS), it
would appear to be a logical conclusion to such programming,
The goal of the client in either case would be to secure a
home without the reliance upon social support systems,
All tenants would be notified of the FSS as one means of
developing increased income potentials, While voluntary and
for most too arduous, this would be the avenue for
participation in the program,
Johnson County has one of the highest median incomes in the
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state of Iowa at $42,500 for an average family, This gives a
high median income for families within the program. The
number of hamebuyers eligible for this program far exceeds
the number of replacement units under this project, With
over 750 Section 8 participants waiting for the opportunity
to purchase a home, the ICHA sees no difficulty in qualifying
buyers for this program,
4, CERTIFICATIONS, To occur as needed and achieved.
5. SUPPORTING DOCUMENTATION. To occur as needed and achieved,
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NOTICE OF PUBLIC HEARING ON PLANS,
SPECIFICATIONS, FORM OF CONTRACT
AND ESTIMATED COST FOR
1993 PAVING ASSESSMENT PROJECT
IN THE CITY OF IOWA CllY, IOWA
TO ALL TAXPAYERS OF THE CITY OF IOWA
CllY, IOWA, AND TO OTHER INTERESTED
PERSONS:
Public notice Is hereby given that the C~y
Council of the City cf Iowa CRy, Icwa, will con-
duct a public hearing on plans, speclllcatlons,
form of contract and estimated cost lor the ccn-
structlon 01 the 1993 Paving Assessment Project
In said City at 7:30 p,m, on the 31st day of
August, 1993, said meeting to be held In the
Council Chambers In the Civic Center In said
City,
Said plans, speclllcatlons, form of contract and
estimated cost are new on file In the oHlce 01 the
City Clerk In the Civic Center In Iowa C~y, Iowa,
and may be Inspected by any Interested persons,
Any Interested persons may appear at said
meeting of the CRy Councillor the purpose of
making objections to and comments concerning
said plans, specifications, contract or the cost of
making said Improvement.
This notice Is given by order 01 the CRy Council
of the C~y cf Iowa C~y, Iowa and as provided by
law,
MARIAN K, KARR, CITY CLERK
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