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Home My WebLink About2015-04-23 Info Packet� - 1 CITY OF IOWA CITY www.icgov.org CITY COUNCIL INFORMATION PACKET MISCELLANEOUS IPI Council Tentative Meeting Schedule April 23, 2015 P2 Article from Asst. City Manager: When It Comes to Housing Affordability, Are Cities Like Seattle Doomed? IP3 Copy of memo from Neighborhood Services Coordinator to City Manager: Housing Policy IP4 Information from Finance Director: Preliminary Official Statement Dated April 21, 2015 - General Obligation Bonds, Series 2015 I135 Sustainability Report: 2014 IP6 Civil Services Entrance Examination — Records Technician IP7 Civil Services Entrance Examination — Systems Engineer IP8 Police Bar Check Report — March 2015 DRAFT MINUTES IP9 Telecommunications Commission: March 23 CITY OF IOWA CITY Date 04-23-15 City Council Tentative Meeting Schedule 1P1 Subject to change _ April 23, 201 Time Meetina Location Tuesday, May 5, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, May 19, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, June 2, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, June 16, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Formal Meeting Monday, July 20, 2015 4:00 PM Reception prior to meeting TBA (Johnson County) 4:30 PM Joint Meeting / Work Session Monday, July 27, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Special Formal Meeting Tuesday, August 18, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, September 1, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, September 15, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, October 6, 2015 5:00 PM Work Session Meeting Emma J. Harvat Hall 7:00 PM Formal Meeting Distributed by Asst. City Mgr. When It Comes to Housing Affordability, Are Cities Like Seattle Doomed? At their annual gathering this week, America's urban planners confronted a growing crisis in the country's most expensive cities. By most measures, Seattle is exactly the kind of urban success story to be celebrated by the 6,300 planners and other city -minded activists who gathered here this week for the American Planning Association's annual National Planning ('.nnfPnnnrP This is a city with plenty of height and density, after all. It has streetcars and other transit, plus bikes and pedestrians coursing through a grid. There are lots of innovation -economy jobs, too, as witnessed by the Amazon -fueled building boom all along Westlake Avenue. It's as green a city as they come, and there's a bustling foodie scene, thoroughly local and organic. Even the weather was nice. Affordability and equity were among the most talked -about subjects at this year's APA conference. It all sounds great, except for one additional characteristic of this fast-growing Pacific Northwest metropolis of 3.6 million: It's rapidly becoming unaffordable. The cost of housing in Seattle is already a crushing burden on household budgets. And officials here say it won't be long before the median home price will catch up with Vancouver's, another urban planning mecca across the border in British Columbia. Just how much does the median home cost in Vancouver these days? The latest estimate is $1.2 million. The challenge of marbling affordability into the great urban renaissance of the last quarter century is not brand new, of course. But the evidence of social inequity in successful cities seems to have lately built to a fever pitch. Affordability and equity were among the most talked -about subjects at this year's APA conference, a part of virtually every discussion, from the future of struggling post-industrial cities like Detroit to vulnerable populations subject to the worst impacts of climate change. It was standing -room only for two presentations in particular, by the city planners representing white-hot cities on either coast, New York and San Francisco. Attendees were peering in through the door to hear what possible policies and programs could make a difference. Leading the buzz kill was Robert Hickey from the Center for Housing Policy, a division of the National Housing Conference, who quantified the scope of the problem—that incomes have simply not kept pace with housing costs. Citing a study of Chicago, Hickey said a growing number of families simply don't earn enough to buy a typical home. Renters are the majority in 10 major cities from Miami to L.A., but the news is equally bad if not worse in that department: rents are up 40 to 80 percent. Households with severe housing cost burdens—shelter costs eating up the family budget and leaving little left over for anything else—have spread from low income to middle class. Intensifying this dynamic is a supply and demand problem, as two groups—highly educated millennials and retiring boomers—compete with working-class residents for the same types of housing: smaller and efficient, and above all close to transit, jobs, and urban amenities. Enter Purnima Kapur, the executive director of New York City's Department of Planning, who attempted to explain how the city plans to achieve Mayor Bill de Blasio's goal to add 200,000 affordable homes over 10 years. Demand for housing among low-income households in New York is twice as large as the supply. Two- thirds of New Yorkers rent, and within that group over 55 percent pay a third of their income for housing; 30 percent pay half. The initiatives in New York, then, are all about increasing supply, both by preserving existing affordable homes—making sure they don't disappear in redevelopment—and smoothing the way to create as much new housing as possible, as inexpensively as possible. That means zoning reform to reduce unnecessary impediments, such as removing outdated and costly minimum parking requirements for developers building near transit stations. The centerpiece initiative, however, is making what's called "inclusionary housing" mandatory—that is, making it a requirement that in new residential development, a significant portion, up to 25 percent, must be affordable. John Rahaim, chief of the San Francisco Planning Department and formerly planning director in Seattle, said inclusionary zoning was also a major tool in the Bay Area. Developers have the option of paying a fee, providing the affordable housing on-site, building off-site, or dedicating a piece of land for the city to build affordable housing. San Francisco is also looking at the density bonus approach, where additional height is allowed in return for more affordability. Betting it all on increasing the supply of housing is fraught, too. But for all that effort, a total of 1,787 affordable units have been built since 1992, Rahaim said. "We should be building that many on an annual basis." Currently, average rent for a two-bedroom apartment in San Francisco is $4,580 per month, and the median home purchase price is over $1 million. All the while, the Bay Area continues to grow, in people and jobs. Projections are for a population increase of 250,000 over the next five years. The city has already hit 40 percent of its 30 -year projected job growth. The trend toward micro-housing—super small living spaces, some with shared kitchens—hasn't been the affordability solution once envisioned. Smaller isn't necessarily cheaper in these hot markets. Both cities are also exploring shared -equity housing and community land trusts, where typically a community non-profit acquires land through a long-term lease, and sells only the structures (thereby effectively taking the high cost of urban land out of the equation). As the audience filed out of the room, they were left with the impression that their colleagues in New York and San Francisco were doing what planners do: systematically attacking a problem, working within the system, and setting long- range goals. They were laudably chipping away. But more than a few might have wondered whether these efforts would ever be enough. The shortfall of affordable housing arguably would take 50 years to fill at the current rate of production in San Francisco—the very frustration expressed by Rahaim. It might take 25 years in New York City. But betting it all on increasing supply is fraught, too. It's expensive to build in the city, and costlier still to build increased height and density without considering the needed infrastructure to support those kinds of environments. Thinking differently about affordable housing can range from the fine-grained to the bigger picture. Seattle is a laboratory for prefabricated housing, including a modular, kit -of -parts project unveiled in the University District; if production costs can be kept down at urban infill sites, that's an important first step. In a broader view, a more regional approach, with polycentric, high-density centers supported by transit, has the advantage of breaking out of the borders of the super -hot markets. Standing in some neighborhoods in San Francisco, Seattle, Chicago, Washington, D.C., New York or Boston, it's hard to imagine that any part of them will ever be affordable again. But a better connected metropolitan region would open up possibilities in Malden, or Long Island or New Jersey, or Oakland and beyond. This is the toughest of math equations, and the kind that won't have a conventional answer. In khakis and the occasional Hawaiian shirt, America's urban planners are generally a cheerful and optimistic bunch, and rarely happier than when they can don the lanyards, network, and get out of the office for a few days. But they know all too well that everything else they do won't count for anything if cities become places only the rich can enjoy: Most of them are heading home today. On affordability, they'll be going back to the drawing board. lIffiz lll �- CITY OF IOWA CITY 1P3 ®ii� CITY OF IOWA CITY MEMORANDUM UNESCO CITY OF LITERATURE Date: April 22, 2015 To: Tom Markus, City Manager From: Tracy Hightshoe, Neighborhood Services Coordinator Re: Housing Policy Introduction An email was submitted to City Council on April 10, 2015, from Tim Weitzel outlining housing policy concerns, especially at it relates to housing vouchers and the supply of affordable housing in Iowa City. History/Background The Iowa City Housing Authority administers housing assistance programs throughout Johnson County, Iowa County and portions of Washington County. There are approximately 1,270 Housing Choice Voucher (Section 8) and Veterans' Supportive Services (VASH) assisted households in this jurisdiction. On average about 65% of the vouchers are utilized in Iowa City, 17% in Coralville and 12% in North Liberty. The remaining vouchers are utilized outside the metropolitan area. There is a concern that low income households are unable to use their vouchers due to discrimination and limited landlord choice. Currently, the Housing Authority works with over 400 landlords in the Housing Choice Voucher program. Our average 10 -year utilization rate is 97%, compared to the state's average of 94% and the national average of 92%. Vouchers in our jurisdiction are being utilized at higher rates than the state and nation. A landlord may legally refuse to accept Section 8 vouchers as the public assistance source of income excludes rent subsidies and therefore would not protect a participant in the Housing Choice Voucher program from being rejected for consideration for rental housing. There are several reasons, other than discrimination, as to why some households are not able to utilize a voucher. Common reasons include bad landlord references, bad credit, lack of security deposit and prior criminal history. Another concern raised was the lack of affordable housing. There are multiple factors that limit affordable housing options in Iowa City such as high land values, students' ability to pay higher rents, lack of affordable multi -family options citywide, etc. Affordable housing is generally defined as housing in which the occupant is paying no more than 30% of gross income for gross housing costs, including utility costs. Many HUD programs limit housing assistance to households under 80% of area median income. The HOME program further restricts household income to typically less than 60% of area median. The City has assisted over 400 rental units through the Community Development Block Grant (CDBG) and HOME programs to increase affordable housing options for households under 80% of median income in Iowa City. The City also offers the UniverCity program to rehabilitate older homes in University impacted neighborhoods for homeownership with several of the homes available for low -moderate income homebuyers. The City Council is currently reviewing inclusionary zoning for Riverfront Crossings to increase affordable housing options near the downtown. The City continues to consider and implement ways to increase affordable housing. On February 17, 2015 the Human Rights Commission made a recommendation to the City Council to include Housing Choice Voucher in the definition of Public Assistance Source of Income in the City's fair housing ordinance so that it would be unlawful to refuse to sell, rent, lease, assign, sublease, refuse to negotiate or to otherwise make unavailable, or deny any real property or housing accommodation to a person based on the use of a Housing Choice April 22, 2015 Page' 2 Voucher. It would also be unlawful to directly or indirectly advertise, or in any other manner indicate or publicize in any real estate transaction that a person is not welcome or not solicited because of their use a Housing Choice Voucher. The City Council will consider this addition once staff has had time to evaluate the recommendation. Conclusion: Despite the Iowa City Housing Authority's high voucher utilization rate, the City will continue to work with landlords to increase landlord participation. Increasing affordable housing in our market remains a City Council concern and City staff will continue its existing programs, as well as consider additional avenues to increase market rate affordable housing. From the Finance Director MJ PRELIMINARY OFFICIAL STATEMENT DATED APRIL 21, 2015 New Issue Rating: Application Made to Moody's Investor Service Assuming compliance with certain covenants, in the opinion of Ahlers & Cooney, P. C, Bond Counsel, under present law and assuming continued compliance with the requirements of the Internal Revenue Code of ]986, as amended (the "Code') the interest on the Bonds is excludable from gross income for federal income tax purposes. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, with respect to corporations (as defined for federal income tax purposes), such interest is included in adjusted current earnings for the purpose of determining the alternative minimum tax imposed on corporations. Interest on the Bonds is included in gross income for purposes of Iowa State personal and corporate income taxes. The Bonds will be designated as "qualified tax- exempt obligations ". See "TAX MATTERS" section herein for a more detailed discussion. CITY OF IOWA CITY, IOWA $7,785,000* General Obligation Bonds, Series 2015 BIDS RECEIVED: Tuesday, May 5, 2015, 10:00 o'clock A.M., Central Time AWARD: Tuesday, May 5, 2015, 7:00 o'clock P.M., Central Time Dated: Date of Delivery (June 2, 2015) Principal Due: June 1 as shown inside front cover The $7,785,000* General Obligation Bonds, Series 2015 (the "Bonds") are being issued pursuant to Division III of Chapter 384 of the Code of Iowa, and resolutions to be adopted by the City Council of the City of Iowa City, Iowa (the "City"). The Bonds are being issued to pay costs of aiding in the planning, undertaking and carrying out of various projects. (See "AUTHORITY AND PURPOSE" section herein for more detailed project descriptions.) The Bonds will be general obligations of the City for which the City will pledge its power to levy direct ad valorem taxes for the repayment of the Bonds. The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). DTC will act as securities depository for the Bonds. Individual purchases may be made in book -entry form only, in the principal amount of $5,000 and integral multiples thereof. Purchaser(s) will not receive certificates representing their interest in the Bonds purchased. Principal of the Bonds, payable annually on each June 1, beginning June 1, 2016 and interest on the Bonds, payable initially on December 1, 2015 and thereafter on each June 1 and December 1, will be paid to DTC by the City's Registrar/Paying Agent, U.S. Bank, St. Paul, Minnesota (the "Registrar"). DTC will in turn remit such principal and interest to its participants for subsequent disbursements to the beneficial owners of the Bonds as described herein. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of close of business on the 15th day of the month (whether or not a business day) of the immediately preceding such interest payment date (the "Record Date"). THE BONDS WILL MATURE AS LISTED ON THE INSIDE FRONT COVER MINIMUM BID: GOOD FAITH DEPOSIT: TAX MATTERS: $7,718,828 Required of Purchaser Only Federal: Tax -Exempt State: Taxable See "TAX MATTERS" for more information. The Bonds are offered, subject to prior sale, withdrawal or modification, when, and if issued and subject to the legal opinion of Ahlers & Cooney, P.C., Bond Counsel, of Des Moines, Iowa, to be furnished upon delivery of the Bonds. It is expected that the Bonds will be available for delivery through the facilities of DTC on or about June 2, 2015. This Preliminary Official Statement will be further supplemented by offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date and underwriter, together with any other information required by law, and shall constitute a "Final Official Statement" of the City with respect to the Bonds, as defined in Rule 15c2-12. * Preliminary; subject to change. CITY OF IOWA CITY, IOWA $7,785,000 General Obligation Bonds, Series 2015 MATURITY: June 1 as follows: Year Amount* Year Amount* 2016 $695,000 2021 $785,000 2017 710,000 2022 805,000 2018 725,000 2023 830,000 2019 740,000 2024 850,000 2020 765,000 2025 880,000 PRINCIPAL ADJUSTMENT: Preliminary; subject to change. The aggregate principal amount of the Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $8,800,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Bonds may be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. INTEREST: December 1, 2015 and semiannually thereafter. REDEMPTION: Bonds maturing after June 1, 2023, may be called for redemption by the City and paid before maturity on said date or any date thereafter, from any funds regardless of source, in whole or from time to time in part, in any order of maturity and within an annual maturity by lot. The terms of redemption shall be par, plus accrued interest to date of call. Written notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Bonds to be redeemed at the address shown on the registration books. COMPLIANCE WITH S.E.C. RULE 15c2-12 Municipal obligations (issued in an aggregate amount over $1,000,000) are subject to General Rules and Regulations, Securities Exchange Act of 1934, Rule 15c2-12 Municipal Securities Disclosure. Preliminary Official Statement: This Preliminary Official Statement was prepared for the City for dissemination to prospective bidders. Its primary purpose is to disclose information regarding the Bonds to prospective bidders in the interest of receiving competitive bids in accordance with the NOTICE OF BOND SALE and TERMS OF OFFERING contained herein. Unless an addendum is received prior to the sale, this document shall be deemed the "Near Final Official Statement'. Review Period: This Preliminary Official Statement has been distributed to City staff as well as to prospective bidders for an objective review of its disclosure. Comments or omissions or inaccuracies must be submitted to Public Financial Management, Inc. (the "Municipal Advisor") at least two business days prior to the sale. Requests for additional information or corrections in the Preliminary Official Statement received on or before this date will not be considered a qualification of a bid received. If there are any changes, corrections or additions to the Preliminary Official Statement, prospective bidders will be informed by an addendum at least one business day prior to the sale. Final Official Statement: Upon award of sale of the Bonds, the legislative body will authorize the preparation of a Final Official Statement that includes the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date and other information required by law and the identity of the underwriter (the "Syndicate Manager") and syndicate members. Copies of the Final Official Statement will be delivered to the Syndicate Manager within seven business days following the bid acceptance. REPRESENTATIONS No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations, other than those contained in the Preliminary Official Statement. This Preliminary Official Statement does not constitute any offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information, estimates and expressions of opinion herein are subject to change without notice and neither the delivery of this Preliminary Official Statement nor any sale made hereunder, shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. This Preliminary Official Statement is submitted in connection with the sale of the securities referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Preliminary Official Statement and any addenda thereto were prepared relying on information from the City and other sources, which are believed to be reliable. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and is not expressing any opinion as to the completeness or accuracy of the information contained therein. Compensation of the Municipal Advisor, payable entirely by the City, is contingent upon the sale of the issue (This page has been left blank intentionally.) TABLE OF CONTENTS NOTICE OF BOND SALE TERMS OF OFFERING......................................................................................................................................................ii SCHEDULE OF BOND YEARS.......................................................................................................................................vii INTRODUCTION MUNICIPAL ADVISOR.................................................................................................................. CONTINUING DISCLOSURE........................................................................................................ CERTIFICATION............................................................................................................................. CITY PROPERTY VALUES IOWA PROPERTY VALUATIONS.................................................................................................................................8 11 PROPERTY VALUATIONS (1/1/2013 Valuations for Taxes Payable July 1, 2014 to June 30, 2015) ............................8 11 2013 GROSS TAXABLE VALUATION BY CLASS OF PROPERTY...........................................................................8 11 TREND OF VALUATIONS..............................................................................................................................................9 12 LARGERTAXPAYERS...................................................................................................................................................9 13 RECENT PROPERTY TAX LEGISLATION................................................................................................................. 10 CITY INDEBTEDNESS..................................................................................................................................................... 11 DEBTLIMIT................................................................................................................................................................... 11 DIRECTDEBT................................................................................................................................................................ 11 URBAN RENEWAL REVENUE DEBT; OTHER DEBT.............................................................................................. 12 INDIRECT GENERAL OBLIGATION DEBT; DEBT RATIOS................................................................................... 13 LEVIES AND TAX COLLECTIONS; TAX RATES..................................................................................................... 14 LEVY LIMTS; CITY FUNDS ON HAND (Cash and Investments as of March 31, 2015) ............................................ 14 THECITY........................................................................................................................................................................... 15 CITYGOVERNMENT.................................................................................................................................................... 15 EMPLOYEES AND PENSIONS..................................................................................................................................... 15 OTHER POST -EMPLOYMENT BENEFITS................................................................................................................. 15 UNIONCONTRACTS.................................................................................................................................................... 16 INSURANCE................................................................................................................................................................... 17 GENERAL INFORMATION 18 LOCATION AND TRANSPORTATION....................................................................................................................... 18 LARGER EMPLOYERS................................................................................................................................................. 18 BUILDING PERMITS..................................................................................................................................................... 18 U.S. CENSUS DATA...................................................................................................................................................... 19 UNEMPLOYMENT RATES........................................................................................................................................... 19 EDUCATION.................................................................................................................................................................. 19 EFFECTIVE BUYING INCOME .................................................................................................................................... 19 FINANCIAL SERVICES................................................................................................................................................ 20 FINANCIAL STATEMENTS......................................................................................................................................... 20 APPENDIX A - FORM OF LEGAL OPINION APPENDIX B - JUNE 30, 2014 COMPREHENSIVE ANNUAL FINANCIAL REPORT APPENDIX C -FORM OF CONTINUING DISCLOSURE CERTIFICATE OFFICIAL BID FORM Matt Hayek Susan Mims Kingsley Botchway II Terry Dickens Rick Dobyns Michelle Payne Jim Throgmorton City of Iowa City, Iowa Mayor/City Council Mayor Mayor Pro Tem Council Member Council Member Council Member Council Member Council Member Administration Term Expires January, 2016 Term Expires January, 2018 Term Expires January, 2018 Term Expires January, 2018 Term Expires January, 2016 Term Expires January, 2016 Term Expires January, 2016 Thomas M. Markus, City Manager Dennis Bockenstedt, Finance Director Marian K. Karr, City Clerk City Attorney Eleanor M. Dilkes Iowa City, Iowa Bond Counsel Ahlers & Cooney, P.C. Des Moines, Iowa Municipal Advisor Public Financial Management, Inc. Des Moines, Iowa NOTICE OF BOND SALE Time and Place of Sealed Bids: Bids for the sale of General Obligation Bonds, Series 2015, of the City of Iowa City, State of Iowa, will be received at the office of the Finance Director, City Hall, 410 E. Washington, Iowa City, Iowa 52440 (the "Issuer") before 10:00 o'clock A.M., on the 5th day of May, 2015. The bids will then be publicly opened and referred for action to the meeting of the City Council in conformity with the TERMS OF OFFERING. The Bonds: The bonds to be offered are the following: GENERAL OBLIGATION BONDS, SERIES 2015, in the amount of $7,785,000*, to be dated June 2, 2015 (the "Bonds") *Subject to principal adjustment pursuant to official terms of offering Manner of Bidding: Open bids will not be received. Bids will be received in any of the following methods: Sealed Bidding: Sealed bids may be submitted and will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa 52440. Electronic Internet Bidding: Electronic internet bids will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa 52440. The bids must be submitted through the PARITY® competitive bidding system. Electronic Facsimile Bidding: Electronic facsimile bids will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa 52440 (facsimile number: 319-341-4008). Electronic facsimile bids will be sealed and treated as sealed bids. Consideration of Bids: After the time for receipt of bids has passed, the close of sealed bids will be announced. Sealed bids will then be publicly opened and announced. Finally, electronic internet bids will be accessed and announced. Sale and Award: The sale and award of the Bonds will be held at the Emma J. Harvat Hall, City Hall, 410 E. Washington, Iowa City, Iowa at a meeting of the City Council on the above date at 7:00 o'clock P.M. Official Statement: The Issuer has issued an Official Statement of information pertaining to the Bonds to be offered, including a statement of the Terms of Offering and an Official Bid Form, which is incorporated by reference as a part of this notice. The Official Statement may be obtained by request addressed to the Finance Director, City Hall, 410 E. Washington, Iowa City, Iowa 52440 (Telephone: 319-356-5053) or the Issuer's Municipal Advisor, Public Financial Management, Inc., 2600 Grand Avenue, Suite 214, Des Moines, Iowa, 50312 (Telephone: 515-243- 2600). Terms of Offering: All bids shall be in conformity with and the sale shall be in accord with the Terms of Offering as set forth in the Official Statement. Legal Opinion: The bonds will be sold subject to the opinion of Ahlers & Cooney, P.C., Attorneys of Des Moines, Iowa, as to the legality and their opinion will be furnished together with the printed bonds without cost to the purchaser and all bids will be so conditioned. Except to the extent necessary to issue their opinion as to the legality of the bonds, the attorneys will not examine or review or express any opinion with respect to the accuracy or completeness of documents, materials or statements made or furnished in connection with the sale, issuance or marketing of the bonds. Rights Reserved: The right is reserved to reject any or all bids, and to waive any irregularities as deemed to be in the best interests of the public. By order of the City Council of the City of Iowa City, State of Iowa. City Clerk, City of Iowa City, State of Iowa i CITY OF IOWA CITY, IOWA TERMS OF OFFERING Bids for the purchase of the City of Iowa City, Iowa's (the "City") $7,785,000* General Obligation Bonds, Series 2015 (the "Bonds") will be received on Tuesday, May 5, 2015 before 10:00 o'clock A.M. Central Time after which time they will be tabulated. The City Council will consider award of the Bonds at 7:00 o'clock P.M. Central Time, on the same day. Questions regarding the sale of the Bonds should be directed to the City's Municipal Advisor, Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa 50309, or by telephoning 515-243- 2600. Information can also be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 East Washington Street, Iowa City, Iowa 52240, or by telephoning 319-356-5053. In addition to the provisions in the NOTICE OF BOND SALE, the following section sets forth the description of certain terms of the Bonds as well as the TERMS OF OFFERING with which all bidders and bid proposals are required to comply, as follows: DETAILS OF THE BONDS GENERAL OBLIGATION BONDS, SERIES 2015 in the principal amount of $7,785,000* to be dated the date of delivery (anticipated to be June 2, 2015) will be in the denomination of $5,000 or multiples thereof and will mature June 1, as follows: *Preliminary; subject to change. Year Amount* Year Amount* 2016 $695,000 2021 $785,000 2017 710,000 2022 805,000 2018 725,000 2023 830,000 2019 740,000 2024 850,000 2020 765,000 2025 880,000 ADJUSTMENT TO THE MATURITY AMOUNTS The aggregate principal amount of the Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $8,800,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Bonds will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post - bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. TERM -BOND OPTION Bidders shall have the option of designating the Bonds as serial bonds or term bonds, or both. The bid must designate whether each of the principal amounts shown above represent a serial maturity or a mandatory redemption requirement for a term bond maturity. (See the OFFICIAL BID FORM for more information.) In any event, the above principal amount scheduled shall be represented by either serial bond maturities or mandatory redemption requirements, or a combination of both. ii OPTIONAL REDEMPTION OF THE BONDS Bonds maturing after June 1, 2023, may be called for redemption by the City and paid before maturity on said date or any date thereafter, from any funds regardless of source, in whole or from time to time in part, in any order of maturity and within an annual maturity by lot. The terms of redemption shall be par, plus accrued interest to date of call. Written notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Bonds to be redeemed at the address shown on the registration books. 112 IN aUILIire] 2WIwo IaOo]21OR Interest on the Bonds will be payable on December 1, 2015 and semiannually on the 0 day of June and December thereafter. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of the 15'b day of the month preceding such interest payment date (the "Record Date"). Interest will be computed on the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. GOOD FAITH DEPOSIT A good faith deposit in the amount of $77,850 for the Bonds (the "Deposit") is required from the lowest bidder only of the Bonds. The lowest bidder is required to submit such Deposit payable to the order of the City in the form of either (i) a cashier's check provided to the City or its Municipal Advisor or (ii) a wire transfer as instructed by the City's Municipal Advisor not later than 12:00 o'clock P.M. Central Time on the day of sale of the Bonds. If not so received, the bid of the lowest bidder may be rejected and the City may direct the second lowest bidder to submit a Deposit and thereafter may award the sale of the Bonds to the same. No interest on a Deposit will accrue to the successful bidder (the "Purchaser"). The Deposit will be applied to the purchase price of the Bonds. In the event a Purchaser fails to honor its accepted bid proposal, any deposit will be retained by the City. IWQRLVAKelm UOWO2113 \V1/114I1 All bids shall be unconditional for the Bonds for a price not less than $7,718,828, plus accrued interest, and shall specify the rate or rates of interest in conformity to the limitations set forth under the "BIDDING PARAMETERS" section. Bids must be submitted on or in substantial compliance with the OFFICIAL BID FORM provided by the City. The Bonds will be awarded to the bidder offering the lowest interest rate to be determined on a true interest cost (the "TIC") basis assuming compliance with the "GOOD FAITH DEPOSIT' section. The TIC shall be determined by the present value method, i.e., by ascertaining the semiannual rate, compounded semiannually, necessary to discount to present value as of the dated date of the Bonds, the amount payable on each interest payment date and on each stated maturity date or earlier mandatory redemption, so that the aggregate of such amounts will equal the aggregate purchase price offered therefore. The TIC shall be stated in terms of an annual percentage rate and shall be that rate of interest, which is twice the semiannual rate so ascertained (also known as the Canadian Method). The TIC shall be as determined by the Municipal Advisor based on the TERMS OF OFFERING and all amendments, and on the bids as submitted. The Municipal Advisor's computation of the TIC of each bid shall be controlling. In the event of tie bids for the lowest TIC, the Bonds will be awarded by lot. The City will reserve the right to: (i) waive non -substantive informalities of any bid or of matters relating to the receipt of bids and award of the Bonds, (ii) reject all bids without cause and (iii) reject any bid which the City determines to have failed to comply with the terms herein. iii BIDDING PARAMETERS Each bidder's proposal must conform to the following limitations: Each annual maturity must bear a single rate of interest from the dated date of the Bonds to the date of maturity. 2. Rates of interest bid must be in multiples of one-eighth or one -twentieth of one percent. 3. The initial price to the public for each maturity must be 98% or greater. RECEIPT OF BIDS Forms of Bids: Bids must be submitted on or in substantial compliance with the NOTICE OF BOND SALE and OFFICIAL BID FORM provided by the City or through PARITY® competitive bidding system (the "Internet Bid System"). Neither the City nor its agents shall be responsible for malfunction or mistake made by any person, or as a result of the use of the electronic bid or any other means used to deliver or complete a bid. The use of such means is at the sole risk of the prospective bidder who shall be bound by the terms of the bid as received. No bid will be accepted after the time specified in the NOTICE OF BOND SALE. The time as maintained by the Internet Bid System shall constitute the official time with respect to all bids submitted. A bid may be withdrawn before the bid deadline using the same method used to submit the bid. If more than one bid is received from a bidder, the last bid received shall be considered. Sealed Bidding: Sealed bids may be submitted and will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440. Electronic Internet Biddin¢: Electronic intemet bids will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440. Internet bids must be submitted through the Internet Bid System. Information about the Internet Bid System may be obtained by calling 212-404-8102. Each bidder shall be solely responsible for making necessary arrangements to access the Internet Bid System for purposes of submitting its intemet bid in a timely manner and in compliance with the requirements of the NOTICE OF BOND SALE and OFFICIAL BID FORM. The City is permitting bidders to use the services of the Internet Bid System solely as a communication mechanism to conduct the Internet bidding and the Internet Bid System is not an agent of the City. Provisions of the TERMS OF OFFERING and OFFICIAL BID FORM shall control in the event of conflict with information provided by the Internet Bid System. Electronic Facsimile Bidding: Electronic facsimile bids will be received at the Office of the Finance Director, Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440 (facsimile number: 319-341-4008). Electronic facsimile bids will be sealed and treated as sealed bids. Electronic Facsimile bids received after the deadline will be rejected. Bidders electing to submit bids via facsimile transmission bear full responsibility for the transmission of such bid. Neither the City nor its agents will assume liability for the inability of the bidder to reach the above named facsimile numbers prior to the time of sale specified above. Time of receipt shall be the time recorded by the facsimile operator receiving the bids. BOOK -ENTRY -ONLY ISSUANCE The Bonds will be issued by means of a book -entry -only issuance with no physical distribution of bond or note certificates made to the public. The Bonds will be issued in fully registered form and one bond or note certificates, representing the aggregate principal amount of the Bonds maturing in each year will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, NY, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. iv Principal and interest are payable by the Registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The Purchaser, as a condition of delivery of the Bonds, will be required to deposit the bond or note certificates with DTC. BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond or note insurance or commitment therefore at the option of the bidder, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the Purchaser. Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the Purchaser, except that, if the City has requested and received a raring on the Bonds from a rating agency, the City will pay that initial raring fee. Any other rating agency fees shall be the responsibility of the Purchaser. Failure of the municipal bond or note insurer to issue the policy after the Bonds have been awarded to the Purchaser shall not constitute cause for failure or refusal by the Purchaser to accept delivery on the Bonds. The City reserves the right in its sole discretion to accept or deny changes to the financing documents requested by the insurer selected by the Purchaser. DELIVERY The Bonds will be delivered to the Purchaser(s) via Fast Automated Securities Transfer ("FAST") delivery with the Registrar holding the Bonds on behalf of DTC, against full payment in immediately available cash or federal funds. The Bonds are expected to be delivered within forty-five days after the sale. Should delivery be delayed beyond sixty days from the date of sale for any reason except failure of performance by the Purchaser(s), the Purchaser(s) may withdraw their bid and thereafter their interest in and liability for the Bonds will cease. When the Bonds are ready for delivery, the City will give the Purchaser(s) five working days notice of the delivery date and the City will expect payment in full on that date; otherwise, reserving the right at its option to determine that the Purchaser(s) failed to comply with the offer of purchase. The Purchaser will be required to certify to the City immediately after the opening of bids: (i) the initial public offering price of each maturity of the Bonds (not including sales to bond houses and brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds (not less than 10% of each maturity) were sold to the public; or (ii) if less than 10% of any maturity has been sold, the price for that maturity determined as of the rime of the sale based upon the reasonably expected initial offering price to the public; and (iii) that the initial public offering price does not exceed their fair market value of the Bonds on the sale date. The Purchaser will also be required to provide a certificate at closing confirming the information required by this paragraph. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Bonds. The Official Statement will be further supplemented by offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date and the identity of the underwriters, together with any other information required by law or deemed appropriate by the City, shall constitute a Final Official Statement of the City with respect to the Bonds, as that term is defined in Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, (the "Rule"). By awarding the Bonds to any underwriter or underwriting syndicate submitfing an OFFICIAL BID FORM therefore, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which each series of the Bonds are awarded up to 15 copies of the Final Official Statement to permit each "Participating Underwriter" (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the Bonds are awarded as its designated agent for purposes of distributing copies of the v Final Official Statement to the Participating Underwriter. Any underwriter executing and delivering an OFFICIAL BID FORM with respect to the Bonds agrees thereby that if its bid is accepted by the City, (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. CK1721012 M 12 [@111011981311 H II In order to permit bidders for the Bonds and other Participating Underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended, the City will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Bonds, in the resolution authorizing the issuance of the Bonds and the Continuing Disclosure Certificate, to provide annual reports of specified information and notice of the occurrence of certain material events as hereinafter described (the "Undertakings"). The information to be provided on an annual basis, the events as to which notice is to be given, and a summary of other provisions of the Undertakings, including termination, amendment and remedies, are set forth as APPENDIX C to this Preliminary Official Statement. Within the past five years, the City failed to timely file annual reports for fiscal years ended June 30, 2010, and 2011. Additionally, the City failed to timely file material event notices for the Moody's April 23, 2010 rating recalibration for the City's parking revenue, sewer revenue and water revenue obligations. Breach of the Undertakings will not constitute a default or an "Event of Default" under the Bonds or the resolution for the Bonds. A broker or dealer is to consider a known breach of the Undertakings, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the Undertakings may adversely affect the transferability and liquidity of the Bonds and their market price. CUSIP NUMBERS It is anticipated that Committee on Uniform Security Identification Procedures ("CUSIP") numbers will be printed on the Bonds and the Purchaser must agree in the bid proposal to pay the cost thereof. In no event will the City, Bond Counsel or Municipal Advisor be responsible for the review of, or express any opinion that the CUSIP numbers are correct. Incorrect CUSIP numbers on said Bonds shall not be cause for the Purchaser to refuse to accept delivery of said Bonds. BY ORDER OF THE CITY COUNCIL Dennis Bockenstedt, Finance Director City of Iowa City, Iowa 410 East Washington Street Iowa City, Iowa 52240 vi SCHEDULE OF BOND YEARS $7,785,000* CITY OF IOWA CITY, IOWA General Obligation Bonds, Series 2015 Bonds Dated: June 2, 2015 Interest Due: December 1, 2015 and each June 1 and December 1 to maturity Principal Due: June 1, 2016-2025 *Preliminary; subject to change. vii Cumulative Year Principal* Bond Years Bond Years 2016 $695,000 693.07 693.07 2017 710,000 1,418.03 2,111.10 2018 725,000 2,172.99 4,284.08 2019 740,000 2,957.94 7,242.03 2020 765,000 3,822.88 11,064.90 2021 785,000 4,707.82 15,772.72 2022 805,000 5,632.76 21,405.49 2023 830,000 6,637.69 28,043.18 2024 850,000 7,647.64 35,690.82 2025 880,000 8,797.56 44,488.38 Average Maturity (dated date): 5.715 Years *Preliminary; subject to change. vii PRELIMINARY OFFICIAL STATEMENT CITY OF IOWA CITY, IOWA $7,785,000* General Obligation Bonds, Series 2015 INTRODUCTION This Preliminary Official Statement contains information relating to the City of Iowa City, Iowa (the "City") and its issuance of $7,785,000* General Obligation Bonds, Series 2015 (the "Bonds"). This Preliminary Official Statement has been authorized on behalf of the City and its Finance Director and may be distributed in connection with the sale of the Bonds authorized therein. Inquiries may be made to the City's Municipal Advisor, Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa 50309, or by telephoning 515-243-2600. Information can also be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 East Washington Street, Iowa City, Iowa 52240, or by telephoning 319-356-5053. F-1100. G]NY11'/_V111101 14 031NI The Bonds are issued pursuant to Division III of Sections 384.25, 384.26 and 403.12 of the Code of Iowa, and a resolution to be adopted by the City Council of the City. The Bonds proceeds will be used to pay the costs of aiding in the planning, undertaking and carrying out of urban renewal projects, including the Riverfront Crossings project, the CBD Streetscape Project and the Riverside Drive pedestrian tunnel; the opening, widening, extending, grading and draining of the right-of-way of streets, sidewalks, highways, avenues, alleys, public grounds, and market places, pedestrian underpasses and overpasses; the construction, reconstruction, and repairing of any street improvements; the acquisition, installation, and repair of traffic control devices and street lighting; the acquisition of real estate needed for any of the foregoing purposes; the acquisition, construction, reconstruction, extension, improvement and equipping of works and facilities useful for the collection, treatment, and disposal of sewage and industrial waste in a sanitary manner, and for the collection and disposal of surface waters and streams; the acquisition, construction, reconstruction, enlargement, improvement and repair of bridges, culverts, retaining walls, viaducts, underpasses, grade crossing separations, and approaches thereto; the rehabilitation and improvement of parks already owned, including the removal, replacement and planting of trees in the parks, and facilities, equipment and improvements commonly found in city parks; and the acquisition, construction, reconstruction, improvement, repair and equipping of waterworks, water mains, and extensions, and real and personal property, useful for providing potable water to residents of the city; the acquisition, construction, reconstruction, enlargement, improvement and equipping of recreation grounds, trails, recreation buildings, juvenile playgrounds, recreation centers and parks; the acquisition, construction, reconstruction, enlargement, improvement and equipping of city buildings, and the acquisition of real estate therefore, including city hall improvements and fiber optic connectivity for city communications and computer systems; and the construction of public recreation facilities in a joint undertaking with the Iowa City Community School District. The estimated Sources and Uses of the Bonds are as follows: Sources of Funds Par Amount of Bonds $7,785,000.00* Uses of Funds Deposit to Project Fund $7,672,457.00 Underwriter's Discount 66,172.50 Cost of Issuance & Contingency 46,370.50 Total Uses $7,785,000.00* * Preliminary, subject to change. OPTIONAL REDEMPTION Bonds maturing after June 1, 2023, may be called for redemption by the City and paid before maturity on said date or any date thereafter, from any funds regardless of source, in whole or from time to time in part, in any order of maturity and within an annual maturity by lot. The terms of redemption shall be par, plus accrued interest to date of call. Written notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Bonds to be redeemed at the address shown on the registration books. IWNNof1193K O041aI1#10IR Interest on the Bonds will be payable on December 1, 2015 and semiannually on the 1" day of June and December thereafter. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of the 15'b day of the month preceding such interest payment date (the "Record Date"). Interest will be computed on the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. PAYMENT OF AND SECURITY FOR THE BONDS The Bonds are general obligations of the City and the unlimited taxing powers of the City are irrevocably pledged for their payment. Upon issuance of the Bonds, the City will levy taxes for the years and in amounts sufficient to provide 100% of annual principal and interest due on all Bonds. If, however, the amount credited to the debt service fund for payment of the Bonds is insufficient to pay principal and interest, whether from transfers or from original levies, the City must use funds in its treasury and is required to levy ad valorem taxes upon all taxable property in the City without limit as to rate or amount sufficient to pay the debt service deficiency. BOOK -ENTRY -ONLY ISSUANCE The information contained in the following paragraphs of this subsection `Book -Entry -Only Issuance" has been extracted from a schedule prepared by Depository Trust Company (`DTC') entitled "SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING DTC AND BOOK -ENTRY -ONLY ISSUANCE. " The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully - registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants (the "Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its 2 regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has Standard & Poor's rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security (the "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co., nor any other DTC nominee, will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date identified in a listing attached to the Omnibus Proxy. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, is the responsibility of the City or Agent, 3 disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book - entry credit of tendered Securities to Tender/Remarketing Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. FUTURE FINANCING The City does not anticipate any additional general obligation borrowing needs within 90 days of date of this Preliminary Official Statement. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. DEBT PAYMENT HISTORY The City knows of no instance in which it has defaulted in the payment of principal or interest on its debt. LEGALITY The Bonds are subject to approval as to certain matters by Ahlers & Cooney, P.C. of Des Moines, Iowa as Bond Counsel. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify, any of the financial or statistical statements, or data contained in this Preliminary Official Statement and will express no opinion with respect thereto. The FORM OF LEGAL OPINION will be delivered at closing is set out in APPENDIX A to this Preliminary Official Statement. TAX MATTERS Tax Exemptions and Related Considerations: Federal tax law contains a number of requirements and restrictions that apply to the Bonds. These include investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and facilities financed with bond proceeds, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the interest on the Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Subject to the City's compliance with the above referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes, and is not included as an item of tax preference in computing the federal alternative minimum tax imposed on individuals and corporations. However, with respect to corporations (as defined for federal income tax purposes), such interest is included in adjusted current earnings for the purpose of determining the federal alternative minimum tax for such corporations Interest on the Bonds is not exempt from present Iowa income taxes. Ownership of the Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Bond Counsel will not express any opinion as to such collateral tax consequences. Prospective purchasers of the Bonds should consult their tax advisors as to collateral federal income tax consequences. Qualified Tax -Exempt Obligations: The City intends to designate the Bonds as "qualified tax-exempt obligations" under the exception provided in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), which affords banks and certain other financial institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. Tax Accounting Treatment of Discount and Premium on Certain Bonds: The initial public offering price of certain Bonds ("Discount Bonds") may be less than the amount payable on such Bonds at maturity. An amount equal to the difference between the initial public offering price of Discount Bonds (assuming that a substantial amount of the Discount Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Discount Bonds. Owners of Discount Bonds should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Bonds. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Bonds ("Premium Bonds") may be greater than the amount of such Bonds at maturity. An amount equal to the difference between the initial public offering price of Premium bonds (assuming that a substantial amount of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes a premium to the initial purchaser of such Premium Bonds. Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Bonds. Related Tax Matters: The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Bonds. If an audit is commenced, under current procedures the Service may treat the City as a taxpayer and the bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any 5 such payments to any bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. Current and future legislative proposals, including some that carry retroactive effective dates, if enacted into law, or clarification of the Code may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent owners of the Bonds from realizing the full current benefit of the tax status of such interest. For example, Representative David Camp, Chair of the House Ways and Means Committee released draft legislation that would subject interest on the Bonds to a federal income tax at an effective rate of 10% or more for individuals, trusts and estates in the highest tax bracket, and the Obama Administration proposed legislation that would limit the exclusion from gross income of interest on obligations like the Bonds to some extent for taxpayers whose income is subject to higher marginal income tax rates. Other proposals have been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income of interest on obligations like the Bonds. The introduction or enactment of any such legislative proposals or clarification of the Code may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed tax legislation, as to which Bond Counsel expresses no opinion. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. Enforcement: There is no bond trustee or similar person to monitor or enforce the terms of the resolution for issuance of the Bonds. In the event of a default in the payment of principal of or interest on the Bonds, there is no provision for acceleration of maturity of the principal of the Bonds. Consequently, the remedies of the owners of the Bonds (consisting primarily of an action in the nature of mandamus requiring the City and certain other public officials to perform the terms of the resolution for the Bonds) may have to be enforced from year to year. The owners of the Bonds cannot foreclose on property within the boundaries of the City or sell such property in order to pay the debt service on the Bonds. In addition, the enforceability of the rights and remedies of owners of the Bonds may be subject to limitation as set forth in Bond Counsel's opinion. The opinion will state, in part, that the obligations of the City with respect to the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and to the exercise of judicial discretion in appropriate cases. Opinion: Bond Counsel's opinion is not a guarantee of a result, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the City described in this section. No ruling has been sought from the Service with respect to the matters addressed in the opinion of Bond Counsel and Bond Counsel's opinion is not binding on the Service. Bond Counsel assumes no obligation to update its opinion after the issue date to reflect any further action, fact or circumstance, or change in law or interpretation, or otherwise. 1:7_74 r lace The City has requested ratings on the Bonds from Moody's Investors Service, Inc. ("Moody's"). In addition, Moody's currently maintains a rating of `Aaa' on the City's outstanding general obligation long-term debt. The existing ratings on long-term debt reflect only the view of the rating agency and any explanation of the significance of such rating may only be obtained from Moody's. There is no assurance that such rating will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of the rating may have an effect on the market price of the Bonds. 10 MUNICIPAL ADVISOR The City has retained Public Financial Management, Inc., Des Moines, Iowa as Municipal Advisor (the "Municipal Advisor") in connection with the preparation of the City's issuance of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Preliminary Official Statement. Public Financial Management is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. CONTINUING DISCLOSURE In order to permit bidders for the Bonds and other Participating Underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended, the City will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Bonds, in the resolution authorizing the issuance of the Bonds and the Continuing Disclosure Certificate, to provide annual reports of specified information and notice of the occurrence of certain material events as hereinafter described (the "Undertakings"). The information to be provided on an annual basis, the events as to which notice is to be given, and a summary of other provisions of the Undertakings, including termination, amendment and remedies, are set forth as APPENDIX C to this Preliminary Official Statement. Within the past five years, the City failed to timely file annual reports for fiscal years ended June 30, 2010, and 2011. Additionally, the City failed to timely file material event notices for the Moody's April 23, 2010 rating recalibration for the City's parking revenue, sewer revenue and water revenue obligations. Breach of the Undertakings will not constitute a default or an "Event of Default" under the Bonds or the resolution for the Bonds. A broker or dealer is to consider a known breach of the Undertakings, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the Undertakings may adversely affect the transferability and liquidity of the Bonds and their market price. CERTIFICATION The City has authorized the distribution of this Preliminary Official Statement for use in connection with the initial sale of the Bonds. I have reviewed the information contained within the Preliminary Official Statement prepared on behalf of the City by Public Financial Management, Inc., Des Moines, Iowa, and said Preliminary Official Statement does not contain any material misstatements of fact nor omission of any material fact regarding the issuance of $7,785,000* General Obligation Bonds, Series 2015. CITY OF IOWA CITY, IOWA /s/ Dennis Bockenstedt, Finance Director * Preliminary, subject to change. CITY PROPERTY VALUES IOWA PROPERTY VALUATIONS In compliance with Section 441.21 of the Code of Iowa, the State Director of Revenue annually directs the county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The 2013 final Actual Values were adjusted by the Johnson County Auditor. The reduced values, determined after the application of rollback percentages, are the Taxable Values subject to tax levy. For assessment year 2013, the Taxable Value rollback rate was 54.4002% of Actual Value for residential property; 43.3997% of Actual Value for agricultural property; 95% of Actual Value for commercial, industrial and railroad properties and 100% of Actual Value for utility property. The Legislature's intent has been to limit the growth of statewide taxable valuations for the specific classes of property to 3% annually. Utility property is limited to an 8% annual growth. Political subdivisions whose taxable valuations are thus reduced or are unusually low in growth are allowed to appeal the valuations to the State Appeal Board, in order to continue to fund present services. PROPERTY VALUATIONS (1/1/2013 Valuation Taxes payable July 1, 2014 to June 30, 2015) Taxable Value 100% Actual Value (With Rollback) Residential $3,488,112,611 $1,894,079,854 Commercial 1,144,437,631 1,086, 556,293 Industrial 80,153,614 76,128,877 Railroads 3,827,506 3,636,130 Utilities w/o Gas & Electric 9,599,528 9,599,528 Gross valuation $4,726,130,890 $3,070,000,682 Less military exemption (2,939,122) (2,939,122) Net valuation $4,723,191,768 $3,067,061,560 TIF increment (used to compute debt service levies and constitutional debt limit) $21,131,574 $21,131,574 Taxed separately Ag. Land & Buildings $3,680,920 $1,597,501 Gas & Electric Utilities $78,642,915 $47,004,994 2013 GROSS TAXABLE VALUATION BY CLASS OF PROPERTY'S Residential Commercial, Industrial and Utility Gas & Electric Utilities Railroads Total Gross Taxable Valuation Taxable Valuation Percent Total $1,894,079,854 60.77% 1,172,284,698 37.61% 47,004,994 1.51% 3,636,130 0.11% $3,117,005,676 100.00% 1) Excludes Taxable TIF Increment and Ag. Land & Buildings. TREND OF VALUATIONS Assessment Payable Utility Taxable Valuation Taxable TIF Year Fiscal Year 100% Actual Valuation (With Rollback) Increment 2010 2011-12 $4,520,142,100 $2,821,191,346 $25,408,838 2011 2012-13 4,615,527,744 2,946,951,863 11,712,327 2012 2013-14 4,668,318,992 3,020,306,824 14,113,908 2013 2014-15 4,826,647,177 3,114,066,554 21,131,574 2014') 2015-16 4,949,594,475 3,146,958,147 33,228,330 1) The City's I/l/2014 valuations are now available from the State of Iowa and become effective July 1, 2015. The 100% Actual Valuations, before rollback and after the reduction of military exemption, include Ag. Land & Buildings, Taxable TIF Increment and Gas & Electric Utilities. The Taxable Valuations, with the rollback and after the reduction of military exemption, include Gas & Electric Utilities and exclude Ag. Land & Buildings and Taxable TIF Increment. Iowa cities certify operating levies against Taxable Valuation excluding Taxable TIF Increment and debt service levies are certified against Taxable Valuation including the Taxable TIF Increment. LARGER TAXPAYERS Set forth in the following table are the persons or entities which represent larger taxpayers within the boundaries of the City, as provided by the Johnson County Auditor's Office. No independent investigation has been made of and no representation is made herein as to the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the City. With the exception of the electric and natural gas provider noted below (which is subject to an excise tax in accordance with Iowa Code chapter 437A), the City's mill levy is uniformly applicable to all of the properties included in the table, and thus taxes expected to be received by the City from such taxpayers will be in proportion to the assessed valuations of the properties. The total tax bill for each of the properties is dependent upon the mill levies of the other taxing entities which overlap the properties. Taxpayer') American College Testing, Inc. Mid American Energy Co. Gerdin, Ann; Revocable Trust Dealer Properties IC LLC Procter & Gamble Hair Care LLC Alpla, Inc. National Computer Systems Inc. CCAL 100 Hawk Ridge Drive LLC Wal-Mart Real Estate Kobrin Development Company Inc. 1/1/2013 Type of Property/Business Taxable Valuations Commercial $46,483,260 Utility 44,173,984 Commercial 22,321,438 Commercial 19, 343, 412 Industrial 16,227,436 Industrial 15,527,947 Commercial 13, 800,109 Residential 12,856,089 Commercial 12,749, 399 Commercial & Residential 12,576,689 1) This list represents some of the top taxpayers in the City, not necessarily the top 10 taxpayers. Source: Johnson County Auditor's Office RECENT PROPERTY TAX LEGISLATION During the 2013 legislative session, the Iowa General Assembly enacted Senate File 295 (the "Act"), which the Governor signed into law on June 12, 2013. Among other things, the Act (i) reduces the maximum annual taxable value growth percent, due to revaluation of existing residential and agricultural property, from the current 4% to 3%, (ii) assigns a "rollback" (the percentage of a property's value that is subject to tax) to commercial, industrial and railroad property of 95% for the 2013 assessment year and 90% for the 2014 assessment year and all years thereafter, (iii) creates a new property tax classification for multi -residential properties (mobile home parks, manufactured home communities, land -lease communities, assisted living facilities and property primarily used or intended for human habitation containing three or more separate dwelling units) ("Multi -residential Property") that begins in the 2015 assessment year, and assigns a declining rollback percentage of 3.75 percent to such properties for each subsequent year until the 2021 assessment year (the rollback percentage for Multi -residential Properties will be equal to the residential rollback percentage in the 2022 assessment year and thereafter) and (iv) exempts a specified portion of the assessed value of telecommunication properties. The Act includes a standing appropriation to replace some of the tax revenues lost by local governments, including tax increment districts, resulting from the new rollback for commercial and industrial property. Prior to Fiscal Year 2017- 18, the appropriation is a standing unlimited appropriation, but beginning in fiscal year 2017-18 the standing appropriation cannot exceed the actual fiscal year 2016-17 appropriation amount. The appropriation does not replace losses to local governments resulfing from the Act's provisions that reduce the annual revaluation growth limit for residential and agricultural properties to 3% from 4%, the gradual transition for Multi -residential Property from the commercial rollback percentage (100% of Actual Value) to the residential rollback percentage (currently 52.8166% of Actual Valuation), or the reduction in the percentage of telecommunications property that is subject to taxation. Given the wide scope of the statutory changes, and the State of Iowa's discretion in establishing the annual replacement amount that is appropriated each year commencing in fiscal year 2017-18, the impact of the Act on the City's future property tax collections is uncertain and the City is unable to estimate the financial impact of the Act's provisions on the City's future operations. In Moody's Investor Service US Public Finance Weekly Credit Outlook, dated May 30, 2013, Moody's Investor Service ("Moody's") projected that local governments in the State of Iowa are likely to experience modest reductions in property tax revenues starting in fiscal year 2014-15 as a result of the Act, with sizeable reductions possible starting in fiscal year 2017-18. According to Moody's, local governments that may experience disproportionately higher revenue losses include regions that have a substantial commercial base, a large share of Multi -residential Property (such as college towns), or significant amounts of telecommunications property. Notwithstanding any decrease in property tax revenues that may result from the Act, Iowa Code section 76.2 provides that when an Iowa political subdivision issues general obligation bonds, "the governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding twenty years. A certified copy of this resolution shall be filed with the county auditor or the auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditors to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full." From time to time, other legislative proposals may be considered by the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described in this Preliminary Official Statement. It cannot be predicted whether or in what forms any of such proposals may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for the levy of taxes by the City. 10 CITY INDEBTEDNESS DEBT LIMIT Article XI, Section 3 of the State of Iowa Constitution limits the amount of debt outstanding at any time of any county, municipality or other political subdivision to no more than 5% of the actual value of all taxable property within the corporate limits, as taken from the last state and county tax list. The debt limit for the City, based on its 2013 valuation currently applicable to the fiscal year 2014-15 is as follows: 2013 Actual Valuation of Property $4,829,586,299 Less: Military Exemption (2,939,122) Net Actual Valuation of Property $4,826,647,177 Legal Debt Limit of 5% 0.05 Legal Debt Limit $241,332,359 Less: Total G.O. Debt Subject to Debt Limit (59,340,000) Less: TIF Revenue Debt Subject to Debt Limit (2,655,000) Net Debt Limit $179,337,359 111111UNA011of1.311 General Obligation Debt Supported by Property Taxes and Tax Increment (Includes the Bonds) 1) The City is considering the early redemption of the 2016 through 2018 maturities of the Series 2008A Bonds with cash on July 1, 2015. General Obligation Debt Supported by Enterprise Funds Date Original of Issue Amount Purpose 6/14 $590,000 City Improvements Total General Obligation Debt Subject to Debt Limit: * Preliminary; subject to change. 11 Principal Final Outstanding Maturity As of 6/02/15 6/17 $575,000 $59,340,000- Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/02/15 6/08A $9,150,000 City Improvements 6/18'1 $3,085,000'1 10/08B 17,005,000 Refunding 6/18 4,530,000 6/09C 6,685,000 City Improvements 6/19 2,900,000 6/09E 5,840,000 Refunding 6/16 915,000 8, 1013 7,420,000 City Improvements 6/20 3,840,000 6/11A 7,925,000 City Improvements 6/21 4,785,000 6/11C 10,930,000 Refunding 6/21 7,385,000 6/12A 9,070,000 City Improvements 6/22 6,565,000 7/13A 7,230,000 City Improvements 6/23 6,505,000 6/14 11,390,000 City Improvements 6/24 10,470,000 6/15 7,785,000* City Improvements 6/25 7,785,000 Subtotal $58,765,000 1) The City is considering the early redemption of the 2016 through 2018 maturities of the Series 2008A Bonds with cash on July 1, 2015. General Obligation Debt Supported by Enterprise Funds Date Original of Issue Amount Purpose 6/14 $590,000 City Improvements Total General Obligation Debt Subject to Debt Limit: * Preliminary; subject to change. 11 Principal Final Outstanding Maturity As of 6/02/15 6/17 $575,000 $59,340,000- Annual Fiscal Year General Obligation Debt Service Payments (Includes the Bonds) * Preliminary; subject to change. URBAN RENEWAL REVENUE DEBT The City has revenue debt payable solely from the net revenues of the City's Urban Renewal Areas as follows: Current Outstandine Bonds Total Outstandine of Issue Amount Purpose Maturity As of 6/02/15 Principal & 6/32 $2,655,000 Principal & $2,655,000 Principal & Fiscal Year Principal Interest Principal* Interest* Principal* Interest* 2015-16 $10,605,000 $11,961,500 $695,000 $906,498 $11,300,000 $12,867,998 2016-17 9,890,000 10,974,788 710,000 906,450 10,600,000 11,881,238 2017-18 8,810,000 9,646,244 725,000 905,475 9,535,000 10,551,719 2018-19 6,350,000 6,934,669 740,000 904,163 7,090,000 7,838,832 2019-20 5,735,000 6,143,481 765,000 908,813 6,500,000 7,052,294 2020-21 4,435,000 4,684,629 785,000 907,775 5,220,000 5,592,404 2021-22 2,830,000 2,957,550 805,000 906,188 3,635,000 3,863,738 2022-23 1,870,000 1,938,150 830,000 909,050 2,700,000 2,847,200 2023-24 1,030,000 1,055,750 850,000 906,225 1,880,000 1,961,975 2024-25 880,000 908,600 880,000 908,600 Total $51,555,000 $7,785,000* $59,340,000* * Preliminary; subject to change. URBAN RENEWAL REVENUE DEBT The City has revenue debt payable solely from the net revenues of the City's Urban Renewal Areas as follows: OTHER DEBT The City has revenue debt payable solely from the net revenues of the Municipal Parking System as follows: Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/02/15 11/12D $2,655,000 Developer Grant 6/32 $2,655,000 Total Urban Renewal Revenue Debt Subject to Debt Limit: $2,655,000 OTHER DEBT The City has revenue debt payable solely from the net revenues of the Municipal Parking System as follows: 1) The City defeased the July 1, 2015 through 2024 maturities of the Series 2009F Bonds in the amount of $6,605,000. Funds are being held in an escrow account at Bankers Trust Company, N.A. until their July 1, 2017 call date. 2) The City intends to enter into a lease purchase agreement ("LPA") with Capital One to purchase a 600 stall parking garage from a developer. The LPA will commence upon satisfaction of all covenants and contingencies expected on or around January 2017. 12 Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/02/15 11/09F $9,110,000 Parking Revenue 7/14 $011 1/17 15,305,000 Parking Revenue LPA 6/36 0 2) 1) The City defeased the July 1, 2015 through 2024 maturities of the Series 2009F Bonds in the amount of $6,605,000. Funds are being held in an escrow account at Bankers Trust Company, N.A. until their July 1, 2017 call date. 2) The City intends to enter into a lease purchase agreement ("LPA") with Capital One to purchase a 600 stall parking garage from a developer. The LPA will commence upon satisfaction of all covenants and contingencies expected on or around January 2017. 12 The City has revenue debt payable solely from the net revenues of the Municipal Water System as follows: Total $16,365,000 The City has revenue debt payable solely from the net revenues of the Municipal Sewer System as follows: 1/1/2013 Portion of Principal Date Original Taxable Final Outstanding of Issue Amount Purpose Maturity As of 6/02/15 10/08D $7,115,000 Water Refunding 7/24 $4,920,000 5/09B 9,750,000 Water Refunding 7/25 7,410,000 6/12C 4,950,000 Water Refunding 7/22 4,035,000 Total $16,365,000 The City has revenue debt payable solely from the net revenues of the Municipal Sewer System as follows: Total $28,585,000 INDIRECT GENERAL OBLIGATION DEBT 1/1/2013 Portion of Principal Date Original Taxable Final Outstanding of Issue Amount Purpose Maturity As of 6/02/15 10/08C $24,280,000 Sewer Refunding 7/22 $14,345,000 5/09A 8,660,000 Sewer Refunding 7/25 6,760,000 4/10A 15,080,000 Sewer Refunding 7/20 7,480,000 Total $28,585,000 INDIRECT GENERAL OBLIGATION DEBT City share of total overlapping debt $31,357,816 1) Taxable Valuation is net of military exemption and includes Ag. Land & Buildings, Taxable TIF Increment and all Utilities. 2) Taxable Valuation is net of military exemption and includes Ag. Land & Buildings, Taxable TIF Increment, all Utilities and City exempt valuations. 3) Includes general obligation bonds, PPEL notes, certificates of participation and new jobs training certificates. DEBT RATIOS 1/1/2013 Portion of City's Market Value Taxable Valuation Percent ($4,826,647,177)') Proportionate Taxin¢ District Valuation') Within the City 2) In City G.O. Debt 3) Share Johnson County $7,356,029,478 $3,136,795,629 42.64% $9,930,000 $4,234,152 Iowa City CSD 5,471,006,291 3,136,738,482 57.33% 17,975,000 10,305,068 Clear Creek -Amapa CSD 125,746,762 57,147 0.05% 48,380,000 24,190 Kirkwood Comm. College 22,848,558,972 3,136,795,629 13.73% 122,319,056 16,794,406 City share of total overlapping debt $31,357,816 1) Taxable Valuation is net of military exemption and includes Ag. Land & Buildings, Taxable TIF Increment and all Utilities. 2) Taxable Valuation is net of military exemption and includes Ag. Land & Buildings, Taxable TIF Increment, all Utilities and City exempt valuations. 3) Includes general obligation bonds, PPEL notes, certificates of participation and new jobs training certificates. DEBT RATIOS 1) Based on the City's 1/1/2013 100% Actual Valuation; includes Ag Land, Ag Buildings, all Utilities and TIF Increment. 2) Population based on the City's 2010 U.S. Census. 3) G.O. debt abated by Water Revenues. 13 Debt/Actual Market Value Debt/67,862 G.O. Debt ($4,826,647,177)') Povulation 2) Total General Obligation Debt $59,340,000 1.23% $874.42 Less G.O. Debt Service Paid by Enterprise Funds 3) (575,000) Net G.O. Debt Paid by Taxes and Tax Increment $58,765,000 1.22% $865.95 TIF Revenue Debt $2,655,000 0.06% $39.12 City's share of total overlapping debt $31,357,816 0.65% $462.08 1) Based on the City's 1/1/2013 100% Actual Valuation; includes Ag Land, Ag Buildings, all Utilities and TIF Increment. 2) Population based on the City's 2010 U.S. Census. 3) G.O. debt abated by Water Revenues. 13 LEVIES AND TAX COLLECTIONS Taxes in Iowa are delinquent each October 1 and April 1 and a late payment penalty of 1% per month of delinquency is enforced as of those dates. If delinquent taxes are not paid, the property may be offered at the regular tax sale on the third Monday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property and funds so received are applied to taxes. A property owner may redeem from the regular tax sale but, failing redemption within three years, the tax sale purchaser is entitled to a deed, which in general conveys the title free and clear of all liens except future tax installments. IIRIVII17_74YW1 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 $/$1,000 Collected During Percent Fiscal Year Levy Collection Year Collected 2010-11 $47,788,547 $47,782,881 99.9% 2011-12 49,594,682 49,542,641 99.9% 2012-13 50,407,375 50,832,407 100.8% 2013-14 50,308,061 50,778,241 100.9% 2014-15 50,302,408 -------In Process of Collection ------- Taxes in Iowa are delinquent each October 1 and April 1 and a late payment penalty of 1% per month of delinquency is enforced as of those dates. If delinquent taxes are not paid, the property may be offered at the regular tax sale on the third Monday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property and funds so received are applied to taxes. A property owner may redeem from the regular tax sale but, failing redemption within three years, the tax sale purchaser is entitled to a deed, which in general conveys the title free and clear of all liens except future tax installments. IIRIVII17_74YW1 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 10okwaIII05110 A city's general fund tax levy is limited to $8.10 per $1,000 of taxable value, with provision for an additional $0.27 per $1,000 levy for an emergency fund which can be used for general fund purposes (Code of Iowa, Chapter 384, Division I). Cities may exceed the $8.10 limitation upon authorization by a special levy election. Further, there are limited special purpose levies which may be certified outside of the above described levy limits (Code of Iowa, Section 384.12). The amount of the City general fund levy subject to the $8.10 limitation is $8.10 for fiscal year 2014-15. The City does levy costs for operation and maintenance of publicly owned Transit, tort liability and other insurance, support of the public library, police and fire retirement, FICA and IPERS and other employee benefits expenses in addition to the $8.10 general fund limit as authorized by law. In addition, the City has not established an emergency fund levy for fiscal year 2014-15. Debt service levies are not limited. CITY FUNDS ON HAND (Cash and Investments as of March 31, 2015) City Operating Funds $118,528,874 City Restricted Funds 61,316,323 Total $179,845,197 14 $/$1,000 $/$1,000 $/$1,000 $/$1,000 $/$1,000 Johnson County 7.22207 6.98984 6.74909 6.73712 6.74168 City of Iowa City 17.75655 17.84150 17.26864 16.80522 16.70520 Iowa City CSD 14.68972 14.59055 14.07327 13.68792 13.69999 Clear Creek-Amana CSD (Clear Creek) 15.71002 15.54876 15.31063 15.31055 15.06516 Kirkwood Comm. College 0.92566 0.99870 1.07888 1.06473 1.05754 City Assessor 0.23472 0.24632 0.24453 0.25873 0.23866 County Ag. Extension 0.08307 0.08358 0.08146 0.08160 0.08119 State of Iowa 0.00340 0.00320 0.00320 0.00330 0.00330 Total Tax Rate - City Resident: Iowa City CSD 40.91519 40.75369 39.49917 38.63862 38.52756 Clear Creek-Amana CSD (Clear Creek) 41.93549 41.71190 40.73653 40.26125 39.89273 10okwaIII05110 A city's general fund tax levy is limited to $8.10 per $1,000 of taxable value, with provision for an additional $0.27 per $1,000 levy for an emergency fund which can be used for general fund purposes (Code of Iowa, Chapter 384, Division I). Cities may exceed the $8.10 limitation upon authorization by a special levy election. Further, there are limited special purpose levies which may be certified outside of the above described levy limits (Code of Iowa, Section 384.12). The amount of the City general fund levy subject to the $8.10 limitation is $8.10 for fiscal year 2014-15. The City does levy costs for operation and maintenance of publicly owned Transit, tort liability and other insurance, support of the public library, police and fire retirement, FICA and IPERS and other employee benefits expenses in addition to the $8.10 general fund limit as authorized by law. In addition, the City has not established an emergency fund levy for fiscal year 2014-15. Debt service levies are not limited. CITY FUNDS ON HAND (Cash and Investments as of March 31, 2015) City Operating Funds $118,528,874 City Restricted Funds 61,316,323 Total $179,845,197 14 THE CITY CITY GOVERNMENT The City is governed by a seven member Council; each member serves a four-year term. Elections are held every two years allowing for continuation in office of at least three members in each biennial election. The Council members are elected at large, but three members are nominated from specific districts and the other four are nominated at large. The Mayor is elected by the Council from its own members. 101051WR#]'101WV-11►1UWBleM[f7e67 The City has 546 full and 60 permanent part-time employees and 400 temporary employees, including a police force of 81 sworn personnel and a fire department of 64 fire fighters. Of the City's 1,006 employees, 628 are enrolled in the Iowa Public Employees Retirement System ("IPERS") pension plan administered by the State of Iowa. The City is current in its obligation to IPERS, which has been as follows: $2,245,326 in fiscal year 2011-12, $2,423,438 in fiscal year 2012-13 and $2,552,602 in fiscal year 2013-14. In addition to IPERS, the City is a participating employer in the Municipal Fire and Police Retirement System of Iowa ("MFPRSI"), and is current in its contributions. Of the City's 1,006 employees, 144 are enrolled in the MFPRSI. MFPRSI contributions have been as follows: $2,232,637 in fiscal year 2011-12, $2,428,631 in fiscal year 2012-13 and $2,920,967 in fiscal year 2013-14. OTHER POST -EMPLOYMENT BENEFITS In addition to providing pension benefits, the City offers certain health care insurance benefits to its retirees. All full- time employees who retire or terminate/resign are offered the following post -employment benefit options: Health insurance and dental insurance: The option of continuing with the City's health insurance plan at the individual's expense. Life insurance: The option of converting the employee's City -paid policy to an individual policy at the individual's expense with the City's life insurance carrier. Long-term disability: For employees who terminate/resign and have been on the plan for a minimum of one year, the option of converting the employee's City -paid group policy to a personal policy at the individual's expense with the City's long-term disability insurance carrier. The above options, while at the individual's own expense, are included within the City's overall insurance package. Therefore, a portion of the above coverage is being subsidized by the City and its current employees. The City currently finances the benefit plan on a pay-as-you-go basis. The City's annual other post -employment benefits ("OPEB") cost is calculated based on the annual required contribution ("ARC") of the City, an amount actuarially determined in accordance with the Governmental Accounting Standards Board ("GASB") Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. For the fiscal year 2013-14, the annual OPEB cost was $649,497, and the net OPEB obligation was $3,614,449. As of July 1, 2012, the most recent actuarial valuation date for the period July 1, 2013 through June 30, 2014 the actuarial accrued liability was $7,163,715, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability of $7,163,715. Funding Policy: The plan member's contribution requirements are established and may be amended by the City. The City currently finances the benefit plans on a pay-as-you-go basis. 15 Annual OPEB Cost and Net OPEB Obligation: The City's annual OPEB cost is calculated based on the annual required contribution ("ARC") of the City, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year ended June 30, 2014, the amount actually contributed to the plans, and changes in the City's net OPEB obligation: Annual required contribution $643,988 Interest on net OPEB obligation 115,697 Adjustment to annual required contribution (110,188) Annual OPEB costs $649,497 Contributions made (340,674) Increase in net OPEB obligation 308,823 Net OPEB obligation beginning of year 3,305,626 Net OPEB obligation end of year 3 614 449 For calculation of the net OPEB obligation, the actuary has set the transition day as July 1, 2008. The end of year net OPEB obligation was calculated by the actuary as the cumulative difference between the actuarially determined funding requirements and the actual contributions for the year ended June 30, 2014. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plans and the net OPEB obligation as of June 30, 2014 are summarized as follows: Year Annual Percentage of Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed from City Obligation June 30, 2012 $600,965 28.5% $2,686,798 June 30, 2013 648,466 4.6% 3,305,626 June 30, 2014 649,497 52.5% 3,614,449 Funded Status and Funding Progress: As of July 1, 2012, the most recent actuarial valuation date for the period July 1, 2013 through June 30, 2014, the actuarial accrued liability was $7,163,715, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability ("UAAL") of $7,163,715. The covered payroll (annual payroll of active employees covered by the plans) was $34,992,423 and the ratio of the UAAL to covered payroll was 20.5%. As of June 30, 2014 there were no trust fund assets. UNION CONTRACTS The City currently maintains labor agreements with the American Federation of State, County, and Municipal Employees ("AFSCME") and with Police ("PLRO") and Fire ("IAFF") bargaining units. Contracts have been negotiated as follows below. Wage Increases FY2015 FY2016 AFSCME 2.20% 2.00% PLRO 2.20% 2.75% IAFF 2.20% 2.00% 16 Contract Expiration June 30, 2020 June 30, 2016 June 30, 2016 INSURANCE The City's insurance coverage is as follows: Type of Insurance Limit General Liability $20,000,000 Automobile Liability $20,000,000 Wrongful Acts — Public Officials $20,000,000 Law Enforcement Liability $20,000,000 Boiler & Machinery Blanket $25,000,000 Extra Expense and Loss of use $500,000 Property Blanket $293,434,737 Workers Compensation Statutory Employers Liability Each Person Accident $2,000,000 Policy Limit Disease $2,000,000 Each Person Disease $2,000,000 Airport Commission General Liability Each Occurrence $5,000,000 Hangar Keepers Legal Liability Each Aircraft $1,000,000 Each Loss $1,000,000 17 GENERAL INFORMATION LOCATION AND TRANSPORTATION The City, with a 2010 Census population of 67,862, serves as the County seat for Johnson County. The City lies at the intersection of Highways 80 and 380. The City is approximately 115 miles east of the City of Des Moines, 20 miles south of the City of Cedar Rapids and 55 miles west of the City of Davenport. The Cedar Rapids Airport, located 20 miles from downtown Iowa City is served by a number of national and regional air carriers. Rail service is provided by the mainline of the Iowa Interstate Railway. LARGER EMPLOYERS A representative list of larger employers in the City is as follows: Employer University of Iowa University of Iowa Hospitals Iowa City Comm. School District Veteran's Affairs Medical Center Mercy Hospital Pearson Educational Measurement Hy -Vee 2) ACT, Inc. City of Iowa City Systems Unlimited International Automotive Components Procter & Gamble Oral B Laboratories Johnson County Administration Type of Business Education Healthcare Education Health Services Health Services Educational Testing Services Grocery Education Programs Government Assisted Living Auto Interior Components Health & Beauty Products Toothbrush Manufacturing Government 1) Includes full and part-time as well as seasonal employees. 2) Includes locations in Iowa City and Coralville. Source: The City as of March 2015. RIU1011Wei WllNu10 Number of Employees'1 18,650 8,704 2,346 1,562 1,559 1,200 1,166 1,089 1,006 890 785 588 462 435 City officials report the following construction activity as of March 31, 2015. Building permits are reported on a calendar year basis. New Construction: No. of new permits: Valuation: Remodeling Repair and Additions: No. of new permits: Valuation: Total Permits Total Valuations 2011 2012 2013 2014 2015 145 225 248 250 29 $57,910,359 $95,292,497 $151,138,166 $124,416,182 $11,086,235 593 491 467 453 92 $23,789,433 $73,944,194 $33,738,686 $28,163,030 $9,808,120 738 716 715 703 121 $81,699,792 $169,236,691 $184,876,852 $152,579,212 $20,894,355 18 lu6xN I104MV 17-11 K1 Population Trend 1980 U.S. Census 50,508 1990 U.S. Census 59,738 2000 U.S. Census 62,220 2002 Special City Census 62,380 2010 U.S. Census 67,862 Source: U.S. Census Bureau website. UNEMPLOYMENT RATES Source: Iowa Workforce Development website. EDUCATION Public education to the City is provided by the Iowa City Community School District, with certified enrollment of 13,328 for fiscal year 2015-16. There are approximately 2,346 full and part time employees of the district. The district owns and operates several pre-school sites, twenty elementary schools, three middle schools, two senior high schools, and one alternative school for ninth through twelfth graders. Education is also provided through the Clear Creek — Amana Community School District, with certified enrollment of 1,839 for fiscal year 2015-16. Four year college programs and vocational training are available throughout the area including University of Iowa and Kirkwood Community College. EFFECTIVE BUYING INCOME Effective Buying Income and Retail Sales as reported for 2014 are as follows: Iowa City Johnson County State of Iowa Source: Claritas, Inc. Total EBI $1,449,682,500 3,256,622,500 67,542,947,500 Median Household EBI $35,182 43,725 43,917 19 Total Retail Sales $1,688,427,295 3,166,359,788 54,160,249,228 Retail Sales Per Household $57,529 55,899 45,575 Johnson State of Iowa City County Iowa Annual Averages: 2011 4.3% 4.2% 5.9% 2012 3.9% 3.8% 5.2% 2013 3.1% 3.3% 4.7% 2014 2.9% 3.0% 4.4% 2015 (Jan -Feb) 2.8% 3.0% 4.1% Source: Iowa Workforce Development website. EDUCATION Public education to the City is provided by the Iowa City Community School District, with certified enrollment of 13,328 for fiscal year 2015-16. There are approximately 2,346 full and part time employees of the district. The district owns and operates several pre-school sites, twenty elementary schools, three middle schools, two senior high schools, and one alternative school for ninth through twelfth graders. Education is also provided through the Clear Creek — Amana Community School District, with certified enrollment of 1,839 for fiscal year 2015-16. Four year college programs and vocational training are available throughout the area including University of Iowa and Kirkwood Community College. EFFECTIVE BUYING INCOME Effective Buying Income and Retail Sales as reported for 2014 are as follows: Iowa City Johnson County State of Iowa Source: Claritas, Inc. Total EBI $1,449,682,500 3,256,622,500 67,542,947,500 Median Household EBI $35,182 43,725 43,917 19 Total Retail Sales $1,688,427,295 3,166,359,788 54,160,249,228 Retail Sales Per Household $57,529 55,899 45,575 Iy1►/_V[ejV-11 W1011tvrim *1 Commercial banking services are provided to residents of the City by Farmers & Merchants Savings Bank and MidWestOne Bank and branch offices of American Bank and Trust Company, N.A., Bank of the West, Corridor State Bank, First American Bank, Hills Bank and Trust Company, Liberty Bank, FSB, U.S. Bank, N.A., Wells Fargo Bank, N.A. and West Bank. Farmers & Merchants Savings Bank and MidWestOne Bank report the following annual deposits as of June 30 of each year: Year 2010 2011 2012 2013 2014 Source: FDIC official website. FINANCIAL STATEMENTS Farmers & Merchants Savings Bank $80,567,000 81,013,000 87,153,000 87,620,000 90,569,000 MidWestOne Bank" $1,200,634,000 1,259,018,000 1,327,058,000 1,345,251,000 1,354,881,000 The City's June 30, 2014 COMPRENSIVE ANNUAL FINANCIAL REPORT is reproduced as APPENDIX B. The City's certified public accountant has not consented to distribution of the audited financial statements and has not undertaken added review of their presentation. Further information regarding financial performance and copies of the City's prior Comprehensive Annual Financial Reports may be obtained from the City's Municipal Advisor, Public Financial Management, Inc. 20 (This page has been left blank intentionally.) APPENDIX A FORM OF LEGAL OPINION (This page has been left blank intentionally.) AHLERS &COONEY, P.C. 100 COURT AVENUE, SUITE 600 DES MOINES, IOWA 50309-2231 FAx 515-243-2149 WWW.AHLERSLAW.COM [draft] We hereby certify that we have examined a certified transcript of the proceedings of the City Council and acts of administrative officers of the City of Iowa City, State of Iowa (the "Issuer"), relating to the issuance of General Obligation Bonds, Series 2015, by said City, dated June 2, 2015, in the denomination of $5,000 or multiples thereof, in the aggregate amount of $ (the 'Bonds"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion as bond counsel. As to questions of fact material to our opinion, we have relied upon representations of the Issuer contained in the resolution authorizing issuance of the Bonds (the 'Resolution") and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based on our examination and in reliance upon the certified proceedings and other certifications described above, we are of the opinion, under existing law, as follows: 1. The Issuer is duly created and validly existing as a body corporate and politic and political subdivision of the State of Iowa with the corporate power to adopt and perform the Resolution and issue the Bonds. 2. The Bonds are valid and binding general obligations of the Issuer. 3. All taxable property in the territory of the Issuer is subject to ad valorem taxation without limitation as to rate or amount to pay the Bonds. Taxes have been levied by the Resolution for the payment of the Bonds and the Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Bonds to the extent the necessary funds are not provided from other sources. 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain WISHARO & BAILV - 1888{ GUERNSEY & BAILY - 1893{ BAILV & STIPP - 1901{ STIPP, PERRY, BANNISTER & STARZINGER - 1914{ BANNISTER, CARPENTER, 2015 City of Iowa City, State of Iowa $ General Obligation Bonds, Series 2015 Page 2 of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding the accuracy, adequacy, or completeness of the Official Statement or other offering material relating to the Bonds. Further, we express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. The rights of the owners of the Bonds and the enforceability of the Bonds are limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Respectfully submitted, 01100819-1\10714-119 APPENDIX B JUNE 30, 2014 COMPREHENSIVE ANNUAL FINANCIAL REPORT (This page has been left blank intentionally.) iq 1 MEOW .. y I �Y {.M l � f ®+I� �►i 1 47im -Wi_�� rl ,GIMM A 11 i1T T� u i 11 111111 Ill v CITY OF IOWA CITY UNESCO CITY OF LITERATURE On the cover In 2014, the City of Iowa City completed its $50 million Wastewater Treatment Plant expansion project, the largest public works project ever undertaken by the City. The work involved permanently shutting down operations at the 80 -year old North Plant, located on South Clinton Street, and expanding the newer South Wastewater Treatment Plant on Napoleon Street, south of Iowa City. The plant is state-of-the-art, utilizing innovative modern designs and natural bioprocesses that are inspired by nature to treat the wastewater and return it to the Iowa River. Unlike the hazardous chemicals that were used in the past, these eco -friendly processes ultimately protect our community and our environment, including the restored wetlands and prairie that surround the facility, where grasses, wildflowers, birds and wildlife abound. COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF IOWA CITY, IOWA FOR THE FISCAL YEAR ENDED JUNE 309 2014 PREPARED BY: FINANCE DEPARTMENT CITY OF IOWA CITY, IOWA CITY OF IOWA CITY, IOWA TABLE OF CONTENTS June 30, 2014 Page INTRODUCTORY SECTION Tableof contents................................................................................................................................ 1 Letterof transmittal............................................................................................................................ 3 Certificate of Achievement for Excellence in Financial Reporting ................................................... 13 Cityorganizational chart.................................................................................................................... 14 Cityofficials....................................................................................................................................... 15 II IcncCal /:\ 1%9 BE" Y 0]►I INDEPENDENT AUDITOR'S REPORT......................................................................................... 17 MANAGEMENT'S DISCUSSION AND ANALYSIS.................................................................... 21 BASIC FINANCIAL STATEMENTS 92 Government -wide fmancial statements Statementof net position............................................................................................................. 34 Statementof activities.................................................................................................................. 36 Fund fmancial statements Balance sheet — governmental funds............................................................................................ 38 Reconciliation of the balance sheet of the governmental funds to the statement of net position 40 Statement of revenues, expenditures, and changes in fund balances — governmental funds ....... 42 Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental funds to the statement of activities..................................................................... 44 Statement of net position — proprietary funds.............................................................................. 46 Statement of revenues, expenses, and changes in fund net position — proprietary funds ............ 48 Statement of cash flows —proprietary funds................................................................................ 50 Statement of fiduciary assets and liabilities................................................................................. 52 Notes to fmancial statements.......................................................................................................... 54 REQUIRED SUPPLEMENTARY INFORMATION Budgetary comparison schedule — budget and actual — all governmental funds and enterprise funds —budgetary basis..................................................................................... 86 Budgetary comparison schedule —budget to GAAP reconciliation ................................... 88 Note to required supplementary information — budgetary reporting ................................... 89 Required supplementary information — schedule of funding progress for health and dental plans............................................................................................................. 90 K6155 III1►11►[�1\►1�11►1�]►�/I�IIIU\IL11011 OW."No Eu I Nee Combining balance sheet — nonmajor governmental funds............................................................ 92 Combining statement of revenues, expenditures, and changes in fund balances —nonmajor governmentalfunds...................................................................................................................... 93 Combining statement of net position — nonmajor enterprise funds ................................................ 96 Combining statement of revenues, expenses, and changes in fund net position —nonmajor enterprisefunds............................................................................................................................ 97 Combining statement of cash flows —nonmajor enterprise funds .................................................. 98 Combining statement of net position — internal service funds ........................................................ 100 Combining statement of revenues, expenses, and changes in fund net position —internal service funds............................................................................................................................................. 101 1 CITY OF IOWA CITY, IOWA TABLE OF CONTENTS June 30, 2014 Page COMBINING AND INDIVIDUAL FUND STATEMENTS (continued) Combining statement of cash flows — internal service funds.......................................................... 102 Statement of changes in assets and liabilities — agency funds......................................................... 104 STATISTICAL SECTION (UNAUDITED) Netposition by component................................................................................................................. 107 Changesin net position...................................................................................................................... 108 Fund balances — governmental funds................................................................................................. 110 Changes in fund balances — governmental funds............................................................................... 111 General government tax revenues by source...................................................................................... 112 Assessed and taxable value of property.............................................................................................. 113 Property tax rates — direct and overlapping governments.................................................................. 114 Property tax budgets and collections.................................................................................................. 115 Principaltaxpayers............................................................................................................................. 116 Principal water system customers...................................................................................................... 118 Sales history and total water charges.................................................................................................. 119 Principal sewer system customers...................................................................................................... 120 Sales history and total sewer charges................................................................................................. 121 Ratios of outstanding debt by type..................................................................................................... 122 Ratios of general obligation bonded debt to assessed value and net bonded debt per capita ............. 123 Ratio of annual debt service expenditures for general bonded debt to total general governmental expenditures..................................................................................................................................... 124 Computation of direct and overlapping debt...................................................................................... 125 Legal debt margin information........................................................................................................... 126 General obligation debt annual maturity schedule............................................................................. 127 Schedule of revenue bond coverage................................................................................................... 128 Revenue debt annual maturity schedule............................................................................................. 129 Revenue debt annual maturity by funding source.............................................................................. 130 Demographic and economic statistics................................................................................................ 132 Principalemployers............................................................................................................................ 133 Full-time equivalent city government employees by function........................................................... 134 Operating indicators by function........................................................................................................ 136 Capitalassets by function................................................................................................................... 138 COMPLIANCE SECTION Independent auditor's report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government AuditingStandards............................................................................................................................. 141 Independent auditor's report on compliance for each major federal program and report on internal control over compliance required by OMB Circular A-133............................................................... 143 Schedule of expenditures of federal awards....................................................................................... 145 Notes to the schedule of expenditures of federal awards................................................................... 150 Schedule of findings and questioned costs......................................................................................... 151 Summary schedule of prior federal audit findings ............................................................................. 155 2 December 11, 2014 To the Citizens, Honorable Mayor, Members of the City Council and City Manager City of Iowa City, Iowa r �. ` owr `s -� j%f.A§M CITY OF IOWA CITY The Comprehensive Annual Financial Report (CAFR) of the City of Iowa City, Iowa (the City) for the fiscal year ended June 30, 2014 is submitted herewith in accordance with the provisions of Chapter 11 of the Code of Iowa. The City's Finance Department prepared this report. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rest with the City. I believe the information, as presented, is accurate in all material respects and presented in a manner designed to fairly present the financial position and results of operations of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included. This report consists of management's representation concerning the finances of the City of Iowa City. Management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Because the cost of internal controls should not outweigh their benefits, the City's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The CAFR reflects all funds of the City in accordance with standards set by the Governmental Accounting Standards Board (GASB). In 1999, GASB adopted Statement No. 34, Basic Financial Statements — Management's Discussion and Analysis — For State and Local Governments. The final effective date for the implementation of GASB No. 34 for the City of Iowa City was June 30, 2003. This report complies with those standards. This statement significantly changes governmental financial reporting in order to bring it closer to a private sector model. The City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions effective with the June 30, 2011 financial statements. Fund balances for the governmental funds are reported in classifications that comprise a hierarchy based on the extent to which the government honors constraints on the specific purposes for which amounts in those funds can be spent. The classifications include: nonspendable amounts that are not in spendable form or the City is legally or contractually required to be maintained intact; restricted amounts contain restraint on their use externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation; committed amounts can only be used for specific purposes imposed by formal action of the government's highest level of decision-making authority; assigned amounts 3 are intended to be used for specific purposes; and the unassigned fund balance is the residual classification for the General Fund. Chapter 11 of the Code of Iowa requires an annual audit to be performed. The independent public accounting firm of Eide Bailly LLP was selected by the City. In addition to meeting the requirements set forth in Chapter 11, the audit was also designed to meet the requirements of the Single Audit Act of 1996 and related Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Non -Profit Organizations. While, the financial statements are the responsibility of the City, the responsibility of the auditor is to express an opinion on the City's financial statements based on their audit. The goal of the independent audit is to provide reasonable assurance that the City's financial statements for the fiscal year ended, June 30, 2014 are free of material misstatement. The audit is conducted in accordance with generally accepted auditing standards and involves examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement preparation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Iowa City's financial statements for the fiscal year ended, June 30, 2014, are fairly presented in conformity with GAAP. The independent auditors' report on the basic financial statements and combining fund statements and schedules is included in the financial section of this report. As a recipient of federal financial assistance, the City is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws and regulations related to these federal programs. These internal accounting and administrative controls are subject to periodic evaluation by the City's management and the City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of State, Local Governments and Non - Profit Organizations. Information related to this single audit, including the schedules of federal financial assistance, findings and questioned costs, and independent auditors' reports on the internal accounting and administrative controls and compliance with applicable laws and regulations are included in the compliance section of this report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Iowa City was incorporated April 6, 1853. The City is governed by a seven member Council; each member serves a four-year term. Elections are held every two years allowing for continuation in office of at least three members at each biennial election. The Council members are elected at large, with three members nominated from specific districts and the remaining four members nominated at large. The Council elects the Mayor from its own members for a two-year term. The City Council is the legislative body and makes all policy determinations for the City through the enactment of ordinances and resolutions. It also adopts a budget to determine how the City will 13 obtain and spend its funds. The Council appoints members of boards, commissions and committees. The City Manager is the chief administrative officer for the City and is appointed by the City Council. The City Manager implements policy decisions of the City Council and enforces City ordinances. In addition, the City Manager appoints and directly supervises the directors of the City's operating departments and supervises the administration of the City's personnel system. The Manager supervises 526 full-time and 57 part-time permanent municipal employees and 396 temporary employees, including a police force of 79 sworn personnel and a fire department of 64 firefighters. The City Clerk is appointed by the City Council and reports to the Council. The City Clerk's Office administers the City government's documentation, City licenses and permits, and provides information from the Municipal Code and City Ordinances to the public and other City departments. The City Clerk's Office is also responsible for distributing and maintaining accurate records of all City Council proceedings. The Clerk supervises 3 full-time employees and 2 temporary employees. The City Attorney is also appointed by the City Council and works at the direction of the City Council. The City Attorney supervises the City Attorney's Office, including 4 Assistant City Attorneys and 2 other full-time employees. In addition, the City Attorney acts as Chief Legal Counsel to the City Council, City Manager, the various City departments and staff, and most City commissions, committees and boards. The City provides a full range of services including police and fire protection, construction and maintenance of roads, streets and infrastructure, inspection and licensing functions, a municipal airport, library, recreational activities, and cultural events. The City owns and operates its water supply and distribution system and sewage collection and treatment system with secondary treatment also provided. Virtually the entire City has separate storm and sanitary sewer systems. The City operates a municipal off-street and on -street parking system in the downtown area. The City also operates a transit system. The annual budget serves as the foundation for the City's financial planning and control. All departments of the City are required to submit requests for appropriation to the City Manager in October. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the Council for review in December. The Council is required to hold a public hearing on the proposed budget and to adopt a final budget no later than March 15. The appropriated budget is prepared by fund, function (e.g., Public Safety), and department (e.g., Police). The City adopts a three-year financial plan that includes both operations and capital improvements. This three-year plan permits a more comprehensive review of the City's financial condition, allowing analysis of the current and future needs and requirements. During preparation of the plan, careful review is made of property tax levy rates, utility and user fee requirements, ending cash balances by fund, debt service obligations, bond financing needs, capital outlay for equipment purchases and major capital improvement projects. The state requires at least a one-year operating budget. While legal spending control is exercised at a state mandated function level, management control is set at the Department Manager level. Encumbrance accounting is utilized in all funds for budgetary control. Appropriations that are not spent lapse at the end of the year. G Information Useful in Assessing the Government's Economic Condition The City's economic strength is based on the educational sector, medical services, and diversified manufacturing. The University of Iowa and the University of Iowa Hospital and Clinics are the City's largest employers with over 30,800 employees. The University of Iowa had a record high enrollment in fall 2012 of 31,498 students, and the enrollment has held steady with a fall semester 2014 enrollment of 31,387 students. The academic and research missions of the University, along with the health care services provided at its hospitals and clinics, have a tremendously positive economic impact on the area. The City also has a significant number of national and international businesses, including Fortune 500 companies. The City continues to see sustained production in our major local industries; ACT Inc., NCS Pearson, and Proctor & Gamble. While established firms continue to prosper and expand in Iowa City, opportunities are available for growth of new businesses. Continued economic development efforts with the Iowa City and Coralville Chambers of Commerce, private interests, the University of Iowa, other surrounding communities, and participation as a member of the Iowa City Area Development Group, have produced positive results with the retention and expansion of businesses. In addition, Iowa's Creative Corridor is a seven -county alliance surrounding Iowa City and has been identified as one of the major growth areas for new business development in the State of Iowa. This Corridor gives employers workforce access to a region uniquely Iowan, founded with a manufacturing heritage, but actively seeking new frontiers and opportunities in information technology, biotechnology and bioprocessing, renewable energy, insurance and financial services, advanced manufacturing, and educational services. Continued developments within Iowa City and the region have a favorable impact upon the City's economy. As a whole, the City's economy continues to grow, but at a slow pace. The major employers have been able to maintain steady employment during the national recession as evidence in the unemployment rate for Iowa City, which continues to remain low at 3.5% for the month of June 2014, as compared to 4.4% for the State of Iowa, and 6.1% for the national average. The rate of new housing construction increased in comparison to the prior year based on the number of building permits issued. This consisted of 171 new single-family houses in 2013, as compared to 143 in 2012; multi -family dwelling units added to the tax rolls for the year ended December 31, 2013 was 488, compared to 144 in 2012; and mixed commercial and residential developments added in 2013 included 27 residential units. Altogether these additions totaled 5131,775,074 in 2013, versus a total of 566,802,512 in 2012. Permits for commercial construction decreased from 525,758,012 in 2012 to 517,816,062 in 2013. And remodeling permits for residential and commercial increased by 56,216,424 from 2012 to 2013. According to the 2010 census, the population of Iowa City is 67,862. This is an increase of 5,672 or 9.1% as compared to the 2000 census. Iowa City population in 2014 is estimated to be 71,591 by the U.S. Census Bureau. There are many signs that the City remains healthy and vibrant with great promise for the future. The stability of the University of Iowa coupled with historically steady employment by the City's multi -sector base of manufacturing and service industries, helped insulate the City from any significant negative economic impacts of the national recession. The City's property valuations continue to rise and along with the low unemployment rate, this is indicative of the City's relative economic stability. 0 Major Initiatives The City of Iowa City, with the assistance of the University of Iowa's Institute of Public Affairs, completed the City's Strategic Plan. The strategic planning process involved multiple steps, including gathering input from the general public, front-line City staff, department directors, and the City Council. The Strategic Plan established the prevailing organizational priorities as the following: Fostering a more INCLUSIVE and SUSTAINABLE Iowa City through a commitment to: 1. Healthy Neighborhoods 2. A Strong Urban Core 3. Strategic Economic Development Activities 4. A Solid Financial Foundation 5. Enhanced Communication and Marketing The first priority of the City's Strategic Plan is to strengthen and enhance the City's many neighborhoods. An effective stabilization strategy requires a review and analysis of the City's policies, programs, communications, and capital investment decisions that directly shape and influence a neighborhood's character and livelihood. Staff will be focusing on the central planning district neighborhoods; however many aspects of the neighborhood stabilization review will have implications throughout the community. In order to achieve the Council's goal, staff will focus on the land use regulations, public infrastructure and open space, private building stock, nuisance mitigation, open stakeholder communication, and updating planning documents. Projects to further neighborhood stabilization include the UniverCity Neighborhood Partnership, a joint project between the City and the University of Iowa to ensure the neighborhoods around the university remain vital, safe, affordable, and attractive places to live and work for both renters and homeowners by acquiring and rehabilitating homes near the University of Iowa campus for resale as affordable owner -occupied housing. Staff will also be actively working with the Iowa City Community School district to promote increased coordination in school and neighborhood planning as neighborhood schools play a role in neighborhood stabilization efforts. The City also continues to invest in neighborhood parks, trails, and events. The second priority of the Strategic Plan is the development of the city's core areas. Staff is focusing on two distinct geographic areas: Downtown Iowa City and Riverfront Crossings. In 2012, the Iowa City Downtown District (ICDD), a self -supported municipal improvement district, was formed presenting a unique opportunity to bring together property owners, businesses, the University of Iowa, and the City of Iowa City. Staff, in partnership with stakeholders, is working to pursue policies and projects that will more fully realize the potential of the central business district and facilitate new private investment in the area. Some of the ICDD current initiatives include a downtown community gallery for public art and science programs, free Wi-Fi in the Pedestrian Mall, holiday lighting, improved snow removal, downtown ambassadors to assist visitors and maintain public spaces, alley beautification, and a downtown beat cop. The City has also instituted a new parking rate structure, including first hour free to make visiting downtown more convenient. The Park@201 building completed construction in 2014 in downtown Iowa City. The building is adjacent to the city's pedestrian mall and was constructed with the assistance of tax increment financing. The Park@201 is a 14 story mixed use development with 4 floors of commercial space and 10 floors of residential units. Meta Communications, a growing software company, has occupied three floors of the commercial space, and the building is completely occupied. 7 Other buildings that are undergoing major re -development downtown include the historic Midwest One bank building, the Jefferson Hotel, and the conversion of the Wilson building and public space into a 15 story mixed use development. Also known as the Chauncey, the 15 story building will have 8 floors of residential units, a 35 unit hotel, two floors of commercial space, a movie theatre and a bowling alley. The project is anticipated to be S49 million and will be assisted with tax increment financing. The Riverfront Crossing Development Plan is an initiative to revitalize the area south of Iowa City's downtown area. This area was hard hit by the flooding in 2008 and ideas for improving the district were initiated as part of a combined flood mitigation plan. Through a grant from the Partnership for Sustainable Communities, the City created a detailed plan for developing the area. The new neighborhood will feature a waterfront park with walking and biking trails, access to the Iowa River for boating and fishing, a variety of housing options near shopping, restaurants, a state-of-the-art recital hall and recreational facilities and is a short walk to downtown Iowa City and the University of Iowa campus. The Riverfront Crossings Development area is being anchored by a 76.8 acre area comprised of public facilities including the City's north wastewater treatment plant that is located on the east bank of the Iowa River and the southeast corner of the development area. The City received an 58.5 million hazard mitigation grant from the State of Iowa that will allow for the removal of these public facilities and will convert the area into a riverfront park and wetland area. On the north side of the Riverfront Crossing area, the University of Iowa is currently constructing the Voxman School of Music and the University of Iowa Art Museum. Just to the south of these buildings, a mixed use development is underway that will include three components: a public parking facility consisting of approximately 600 parking spaces, the six story Midwest One mortgage center office building, and 28 residential townhome units. Also in this area, a mixed use facility is proposed to be constructed on city owned property at the streets of Court & Linn. The city issued an RFP for the development of this parcel and is in the process of reviewing proposals. Construction on this property is anticipated to begin in 2015. The City Council has also indicated a strong desire to promote private investment and re- development of other targeted areas throughout the community. The areas that are currently being focused on include the Towncrest commercial area, Sycamore Mall and First Avenue, Highway 6/Highway 1 intersection, 420 Street Industrial Park, and Moss Ridge Office Park. In the Towncrest commercial area, City staff is working to facilitate redevelopment of several key properties and a streetscape project that will improve the function and aesthetic appeal of the area. The Towncrest Urban Renewal Area was developed to revitalize the Towncrest commercial district in ways that would serve existing businesses while also drawing new retailers, service providers, and consumers to the area. The first catalyst project approved in the Towncrest Urban Renewal Area was a developer's agreement with MDK Development LLC for the redevelopment of a gas station and a building used for storage at the corner of Muscatine Avenue and William Street. MDK Development LLC purchased both properties, demolished the buildings and has constructed two new buildings with a combined square footage of 14,500. The two buildings will be primarily medical offices — home to Eye Associates and Towncrest Dental. A third commercial condo, approximately 2,000 SF is available for lease/purchase. Total project costs for this development are estimated at 55,200,000. The departure of an anchor tenant at Sycamore Mall presented a great challenge, but also a unique opportunity to reinvent the commercial space. Mall ownership has plans for physical improvements to the property and a new marketing name of Iowa City Marketplace. The Mall ownership has found a replacement anchor tenant that is expected to occupy Mall space in 2015. The City is coordinating significant capital projects in the area that are expected to last two or more construction seasons. These projects include improvements to Sycamore and Lower Muscatine Road, and a grade separation project on First Avenue including new storm sewer and a railroad underpass. These projects, which are underway in different phases, will each have a positive impact on the traffic flows and aesthetics in this commercial district. The Highway 6/Highway 1 intersection is a viable commercial corridor, in large part because of high traffic counts. Staff has focused efforts on the municipal public works and transit property in the area. The City continues to relocate its municipal operations from this area, to convert the area into prime development space. The City's municipal airport is also adjacent to this area, and the City has successfully re -developed a portion of the airport into the North Aviation Commerce Park. The City has received purchase offers on the final four lots which completes the development of all of the lots in the business park. The City has also invested considerable money for infrastructure development in the shovel -ready 420"' Street Industrial Parr This project involved annexing and rezoning 180 acres of land and building the street, water, and sewer infrastructure needed to support industrial businesses. The Iowa City Area Development Group and City staff continue to market this property and respond to inquiries from business and site location consultants. This project's costs were 513,762,000 and were funded through bonds, state grants, road use tax, and wastewater operations. Another business park established for development is the Moss Ridge Office Park. This is a 243 - acre, 18 -lot office research and mixed use subdivision on the northeast edge of the city, just off Interstate 80. Significant infrastructure improvements are necessary to accommodate the planned growth and City staff is working with Moss Office Park owners and adjacent businesses on potential access arrangements to accommodate a phased development approach to this property. Construction of an access road and entrance from the adjacent highway began in 2014. Project costs to build the infrastructure are 54,900,000 and are being funded with state grants and GO bonds. Northgate Corporate Park, adjacent to Moss Ridge Office Park, continues to experience build out and only one vacant lot remains in the park. The City aims to create a strong and sustainable financial foundation that will provide needed stability and flexibility while utilizing taxpayer dollars in the most efficient and responsible manner. hi order to achieve this goal, the City is focusing on two primary areas: new financial policies and strategies that will provide a greater level of financial stability and second, enhance the level of financial analysis presented to the public so elected officials will have a greater information foundation on which to base future decisions. Policies included in this analysis are economic development policies, purchasing policies and procedures, target fund balances, debt service coverage levels, general fund contingency level, and an annual review of rates, user charges and fines. The City has also examined operations where the City is providing subsidized service beyond our borders and has developed plans to ensure the City is being equitably reimbursed for such services. In May 2014, Moody's conducted a review of the City as part of the bond rating process and reaffirmed the City's Aaa bond rating. In their report, Moody said the rating "reflects the City's stable tax base and economy anchored by the University of Iowa... history of favorable financial operations and expected maintenance of healthy reserves, and manageable debt profile." The fifth and final priority of the City's Strategic Plan is enhanced communication and marketing. The City strives to be a high -functioning, customer service orientated organization that actively supports and engages stakeholders through clear, open, and innovative communication methods. A reorganization of staff created a new communication team, which 9 has assumed the responsibilities of the front desk at City Hall and offers front line customer service assistance to visitors and those contacting City Hall via phone or email. The City is working with the University of Iowa to develop a new web site to be launched in 2015, and has introduced a City Facebook and Twitter page. These communication improvements have allowed the City to reach broader audiences and better promote activities, community news, and service information. The City also introduced ICgovXpress; a convenient way for Iowa City residents to request services, ask questions, or submit citizens reports of everything from trash and debris in unkempt yards to abandoned cars, unshoveled walks, and graffiti either online or by downloading the ICgovXpress app to their smart phone. The City has also completed the first phase of implementing enterprise resource planning software (ERP). On July 1, 2013 the financials modules of general ledger, accounts payable, purchasing, and budget went live. The human resources and payroll sections were implemented on January 1, 2014. And the utility billing and revenues portions will be implemented in the spring of 2015. The ERP system will allow for improved internal workflows and internal and external communication. Long-term Financial Planning It is our intent to support the major initiatives through budget appropriations, departmental operations, and employee direction so that the organization as a whole is moving in the same direction. A significant influence in the preparation of the three-year financial plan (FY14 — FY16) is the passage of property tax reform (SF295) by the state legislature. The property tax reform bill has multiple components including a property tax rollback for commercial and industrial property, steadily reducing the taxable value of these property types. The bill establishes a State backfill for lost property tax revenues to the City due to the commercial and industrial rollback beginning in FY15 and then caps the amount at FY17 levels. The cumulative reduction in commercial and industrial property taxes due to this rollback is estimated to be 515,418,000 over the next ten years. The maximum reimbursement from the State would be 514,732,000 for a net loss in revenues of 5686,000. This bill also limits the annual taxable valuation growth of residential and agricultural property to 3 percent, instead of the current 4 percent. Initially, the financial impact will be minimal but over time the consequences of this change will be significant. The effect will be that the taxable percentage of residential property will increase at a slower pace. Without this change, the estimated taxable percentage of residential property would be 60.85% in assessment year 2022. With this provision in place, the estimated taxable percentage in year 2022 will be 55.11%, a reduction of 5.74%. Based on the assessed value of residential property in Iowa City, the cumulative loss is estimated to be 520,772,000 over the next ten years and the City will not receive any money from the State due to lost revenue from this provision. SF295 also establishes a multi -residential property classification that will include mobile home parks, assisted living facilities, and property primarily intended for human habitation. A gradual rollback will be applied to these properties that will basically treat them as residential property, rather than commercial, by the year 2022. The estimated cumulative loss over the next ten years is S 15,505,000 and will not be reimbursed by the State of Iowa. With the implementation of SF295, the City estimates the tax revenue losses to be 5933,500 for FY14 —FY16. Since some of the effects of these reforms are gradual, the magnitude of the losses 10 will not be felt till later years and the total cumulative ten-year loss is anticipated to be 536,963,000, which will significantly affect the City's ability to finance services at current levels without finding other revenue sources. On a more positive note, the City is seeing a small but steady growth in assessed property valuations when compared with prior years. Based on the increase in building permits in 2013, assessed valuations should continue to increase at steady pace in the future. In looking at expenses for the FY14 — FY16 financial plan, the City will generally experience increased expenditures; however at a modest pace. Bargaining unit wage increases are approximately 2% each year, and the budgeted full time equivalents (FTE) has decreased from 623.90 in 2013 to 607.66 in 2015. In addition, public safety pension contribution rates have leveled off and are anticipated to start decreasing. The City has also seen virtually no increase in its health insurance premium rates. In balancing the budget for the three-year period, the City attempted to reduce costs where possible, while continuing to provide high quality services; identify and eliminate redundancies that may exist within the organization; examine existing and potential new revenue sources; promote and plan for economic development and redevelopment throughout the City to ensure strong property values; determine appropriate staffing levels; provide for necessary improvements to existing infrastructure and prioritize capital projects; and uphold fiscal integrity and maintain adequate cash reserves. The City also continues to strive to reduce the City's total property tax levy. For collection year 2013, the levy was 517.269 per 51,000 of assessed value. In 2014, the levy was 516.805, a reduction of 2.7 percent, and in 2015, the levy is 516.705, a reduction of .6 percent. Overall, the City is continuing to look for ways to control operating costs, diversify revenues, and create operating efficiencies. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting (the Certificate) to the City of Iowa City, Iowa for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2013. The Certificate is the highest form of recognition for excellence in state and local financial reporting. In order to be awarded the Certificate, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. The Comprehensive Annual Financial Report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. The Certificate is valid for a period of one year only. The City has received the Certificate for the last twenty-nine consecutive years. I believe our current report continues to conform to the Certificate requirements and I will submit it to GFOA to determine its eligibility for another certificate. In addition, the City received the GFOA's Award for Distinguished Budget Presentation for its annual appropriated budget beginning July 1, 2014. hi order to qualify for the Distinguished Budget Presentation Award, the City's budget document was judged to be proficient or outstanding in several categories including policy documentation, financial planning, and organization. This is the third consecutive year the City has received this award. 11 Responsibility and Acknowledgments The Department of Finance prepared the Comprehensive Annual Financial Report of the City of Iowa City, Iowa for the fiscal year ended June 30, 2014. The City Council, as required by law, is responsible for the complete and accurate preparation of the City's Comprehensive Annual Financial Report. I believe that the information presented is accurate in all material respects and that this report fairly presents the financial position and results of operations of the various funds of the City. The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated services of the entire staff of the City's Finance Department. I would like to express my appreciation to all members of the department who assisted and contributed to its preparation. I want to especially recognize the contributions of the City's Controller, Nicole Knudtson-Davies, Assistant Controller, Sara Sproule, Senior Accountants, Justin Armatis and Steven Christopher and Payroll Accountant, Chris Hurlbert. Also, I thank the Mayor, members of the City Council and the City Manager for their interest and support in planning and conducting the financial operations of the City in a dedicated, responsible, and progressive manner. Respectfully submitted, Dennis Bockenstedt Director of Finance 12 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Iowa City Iowa For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2013 *4p W 4 0.: A Executive Director/CEO 13 Y N U _a U Q m U o U C E = E d o 0 - VI C 0 L C E O ` > Y OU J N co O <<mms O U N Q N 0 �y 0.0 O T W E yp O L Q]cl) C ¢ ¢Q E m m m Q p O n = J J _ =m== > -Q L O0 L0000 U U O _ _ N cu o O = U m U Od C U C = � � O _ 0 CO m N ° U (0 Y N m= `m v O° U d a O J �` 'E 'E O U Y N U _a U Q m U o U C E = E d o 0 - VI C 0 L C E O ` > Y OU J N co O <<mms O U N Q N 0 �y 0.0 O T W E yp O L Q]cl) C ¢ ¢Q E m m m Q p O n = J J _ =m== > -Q L O0 L0000 U co O _ _ N O o O = U m U Od C ca m o = 0> i 0 CO m O U FO O (0 Y N m= `m v O° d a J �` 'E 'E O E Uy E Q 0 J QmmU j j Q Q Y N U _a U Q m U o U C E = E d o 0 - VI C 0 L C E O ` > Y OU J N co O <<mms O U N Q N 0 �y 0.0 O T W E yp O L Q]cl) C ¢ ¢Q E m m m Q p O n = J J _ =m== > O O0 L0000 O o O _ UCI Q C Na L C,> m m m U Od C = Q'¢ O? 0 CO m O U O Y N m= `m v Qti U E Uy E Q 0 QmmU Q Q Y N U _a U Q m U o U C E = E d o 0 - VI C 0 L C E O ` > Y OU J N co O <<mms O U N Q N 0 �y 0.0 O T W E yp O L Q]cl) C ¢ ¢Q E m m m Q p O n = J J _ =m== 14 Q C N U 0 .E 0 > ° 0 L0000 L O _ 0 Q iT = LL N U C > C,> m m m = U d Qw iiF 14 Q C N U 0 .E 0 Mayor Council Member and Mayor Pro Tem Council Member Council Member Council Member Council Member Council Member City Manager City Clerk City Attorney CITY OF IOWA CITY, IOWA LISTING OF CITY OFFICIALS June 30, 2014 ELECTED OFFICIALS Matt Hayek Susan Mims Kingsley Botchway II Terry Dickens Rick Dobyns Michelle Payne Jim Throgmorton APPOINTED OFFICIALS Thomas Markus Marian K. Kan Eleanor Dilkes DEPARTMENT DIRECTORS Assistant to City Manager Director of Neighborhood Development Services Library Director Director of Public Works Director of Transportation Services Senior Center Coordinator Fire Chief Parks and Recreation Director Director of Finance Chief of Police Geoff Frain Douglas W. Boothroy Susan Craig Rick Fosse Chris O'Brien Linda Kopping John Grier Mike Moran Dennis Bockenstedt Sam Hargadine 15 Term Expires January 2, 2016 January 2, 2018 January 2, 2018 January 2, 2018 January 2, 2016 January 2, 2016 January 2, 2016 Date of Hire December 1, 2010 May 21, 1979 March 18, 1996 November 28, 2011 September 22, 1975 July 28, 1975 February 22, 1984 December, 29, 1997 March 20, 1995 August 10, 1992 September 26, 1983 February 15, 2013 August 29, 2005 16 �000%1'� EideBailly. CPAs & BUSINESS ADVISORS Independent Auditor's Report To the Honorable Mayor and Members of the City Council City of Iowa City, Iowa Report on the F =:z*a= We have audited : e acco.=.z:} i: -.z :=zncial statements of the governmental activities, the business -type activities, each ma or fund, a -a':. asa-e<z_<; _ information of the City of (City) as of and the year ceded June 30, 20. ', zrc ,sated notes to the financial statements, which collectively comprise the Ci:y's basic financial sa: -ors as listed ir. .e :zcl e of contents. Management's Responsibility for the Financia: Scaeements Management is responsible for the preparation and fair presentation o` %se---:ancial statements in accordance with accounting principles generally accepted in the nitec S,..cs of America; this includes is-nplementation, and maintenance of internal control relevant to _he preparation and fair nresentation of financial statements that are free from material misstatement, whether due to fraud or e --or. editor's Responsibility C�:- responsibility is to express opinions on these financial statements based on our audit. We conducted cc- Feel, in accc-cance with audi,.-_ standards generally accepted in the United States of America and c s,zzards ar-:';;able to finarcia' aces contained in Government Auditing Standards, issued by the - ....cc S'.a:-_s. Those standards require that we plan and perform the audit to ..a..: -case-a- ass--ance about whether the financia: statements are free from material misstatement. co:vcs c =o -:ring procedures tc obtain audit ec:ce-cc about the amounts and disclosures in 1rocedures se.: cted depend on C:c a_:ditor's judgment, including the assess-:e:r c s 7S- s o cz' -ia: misstate:r cnt of the financia. satements. whether due to fraud or error. .... z:':_g those is , assess:-cc's.:he aud_'_.:- considers intema. control relc, ant to the entity's preparation zrc presentation of the fina::zia. eats in orcc- to desi_- audit procedures tha, a -c appropriate in z.-camstances, but not cr the purpose c_": xpress:re z.: es'. '.c on the c _' dive-css c entity's . �-, ,._-. zac;t also lnz_�ccc z,a._z: -,- ,�� control. Accorc:-g ; _ we express : c s: c.: <;-:�:: - � _.. aparoarateness e`acc _:::_`.:: o'.icies escc ace's_ rcascca ieness ofsignifica:._ zzc:r_:n'.'.n - ss_ : ates made Dv_a a_� - as as -,. �a. _ _ _,ntation of the fina s ;-s. We be;ieve that the Face c: `.�o: cc '.a,c s_amcc is SU;71cient and appropriate to provicc a oasis for our audit opinions. 17 www.eidebailly.com 3545 Assxiates Dr., Ste. 101 ! Dubuque, IA 52002 ; T 563.556.1790 1 F 563.557.7842 ! EOE Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Iowa City, Iowa, as of June 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter During the year ended June 30, 2014, the City adopted GASB 65, Items Previously Reported as Assets and Liabilities. The adoption of this statement resulted in the reclassification of items previously reported in liabilities as deferred revenues. These items are now reported in deferred inflows of resources as unavailable revenues. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and other required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Iowa City, Iowa's financial statements. The introductory section, combining nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non -Profit Organization, and is also not a required part of the financial statements. The combining nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajor fund financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 18 The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated December 11, 2014, on our consideration of the City of Iowa City, Iowa's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. 4-,J.0 y./L 711�1 Dubuque, Iowa December 11, 2014 19 (This page left blank intentionally.) 20 Management's Discussion and Analysis As management of the City of Iowa City, we present this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2014. This narrative is intended to be used in conjunction with additional information that is included in the letter of transmittal, which can be found on pages 3 —12 of this report. Financial Highlights • The assets of the City of Iowa City exceeded its liabilities and deferred inflows of resources at the close of the fiscal year ending June 30, 2014 by 5573,905,000 (net position). Of this amount, 5111,300,000 (unrestricted net position) may be used to meet the government's ongoing obligations to its citizens and creditors. • The City's total net position increased by 519,285,000 during the fiscal year. Governmental activities increased by 510,598,000 and business -type activities increased by 58,687,000. • At the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of 579,185,000, an increase of 512,306,000 in comparison with the prior year. Of this total amount, approximately 517,898,000 or 22.6% is unassigned and available for spending at the City's discretion. • At the end of the current fiscal year, the City's unassigned fund balance for the General Fund was 517,907,000 or 38.1% of total General Fund expenditures. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide Financial Statements: The government -wide financial statements are designed to provide readers with a broad overview of the City's finances in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include Public Safety, Public Works (roads and traffic controls), Culture and Recreation, Community and Economic Development, General Government, and Interest on long-term debt. The business -type activities of the City include Airport, Cable Television, Housing Authority, Parking, Sanitation, Stormwater Collection, Transit, Wastewater Treatment, and Water. 21 The government -wide financial statements may be found on pages 34 — 37 of this report Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds: Governmental funds are used to account for essentially the same function reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements and is typically the basis that is used in developing the next annual budget. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison. The City has six major governmental funds: General Fund, Employee Benefits Fund, Community Development Block Grant Fund, Other Shared Revenue and Grants Fund, Other Construction Fund, and Debt Service Fund. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for these major funds. Data from all other non -major governmental funds is combined into a single aggregated presentation and are referenced under a single column as `tether Governmental Funds". Individual fund data on each of these non - major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for all governmental funds as required by state statute. Budget comparisons have been provided for the Governmental funds and the Enterprise funds, to demonstrate compliance with the adopted budget. The basic governmental funds financial statements can be found on pages 38 — 44 of this report. Proprietary Funds: The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for its Airport, Cable Television, Housing Authority, Parking, Sanitation, Stormwater Collection, Transit, Wastewater Treatment, and Water activities. Internal Service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City has four Internal Service Funds: Equipment Maintenance, Central Services, Loss Reserve, and Information Technology. Because these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the government -wide financial statements. Proprietary funds financial statements provide the same type of information as the government -wide financial statements, only in more detail. Parking, Wastewater Treatment, Water, Sanitation, Housing Authority and Transit Funds are considered to be major funds and are reported individually throughout the report. The other three non -major enterprise funds are grouped together for reporting purposes and listed under a single heading "Other Enterprise Funds". Detailed information for each of the non -major funds is provided in the combining statements on pages 96 — 98. Individual fund data for the Internal Service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 46 — 51 of this report. 22 Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not available to support the City's own programs and therefore are not reflected in the government -wide financial statements. The City has one fiduciary fund: Project Green, which is maintained as an agency fund. The basic fiduciary funds financial statements can be found on page 52. Notes to Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 54 - 84 of this report. Other Information: The combining statements referred to in the above paragraphs in connection with non - major governmental funds, non -major enterprise funds, and internal service funds are presented immediately following the notes. Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, assets exceeded liabilities and deferred inflows of resources by $573,905,000 at the close of the fiscal year ended June 30, 2014. By far, the largest portion of the City's net position reflect its investment in capital assets (e.g., land, building, machinery and equipment, improvements other than buildings, and infrastructure), net any related debt to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Iowa City's Net Position June 30, 2014 (amounts expressed in thousands) Governmental Business -type 23 2014 2013 2014 2013 2014 2013 Current and other assets $ 176,570 $ 162,144 $ 106,436 $ 110,907 $ 283,006 $ 273,051 Capital assets 187,654 182,263 323,181 317,564 510,835 499,827 Total assets 364,224 344,407 429,617 428,471 793,841 772,878 Long-term liabilities outstanding 71,723 65,012 67,504 72,048 139,227 137,060 Content and other liabilities 11,171 10,651 6,406 9,403 17,577 20,054 Total liabilities 82,894 75,663 73,910 81,451 156,804 157,114 Defermd ivfl.s ofresources 63,132 61,144 - - 63,132 61,144 Net position: Net investment in capital assets 138,482 133,989 264,727 253,617 403,209 387,606 Restrieted 39,958 22,867 19,438 19,033 59,396 41,900 Unrestrieted 39,758 50,744 71,542 74,370 111,300 125,114 Total net position $ 218,198 $ 207,600 $ 355,707 $ 347,020 $ 573,905 $ 554,620 23 A portion of the City's net position, $59,396,000 or 10.3%, represents resources that are subject to external restrictions on how they maybe used. The remaining balance of the unrestricted net position, $111,300,000 or 19.4%, may be used to meet the government's ongoing obligations to its citizens and creditors. At the end of the fiscal year ended June 30, 2014, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities. Governmental Activities: Governmental activities increased the City's net position by $10,598,000. The increase in net position of governmental activities is primarily due to receiving grants to fund expenses for capital assets and community development projects. The following is a more detailed review of FY14's operation. City of lom City's Changes in Net Position (amounts expressed in thousands) 24 Governmental Business -type activities activities Total 2014 2013 2014 2013 2014 2013 Revenues: Program Revenues: Charges for services $ 7,570 $ 7,688 $ 39,355 $ 39,065 $ 46,925 $ 46,753 Op crating grants and contributions 3,231 4,731 9,003 9,224 12,234 13,955 Capital grants and contributions 5,580 6,876 13,812 34,251 19,392 41,127 General Revenues: Property taxes 50,551 51,017 - - 50,551 51,017 Road usetax 6,745 6,589 - - 6,745 6,589 Local option sales tax 466 8,858 - - 466 8,858 Other taxes 2,778 2,609 - - 2,778 2,609 Earnings on investments 973 841 494 671 1,467 1,512 Gain on disposal of capital assets 1,651 1,312 725 293 2,376 1,605 Other 4,353 4,390 265 918 4,618 5,308 Total revenues 83,898 94,911 63,654 84,422 147,552 179,333 Expenses: Public safety 22,721 20,989 - - 22,721 20,989 Public works 8,258 10,240 - - 8,258 10,240 Culture and recreation 16,586 14,481 - - 16,586 14,481 Community and economic development 10,059 10,596 - - 10,059 10,596 General governmeut 7,687 7,513 - - 7,687 7,513 Interest on long-term debt 1,797 2,237 - - 1,797 2,237 Wastewater treatment - - 21,139 10,464 21,139 10,464 Water - - 8,723 9,074 8,723 9,074 Sanitation - - 8,402 7,279 8,402 7,279 Housing authority - - 7,703 7,658 7,703 7,658 Parking - - 4,093 4,579 4,093 4,579 Airport - - 1,209 1,086 1,209 1,086 Stormwater - - 1,314 1,318 1,314 1,318 Cabletelevision - - 781 692 781 692 Transit 7,795 6,998 7,795 6,998 Total expenses 67,108 66,056 61,159 49,148 128,267 115,204 Change in net p osition before transfers 16,790 28,855 2,495 35,274 19,285 64,129 Transfers 6,192 10,485 6,192 10,485 - - Cbangeinnet position 10,598 18,370 8,687 45,759 19,285 64,129 Net position beginning of year 207,600 189,230 347,020 301,261 554,620 490,491 Net position end of year $ 218,198 $ 207,600 $ 355,707 $ 347,020 $ 573,905 $ 554,620 24 The total revenues for governmental activities for FY14 were 583,898,000. Governmental activities are primarily funded through taxes, 560,540,000 or 72.2%, and grants and contributions, 58,811,000 or 10.5%. Taxes decreased from the prior year by 58,533,000 as the local option sales tax ended June 30, 2013. Grants and contributions decreased from prior year by 52,796,000 as the City's expenses for flood mitigation, which were covered by supplemental Community Development Block Grants, have decreased. Expenses for governmental activities totaled 567,108,000. Governmental activities are tracked by function including Public Safety, Public Works, Community and Economic Development, Culture and Recreation, and General Government. In FY14, Public Safety accounted for the highest portion of governmental expenses, 522,721,000 or 33.9%, and increased slightly over the prior year due to increased insurance claims. Culture and Recreation, 516,586,000 or 24.7%, made up another large portion of the governmental expenses and increased over the prior year due to additions of trails and improvements to parks. Community and Economic Development, 510,059,000 or 15.0%, made up the third highest portion of governmental expenses and decreased from the prior year due to fewer flood recovery and mitigation projects. Business -type Activities: Business -type activities increased the City's total net position by 58,687,000. The increase in net position was primarily in the Airport fund and is due to an increase in capital assets funded by grants, rather than debt. The City has been able to utilize federal grants to acquire property, rather than have to issue new debt to pay for this project. For all business -type activities, revenues exceeded expenses by 52,495,000. Revenues for business -type activities totaled 563,654,000. The primary revenue source for business -type activities is charges for services, 539,355,000 or 61.8%. In addition for FY14, the City's business type - activities had a significant portion, 522,815,000 or 35.8%, of their revenues from grants and contributions used to help fund capital and flood recovery projects for business -type activities. This is a decrease of 520,660,000 due to additional grants to cover expenses for the Wastewater flood mitigation project received in the prior year. The total expenses for business -type activities in FY14 were 561,159,000. Wastewater Treatment represented the highest portion of business -type activities, 521,139,000 or 34.6%, with Water, 58,723,000 or 14.3%, Sanitation, 58,402,000 or 13.7%, Transit, 57,795,000 or 12.7%, and Housing Authority, 57,703,000 or 12.6%, making up the remainder of the majority of business -type activities expenses. The graphs on the following pages represent a breakdown of revenue by source and expenses by program area for governmental and business -type activities. 25 Governmental Activities FY2014 Revenue by Source Misc. Other Taxes Other Charges for 12% 8% services 9% Business -Type Activities FY2014 Revenue by Source Misc. Other Charges for Grants and 2% services I ,rants and mtributions 11% 26 27 Governmental Activities FY2014 Expenses by Program Area (amounts expressed in thousands) 24,000 Public Safety Interest Expense 22,000 Culture and 20,000 Recreation 18,000 16,000 Gn 14,000 12,000 and Public Econ DevGeueral 10,000 ors Govt 8,000 6,000 4,000 2,000 0 Program Area Business-Type Activities FY2014 Expenses by Program Area (amounts expressed in thousands) Wastewater Treatment 22,000 20,000 18,000 16,000 14,000 h 12,000 Sanitation c 10 000 a er ousmg Ca 8,000 Authori Transit 6,000 Parking 4,000 Stormwater Airport Cable TV 2,000 0 Program Area 27 Interest Expense 27 Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental Funds: The financial reporting focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information may be/is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. The City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions effective with the June 30, 2011 financial statements. Fund balances for the governmental funds are reported in classifications that comprise a hierarchy based on the extent to which the government honors constraints on the specific purposes for which amounts in those funds can be spent. As of the fiscal year ended June 30, 2014, the City's governmental funds reported combined ending fund balances of 579,185,000, an increase of 512,306,000 in comparison with the prior year. Of this total amount, 517,898,000 constitutes unassigned fund balance, which is available to use as working capital for the General Fund since property tax revenues are received only twice a year and the remainder is available to meet the future needs of the City. The remainder of the fund balance is not available for new spending because of constraints imposed externally by creditors, grantors, contributors, or laws or regulations of other governments or constraints imposed internally on the specific purposes for which these amounts can be spent. The restricted fund balance of 557,818,000 or 73% contains external restraints on its use. The assigned fund balance of 53,400,000 or 4.3% has been identified by the City to be used for specific purposes. The nonspendable fund balance is 569,000 or 0.1%, which the City is contractually required to maintain intact or cannot be spent because it is in a nonspendable format, such as inventories. The General Fund is the chief operating fund of the City. As of the fiscal year ended June 30, 2014, the unassigned fund balance of the General Fund was 517,907,000 while General Fund's total fund balance was 547,909,000. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 38.1% of total General Fund expenditures of 546,964,000, while total fund balance represents 102.0% of that same amount. During the current fiscal year, the fund balance of the City's General Fund increased by 53,294,000. This was due to a reduction in the amount of capital projects that were funded The fund balance in the Bridge, Street, and Traffic Control Construction Fund was 511,138,000, an increase of 54,193,000. This fund accounts for transactions relating to the acquisition or construction of major streets, bridges, and traffic control facilities. The fund balance in the Other Construction Fund was 56,854,000, an increase of 52,612,000. This fund accounts for the construction or replacement of other governmental general capital assets, such as administrative buildings, with various funding sources, including general obligation bonds, intergovernmental revenues, and contributions. The change in these fund balances is due to timing of the sale of GO bonds. The fund balance for the Community Development Block Grant Fund was negative 59,000, representing a 51,000 decrease in FY14 and revealing that liabilities in this fund were higher than assets. In FYl1, the City received program income that we were required to use prior to accessing new grant funding. This program income was fully utilized in FY13 and this fund will normally carry a minimal or zero fund balance going forward. The ending fund balance of the Other Shared Revenues and Grants fund was 54,517,000, a 51,884,000 increase. This increase is due to a refund received for overcharges for services in prior years and a reduction in expenses. W The ending fund balance of the Debt Service Fund was 56,872,000, an increase of 5345,000, all of which is reserved for the payment of debt service (i.e. payment of general obligation principal and interest). The fund balance in the Employee Benefits Fund was stable from prior year. The ending fund balance was 51,713,000, a decrease of 578,000 or 4.4% from FY13. Proprietary Funds: The City's proprietary funds provide the same type of information found in the government -wide fmancial statements, but in more detail. The ending net position of the enterprise funds was 5344,367,000, an increase in net position of 58,686,000. This was primarily due to capital contributions of federal and state grants to fund capital improvement projects and transfers of business -type capital assets from governmental capital project funds. Of the enterprise funds' net position, 5264,727,000 is net investment in capital assets. Unrestricted net position totaled 560,202,000, a decrease of 52,829,000 compared to the previous year. The Internal Service funds showed net position totaling 531,732,000 as of June 30, 2014, an increase of 582,000 primarily due to an operating income in the Equipment Reserve Fund to build up reserves for future capital outlay and offset by an operating loss in the Loss Reserve Fund as claims were more than anticipated. Budgetary Highlights The City presents budgetary information as allowed by GASB Statement No. 41. Budgets are based on nine functional areas as required by state statute, not by fund or fund type. The City had two budget amendments during the fiscal year. These amendments increased budgeted revenues by 522,447,000 or 15.3% to a total of 5169,125,000 and the expenditure budget by 548,378,000 or 28.6% to a total of 5217,391,000. These increases were due primarily to capital projects in governmental and business - type funds because of timing of completion of projects. Capital Assets and Debt Administration Capital Assets: The City's investment in capital assets for its governmental and business -type activities as of June 30, 2014 amounts to 5510,835,000, net of accumulated depreciation. This investment in capital assets, including land, buildings, improvements other than buildings, equipment, streets, bridges, trails, wastewater and water systems, and other infrastructure represents the value of resources utilized to provide services to its citizens. The City's investment in capital assets for the fiscal year ended June 30, 2014 increased by 55,391,000 for governmental activities compared to the prior year and increased by 55,617,000 for business - type activities over the prior year. The following table reflects the 5510,835,000 investment in capital assets, net of accumulated depreciation. 29 City of Iowa City's Capital Assets (net of depreciation) (amounts expressed in thousands) Major capital asset events during the current fiscal year included the following: • Work was completed on the South Wastewater Plant Expansion. This project relocated the North Wastewater Treatment Plant and consolidated operations into the South Wastewater Treatment Plant through expansion of south plant facilities and demolition of the north plant facilities. Funding for the project includes 522,003,000 in federal EDA grants, 513,610,000 in local options sales tax, 55,495,000 in I -JOBS grant monies, 55,000,000 in CDBG Public Infrastructure grants, as well as, 51,890,000 from Wastewater user fees and 57,000,000 in revenue bonds. The beginning construction in progress balance was 540,167,000 and an additional 511,088,000 of expense was incurred in FY14, for a total of 551,255,000 which was capitalized. • Current construction projects at the municipal airport include rehabbing existing runways, adding a parallel runway to improve safety, and obstruction mitigation. The construction in progress balance at the end of FY13 was 54,153,000. Additional expenses of 5716,000 were incurred during FY14. 53,021,000 remains in construction in progress and 51,848,000 was capitalized. These costs are primarily funded through federal or state grants, with the remainder of funding from GO bonds. In addition the airport acquired land at a cost of 55,011,000 which was funded through a federal grant. • Current construction is being done for the West Side Levee Project, which includes the construction of an earthen levee, riverbank stabilization, and interior drainage improvements. The construction in progress balance at the beginning of the year was 5292,000. Additional expenses of 52,322,000 were added in FY 14, for an ending balance in construction in progress of 52,614,000. The total cost of the project is 55,729,000 and is funded primarily through federal or state grants, with the remainder of funding from GO bonds. • Reconstruction of a landfill cell that was damaged by a fire in FY12 was completed. The beginning construction in progress balance was 53,805,000. Additional costs of 51,096,000 were incurred in FY14. Total project costs were 54,901,000 and they were funded through landfill operations. • Expenses for a variety of street and bridge construction were moved into construction in progress at the end of FY14 for a total balance of 512,485,000. This includes a project from the City's major initiative for economic development with a balance of 57,263,000 for Lower Muscatine from Kirkwood to First Avenue. Additional construction in progress includes 53,193,000 for the Iowa City Gateway Project, which will reconstruct and elevate Dubuque Street and Park Road Bridge to provide flood protection. Additional information on the City's capital assets can be found in Note 5 to the financial statements. 30 Governmental Business -type Activities Activities Total 2014 2013 2014 2013 2014 2013 Land $ 23,103 $ 22,782 $ 33,497 $ 28,496 $ 56,600 $ 51,278 Buildings 39,083 35,065 67,094 80,280 106,177 115,345 Improvements other than buntings 3,884 4,120 5,369 5,686 9,253 9,806 Machinery and equipment 13,874 14,203 10,608 11,545 24,482 25,748 Infrastructure 92,601 82,815 199,175 139,960 291,776 222,775 Construction in progress 15,109 23,278 7,438 51,597 22,547 74,875 Total S 187.654 S 182,263 S 323,181 S 317,564 S 510,835 S 499.827 Major capital asset events during the current fiscal year included the following: • Work was completed on the South Wastewater Plant Expansion. This project relocated the North Wastewater Treatment Plant and consolidated operations into the South Wastewater Treatment Plant through expansion of south plant facilities and demolition of the north plant facilities. Funding for the project includes 522,003,000 in federal EDA grants, 513,610,000 in local options sales tax, 55,495,000 in I -JOBS grant monies, 55,000,000 in CDBG Public Infrastructure grants, as well as, 51,890,000 from Wastewater user fees and 57,000,000 in revenue bonds. The beginning construction in progress balance was 540,167,000 and an additional 511,088,000 of expense was incurred in FY14, for a total of 551,255,000 which was capitalized. • Current construction projects at the municipal airport include rehabbing existing runways, adding a parallel runway to improve safety, and obstruction mitigation. The construction in progress balance at the end of FY13 was 54,153,000. Additional expenses of 5716,000 were incurred during FY14. 53,021,000 remains in construction in progress and 51,848,000 was capitalized. These costs are primarily funded through federal or state grants, with the remainder of funding from GO bonds. In addition the airport acquired land at a cost of 55,011,000 which was funded through a federal grant. • Current construction is being done for the West Side Levee Project, which includes the construction of an earthen levee, riverbank stabilization, and interior drainage improvements. The construction in progress balance at the beginning of the year was 5292,000. Additional expenses of 52,322,000 were added in FY 14, for an ending balance in construction in progress of 52,614,000. The total cost of the project is 55,729,000 and is funded primarily through federal or state grants, with the remainder of funding from GO bonds. • Reconstruction of a landfill cell that was damaged by a fire in FY12 was completed. The beginning construction in progress balance was 53,805,000. Additional costs of 51,096,000 were incurred in FY14. Total project costs were 54,901,000 and they were funded through landfill operations. • Expenses for a variety of street and bridge construction were moved into construction in progress at the end of FY14 for a total balance of 512,485,000. This includes a project from the City's major initiative for economic development with a balance of 57,263,000 for Lower Muscatine from Kirkwood to First Avenue. Additional construction in progress includes 53,193,000 for the Iowa City Gateway Project, which will reconstruct and elevate Dubuque Street and Park Road Bridge to provide flood protection. Additional information on the City's capital assets can be found in Note 5 to the financial statements. 30 Debt Administration: At the end of the fiscal year, the City had total bonded debt outstanding of $123,920,000. Of this amount, $64,420,000 comprises debt backed by the full faith and credit of the City. However, $890,000 or 1.4% of the general obligation bonds is debt that serves enterprise funds and is abated by their charges for services and $7,189,000 or 11.2% of these bonds is debt that will be paid with Tax Increment Financing revenues. $59,500,000 represents revenue bonds secured solely by specific revenue sources. City of Iowa City's Outstanding Debt General Obligation and Revenue Bonds (amounts expressed in thousands) Governmental Business -type Activities Activities 2014 2013 2014 2013 General obligation bonds $ 63,530 $ 57,360 $ 890 $ 1,190 Revenue bonds 2,655 2,655 56,845 61,960 Total $ 66,185 $ 60,015 $ 57,735 $ 63,150 2014 $ 64,420 59,500 $ 123,920 Total 2013 $ 58,550 64,615 $ 123,165 The City issued $20,320,000 General Obligation bonds during FY14 and during the current fiscal year the City's total bonded debt only increased by $755,000 because of retirement of debt. The City continues to have the same excellent bond rating on its General Obligation bonds that it has had for the past several years. This rating is given to those bonds judged to be of the best quality and carrying the smallest degree of investment risks. The City's bond ratings by Moody's Investors Services, Inc. as of June 30, 2014 were as follows: General obligation bonds Aaa Parking revenue bonds A Wastewater treatment revenue bonds A Water revenue bonds A The City continues to operate well under the State debt capacity debt limitations. State statute limits the amount of debt outstanding to 5% of the assessed value of all taxable property in Iowa City. Debt subject to the debt limit includes general obligation debt and revenue bonds issued pursuant to Iowa Code Chapter 403 (tax increment). The current debt limitation for the City is $233,416,000. With outstanding debt applicable to this limit of $67,075,000 we are utilizing 28.7% of this limit. More detailed information on debt administration is provided in Note 6 of the financial statements. Economic Factors and Next Year's Budget and Rates During the 2009 session, the Iowa State Legislature passed a law allowing cities to utilize franchise fee tax as a revenue alternative to property tax. The Iowa City Council passed a local franchise fee tax of 1% on natural gas and electricity that became effective April 1, 2010. This revenue is being utilized to support additional public safety initiatives, including operating a fourth fire station. In FY14, the City collected $1,031,000 in local franchise fee. 31 The City expects continued constraints by the State's property tax formula. During the last legislative session, the State passed property tax reform, which will negatively affect the City's general operating funds. Without the potential for new revenue sources, like those mentioned above, the City's opportunities for new initiatives are limited. The Council has established a balanced budget in the General Fund for FY15 that strives to maintain current service delivery levels. The tax levy rate per $1,000 of assessed valuation for FY15 is provided below: General Levy $ 8.100 Debt Service Levy 4.130 Employee Benefits Levy 2.963 Transit Levy 0.950 Liability Insurance Levy 0.292 Library Levy 0.270 Total City Levy $ 16.705 Requests for Information This report is designed to provide a general overview of the City of Iowa City's finances for all of those with an interest in the government's finances. Questions concerning any of the information provided in this report, or requests for additional financial information should be addressed to City of Iowa City, Finance Department, 410 East Washington Street, Iowa City, IA, 52240. 32 33 CITY OF IOWA CITY, IOWA STATEMENT OF NET POSITION June 30, 2014 (amounts expressed in thousands) Assets Equity in pooled cash and investments Receivables: Property tax Accounts and unbilled usage Interest Notes Internal balances Due from other governments Inventories Assets held for resale Restricted assets: Equity in pooled cash and investments Other post employment benefits asset Capital assets: Land and construction in progress Other capital assets (net of accumulated depreciation) Total assets Liabilities Accounts payable Contracts payable Accrued liabilities Interest payable Deposits Advances from grantors Due to other governments Notes payable Noncurrent liabilities: Due within one year: Employee vested benefits Bonds payable Due in more than one year: Employee vested benefits Other post employment benefits obligation Notes payable Bonds payable Landfill closure/post-closure liability Total liabilities Governmental Business -type Activities Activities Total $ 60,279 $ 53,541 $ 113,820 51,828 - 51,828 530 3,190 3,720 165 149 314 17,787 823 18,610 (11,066) 11,066 - 7,410 3,243 10,653 597 646 1,243 2,108 - 2,108 46,909 33,772 80,681 23 6 29 38,211 149,443 40,935 282,246 79,146 431,689 364,224 429,617 793,841 2,523 1,098 3,621 1,418 2,808 4,226 3,964 332 4,296 190 1,152 1,342 1,068 882 1,950 29 - 29 36 134 170 1,943 - 1,943 1,163 433 1,596 11,780 5,592 17,372 941 317 1,258 2,659 984 3,643 211 - 211 54,969 52,862 107,831 - 7,316 7,316 82,894 73,910 156,804 (continued) 34 CITY OF IOWA CITY, IOWA STATEMENT OF NET POSITION (continued) Deferred inflows of resources Unavailable revenues: Suceeding year property taxes Notes Total deferred inflows of resources Net position Net investment in capital assets Restricted for or by: Employee benefits Capital projects Debt service Police Other purposes Bond ordinance State statute Future improvements Grant agreement Unrestricted Total net position June 30, 2014 (amounts expressed in thousands) Governmental Business -type Activities Activities Total $ 51,609 $ - $ 51,609 11,523 - 11,523 63,132 - 63,132 138,482 264,727 403,209 1,713 - 1,713 30,692 - 30,692 6,718 - 6,718 529 - 529 306 - 306 - 14,533 14,533 - 1,305 1,305 - 486 486 - 3,114 3,114 39,758 71,542 111,300 $ 218.198 $ 355.707 $ 573.905 The notes to the financial statements are an integral part of this statement. 35 Functions/Programs: Expenses Governmental activities: CITY OF IOWA CITY, IOWA STATEMENT OF ACTIVITIES For the Year Ended June 30, 2014 (amounts expressed in thousands) Program Revenues 22,721 $ Operating Capital Charges Grants and Grants and for Services Contributions Contributions Public safety $ 22,721 $ 3,626 $ 486 $ - Public works 8,258 61 69 5,227 Culture and recreation 16,586 808 87 342 Community and economic development 10,059 45 2,589 11 General government 7,687 3,030 - - Interest on long-term debt 1,797 - - - Total governmental activities 67,108 7,570 3,231 5,580 Business -type activities: Wastewater treatment 21,139 12,559 62 7,105 Water 8,723 8,443 6 539 Sanitation 8,402 8,467 27 - Housing authority 7,703 213 6,721 - Parking 4,093 5,294 - - Airport 1,209 328 56 5,214 Stormwater 1,314 1,093 13 711 Cable television 781 773 - - Transit 7,795 2.185 2,118 243 Total business -type activities 61,159 39.355 9,003 13,812 Total $ 128,267 $ 46.925 $ 12,234 $ 19,392 General revenues: Property taxes, levied for general purposes Road use tax Hotel/motel tax Gas and electric tax Local option sales tax Utility franchise tax Earnings on investments Gain on disposal of capital assets Miscellaneous Transfers Total general revenues and transfers Changes in net position Net position beginning of year Net position end of year The notes to the financial statements are an integral part of this statement 36 Net (Expense) Revenue and Changes in Net Position Governmental Business -type Activities Activities Total $ (18,609) $ - $ (18,609) (2,901) - (2,901) (15,349) - (15,349) (7,414) - (7,414) (4,657) - (4,657) (1,797) - (1,797) (50,727) - (50,727) - (1,413) (1,413) - 265 265 - 92 92 - (769) (769) - 1,201 1,201 - 4,389 4,389 - 503 503 (8) (8) - (3,249) (3,249) - 1,011 1,011 (50,727) 1,011 (49,716) 50,551 - 50,551 6,745 - 6,745 967 - 967 780 - 780 466 - 466 1,031 - 1,031 973 494 1,467 1,651 725 2,376 4,353 265 4,618 (6,192) 6,192 - 61,325 7,676 69,001 10,598 8,687 19,285 207.600 347.020 554.620 $ 218.198 $ 355.707 $ 573.905 37 38 v w N O N w w w o O w'n �wm rn M m � C a� .d 0 " "O d O F Nox d �8 s � 0 6 � N a V O s U � ; w � 0 A 5 ca d h m ti ti` 38 � C a� .d 0 " "O d O z Nox d �8 s � 0 6 � N a V O U � � ww z w g m a F4 m U Q P, C W � C7 38 � C a� .d 0 " "O d O z Nox d �8 s � 0 38 V1 W T f1 �, I f1 W fr fr T M M V C7I 'O y L V G y R y R aw m air SIN v WE 39 0 T W O WIV1 W V W fr e ie O V T V1 T 0 F F rn M N s � w 0 A 5 ca N P a .o A 5j �a so zd d� d �o P, C W � �n N MM v C7I 'O y L V G y R y R aw m air SIN v WE 39 0 T W O WIV1 W V W fr e ie CITY OF IOWA CITY RECONCILIATION OF THE BALANCE SHEET OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2014 (amounts expressed in thousands) Total governmental fund balances $ 79,185 Amounts reported for governmental activities in the statement of net position are different because: Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 31,732 Other long-term assets are not available to pay for current period expenditures and therefore are unavailable in the funds: Notes, grants and other receivables - Earned but unavailable 9,894 Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds. 180,419 Accrued compensated absences are not due and payable in the current period and therefore are not reported in the funds. (1,992) Accrued post employment benefit obligations are not due and payable in the current period and therefore are not reported in the funds. (2,586) Bonds payable are not due and payable in the current period and therefore are not reported in the funds. (66,749) Notes payable are not due and payable in the current period and therefore are not reported in the funds. (211) Accrued interest on bonds (154) Internal balance due to integration of internal service funds (11,340) Total net position of governmental activities $ 218,198 The notes to the financial statements are an integral part of this statement. 40 41 42 vl ,-• ti ,-• b W N W ti W P ti ,-. �� . R U � Vd O � w 0 W 41 b o a 0 a ❑p � ,W y N Q Hj ✓`� Y O r i i N i .ti O Vl i i i p� i i i� � V� W :'• o w o 0 0 z w W G F � � o b � � C p O O C ti w b C w D ,2 O� U Q"""OF' •� W �j 42 I 43 fn W W F fn O O l� W b C � 0 p V O U W C G O p V C P ;fl F Vd O p z D�v�a"FFF w w O � w 0 C7 � Q � .p O O a r m N W �! o m �n m fn b a ma m m �n �i EA Ny ti ti r r w °a m m m o a o 0 � � C C7 43 b C � 0 p V O U W C G O p V C P ;fl O p z D�v�a"FFF w w 43 CITY OF IOWA CITY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2014 (amounts expressed in thousands) Net change in fund balances - total governmental funds $ 12,306 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the asset. Capital outlays and contributed capital assets exceeded depreciation expense in the current year as follows: Expenditures for capital assets $ 13,702 Transfers of capital assets (to)\from enterprise funds - net (3,500) Capital assets contributed 1,312 Depreciation expense (5,625) 5,889 Bond proceeds are reported as other financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net position. Debt issued (19,730) premium on bonds issued (385) Repayments of debt 13,560 Amortization of premium 109 (6,446) Because some revenues will not be collected for several months after the City's year end, they are not considered available revenues in the governmental funds (927) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Change in accrued compensated absences 6 Change in accrued post employment benefit obligations (275) Change in accrued interest on debt (3) In the statement of activities, only the gain on the sale of the capital assets is recognized, whereas in the governmental funds, the proceeds from the sale increased financial resources. Thus, the change in net position differs from the change in fund balance by the cost of the capital asset sold. (33) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. 81 Change in net position of governmental activities $ 10,598 The notes to the financial statements are an integral part of this statement. 44 ELI ro � as as t d °' as ° 'tl '� ., °46 o o 'J a�ppi h o C b o d p �waazaQzFzawou��a�F 0 46 � Q C m N rn rn N v w v w o rn rn w 0 ka. ri M v vi w vi m m W � W � 'C oq� o N m m rn P a o o rn� w h m w x¢ wm N m N o v v rn M o M � 3 v N m Cr rn m -. N M w v 0 .'� m m rn �ryM von ryrn ro � as as t d °' as ° 'tl '� ., °46 o o 'J a�ppi h o C b o d p �waazaQzFzawou��a�F 0 46 C7 ¢ rn o m m m n I �v w m w w m �n n m w o m w M rn O n rn a w w N v ow o Cw a o o N Ci�ry � m � �M rn W W O O F z py o v m M ry ,-. v ry o ry rn ry U W� H3 F" v3 f. v3 a v3 � � o d -fog o m d O C p �� C a 109 d C N N A N C HIM G T T O T LL y m 7 ti roy d o 0.'d 'C g-0 o I ? d d d d LL C p Ab LL C O W p a¢cJ¢wq,5w aaF za Q¢w� aa0F"F zzrz rz rz rz 'a F 47 .11 Ki F m ti ani O n V `n N 2 :� C ro a? W � U O C7 vi �O N r. co Ov Ov r. O co � O Ov �O M OA OA V M O O OA OA OA N N R A N R O O .ro EA .ro O. d� ti N N .ro N � DU�� OwUv� Cam zC70 ti, V OA M N �O M co OA �O vi OA �O ' O y x¢ �N ��v covcoovv o � N o\ O\ oc ti ro F W. ti ani N ti C ro a? W � U O R A N R O O .ro ti .ro O. d� ti N N .ro �� DU�� OwUv� Cam zC70 W. R� / 49 \ \ \ \ \ \ \\ 55\ K z z \ / A ƒ ƒ 49 AN O f� ° ° m 0 m 0 W N N N Nr O 0 V ' 0 0 0 m C v 50 i �o w F E' c " w W E 3 H m ,': ��• o h Nmr. vr � rn rn v3 I Iva m rn N N NN FL ria 51 M ri � o m m E oq - y ^n S, E o o ami T m m un o? E v M o C u n d E '5m, = 3 ^� d .., b � �, a d o 0 6 m m o _ u asddwS¢�¢�wQQQow o 3 0¢ z 51 M ri CITY OF IOWA CITY STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES June 30, 2014 (amounts expressed in thousands) Agency Funds Assets Equity in pooled cash and investments $ 156 Total assets $ 156 Liabilities Accounts payable $ 5 Due to agency 151 Total liabilities $ 156 The notes to the financial statements are an integral part of this statement. 52 53 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS June 30, 2014 1. Accounting Policies The City of Iowa City, Iowa, (the City) was incorporated April 6, 1853, and operates under the Council/Manager form of government. The City provides a broad range of services to its citizens including general government, public safety, streets, parks, and cultural facilities. It also operates an airport, a mass transportation system, parking facilities, water treatment, wastewater treatment, storm water collection, sanitation collection and disposal (including landfill operations), cable television, and a housing authority. The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the City are described below. The Reporting Entity For financial reporting purposes, the City includes all of its funds, organizations, agencies, boards, commissions, and authorities. The City has also considered all potential component units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body, and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the City. There were no component units required to be included. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non -fiduciary activities of the primary government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. As a general rule, the effect of inter -fund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the City's water and sewer function and various other functions of the government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. 54 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Description of Funds These financial statements include all funds owned or administered by the City or for which the City acts as custodian. The City maintains its records on a modified cash basis of accounting under which only cash receipts, cash disbursements and encumbrances, investments, and bonded debt are recorded. These modified cash basis accounting records have been adjusted to the accrual or modified accrual basis, as necessary, to prepare the accompanying financial statements in accordance with GAAP. The accounts of the City are organized on the basis of funds, each of which is considered to be a separate accounting entity. The fund categories are governmental, proprietary, and fiduciary. Each fund is accounted for by providing a separate set of self -balancing accounts that comprise its assets, liabilities, deferred inflows of resources, net position, revenues, and expenditures or expenses, as appropriate. The individual funds account for the governmental resources allocated to them for the purpose of carrying on specific activities in accordance with laws, regulations, or other restrictions. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its "measurement focus." The government -wide financial statements and proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Agency funds do not have a measurement focus and use the accrual basis of accounting. Under the accrual method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. All governmental funds are accounted for using a current financial resources measurement focus, which generally includes only current assets and current liabilities on the balance sheet. The modified accrual basis of accounting is used for these funds. Under the modified accrual basis, revenue is recognized when susceptible to accrual, which is in the period in which it becomes both available (collectible within the current period or soon thereafter to be used to pay liabilities of the current period) and measurable (the amount of the transaction can be determined). Revenue accrued includes property taxes, intergovernmental revenue, and interest earned on investments (if they are collected within 60 days after the year-end). Expenditures are recorded when the related fund liability is incurred. Principal and interest on long-term debt, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. The City reports the following major governmental funds The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. 55 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 The Employee Benefits Fund is used to account for the employee benefits related to those employees who are paid through governmental fund types, which are funded by a separate property tax levy. The Community Development Block Grant Fund accounts for revenue from the U.S. Department of Housing and Urban Development's Community Development Block Chant programs. The Other Shared Revenue and Grants Fund accounts for revenue from various sources, primarily road use tax monies from the State of Iowa and reimbursable programs funded by federal and state grants. The Other Construction Fund accounts for the construction or replacement of other City general fixed assets, such as administrative buildings with various funding sources, including general obligation bonds, intergovernmental revenues, and contributions. The Debt Service Fund accounts for the accumulation of resources for the payment of general long-term debt principal, interest, and related costs. The City reports the following major proprietary funds The Parking Fund is used to account for the operation and maintenance of the "on" and "off' street public parking facilities. The Wastewater Treatment Fund is used to account for the operation and maintenance of the wastewater treatment facility and sanitary sewer system. The Water Fund is used to account for the operation and maintenance of the water system. The Sanitation Fund is used to account for the operation and maintenance of the solid waste collection system and landfill. The Housing Authority Fund is used to account for the operations and activities of the City's low and moderate income housing assistance and public housing programs. The Transit Fund is used to account for the operation and maintenance of the public transportation system. Additionally, the City reports internal service funds to account for goods and services provided by one department to other City departments on a cost reimbursement basis. The funds in this category are the Equipment Maintenance Fund, Central Services Fund, Loss Reserve Fund, and the Information Technology Fund. 56 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 The City also reports fiduciary funds which are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City has one fiduciary fund which is maintained as an agency fund, with no attempt to create an ongoing fund balance. The fund in this category is Project Green, which accounts for donations that are received to plant and develop yards and lawns, both public and private, within Iowa City. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds and of the City's internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. Uses of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue, expenditures and expenses, as appropriate, during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of landfill closure and post -closure care costs, total capacity of the landfill at closure, and calculation of the costs of claims incurred, but not reported. Cash and Investments The City maintains one primary demand deposit account through which the majority of its cash resources are processed. Substantially all investment activity is carried on by the City in an investment pool, except for those funds required to maintain their investments separately. The earnings on the pooled investments are allocated to the funds on a systematic basis. All investments are stated at fair value except for the Iowa Public Agency Investment Trust (IPAIT) which is valued at amortized cost pursuant to Rule 2a-7 under the Investment Company Act of 1940. For the purpose of the Statement of Cash Flows, restricted and non -restricted investments with a maturity of three months or less when purchased are considered cash equivalents. 57 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Receivables and Revenue Recognition Property tax receivable is recognized in governmental funds on the levy or lien date, which is the date that the tax asking is certified by the City to the County Board of Supervisors. Current year delinquent property tax receivable represents unpaid taxes from the current year. The succeeding year property tax receivable represents taxes certified by the City to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the City is required to certify its budget to the County Auditor by March 15 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, the related revenue is unavailable in both the government -wide and fund financial statements and will not be recognized as revenue until the year for which it is levied. Federal and state grants are recorded as receivables and the revenue is recognized during the period in which the City fulfills the requirements for receiving the grant awards, as long as the susceptible to accrual criteria are met. Income from investments in all fund types and from charges for services in proprietary fund types is recognized when earned. Licenses and permits, fines and forfeitures, fees and refunds, charges for services (in governmental fund types), miscellaneous, and other revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Inventories Inventories are recognized only in those funds in which they are material to the extent of affecting operations. For the City, these are the Transit Fund, Water Fund, and the Equipment Maintenance Fund. Inventories of materials and supplies in the enterprise funds are determined by actual count and priced on the FIFO method. Capital Assets Capital assets, which include property, buildings, equipment, and infrastructure assets (e.g., roads, bridges, water mains, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. The City follows the policy of not requiring capitalization of an asset with an initial, individual cost of less than 550,000 for infrastructure, 525,000 for buildings and improvements, and 55,000 for equipment assets. Such assets are recorded at original purchase cost or at fair value at the date of donation when received as donated properties. Depreciation is computed using the straight-line method over the following estimated useful lives: Infrastructure 3 —100 years Buildings and structures 20 — 50 years Improvements other than buildings 10 — 50 years Vehicles 2-20 years Other equipment 5 — 30 years W CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Bond Premiums and Discounts Debt issued at a premium or discount is recorded net of the unamortized premium or discount. In the governmental funds, premiums and discounts are recorded entirely as other financing sources or uses in the year of issuance. In the proprietary funds and the government -wide statements, they are amortized over the life of the bonds. Compensated Absences Permanent City employees accumulate vacation and sick leave hours for subsequent use or for payment upon death, resignation, or retirement. The City pays its employees (except firefighters) one-half of the accumulated sick leave at the time of termination on the basis of the employee's then effective hourly base salary, provided that the dollar amount of the payment may be up to, but not exceed, the amount that an employee would be paid if the employee had terminated on June 28, 1985. Employees hired on or after June 29, 1985, are not eligible for payment of accumulated sick leave upon termination, death, or retirement. Pensions The provision for pension cost is recorded on the accrual basis (based on statutorily determined contribution rates), and the City's policy is to fund pension costs as they accrue. Landfill Closing Costs Costs expected to be incurred in ultimately closing the present landfill site are being systematically provided for through charges to expense over the estimated useful life of the landfill on the basis of capacity used (see Note ). Deferred Inflows of Resources Although certain revenues are measureable, they are not available. Available means collected within the current year or expected to be collected soon enough thereafter to be used to pay liabilities of the current year. Deferred inflows of resources in the governmental fund financial statements represent the amount of assets that have been recognized, but the related revenue has not been recognized since the assets are not collected within the current year or expected to be collected soon enough thereafter to be used to pay liabilities of the current year. Deferred inflows of resources consist of property tax receivable, notes receivable, grants receivable and other receivables. Deferred inflows of resources in the Statement of Net Position consist of succeeding year property tax receivable that will not be recognized as revenue until the year for which they are levied and notes receivable that will not be recognized as revenue until the year for which the payment is received. 59 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Budgetary and Legal Appropriation and Amendment Policies The City prepares and adopts an annual function budget, as prescribed by Iowa statutes, for all funds except internal service and agency funds. This is formalized in a separate budgetary report, the Financial Plan. This budget is adopted on or before March 15 of each year to become effective July 1, and constitutes the City's appropriation for each program and purpose specified therein until amended. The adopted budget must include the following: a. Expenditures for each function: Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Business-type/enterprise b. The amount to be raised by property taxation c. Income from sources other than property taxation d. Transfers in and transfers out The legal level of control (the level at which expenditures may not legally exceed appropriations) is the function level for all funds combined, rather than at the individual fund level. Management can transfer appropriations within a function, within a fund type, and between fund types, without the approval of the governing body so long as the total budget by function area will not be exceeded. It is necessary, therefore, to aggregate the expenditures of the budgeted activities within the governmental fund types with the expenditures of the budgeted activities within the enterprise funds on a function basis, and to compare such function totals to function budgeted totals in order to demonstrate legal compliance with the budget. The City's budget for revenue focuses on the individual fund revenue rather than on aggregated fund totals. The City formally adopts budgets for several funds that are not required by state law to be included in the annual function budget. Annual operating budgets are adopted for the internal service funds for management control purposes. Such budgets, however, are not legally required to be adopted under state statutes. These budgets are adopted and amended at the same time and in the same manner as the City's annual function budget. A City budget for the current fiscal year may be amended for any of the following purposes as prescribed by Iowa statute: a. To permit the appropriation and expenditure of unexpended, unencumbered cash balances on hand at the end of the preceding fiscal year. b. To permit the appropriation and expenditure of amounts anticipated being available from sources other than property taxation. c. To permit transfers between funds. d. To permit transfers between programs. CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 A budget amendment must be prepared and adopted in the same manner as the original budget. The City's budget was amended as prescribed, and the effects of those amendments are shown in the accompanying budgetary comparison schedule. The original budget was increased by $62,497,049 in revenues and other financing sources and by $75,740,061 in expenditures and other financing uses. Appropriations, as adopted or amended, lapse at the end of the fiscal year. As allowed by GASB Statement No. 41, Budgetary Comparison Schedules —Perspective Differences, the City presents budgetary comparison schedules as required supplementary information based on the program structure of nine functional areas as required by state statute for its legally adopted budget. Restricted Assets Assets within the individual funds, which can be designated by the City Council for any use within the fund's purpose, are considered to be unrestricted assets. Assets, which are restricted for specific uses by bonded debt requirements, grant provisions, or other requirements, are classified as restricted assets. Liabilities, which are payable from restricted assets, are classified as such. Classification of Fund Balances Fund balances for the governmental funds are reported in classifications based on the nature of any limitations requiring the use of resources for specific purposes (see Note 9). 2. Compliance and Accountability At June 30, 2014 the Community Development Block Grant Fund reported a deficit balance of $9,000. The deficit is due to unavailable revenue from the Department of Housing and Urban Development (HUD). The City anticipates receiving these funds from HUD. 3. Cash and Pooled Investments The City's deposits in banks at June 30, 2014 were entirely covered by federal depository insurance, national credit union administration, or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. The City is authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured Iowa depository institutions approved by City Council and secured pursuant to the limitations set forth in Chapter 12C of the Code of Iowa; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; Iowa Public Agency Investment Trust (IPAIT); certain registered open—end management investment companies registered with the Securities & Exchange Commission under the federal Investment Company Act of 1940; certain joint investment trusts; and warrants or improvement certificates of a drainage district. Investments are stated at fair value. In addition, the City had investments in the Iowa Public Agency Investment Trust, which are valued at an amortized cost of $1,500,000 pursuant to Rule 2a-7 under the Investment Company Act of 1940. 61 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 At June 30, 2014 the City had the following investment: Type U S Agencies Fair Value Maturity 5997,803 August 2017 Interest rate risk. The City's investment policy limits the investment of general and operating funds to one year, unless a temporary extension of maturities is approved by the City Council. In such cases, the average maturity of each fund's portfolio shall not exceed 397 days. Funds not identified as operating funds may be invested in instruments whose maturities do not exceed five years at the time of purchase. Credit risk. State law limits investments to commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. It is the City's policy to comply with rating restrictions. The investment in Iowa Public Agency Investment Trust is not rated by Moody's Investors service as it is a state security that is backed by the full faith and credit of the issuing govermnent and is not subject to credit risk. Concentration of credit risk. The City investment policy limits the amount that may be invested in any one issuer to a maximum amount approved by the City Council. The aforementioned Iowa Public Agency Investment Trust (IPAIT) represents an investment in a pool managed by others. IPAIT is a common trust established under Iowa law pursuant to Iowa Code Chapter 28E in 1987 to enable eligible Iowa public agencies to safely and effectively invest their available operating and reserve funds. IPAIT is registered under the Investment Company Act of 1940. The IPAIT portfolios have followed established money market mutual fund investment parameters designed to maintain a S1 per unit net asset value since inception and were registered with the Securities and Exchange Commission (SEC). Due to legal and budgetary reasons, the General Fund is assigned a portion of the investment earnings associated with other funds. These funds are the employee benefits, other shared revenue, and sanitation funds. 62 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 4. Interfund Balances and Transfers Interfund balances for the year ended June 30, 2014, consisted of the following: Advances from Interfund balances at June 30, 2014, include advances due to/from other funds. Advances to/from other funds represent amounts for construction loans, land and negative cash balance funding. $640,742 of the $935,127 advances to the Nonmajor Enterprise Funds and $29,701 of the $86,039 advance to the Transit Fund are not expected to be repaid within the next year. The $429,448 of the advance to the Community Development Block Chant Fund is expected to be repaid within the next year. $150,576 of the $162,888 advance to the Other Shared Revenue and Grants Fund is not expected to be repaid within the next year. None of the $18,000 advance to Housing Authority is expected to be repaid within the next year. 63 Community Development Debt General Block Gant Service Sanitation Total Advances to: Community Development $ 429,448 $ $ $ $ 429,448 Block Gant Other Shared Revenue and Grants - - 162,888 162,888 Housing Authority 18,000 - - 18,000 Transit - - 86,039 86,039 Nonmajor Enterprise 255,982 - - 679,145 935,127 Total $ 685,430 $ 18,000 $ 162,888 $ 765,184 $ 1,631,502 Interfund balances at June 30, 2014, include advances due to/from other funds. Advances to/from other funds represent amounts for construction loans, land and negative cash balance funding. $640,742 of the $935,127 advances to the Nonmajor Enterprise Funds and $29,701 of the $86,039 advance to the Transit Fund are not expected to be repaid within the next year. The $429,448 of the advance to the Community Development Block Chant Fund is expected to be repaid within the next year. $150,576 of the $162,888 advance to the Other Shared Revenue and Grants Fund is not expected to be repaid within the next year. None of the $18,000 advance to Housing Authority is expected to be repaid within the next year. 63 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Interfund transfers for the year ended June 30, 2014, consisted of the following: Transfer from Transfer to: General CommuniTyDevelopment Block Grant Debt Service Other Shared Revenue and Grants Capital Projects Other Construction Nomnajor Governmental Parkmg Wastewater Treatment Water Housing--U—My - Transit 2,858,163 Nonnejor Enterprise 72,342 Internal Service 10,108 $ - $ 8,768255 $ - $ 73,078 $ 465 $ 41,542 2,820 - - 158,624 - - - 367,973 255,060 2,098 405,477 - - 184,974 - - - 367,949 703,115 - - 786,786 39,505 - 18,850 - - - - 25,931 - - - - 263,822 1,158 16,360 374,351 352,179 237,655 Total Transfer to $ 3,992,244 $ 9,173,732 $ 1,158 $ 859,864 $ 1,424,226 $ 683,401 $ 254,015 (continued) Transfers are used to move revenues and bond proceeds from the fund that State statutes or the budget requires to collect them to the fund that the State statutes or the budget requires to expend them. In the fund financial statements, total transfers in and transfers out of $17,989,946 are less than total transfers of $21,490,220 because of the treatment of transfers of capital assets to and from the governmental activities capital assets. During the year, construction in progress related to construction along Lower Muscatine Road with a value of 5317,207 was transferred from governmental activities capital asset to Wastewater Treatment. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of financial resources. However, Wastewater Treatment did report capital contributions for the capital resources received. Other Capital Communny Shared Projects Employee Development Revenue and Other Ncranajor Wastewater General Benefits BlockGrard Grants Construction Governmental Treatment Transfer to: General CommuniTyDevelopment Block Grant Debt Service Other Shared Revenue and Grants Capital Projects Other Construction Nomnajor Governmental Parkmg Wastewater Treatment Water Housing--U—My - Transit 2,858,163 Nonnejor Enterprise 72,342 Internal Service 10,108 $ - $ 8,768255 $ - $ 73,078 $ 465 $ 41,542 2,820 - - 158,624 - - - 367,973 255,060 2,098 405,477 - - 184,974 - - - 367,949 703,115 - - 786,786 39,505 - 18,850 - - - - 25,931 - - - - 263,822 1,158 16,360 374,351 352,179 237,655 Total Transfer to $ 3,992,244 $ 9,173,732 $ 1,158 $ 859,864 $ 1,424,226 $ 683,401 $ 254,015 (continued) Transfers are used to move revenues and bond proceeds from the fund that State statutes or the budget requires to collect them to the fund that the State statutes or the budget requires to expend them. In the fund financial statements, total transfers in and transfers out of $17,989,946 are less than total transfers of $21,490,220 because of the treatment of transfers of capital assets to and from the governmental activities capital assets. During the year, construction in progress related to construction along Lower Muscatine Road with a value of 5317,207 was transferred from governmental activities capital asset to Wastewater Treatment. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of financial resources. However, Wastewater Treatment did report capital contributions for the capital resources received. CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Transfer from Housing Nonmajor Internal Total Water Sanitation Authority Transit Enterprise Service Transfer from $ 213,989 $ 55,000 49,370 23,830 201,000 67,533 53,478 710,000 15,805 202,003 $ 9,152,329 2,820 781,657 407,575 1,045,486 1,650,417 18,850 25,931 989,627 1,158 2,858,163 446,693 7,356 1,942 609,240 $ 116,903 $ 733,830 $ 213,989 $ 7,356 $ 325,283 $ 203,945 17,989,946 Transfers from govEmrnental activities capital assets to enterprise funds 3,500 274 $ 21,490,220 During the year, construction in progress related to construction along Lower Muscatine Road, Rochester Avenue Bridge and William Street with values of 5978,303, 5430,196 and 5101,601, respectively, were transferred from governmental activities capital asset to Water. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of financial resources. However, Water did report capital contributions for the capital resources received. Also during the year, construction in progress related to construction along Lower Muscatine Road, Rochester Avenue Bridge and William Street with values of 51,514,791, 593,597 and 564,579, respectively, were transferred from governmental activities capital asset to Stormwater. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of financial resources. However, Stormwater did report capital contributions for the capital resources received. N CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 5. Capital Assets Capital asset activity for the year ended June 30, 2014, was as follows: Less accumulated depreciation for Buildings 18,716,707 Acquisitions Disposals 20,044,956 Improvements other than buildings Beginning and and Balance Machnery and equipment July 1, 2013 Transfers Transfers June 30, 2014 Cwerrnnental activities: 31,526,838 2,687,171 - 34214,009 Capital assets, not being depreciated- epreciatedLand 79238,664 7,175,535 2,855,065 83,559,134 Land $ 22,781,401 $ 321,340 $ - $ 23,102,741 Construction in progress 23278,125 6,715,419 14,884,434 15,109,110 Total capital assets, not being depreciated 46,059,526 7,036,759 14,884,434 38211,851 Capital assets, being depreciated $ 14,921,824 $ 187,654,023 Buildings 53,781,790 5,367,416 21,067 59,128,139 Improvements other than buildings 6,613 274 10,000 - 6,623 274 Machnery and equipment 40,705,010 2,600,863 2,871388 40,434,485 Infrastructure 114,341321 12,474,087 - 126,815,408 Total capital assets being depreciated 215,441395 20,452,366 2,892,455 233,001306 Less accumulated depreciation for Buildings 18,716,707 1,346,786 18,537 20,044,956 Improvements other than buildings 2,492,970 246,479 - 2,739,449 Machnery and equipment 26,502,149 2,895,099 2,836,528 26,560,720 Infrastructure 31,526,838 2,687,171 - 34214,009 Total accumulated depreciation 79238,664 7,175,535 2,855,065 83,559,134 Total capital assets, being depreciated, net 136,202,731 13 276,831 37,390 149,442,172 Coverrnnental activities capital assets, net $ 182,262 257 $ 20313,590 $ 14,921,824 $ 187,654,023 Me CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Acquisitions Beginning and July 1, 2013 Transfers Business -type activities: Capital assets, not being depreciated Disposals and Balance Transfers June 30,2014 Land $ 28,496,004 $ 5,108,468 $ 107,392 $ 33,497,080 Construction in progress 51,596,844 3,687,472 47,846,037 7,438279 Total capital assets, not being depreciated 80,092,848 8,795,940 47,953,429 40,935,359 Capital assets, being depreciated Buildings 141,875,564 226,537 22,843,655 119,258,446 Improvements other than buildings 10,575,982 228,300 251,557 10,552,725 Machnery and equipment 33 241,933 600,134 3,479,480 30362,587 Infrastructure 211,812,898 64,120,572 176,600 275,756,870 Total capital assets being depreciated 397,506377 65,175,543 26,751,292 435,930,628 Less accumulated depreciation for: Buildings 61,595,134 3,606,982 13,037,605 52,164,511 Improvements other than buildings 4,890250 444,605 151,744 5,183,111 Machinery and equipment 21,696,937 1,455358 3,397,545 19,754,750 Infrastructure 71,852,719 4,804,855 75,884 76,581,690 Total accumulated depreciation 160,035,040 10311,800 16,662,778 153,684,062 Total capital assets, being depreciated, net 237,471337 54,863,743 10,088,514 282,246,566 Business -type activities capital assets, net $ 317.564.185 $ 63.659.683 $ 58.041.943 $ 323.181.925 Depreciation expense was charged to functions as follows: Governmental activities: Public safety $ 1,232,534 Public works 3,290354 Culture and recreation 2,401,728 Community and economic development 34,186 General government 216,733 Total depreciation expense - governmental activities $ 7,175,535 Business -type activities: Parking $ 800,453 Transit 1,069,850 Wastewater treatment 4,035,790 Water 2,180,793 Samtation 474,374 Housing authority 132,496 Nonmajor enterprise 1,618,043 Total depreciation expense - business -type activities $ 10311,800 67 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 6. Long Term Debt Changes in Debt for Bonds Bond debt activity for the year ended June 30, 2014, was as follows: Governmental activities: General obligation bonds Plus: Unamorttzed Premium Total general obligation bonds Revenue bonds Less: Unamorttzed Discounts Total revenue bonds Business -type activities: General obligation bonds Less: Unamorttzed Discounts Total general obligation bonds Revenue bonds Plus: Unamorttzed Premium Total revenue bonds General Obligation Bonds July 1, 2013 Issues Retirements Due Within June 30, 2014 One Year $ 57260,000 $ 19,730,000 $ 13,560,000 $ 63,530,000 $ 11,670,000 328,803 384,973 111,266 602,510 112,550 57,688,803 20,114,973 13,671266 64,132,510 11,782,550 2,655,000 - - 2,655,000 - 40256 - 2,124 38,232 2,124 2,614,644 - (2,124) 2,616,768 (2,124) $ 60203,447 $ 20.114.973 $ 13.669.142 $ 66,749278 $ 11.780.426 $ 1,190,000 $ 590,000 $ 890,000 $ 890,000 $ 300,000 7,685 - 3,842 3,843 3,843 1,182215 590,000 886,158 886,157 296,157 61960,000 - 5,115,000 56,845,000 5,290,000 804,738 - 81,221 723,517 6221 62,764,738 - 5,196221 57,568,517 5296221 $ 63.947.053 $ 590.000 $ 6.082379 $ 58.454.674 $ 5.592.378 Various issues of general obligation bonds totaling $64,420,000 are outstanding as of June 30, 2014. The bonds have interest rates ranging from 0.5% to 5.6% and mature in varying annual amounts ranging from $105,000 to $2,185,000 per issue, with the final maturities due in the year ending June 30, 2024. Interest and principal payments on all general obligation bonds, except tax abated portions recorded in the enterprise funds, are accounted for through the Debt Service Fund. Portions of several general obligation bond issues have been used to acquire or expand the enterprise fund facilities. In some instances, revenue generated by the enterprise funds is used to pay the general long- term debt principal and interest. The liability for those bonds that are expected to be paid by enterprise funds is included in those funds. CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Ending June 30 2015 2016 2017 2018 2019 2020-2024 Governmental Activities Principal 11,670,000 11,205,000 9,595,000 8,810,000 6,350,000 15,900,000 Interest 1,795,472 1,382,580 1,078,887 836,244 584,669 879,560 Business -type Activities Principal Interest 300,000 44,959 295,000 11,800 295,000 5,900 Total $ 63,530,000 $ 6,557,412 $ 890,000 $ 62,659 On June 2, 2014, the City issued $11,980,000 of general obligation refunding bonds of which $2,660,000 was to provide resources for future debt payments of $2,660,000 of general obligation bonds. As a result, the refunded general obligation bonds are considered to defeased and the liability has been removed from the governmental activities column of the statement of net position. The refunding was undertaken to reduce total future debt service payments. The result of the transaction is a reduction of $186,630 in future debt service payments and an economic gain of $181,222. The City had refunded general obligation debt totaling $2,660,000 that was still outstanding as of June 30, 2014. Revenue Bonds As of June 30, 2014, the following unmatured revenue bond issues are outstanding: Wastewater Taxable Urban Parking Treatment Water Renewal Original issue amount $ 9,110,000 $ 48,020,000 $ 21,815,000 $ 2,655,000 Interest rates 3.0% to 5.0% 3.0% to 5.0% 1.5% to 4.5% 1.0% to 3.9% Annual maturities $ 540,000 to $ 465,000 to $ 395,000 to $ 130,000 to $ 770,000 $ 2,205,000 $ 835,000 $ 200,000 Amount outstanding $ 7,145,000 $ 31,955,000 $ 18,635,000 $ 2,655,000 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ending Governmental Activities Business -type Activities June 30 Principal Interest Principal Interest 2015 2016 2017 2018 2019 2020-2024 2025-2029 2030-2034 Total 130,000 130,000 135,000 135,000 725,000 825,000 575,000 75,335 75,335 74,035 72,345 70,185 305,145 197,425 44,495 5,290,000 5,500,000 5,670,000 5,900,000 6,105,000 23,945,000 4,435,000 2,206,665 2,015,284 1,807,671 1,588,927 1,359,765 3,258,915 181,269 $ 2,655,000 $ 914,300 $ 56,845,000 $ 12,418,496 The revenue bond ordinances required that wastewater treatment, parking system, water revenues, and urban renewal tax revenues be set aside into separate and special accounts as they are received. The use and the amounts to be included in the accounts are as follows: (a) Revenue Bond and Interest Sinking Reserve (b) Revenue Debt Service Reserve Amount sufficient to pay current bond and interest maturities. Amount required to be deposited in the Revenue Bond and Interest Reserve until the reserve fund equals: Parking Revenue, Water Revenue and Taxable Urban Renewal Revenue bonds — maximum debt service due on the bonds in any succeeding fiscal year. Wastewater Revenue bonds — 125% of the average principal and interest payments over the life of all the Wastewater Revenue bonds. (c) Improvement Reserve $20,000 per month until the reserve balance equals or exceeds $2,000,000 for Wastewater Revenue bonds and $5,000 per month until the reserve balance equals or exceeds $450,000 for Water Revenue bonds, with no further deposits once the minimum balance is reached. If the reserve falls below the required minimum, monthly transfers in the aforementioned amounts will resume. 70 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Summary of Bond Issues General obligation and revenue bonds payable at June 30, 2014, are comprised of the following issues: $ 123,920,000 71 Date of Amount brterest Final Outstanding Issue Issued Rates Matarity June 30, 2014 General Obligation Bonds: Muki-Purpose Mar. 2005 7,020,000 3.0-4.0 6/15 $ 820,000 Muki-Purpose Jun 2006 6,265,000 3.625-4.0 6/16 1,495,000 Muki-Purpose Jun 2006 1,000,000 5.5-5.6 6/16 250,000 Refimded Water Construction (1) Sep. 2006 3,350,000 3.6-3.75 6/17 300,000 Muki-Purpose May 2007 8,870,000 3.75 6/17 950,000 Muki-Purpose June 2008 9,150,000 3.25-3.75 6/18 4,040,000 Refimded Muki-Purpose (2) Oct 2008 17,005,000 3.0-3.75 6/18 5,975,000 Muki-Purpose June 2009 6,685,000 2.5-4.0 6/19 3,570,000 Refimded Muki-Purpose (3) June 2009 5,840,000 2.0-4.0 6/16 1,795,000 Muki-Purpose Aug. 2010 7,420,000 2.0-2.75 6/20 4,550,000 Muki-Purpose June 2011 7,925,000 2.0-3.625 6/21 5,610,000 Refimded Muki-Propose and Library Construction (4) June 2011 10,930,000 2.0-3.625 6/21 8,520,000 Muki-Purpose June 2012 9,070,000 2.0-2.25 6/22 7,440,000 Muki-Purpose July 2013 7,230,000 1.0-2.0 6/23 6,865,000 Muki-Purpose July 2013 520,000 2.0 6/15 260,000 Refinded Muki-Purpose (5) June 2014 11,980,000 0.5-0.6 6/24 11,980,000 Total General Obligation Bonds $ 64,420,000 Date of Amount Hrterest Final Outstanding Issue Issued Rates Matarity June 30, 2014 Revenue Bonds: Refinded Parking Bonds (6) Nov. 2009 $ 9,110,000 3.0-5.0 7/24 $ 7,145,000 Refinded Wastewater Treatment Bonds (7) Oct 2008 24,280,000 3.0-5.0 7/22 16,145,000 Refinded Wastewater Treatment Bonds (8) May 2009 8,660,000 3.5-5.0 7/25 7,225,000 Refinded Wastewater Treatment Bonds (9) Apr. 2010 15,080,000 3.0-4.0 7/20 8,585,000 Refimded Water Bonds (10) Oct 2008 7,115,000 3.0-4.375 7/24 5,315,000 Refimded Water Bonds (11) May 2009 9,750,000 4.0-4.5 7/25 7,930,000 Refimded Water Bonds (12) June 2012 4,950,000 1.5 - 2.1 7/22 4,500,000 Taxable Urban Renewal Nov. 2012 2,655,000 1.0-3.9 6/32 2,655,000 Total Revenue Bonds $ 59,500,000 $ 123,920,000 71 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 (1) This bond issue has the general obligation bonds payable shown as a liability on the balance sheet of the Water Fund. Also, this bond issue refunded the November 1997 Water Construction General Obligation Bonds. (2) This bond issue refunded the April 1998, March 1999, and July 2000 General Obligation Bonds. (3) This bond issue refunded the June 2001 General Obligation Bonds. (4) This bond issue refunded the May 2002 General Obligation Bonds. (5) This bond issue is an advance refunding of portions of the September 2006 and May 2007 General Obligation Bonds. (6) This bond issue refunded the December 1999 Parking Revenue Bonds. (7) This bond issue refunded the March 1996, May 1997, and January 1999 Wastewater Revenue Bonds. (8) This bond issue refunded the October 2000 Wastewater Revenue Bonds. (9) This bond issue refunded the December 2001 and April 2002 Wastewater Revenue Bonds. (10) This bond issue refunded the May 1999 Water Revenue Bonds. (11) This bond issue refunded the December 2000 Water Revenue Bonds. (12) This bond issue refunded the October 2002 Water Revenue Bonds. Conduit Debt Obligations From time to time, the City has issued Industrial Development Revenue Bonds, Facility Refunding Revenue Bonds, and Midwestern Disaster Area Revenue Bonds to provide financial assistance to private sector entities for the acquisition, construction, and renovation of industrial and commercial facilities deemed to be in the public interest. The bonds are collateralized by the property financed and are payable solely from payments received on the underlying mortgage loans. All payments on the bonds are made by the private sector entities directly to a bond trustee, who is a third party fmancial institution, and in turn, disburses the payment to the respective bond holders. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying fmancial statements. As of June 30, 2014, there were four series of Industrial Development Revenue Bonds, Facility Refunding Revenue Bonds, and Midwest Disaster Area Revenue Bonds outstanding, with an aggregate principal amount payable of $40,663,555. Debt Legal Compliance Legal Debt Margin: As of June 30, 2014, the general obligation debt issued by the City did not exceed its legal debt limit computed as follows (amounts expressed in thousands): Assessed valuation: Real property $ 4,581,219 Utilities 87,100 Total valuation 4.668.319 Debt limit, 5% of total assessed valuation $ 233,416 Debt applicable to debt limit 67,075 Legal debt margin $ 166,341 72 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 7. Other Long-term Liabilities Notes Payable Note Payable activity for the year ended June 30, 2014, was as follows: July 1, 2013 Issues Retirements Due Within June 30, 2014 One Year Governmental activities: $ 211,000 $ - $ - $ 211,000 $ - A note payable was issued to Greater Iowa City Housing Fellowship for the purchase of an 11 unit apartment building for low income and disabled housing in the Peninsula Neighborhood. The terms of the loan are 1%, interest only payments for twenty years with a final balloon payment of $211,000 due on August 1, 2025. Employee Vested Benefits Changes in Long -Term Liabilities -Employee Vested benefits Employee Vested Benefits activity for the year ended June 30, 2014, was as follows: For the governmental activities, employee vested benefits are generally liquidated by the General Fund and Community Development Block Grant Fund. 73 Due Within July 1, 2013 Issues Retirements June 30, 2014 One Year Governmental activities: $ 2.110.614 $ 1.155293 $ 1.160.900 $ 2.105.007 $ 1.163.657 Business -type activities: $ 742.700 $ 433.680 $ 427285 $ 749.095 $ 431.645 For the governmental activities, employee vested benefits are generally liquidated by the General Fund and Community Development Block Grant Fund. 73 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Landfill Closure / Post -Closure Care Costs Changes in Long -Term Liabilities - Landfill Closure Post -closure Care Costs Landfill Closure Post -closure care activity for the year ended June 30, 2014, was as follows: July 1, 2013 Issues Retirements Due Within June 30, 2014 One Yew Business -type activities: $ 6,404,915 $ 911,376 $ $ 7,316,291 $ - In August 1993, the GASB issued Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Post -closure Care Costs (the Statement). Under these rules, in addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and post -closure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and post -closure care costs is based on the amount of the landfill used during the year. The estimated liability for landfill closure and post -closure care costs as of June 30, 2014, is 57,316,291, which is based on 47.2% usage (filled) of the landfill and is included in accrued liabilities within the Sanitation Fund. It is estimated that an additional amount of approximately 58,184,325 will be recognized as closure and post -closure care expenses between the date of the balance sheet and the date the landfill is expected to be filled to capacity by the year ended June 30, 2025. The estimated total current cost of the landfill closure and post -closure care costs at June 30, 2014, was determined by a licensed professional engineer and approximated at 515,500,616. It is based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of June 30, 2014. These amounts are based on an estimated post -closure care and monitoring period of 30 years, consistent with current State Department of Natural Resources regulations. However, the actual cost of closure and post -closure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City is required by federal and state laws and regulations to provide some form of financial assurance to finance closure and post -closure care. The City will meet its financial assurance obligations through the issuance of general obligation bonds. As of June 30, 2014, the Sanitation Fund had 512,405,214 in related equity in pooled cash and investments, at fair value designated for satisfaction of closure and post -closure costs. The City estimates that these cash reserves will only provide a fraction of the dollars needed to close and monitor the landfill. The remaining portion of post -closure care costs, anticipated future inflation costs and additional costs that might arise from changes in post -closure requirements (due to changes in technology or more rigorous environmental regulations, for example) may need to be covered by charges to future landfill users as well as City taxpayers. 74 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Other Post Employment Benefits Changes in Long -Term Liabilities - Other Post Employment Benefits Net OPEB Obligation 2013 Current Year June30,2014 Governmental activities: $ 2,362,257 $ 273,022 $ 2,635,279 Business -type activities: $ 943,369 $ 35,800 $ 979,169 The City implemented GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits other Than Pensions during the year ended June 30, 2009. Plan Description: The City operates one self-funded medical and dental plan for all employees, which is offered to current and retired employees and their dependents. All full-time employees who retire or terminate/resign and their eligible dependents are offered the following post -employment benefit options: Health insurance and dental insurance — The option of continuing with the City's health insurance plan at the individual's expense. These benefits cease upon Medicare eligibility. Life insurance — The option of converting the employee's City -paid policy to an individual policy at the individual's expense with the City's life insurance carrier. Long-term disability — For employees who terminate/resign and have been on the plan for a minimum of one year, the option of converting the employee's City -paid group policy to a personal policy at the individual's expense with the City's long-term disability insurance carrier. The above options, while at the individual's own expense, are included within the City's overall insurance package, which results in an implicit rate subsidy and an OPEB liability. Funding Policy: The plan member's contribution requirements are established and may be amended by the City. The City currently finances the benefit plans on a pay-as-you-go basis. For governmental activities, this liability is expected to be liquidated by the General Fund. 75 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Annual OPEB Cost and Net OPEB Obligation: The City's annual OPEB cost is calculated based on the annual required contribution (ARC) of the City, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year ended June 30, 2014, the amount actually contributed to the plans, and changes in the City's net OPEB obligation: Annual required contribution $ 643,988 Interest on net OPEB obligation 115,697 Adjustment to annual required contribution (110,188) Annual OPEB costs 649,497 Contributions made (340,674) Increase in net OPEB obligation 308,823 Net OPEB obligation beginning of year 3,305,626 Net OPEB obligation end of year 3 614 449 For calculation of the net OPEB obligation, the actuary has set the transition day as July 1, 2008. The end of year net OPEB obligation was calculated by the actuary as the cumulative difference between the actuarially determined funding requirements and the actual contributions for the year ended June 30, 2014. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plans and the net OPEB obligation as of June 30, 2014 are summarized as follows: Annual Year Ended OPEB Cost June 30, 2012 $ 600,965 June 30, 2013 $ 648,466 June 30, 2014 $ 649,497 Percentage of Annual OPEB Cost Net OPEB Contributed from City Obligation 28.5% $2,686,798 4.6% $3,305,626 52.5% $3,614,449 Funded Status and Funding Progress: As of July 1, 2012, the most recent actuarial valuation date for the period July 1, 2013 through June 30, 2014, the actuarial accrued liability was $7,163,715, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of $7,163,715. The covered payroll (annual payroll of active employees covered by the plans) was $34,992,423 and the ratio of the UAAL to covered payroll was 20.5%. As of June 30, 2014, there were no trust fund assets. Actuarial Methods and Assumptions: Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Examples include assumption about future employments, mortality, and the health care cost trend. Actuarially determined amounts are subject to continual review as actual results are compared with past expectations and new estimates are made about the future. Actuarial calculations of the OPEB plan reflect a long-term perspective. 76 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 The required schedule of funding progress, presented as required supplementary information in the section following the Notes to Financial Statements, will present multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. As of the July 1, 2012 actuarial valuation date, the actuarial cost method used is the entry -age normal method. The actuarial assumption includes a 3.5% discount rate and an inflation rate of 3% per annum. The projected annual medical trend rate is 8.5%. The ultimate medical trend rate is 5.0%. The medical trend rate is decreased to 8.0% for year two and then reduced by 0.5% each year until reaching the 5.0% ultimate trend rate. The projected annual dental trend rate is 5.0%. The ultimate dental trend rate is 4%. The dental trend rate is decreased to 4.75% for year two and then reduced by 0.25% each year until reaching the 4% ultimate trend rate. Mortality rates for active employees are from the RP -2000 Employee Table (Male and Female) Projected to 2013 (Projection Scall AA). For retirees, mortality rates are from the RP -2000 Healthy Annuitant Table (Male and Female) Projected to 2013 (Projection Scale AA). Annual retirement and termination probabilities were developed from the retirement probabilities from the MFPRSI and IPERS pension plan turnover tables, adjusted to be consistent with expected first fiscal year retirements. Projected claim costs of the health and dental plans are $821.13 per month. The salary increase rate was assumed to be 3.5% per year. The UAAL is being amortized as a level percentage of projected payroll expenses over 30 years on an open basis. 8. Short Term Debt Changes in Short -Term Liabilities -Notes Payable Notes Payable activity for the year ended June 30, 2014, was as follows: Due Within July 1, 2013 Issues Retirements June 30, 2014 One Year Governmental activities: $ 538,000 $ 2,813,100 $ 1,408,000 $ 1,943,100 $ 1,943,100 During FY14, the City entered into additional multiple short term loans totaling $2,813,100 and repaid multiple short term loans totaling $1,408,000. The outstanding loans mature one year from the date of the loan and bear interest rates ranging from 2% to 3.25%. The loans were used to fund the acquisition and rehabilitation of single family homes as part of the UniverCity Neighborhood Partnership Program (UniverCity). UniverCity is a cooperative effort of the City of Iowa City and the University of Iowa dedicated to ensuring that the University of Iowa Campus and surrounding neighborhoods remain vital, safe, affordable, and attractive places to live and work for both renters and homeowners. The short term loans have been repaid and will be repaid with the proceeds from the sale of the rehabilitated homes. 77 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 9. Fund Equity Fund balances for the governmental funds are reported in classifications that comprise a hierarchy based on the extent to which the government honors constraints on the specific purposes for which amounts in those funds can be spent. • The Nonspendable classification contains amounts not in spendable form or legally or contractually required to be maintained intact. • Restricted amounts contain restraint on their use externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. • Committed amounts can only be used for specific purposes imposed by formal action of the government's highest level of decision-making authority. The highest level of decision-making authority is the City Council and it takes a resolution to establish, modify or rescind a fund balance commitment. • Amounts intended to be used for specific purposes are Assigned. Assignments should not cause deficits in the Unassigned fund balance. The Finance Director has been delegated authority by the City Council through a resolution to assign amounts to be used for specific purposes. • Unassigned fund balance is the residual classification for the General Fund. The City would use Restricted fund balances first, followed by Committed resources, and then Assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend Unassigned resources first to defer the use of these other classified funds. W Component of Fund Mlance Nonsxddade Perpetual Care Principal Total Nonsperdable R.tndedfor: Pudic Safety Local Option Sales Tax De2A SeMce GO Bond Projects State Funding Pudic Safety Employee Benefits Other Restricted Total ReAnded Assigned to. Library Programs Senior Center Programs Emergency Fund Replacement and Acquiedion Renews Other Assigned Total Assgne l Unassigned Total Fund Balances 10. Risk Management CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Conmunity Other Development Shanxi Other Employee Block Revenue and Other Debt Governmental General Bents Grant Grants Canslaction S.Ce Fords Total $ More) $$ - $ $ $ $ _ - - - - $ More) 6.9 000 6.9 000 75,560 75,560 3399601 - - - - - - 3399601 - - - - - 6,872,181 - 6872181 705,857 - - - 6853,6]1 - 11,138,247 1807,775 - - - 4,517,082 - - - 4,517,082 - 1,713,207 - - - - - 1,713,207 46562 190,633 237,195 26533,483 1,713,207 4,517,082 6,853,671 6,872,181 11,328,880 57,818,504 17,906,13M (9,543) (188) 17,ID7,153 $ 47,908,888 $ 1,713,287 $ (9,543) $ 4,517,882 $ 6853,671 $ 6872181 $ 11,328,772 $ 79,184,258 The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; workplace accidents, errors and omissions; and natural disasters. During fiscal year 1988 the City established the Loss Reserve Fund, an internal service fund, to account for and finance its uninsured risks of loss. During the year ended June 30, 2014 the City purchased property, liability, and workers' compensation insurance under the program that provides for a $100,000 self-insured retention per occurrence on property losses, a $500,000 self-insured retention per occurrence on liability, and a $500,000 self-insured retention on workers' compensation losses. The liability insurance provides coverage for claims in excess of the aforementioned self-insured retention up to a maximum of $21,000,000 annual aggregate of losses paid. Settled claims have not exceeded this commercial coverage in any of the past twenty five fiscal years. The operating funds pay annual premiums to the Loss Reserve Fund. Accumulated monies in the Loss Reserve Fund are available to cover the self-insured retention amounts and any uninsured losses. 79 75,560 75,560 3399601 - - - - - - 3399601 17,906,13M (9,543) (188) 17,ID7,153 $ 47,908,888 $ 1,713,287 $ (9,543) $ 4,517,882 $ 6853,671 $ 6872181 $ 11,328,772 $ 79,184,258 The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; workplace accidents, errors and omissions; and natural disasters. During fiscal year 1988 the City established the Loss Reserve Fund, an internal service fund, to account for and finance its uninsured risks of loss. During the year ended June 30, 2014 the City purchased property, liability, and workers' compensation insurance under the program that provides for a $100,000 self-insured retention per occurrence on property losses, a $500,000 self-insured retention per occurrence on liability, and a $500,000 self-insured retention on workers' compensation losses. The liability insurance provides coverage for claims in excess of the aforementioned self-insured retention up to a maximum of $21,000,000 annual aggregate of losses paid. Settled claims have not exceeded this commercial coverage in any of the past twenty five fiscal years. The operating funds pay annual premiums to the Loss Reserve Fund. Accumulated monies in the Loss Reserve Fund are available to cover the self-insured retention amounts and any uninsured losses. 79 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 The Housing Authority Fund is insured under a separate policy with the Assisted Housing Risk Management Association. The remaining funds participate in the Loss Reserve Fund. The funds make payments to the Loss Reserve Fund based on actuarial estimates of the amounts needed to pay prior- and current -year claims and to establish a reserve for catastrophic losses. The Fund's accrued liabilities balance includes a claims liability at June 30, 2014 based on the requirements of GASB Statement No. 10, as amended, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in the Loss Reserve Fund's claims liability amount for property, liability, and workers' compensation for the years ended June 30, 2014 and 2013 are as follows: Current -Year Beginning -of- Claims and Balance at Fiscal -Year Changes in Claim Fiscal Liability Estimates Payments Year -End 2012-2013 $ 1,184,000 $ 1,616,000 $ 1,177,000 $ 1,623,000 2013-2014 1,623,000 2,826,000 2,033,000 2,416,000 Also, the City is partially self-insured, through stop -loss insurance, for employee health care coverage, which is available to all of its permanent employees. This insurance provides stop -loss coverage for claims in excess of $125,000 per employee with an aggregate stop -loss of $8,264,321. The operating funds are charged premiums by the Loss Reserve Fund. The City reimburses a health insurance provider for actual medical costs incurred, plus a claims processing\administrative fee. Changes in the Loss Reserve Fund's claims liability amount for health care coverage for the years ended June 30, 2014 and 2013 are as follows: 2012-2013 2013-2014 Beginning -of - Fiscal -Year Liability Current -Year Claims and Changes in Estimates 716,000 $ 5,480,000 509,000 7,292,000 'ml Claim Payments $ 5,687,000 7,220,000 Balance at Fiscal Year -End 509,000 581,000 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 11. Commitments and Contingencies The total outstanding contractual commitments as of June 30, 2014 are as follows: Fund Project Bridge, street and traffic Paving and bridge construction, control construction engineering design and consulting Other construction Public works, culture & recreation, Economic Dev, Fire & Police, construction Wastewater Sewer construction and south plant expansion Water Water main construction Airport Runway grading and paving The total significant encumbrances as of June 30, 2014 are as follows: Fund Project Other Construction Financial System, fire equipment and public works radio system 01 Amount $ 2,992,475 6,726,463 486,117 23,024 183,222 $ 10,411,301 Amount $ 568,775 $ 568,775 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 12. Contingent Liabilities Litigation The City is a defendant in a number of lawsuits arising principally from claims against the City for alleged improper actions by City employees, with such lawsuits typically involving claims of improper police action, unlawful taking of property by zoning, negligence, appeals of condemnations, and discrimination. Total damages claimed are substantial; however, it has been the City's experience that such actions are settled for amounts substantially less than claimed amounts. The City's management estimates that the potential claims against the City, not covered by various insurance policies, would not materially affect the financial condition of the City. The City has the authority to levy additional taxes (outside the regular limit) to cover uninsured judgments against the City. 13. Pension and Retirement Systems Municipal Fire and Police Retirement System of Iowa The City is a participating employer in the Municipal Fire and Police Retirement System of Iowa (MF'PRSI or the Plan), which is a cost-sharing multiple -employer defined benefit public police and fire employees retirement system. All fire fighters and police officers appointed under civil service participate in the Plan. The Plan provides retirement, disability, and death benefits that are established under state statute. The Plan issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to Municipal Fire and Police Retirement System of Iowa, 7155 Lake Drive Suite 201, West Des Moines, Iowa 50266 or the report may be obtained from website www.mfprsi.org under the publications link. A member may retire at age 55 with 22 years of employment, and receive full benefits that are equal to 66% of the member's average final compensation. Additionally, members retiring with more than 22 years of service will receive an additional 2% of the member's average final compensation for up to 8 years of additional service. Other benefits are also calculated at varying percentages of the average final compensation. Benefits vest after four years of service. Member contribution rates are established by state statute. For the fiscal year ended June 30, 2014, members contributed 9.40%. The City's contribution rate is based upon an actuarially determined normal contribution rate. The normal contribution rate is provided by state statute to be the actuarial liabilities of the plan less current plan assets, the total then being divided by 1% of the actuarially determined present value of prospective future compensation of all members, further reduced by member contributions. Legislatively appropriated contributions from the state to the plan may further reduce the City's contribution rate. However, the City's contribution rate may not be less than 17% of eamable compensation. The City was required to contribute 30.12% of earnable compensation of each member in FY 2014, 26.12% of eamable compensation in FY 2013, and 24.76% of earnable compensation in FY 2012. The contributions paid by the City for the years ended June 30, 2012, 2013, and 2014, were 52,232,637, 52,428,631, and 52,920,967 respectively, and was equal to the required contributions for each year. M CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Iowa Public Employees Retirement System The City contributes to the Iowa Public Employees Retirement System (IPERS), which is a cost-sharing multiple -employer defined benefit pension plan administered by the State of Iowa. IPERS provides retirement and death benefits, which are established by State statute to plan members and beneficiaries. IPERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to IPERS, P.O. Box 9117, Des Moines, Iowa 50306-9117. All employees eighteen or older, except temporary employees of six months or less of employment duration, who do not participate in any other public retirement system in the state are eligible and must participate in IPERS. The pension plan provides retirement and death benefits that are established by state statute. Generally, a member may retire at the age of 65, or any time after age 62 and 20 years or more of service, or when age plus years of service equals or exceeds 88, and receive unreduced (for age) benefits. Members may also retire at the age of 55 or more at reduced benefits. Benefits vest after seven years of service or after attaining the age of 55. Full benefits are equal to 60% of the average of the highest five years of covered wages times years of service divided by 30. Plan members are required to contribute 5.95% of their annual covered salary and the City is required to contribute 8.93% of annual covered payroll. Contribution requirements are established by state statute. The City's contributions to IPERS for the years ended June 30, 2012, 2013, and 2014, were 52,245,326, 52,423,438, and 52,552,602 respectively, and were equal to the required contributions for each year. 14. Subsequent events On November 12, 2014, the City of Iowa City placed funds in escrow to defease whole maturities of Parking System Revenue Refunding Capital Loan Notes, Series 2009F, dated November 23, 2009. These Capital Loan Notes have stated maturity dates of July 1, 2015 through July 1, 2024 totaling 56,605,000 in principal amount. 15. New Governmental Accounting Standards Board (GASB) Standards The Governmental Accounting Standards Board (GASB) has issued three statements not yet implemented by the City. The statements, which might impact the City's financial statements, are as follows: Statement No. 68, Accounting and Financial Reporting for Pensions — an amendment of GASB Statement No. 27, issued June 2012, will be effective for the fiscal year ending June 30, 2015. The objective of this Statement is to improve information provided by state and local governmental employers about financial support for pensions that is provided by other entities. Statement No. 69, Government Combinations and Disposals of Government Operations, issued January 2013, will be effective for the fiscal year ending June 30, 2015. The objective of this statement is to improve financial reporting by addressing accounting and financial reporting for government combinations and disposals of government operations. The term government combinations is used in this Statement to refer to a variety of arrangements including mergers and acquisitions. ME CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2014 Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date —an amendment of GASB Statement No. 68, issued November 2013, will be effective for the fiscal year ending June 30, 2015. The objective of this statement is to address an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The City's management has not yet determined the effect these statements will have on the City's financial statements. M KI CITY OF IOWA CITY BUDGETARY COMPARISON SCHEDULE BUDGET AND ACTUAL - ALL GOVERNMENTAL FUNDS AND ENTERPRISE FUNDS BUDGETARY BASIS REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2014 (dollar amounts expressed in thousands) Governmental Fund Types Enterprise Fund Actual Budgetary Types Actual Total Actual Basis Budgetary Basis Budgetary Basis Revenues: Public safety Property taxes $ 50,046 $ - $ 50,046 Delinquent property taxes 5 - 5 Tax increment financing taxes 435 - 435 Other city taxes 3,309 - 3,309 Licenses and permits 1,660 7 1,667 Intergovernmental 18,043 25,253 43,296 Charges for services 4,292 38,223 42,515 Use of money and property 851 1,167 2,018 Miscellaneous 2,938 522 3,460 Total revenues 81,579 65,172 146,751 Expenditures/Expenses: Public safety 21,555 - 21,555 Public works 6,349 - 6,349 Health and social services 264 - 264 Culture and recreation 12,665 - 12,665 Community and economic development 10,979 - 10,979 General government 7,039 - 7,039 Debt service 13,160 - 13,160 Capital outlay 17,103 - 17,103 Business -type - 65,444 65,444 Total expenditures/expenses 89,114 65,444 154,558 Excess (deficiency) of revenues over (under) expenditures/expenses (7,535) (272) (7,807) Other financing sources and uses, net 22,538 3,092 25,630 Net change in fund balances 15,003 2,820 17,823 Balances, beginning of year 66,349 86,134 152,483 Balances, end of year 81,352 88,954 170,306 See Note to Required Supplementary Information. 00, Budgeted Amounts Final to Actual Variance - Positive Original Final (Negative) $ 50,307 $ 50,307 $ (261) 7,484 7,561 5 454 454 (19) 5,007 4,744 (1,435) 1,351 1,352 315 42,419 64,823 (21,527) 40,304 45,331 (2,816) 1,661 (3,061) 5,079 5,175 5,175 (1,715) 146,678 169,125 (22,374) 21,784 22,400 845 7,484 7,561 1,212 265 265 1 13,128 13,495 830 10,700 13,351 2,372 7,790 7,758 719 13,497 13,497 337 18,864 48,272 31,169 75,501 90,792 25,348 169,013 217,391 62,833 (22,335) (48,266) 40,459 20,262 32,951 (7,321) (2,073) (15,315) 33,138 98,087 152,483 96,014 137,168 OR CITY OF IOWA CITY BUDGETARY COMPARISON SCHEDULE BUDGET TO GAAP RECONCILIATION REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2014 (dollar amounts expressed in thousands) Governmental Fund Types Accrual Modified Accrual Budget Basis Adjustments Basis Revenues $ 81,579 $ 282 $ 81,861 Expenditures 89,114 (854) 88,260 Net (7,535) 1,136 (6,399) Other financing sources (uses) 22,538 (3,833) 18,705 Beginning Fund Balances 66,349 530 66,879 Ending Fund Balances $ 81,352 $ (2,167) $ 79,185 Enterprise Fund Types Accrual Accrual Budget Basis Adjustments Basis Revenues $ 65,172 $ 1,257 $ 66,429 Expenditures 65,444 (14,375) 51,069 Net (272) 15,632 15,360 Other financing sources (uses) 3,092 (9,766) (6,674) Beginning Fund Balances 86,134 249,547 335,681 Ending Fund Balances S 88,954 S 255,413 S 344,367 See Note to Required Supplementary Information. 88 City of Iowa City, Iowa Note to Required Supplementary Information - Budgetary Reporting For the Year Ended June 30, 2014 In accordance with Code of Iowa, the City Council annually adopts a budget following required public notice and hearing which includes all funds, except internal service funds and agency funds. The budget basis of accounting is cash basis. The annual budget may be amended during the year utilizing similar statutorily prescribed procedures. Formal and legal budgetary control is based upon nine major classes of expenditures known as functions, not by fund or fund type. These nine functions are: public safety, public works, health and social services, culture and recreation, community and economic development, general government, debt service, capital outlay and business -type. The legal level control is at the aggregated function level, not at the fund or fund type level. During the year, budget amendments increased budgeted revenues by $22,447,000 and expenditures by $48,378,000. The budget amendments were primarily due to changes in the breadth and timing of capital improvement projects, which the City budgets in full during the initial year of the projects and amends future year budgets for carryover. M City of Iowa City, Iowa Required Supplementary Information — Schedule of Funding Progress for Health and Dental Plans For the Year Ended June 30, 2014 UAAL As a Actuarial Actuarial Actuarial Percentage of Valuation Fiscal Value of Accrued Unfunded AAL Funded Covered Date Year Assets Liability (AAL) (UAAL) Ratio Covered Payroll Payroll July 1, 2008 June 30, 2009 $ $ 15,235,196 $ 15,235,196 0.00% $ 29,842,842 51.1% July 1, 2010 June 30, 2011 $ $ 6,893,438 $ 6,893,438 0.00% $ 31,505,702 21.9% July 1, 2012 June 30, 2013 $ $ 7,163,715 $ 7,163,715 0.00% $ 34,992,423 20.5% NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special Revenue Funds account for revenues derived from specific sources that are required to be accounted for as separate funds. The funds in this category and their purpose are as follows: Economic Development Fund — accounts for revenue and expenditures of economic development activities. Metropolitan Planning Organization of Johnson County (formerly Johnson County Council of Governments) Fund — accounts for the financial activities of the metropolitan/rural cooperative planning organization. CAPITAL PROJECT FUND Capital Projects Funds are utilized to account for all resources used in the acquisition and construction of capital facilities and other major fixed assets, with the exception of those that are financed by proprietary fund monies. The fund in this category is as follows: Bridge, Street, and Traffic Control Construction Fund — accounts for the construction or replacement of infrastructure fixed assets, such as streets, bridges, dams, sidewalks, and lighting systems. 91 CITY OF IOWA CITY COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Assets Equity in pooled cash and investments Receivables: Property tax Interest Due from other governments Assets held for resale Restricted assets: Equity in pooled cash and investments Total assets June 30, 2014 (amounts expressed in thousands) Total $ 19 $ 116 $ 891 $ 1,026 284 - 284 - - 14 14 - 64 1,683 1,747 - 165 165 - - 9,700 9,700 $ 303 S 180 S 12,453 $ 12,936 Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable $ 2 S Contracts payable - Accrued liabilities - Liabilities payable from restricted assets: Deposits Total liabilities Deferred inflows of resources: Unavailable revenues: Suceeding year property taxes Grants Other Total deterred inflows of resources Fund balances: Restricted Total fund balances Total liabilities, deterred inflows of resources and fund balances 9 $ Capital Special Revenue Projects Metropolitan Bridge, Planning Street, and Organization Traffic Economic ofJohnson Control Development County Construction Total $ 19 $ 116 $ 891 $ 1,026 284 - 284 - - 14 14 - 64 1,683 1,747 - 165 165 - - 9,700 9,700 $ 303 S 180 S 12,453 $ 12,936 Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable $ 2 S Contracts payable - Accrued liabilities - Liabilities payable from restricted assets: Deposits Total liabilities Deferred inflows of resources: Unavailable revenues: Suceeding year property taxes Grants Other Total deterred inflows of resources Fund balances: Restricted Total fund balances Total liabilities, deterred inflows of resources and fund balances 9 $ 97 $ 539 9 11 1 9 648 99 539 20 1 659 281 - - 281 - - 531 531 - - 136 136 281 - 667 948 20 171 11,138 11,329 20 171 11,138 11,329 $ 303 S 180 S 12,453 $ 12,936 92 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2014 (amounts expressed in thousands) Revenues Property taxes $ 711 $ - $ - $ 711 Intergovernmental - 355 2,177 2,532 Charges for services - - 58 58 Use of money and property - - 37 37 Miscellaneous - 17 56 73 Total revenues 711 372 2,328 3,411 Expenditures Capital Special Revenue Projects Metropolitan Bridge, Planning Skeet, and Organization Traffic Economic ofJohnson Control Development County Construction Total Revenues Property taxes $ 711 $ - $ - $ 711 Intergovernmental - 355 2,177 2,532 Charges for services - - 58 58 Use of money and property - - 37 37 Miscellaneous - 17 56 73 Total revenues 711 372 2,328 3,411 Expenditures 288 Current (4,994) Public works - - 1,799 1,799 Community and economic development 423 674 - 1,097 Capital outlay - - 5,523 5,523 Total expenditures 423 674 7,322 8,419 Excess (deficiency) of revenues over (under) expenditures 288 (302) (4,994) (5,008) Other Financing Sources (Uses) Issuance of debt - - 8,132 8,132 Discount on issuance of bonds - - 159 159 Transfers in - 343 1,307 1,650 Transfers out (272) - (411) (683) Total other financing sources and (uses) (272) 343 9,187 9,258 Net change in fund balances 16 41 4,193 4,250 Fund Balances, Beginning 4 130 6,945 7,079 Fund Balances, Ending $ 20 $ 171 $ 11,138 S 11,329 93 94 NONMAJOR ENTERPRISE FUNDS Enterprise Funds account for operations and activities of the City that are financed and operated in a manner similar to a private business enterprise, and where the costs of providing services to the general public on a continuing basis are expected to be financed or recovered primarily through user charges, or where the City has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The funds in this category are as follows: Airport Fund—accounts for the operation and maintenance of the airport facility. Stormwater Fund—accounts for the operation and maintenance of the stormwater operation. Cable Television Fund — accounts for the operation and maintenance of the Broadband Telecommunications Commission that oversees the franchise agreement with the cable television company, including production and broadcasting on the government television channels. 95 CITY OF IOWA CITY, IOWA 3INING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS June 30, 2014 (amounts expressed in thousands) Cable Airport Stormwater Television Total Assets 79 23 119 221 Current assets: 261 60 - 321 Equity in pooled cash and investments $ - $ 1,225 $ 1,397 $ 2,622 Receivables: 3 - 13 16 Accounts and unbilled usage - 123 170 293 Interest - 1 2 3 Due from other governments 964 19 - 983 Total currant assets 964 1,368 1,569 3,901 Noncurrent assets: 935 - - 935 Restricted assets: 2 - 10 12 Equity in pooled cash and investments 109 - 118 227 Other post employment benefits asset 6 - - 6 Capital assets: 1,291 95 163 1,549 Land 12,217 2,264 - 14,481 Buildings 5,157 - 731 5,888 Improvements other than buildings 409 - - 409 Machinery and equipment 281 260 110 651 Infrastructure 14,029 41,999 - 56,028 Accumulated depreciation (5,798) (10,700) (419) (16,917) Constriction in progress 3,201 1,955 - 5,156 Total noncurrent assets 29,611 35,778 540 65,929 Total assets 30,575 37,146 2,109 69,830 Liabilities Current liabilities Accounts payable 79 23 119 221 Contracts payable 261 60 - 321 Accmedliabilifies 2 5 9 16 Employee vested benefits 3 - 13 16 Total current liabilities 345 88 141 574 Noncurrent liabilities: Liabilities payable from restricted assets: Deposits 9 - - 9 Advances from other funds 935 - - 935 Employee vested benefits 2 - 10 12 Other post employment benefits obligation - 7 12 19 Total noncurrent liabilities 946 7 22 975 Total liabilities 1,291 95 163 1,549 Net Position Net investment in capital assets 29,496 35,778 422 65,696 Restricted for future improvements 100 - - 100 Unrestricted (312) 1,273 1,524 2,485 Total net position $ 29.284 S 37951 S 1.946 S 68,281 96 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION NONMAJOR ENTERPRISE FUNDS Operating Revenues: Charges for services Miscellaneous Total operating revenues Operating Expenses: personal services Commodities Services and charges Depreciation Total operating expenses Operating loss Nonoperating Revenues (Expenses): Gain (loss) on disposal of capital assets Operating grants Interest income Total nonopemting revenues (expenses) Income (loss) before capital contributions and transfers Capital contributions Transfers in Transfers out Change in net position Net Position, Beginning Net Position, Ending For the Year Ended June 30, 2014 (amounts expressed in thousands) Cable Airport Stonnwater Television Total $ 328 $ 1,093 $ 773 $ 2,194 28 1 - 29 356 1,094 773 2,223 72 153 497 722 40 100 6 146 319 245 239 803 431 498 742 1,671 780 805 33 1,618 1,211 1,303 775 3,289 (855) (209) (2) (1,066) 675 - 675 56 13 - 69 3 3 6 731 16 3 750 (124) (193) 1 (316) 5,214 2,384 - 7,598 72 374 - 446 - (90) (235) (325) 5,162 2,475 (234) 7,403 24,122 34,576 2,180 60,878 $ 29,284 $ 37,051 $ 1,946 $ 68,281 97 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS For the Year Ended June 30, 2014 (amounts expressed in thousands) rM Cable Airport Stormwater Television Total Cash Flows From Operating Activities Receipts from customers and users $ 356 $ 1,072 $ 784 $ 2,212 Payments to suppliers (376) (343) (243) (962) Payments to employees (69) (150) (503) (722) Net cash flows from (used for) operating activities (89) 579 38 528 Cash Flows From Noncapital Financing Activities Operating grants received 11 7 - 18 Transfers from other funds 72 374 - 446 Transfers to other funds - (90) (235) (325) Net cash flows from (used for) noncapital financing activities 158 291 (235) 214 Cash Flows From Capital and Related Financing Activities Capital grants received 5,072 - - 5,072 Acquisition and construction of property and equipment (6,386) (1,411) - (7,797) Proceeds from sale of property 675 - - 675 Net cash flows used for capital and related financing activities (639) (1,411) - (2,050) Cash Flows From Investing Activities Interest on investments - 3 3 6 Net decrease in cash and cash equivalents (570) (538) (194) (1,302) Cash and Cash Equivalents, Beginning 679 1,763 1,709 4,151 Cash and Cash Equivalents, Ending $ 109 $ 1,225 $ 1,515 $ 2,849 Reconciliation of operating loss to net cash Bows from (used for) operating activities: Operating loss $ (855) $ (209) $ (2) $ (1,066) Adjustments to reconcile operating loss to net cash flows from operating activities: Depreciation expense 780 805 33 1,618 Changes in: Receivables: Accounts and unbilled usage - (23) 11 (12) Accounts payable (17) 2 2 (13) Accrued liabilities 1 2 (1) 2 Employee vested benefits 1 - (7) (6) Other post employment benefits asset/obligation 1 1 2 4 Total adjustments 766 788 40 1,594 Net cash flows from (used for) operating activities $ (89) $ 579 $ 38 $ 528 Noncash Investing, Capital, and Financing Activities: Contributions of capital assets from government and others $ - $ 2,384 $ - $ 2,384 rM INTERNAL SERVICE FUNDS Internal Service Funds account for goods and services provided by one department to other City departments on a cost -reimbursement basis. The funds in this category are: Equipment Maintenance Fund — accounts for the provision of maintenance for City vehicles and equipment and vehicle rental to other City departments from a central vehicle pool. Central Services Fund — accounts for the support services of photocopying, paper supplies, mail, overnight shipping, and two-way radios provided to other City departments. Loss Reserve Fund — accounts for the property, liability, Workers' Compensation and health insurance premiums and claims activity for City departments, including the self-insured retention portion. Information Technology Fund — accounts for the accumulation and allocation of costs associated with telecommunications and data processing, including the operation and replacement of equipment. 99 CITY OF IOWA CITY COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS June 30, 2014 (amounts expressed in thousands) Liabilities Current liabilities Accounts payable Equipment Central Loss Information 438 Accrued liabilities Maintenance Services Reserve Technology Total Assets 36 1 3 22 62 Current assets: 216 23 3,199 107 3,545 Equity in pooled cash and investments $ 9,986 $ 736 $ 13,841 $ 2,871 $ 27,434 Receivables: 28 1 3 18 50 Accounts and unbilled usage - - 22 - 22 Interest 15 1 20 4 40 Due from other governments 49 - - - 49 Inventories 597 - - - 597 Total crurent assets 10,647 737 13,883 2,875 28,142 Noncurrent assets: Other post employment benefits asset - - 23 - 23 Capital assets: Land 45 - - - 45 Buildings 578 - - 243 821 Improvements other than buildings 50 - - - 50 Machinery and equipment 15,204 812 24 2,013 18,053 Infrastructure - 31 - 1,746 1,777 Accumulated depreciation (10,948) (222) (18) (2,330) (13,518) Construction in progress - - - 7 7 Total noncurrent assets 4,929 621 29 1,679 7,258 Total assets 15,576 1,358 13,912 4,554 35,400 Liabilities Current liabilities Accounts payable 159 21 195 63 438 Accrued liabilities 21 1 3,001 22 3,045 Employee vested benefits 36 1 3 22 62 Total current liabilities 216 23 3,199 107 3,545 Noncurrent liabilities: Employee vested benefits 28 1 3 18 50 Other post employment benefits obligation - 5 - 68 73 Total noncurrent liabilities 28 6 3 86 123 Total liabilities 244 29 3,202 193 3,668 Net Position Net investment in capital assets 4,929 621 6 1,679 7,235 Unrestricted 10,403 708 10,704 2,682 24,497 Total net position $ 15,332 $ 1,329 $ 10,710 $ 4,361 $ 31,732 100 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS Operating Revenues: Charges for services Miscellaneous Total operating revenues Operating Expenses: personal services Commodities Services and charges Depreciation Total operating expenses Operating income (loss) Nonoperating Revenues: Gain on disposal of capital assets Interest income Total nonopemting revenues Income (loss) before transfers Transfers in Transfers out Change in net position Net Position, Beginning Net Position, Ending For the Year Ended June 30, 2014 (amounts expressed in thousands) Equipment Central Loss Information Maintenance Services Reserve Technology Total $ 6,024 $ 235 $ 9,022 $ 1,727 $ 17,008 6,024 235 9,023 1,727 17,009 935 29 181 1,010 2,155 2,514 66 10 310 2,900 600 175 9,592 483 10,850 4,049 270 9,783 1,803 15,905 1,288 23 4 236 1,551 5,337 293 9,787 2,039 17,456 687 (58) (764) (312) (447) 50 - - 9 59 24 2 32 7 65 74 2 32 16 124 761 (56) (732) (296) (323) 10 164 - 435 609 (202) - - (2) (204) 569 108 (732) 137 82 14,763 1,221 11,442 4,224 3 1,65 0 $ 15,332 $ 1,329 $ 10,710 S 4,361 $ 3 1,73 2 101 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended June 30, 2014 (amounts expressed in thousands) Equipment Central Loss Information Maintenance Services Reserve Technology Total Cash Flows From Operating Activities (58) $ (764) $ (312) $ (447) 1,288 23 4 Receipts from customers and users $ 6,075 $ 235 $ 10,191 $ 1,727 $ 18,228 Payments to suppliers (3,344) (221) (9,562) (756) (13,883) Payments to employees (926) (28) 686 (1,015) (1,283) Net cash flows from (used for) operating activities 1,805 (14) 1,315 (44) 3,062 Cash Flows From Noncapital Financing (2) Activities Transfers from other funds 10 164 - 435 609 Operating transfers to other funds (202) - - (2) (204) Net cash flows from (used for) noncapital financing activities (192) 164 - 434 406 Cash Flows From Capital and Related Financing Activities Acquisition and construction of property and equipment Proceeds from sale of property Net cash flows from (used for) capital and related financing activities Cash Flows From Investing Activities Interest on investments Net increase in cash and cash equivalents Cash and Cash Equivalents, Beginning Cash and Cash Equivalents, Ending Reconciliation of operating income (loss) to net cash flows from (used for) operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash flows from (used for) operating activities: Depreciation expense Changes in: Receivables: Accounts and unbilled usage Due from other governments Inventories Accounts payable Accrued liabilities Employee vested benefits Other post employment benefits asset/obligation Total adjustments Net cash flows from (used for) operating activities (537) (178) 54 - (483) (178) (376) (1,091) 9 63 (367) (1,028) 17 2 23 6 48 1,147 (26) 1,338 29 2,488 8,839 762 12,503 2,842 24,946 $ 9,986 $ 736 $ 13,841 $ 2,871 $ 27,434 $ 687 $ (58) $ (764) $ (312) $ (447) 1,288 23 4 236 1,551 - - 1,168 - 1,168 51 - 51 62 - - - 62 (292) 20 40 37 (195) 6 - 866 3 875 9 - - (11) (2) (6) 1 1 3 (1) 1,118 44 2079 268 3509 $ 1,805 $(14) $ 1.315 $ (44) $ 3.062 102 AGENCY FUND The Agency Fund accounts for assets held by the City in a trustee or custodial capacity for other entities, such as individuals, private organizations, or other governmental units. The fund in this category is: Project Green Fund — accounts for donations that are received to plant and develop yards and lawns, both public and private, within Iowa City. 103 CITY OF IOWA CITY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS Project Green Assets Equity in pooled cash and investments Total assets Liabilities Accounts payable Due to agency Total liabilities For the Year Ended June 30, 2014 (amounts expressed in thousands) Balance Balance July 1, 2013 Increases Decreases June 30, 2014 $ 145 $ 80 $ 69 $ 156 $ 145 $ 80 $ 69 $ 156 $ 6 $ 5 $ 6 $ 5 139 75 63 151 $ 145 $ 80 $ 69 $ 156 104 Statistical Section This part of the City of Iowa City's comprehensive annual financial report represents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Page Financial Trends 107 These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity 112 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 122 These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 132 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 134 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial report for the relevant year. The city implemented GASB 34 in FY03; schedules presenting government -wide information include information beginning in that year. 105 106 a I S � M o . M � m o M N-. w �raiw v wM IM M N m Mi 107 II''II °II II 79 PI fl Cli II kl � M o . M � m o M N-. w �raiw v wM IM M N m Mi 107 108 0 �o 9 of a 0 A� sA w a` 108 0 r 109 9 w N N a dill Al s AiiA ol E v E _°_ a AAAA AAA A6b 6b 6b 6b 6b 6b 6ba a c4 .�'°� �a>o NOS m€a ° V c w°2�$ 109 � )�f;;:z z l4 / 110 , {\ 6 ...} . 06 � )�f;;:z z l4 / 110 111 O h W r M W 1` m N N m C{ W W y N r V W m 1 W W r r 0, W � O ti r l N M W 1 V W O M M r r W pq N C � � � O O MN V h ti O N O O � o _ 5 y o a °N' O=9 F 09 Po Ou. d fL 2.�sN�zaHH W oN q 111 112 �� V co O M V vi co OA O O H w y R L w a O R H y � a -o H ✓' WO '� M ti N A F U w O a o o R O M N � CO N CO M CO M U O 4' M M V V V Vl V Vl Vl Vl Y C N m 3 F» H ti � o m . a � 0 0 112 114 _ � •y o m N co �n �n o\ � � � a ; O ca a a a a a m m m m m p R O O O O O O O O O O Y H EA O U G y3 L �+ O R � � o C F O o v3 o � W � O p d EA F. y+ ro O N b ° R R - C U 0 U � C � U O N O N O N O N O N O N O N O N O N O N r y O 114 CITY OF IOWA CITY, IOWA PROPERTY TAX BUDGETS AND COLLECTIONS Last Ten Fiscal Years (Cash basis of accounting) (amounts expressed in thousands) Collection Total Tax Current Tax Year Levied Collections 2005 $ 34,403 $ 34,814 2006 36,460 36,654 2007 39,094 38,947 2008 39,973 39,768 2009 43,168 43,118 2010 45,393 45,318 2011 47,789 47,826 2012 49,595 49,543 2013 50,407 50,139 2014 50,307 49,835 Percent of Levy Delinquent Tax Collected Collections' 101.2 % $ 15 $ 100.5 44 99.6 13 99.5 70 99.9 99.8 100.1 99.9 99.5 99.1 18 17 8 1 3 1 Total Tax Collections 34,829 36,698 38,960 39,838 43,136 45,335 47,834 49,544 50,142 49,836 Total as a Percent of Levy 101.2 % 100.7 99.7 99.7 99.9 99.9 100.1 99.9 99.5 99.1 Source: Certificate of City Taxes and Johnson County Treasurer's Office Note: This schedule is presented on a cash basis of accounting. Taxes are collected by the Johnson County Treasurer and submitted to the City in the following month. Because of the month delay, some years will show Current Tax Collections in excess of the Total Tax Levied. ' Delinquent tax collection is presented by collection year, rather than levy year, because information is not available from Johnson County Treasurer by levy year. 115 116 0 0 F R R O R O F �1 •'� R .� N t� � vl �O h CO O� � � � � � � O vl t� t� N vl CO CO P vl N 0 0 F R R O R O F N b a � x T v '•' SWC O � ,� a� a� C 0 ¢ q v O v O N 3 U 116 117 B \ } P. P� \ c=y<<<==r )^ \7 5 \\ \) ) P� 118 )^ \7 5 \\ \) ) \\\ \\\\\\\ \| \ 118 )^ \7 5 \\ \) \J 118 CITY OF IOWA CITY, IOWA SALES HISTORY AND TOTAL WATER CHARGES Last Ten Fiscal Years Fiscal Water Sales Water System Year Cubic Feet Sold Charges 2005 254,560,239 $ 8,315,719 2006 267,107,998 8,844,993 2007 261,072,632 8,414,310 2008 249,361,929 7,976,536 2009 234,804,167 7,497,903 2010 234,342,825 7,568,378 2011 236,838,370 7,661,898 2012 246,618,257 7,953,738 2013 254,616,773 8,194,467 2014 239,790,719 7,778,364 Sources: City of Iowa City Revenue Department 119 I i 0 O N 1Ia 0 ti C 0 N � N .� �M�oz0000zoo qUq Q U U ¢ U L v N m v ov m ov m� co ov U QI M OA vi M l M OA V OA co N 1Ia 0 ti C 0 N � N .� �M�oz0000zoo qUq Q Y U ¢ L v N m v ov m ov m� co ov Qi M OA vi M l M OA V OA co N y cS r-" m cS 120 0 ti C 0 N � N .� �M�oz0000zoo qUq Q Y U ¢ L v N m v ov m ov m� co ov Qi 120 4. ti C N � N a qUq Q U ¢ v N m v ov m ov m� co ov 120 4. ti C N � N qUq Q U ¢ 120 CITY OF IOWA CITY, IOWA SALES HISTORY AND TOTAL SEWER CHARGES Last Ten Fiscal Years Fiscal Sewer Sales Sewer System Year Cubic Feet Sold Charges 2005 297,714,953 $ 12,557,646 2006 302,925,357 12,373,762 2007 315,199,203 11,084,369 2008 285,492,596 12,221,769 2009 276,455,246 12,499,949 2010 265,375,857 12,541,905 2011 280,303,237 12,748,695 2012 282,134,840 12,784,321 2013 285,472,392 12,883,641 2014 269,505,370 12,382,031 Sources: City of Iowa City Revenue Department 121 y i+ R N (n b N O W M O b b M M G � � u L Pr G Pi O m oo m oo �n o0 0 o m U F •� � n o �o ,-: m n �o � � n 0 R N (n b N O W M O b b M M G � � u L Pr G Pi O 0 0 0 0 0 0 0 0 0 0 � �� ti ti ti ti ti ti ti ti ti ti R O O N N N N N N N N N N Jaz m oo m oo �n o0 0 o m F •� � n o �o ,-: m n �o � � n s� U' s� 0 0 0 0 0 0 0 0 0 0 � �� ti ti ti ti ti ti ti ti ti ti R O O N N N N N N N N N N Jaz m oo m oo �n o0 0 o m Pio O O OA OA 00 t � b b � s� o.. R 9 O W � b N N aLi aLi R r. r. 0 0 v3 0 0 0 0 0 0 0 0 0 0 � �� ti ti ti ti ti ti ti ti ti ti R O O N N N N N N N N N N Jaz 122 o.. R 9 O W � b N N aLi 0 122 123 co o h h co h N co �O vi O � R A z L a: 0 0 0 0 0 0 0 0 0 0 aoN a ca R ap y L C p. R Vl U N N = � gz ° a � U Y L :E � O R a L W oo � U E h h co h h h vi �O U � _ a, > Qi a � L vi �O h co O\ O N M V 123 CITY OF IOWA CITY, IOWA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES' Fiscal Year Ended June 30 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Notes: PrincipalZ $ 9,349 $ 6,099 6,700 7,323 8,418 9,354 10,386 13,294 16,465 10,900 Last Ten Fiscal Years (amounts expressed in thousands) Interese 3,676 $ 3,458 3,464 3,556 3,364 3,064 2,889 2,543 2,339 1,903 Total Debt Service 13,025 $ 9,557 10,164 10,879 11,782 12,418 13,275 15,837 18,804 12,803 Total General Governmental Expenditures and Transfers 1 General Fund, Special Revenue Funds, Debt Service Fund and Capital Projects Funds. z Beginning in FY13, Taxable Urban Renewal Revenue Bonds are also included. 124 88,342 93,360 93,639 99,178 102,607 108,950 120,424 119,242 129,814 101,734 Ratio of Debt Service to General Expenditures .15 : 1.00 .10 : 1.00 11 : 1.00 11 : 1.00 11 : 1.00 11 : 1.00 11 : 1.00 .13 : 1.00 .14 : 1.00 .13 : 1.00 Name of Governmental Unit City of Iowa City Iowa City Community School District Total Per capita assessed value CITY OF IOWA CITY, IOWA COMPUTATION OF DIRECT AND OVERLAPPING DEBT June 30, 2014 (amounts expressed in thousands, except per capita) Total General Percent Amount This schedule estimates the portion Long -Term Applicable Applicable residents and businesses of Iowa Direct Debt to the City of to the City of and repay long-term debt, the entire Outstandine Iowa Ci Iowa City Per Capita $ 66,960 100.00 % $ 66,960 $ 935.3170 12,280 57.33 7,041 98.3448 $ 79,240 $ 74,001 $ 1,033.6618 Source: Johnson County Auditor's Office. $ 65,208 Note: Overlapping governments are those that coincide, at least in part with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is home by the residents and businesses of Iowa City. This process recognizes that when considering the City's ability to issue and repay long-term debt, the entire burden home by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government 125 126 / ) »a \ )/{ # >0t )/)) /)/} [ \ � \ e / 126 / ) »a \ )/{ # >0t )/)) /)/} 126 n .mow 127 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 vii R G �i L rl U R 127 N N o o � vii �i L rl U R L U � � Vt Vt Vt Vt Vt Vt Vt � M Vl S G R w F � � o fyi Pr R M M N O OA �O �O . N F 6A b9 M 00 00 � �O 00 N Vt V� V� 00 G H 6A b9 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 0 0 0 0 0 0 0 O •� � o� �n o0 0o m � � o0 00 0 � Qi g9 b9 U 0 0 0 0 0 0 0 0 0 0 0 O 127 CITY OF IOWA CITY, IOWA SCHEDULE OF REVENUE BOND COVERAGE Last Ten Fiscal Years (amounts expressed m thousands) Fiscal Year Net Revenue Annual Debt Service' Ended Available for Ratio of June30 Revenue Expenses' Debt Service Principal Interest Iotal Coveraee Parking Revenue' 2005 $ 4,360 $ 2,377 $ 1,983 $ 305 $ 663 $ 968 2.05 2006 4,161 2,380 1,781 320 645 965 1.85 2007 5,035 2,973 2,062 335 626 961 2.15 2008 4,995 2,454 2,541 355 606 961 2.64 2009 5,630 3,024 2,606 370 584 954 2.73 2010' 5,509 3,149 2,360 390 504 894 2.64 2011 5,389 2,920 2,469 420 391 811 3.04 2012 4,945 3,034 1,911 500 339 839 2.28 2013 5,122 3,549 1,573 515 324 839 1.87 2014 5,365 2,969 2,396 530 308 838 2.86 Wastewater Ireatment Revenue 2005 $ 12,600 $ 4,432 $ 8,168 $ 3,630 $ 3,537 $ 7,167 1.14 2006 12,798 4,260 8,538 3,815 3,390 7,205 1.19 2007 13,708 4,236 9,472 3,905 3,234 7,139 1.33 2008' 13,332 4,581 8,751 4,105 3,071 7,176 1.22 2009' 13,462 5,202 8,260 4,260 2,813 7,073 1.17 2010' 13,174 5,050 8,124 4,205 2,307 6,512 1.25 2011' 13,281 5,477 7,804 1,840 2,054 3,894 2.00 2012 13,175 5,663 7,512 4,615 1,693 6,308 1.19 2013 13,301 5,340 7,961 4,865 1,547 6,412 1.24 2014 12,835 5,708 7,127 3,250 1,428 4,678 1.52 Water Revenues 2005 $ 9,287 $ 4,783 $ 4,504 $ 845 $ 1,340 $ 2,185 2.06 2006 9,918 5,722 4,196 880 1,305 2,185 1.92 2007 9,220 5,356 3,864 915 1,268 2,183 1.77 2008' 9,258 5,348 3,910 955 1,229 2,184 1.79 2009' 8,833 5,726 3,107 995 1,171 2,166 1.43 2010' 8,336 5,153 3,183 680 1,055 1,735 1.83 2011 8,354 5,464 2,890 1,110 902 2,012 1.44 2012' 8,649 5,653 2,996 1,200 861 2,061 1.45 2013' 9,342 6,348 2,994 845 758 1,603 1.87 2014' 8,613 5,818 2,795 1,335 650 1,985 1.41 Notes: ' Excludes depreciation and interest. 3 Includes principal and interest of revenue bonds only. ' Parking Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.25. Wastewater Treatment Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service' is required to be at least 1.10. s Water Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.10. ' Refunded Revenue Bonds paid are excluded from the principal of Annual Debt Service. 128 v1 v1 v1 v1 v1 v1 v1 v1 v1 v1 v1 v1 v1 v1 v1 v1 O v1 O G m m m m v w w v a v v v rn v a 0 w w . v . 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N N N N N N N N N N N N N N N N N p R -- G F G rn N rn a vi r m v t� W W W W T T ----- TTT- m- aT T T T T T T T T T V V W d d O O O O O O O O T T O V1 'J' O V1 V1 V1 V1 V1 V1 O �O oO O l� � m a rn v w m rn v w o m y m m m m mN N N N N N W w w w w w w w w w w w � G 1 R py V3 o o n o C a v n n v a o ci o� � ci rn v o r Cn 0 0 0 0 0 0 v� v� �� m ry a a a a a a F a r a rn v o w r o w of rn m a r rn w c 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 R h O O O V1 O O O V1 O ul O O V1 O V1 V1 O O 1 ao o m v o v v w w rn o ci I w o ci �n ry o rn rn rn � N W a. a a a a a a a a... N N N N N N N N N N N N N N N N N N N 129 2U14 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Total CITY OF IOWA CITY, IOWA REVENUE DEBT ANNUAL MATURITY BY FUNDING SOURCE Principal $ 530,000 540,000 560,000 580,000 605,000 625,000 650,000 680,000 705,000 735,000 770,000 695,000 $ 7,675,000 Principal $ 3,250,000 3,370,000 3,520,000 3,625,000 3,775,000 3,915,000 4,090,000 3,740,000 2,485,000 1,220,000 700,000 740,000 Parking Outstanding Interest $ 308,300 292,250 272,950 250,150 226,450 201,850 176,350 148,900 119,469 88,869 54,000 17,375 $ 2,156,913 Sewer Outstanding Interest $ 1,418,681 1,304,900 1,175,119 1,034,575 886,575 731,400 557,463 378,013 232,288 141,250 93,250 57,250 Total $ 838,300 832,250 832,950 830,150 831,450 826,850 826,350 828,900 824,469 823,869 824,000 712,375 $ 9,831,913 Total $ 4,668,681 4,674,900 4,695,119 4,659,575 4,661,575 4,646,400 4,647,463 4,118,013 2,717,288 1,361,250 793,250 797,250 775,000 19,375 794,375 $ 35,205,000 $ 8,030,139 $ 43,235,139 130 (continued) CITY OF IOWA CITY, IOWA REVENUE DEBT ANNUAL MATURITY BY FUNDING SOURCE (continued) 2U14 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Total Fiscal Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Total Principal $ 1,335,000 1,380,000 1,420,000 1,465,000 1,520,000 1,565,000 1,620,000 1,680,000 1,740,000 1,805,000 1,325,000 1,390,000 Water Outstanding Interest Total $ 649,946 609,515 567,215 522,946 475,903 426,515 374,103 317,571 256,781 191,764 128,847 68,481 835,000 18,788 S 19,080,000 $ 4,608,375 Taxable Urban Renewal Principal 130,000 130,000 135,000 135,000 140,000 140,000 145,000 150,000 150,000 155,000 160,000 165,000 170,000 175,000 185,000 190,000 Outstanding Interest $ 75,335 75,335 75,335 74,035 72,345 70,185 67,485 64,545 61,325 57,845 53,945 49,745 45,095 39,975 34,365 28,245 21,770 14,925 $ 1,984,946 1,989,515 1,987,215 1,987,946 1,995,903 1,991,515 1,994,103 1,997,571 1,996,781 1,996,764 1,453,847 1,458,481 853,788 $ 23,688,375 Total $ 75,335 75,335 205,335 204,035 207,345 205,185 207,485 204,545 206,325 207,845 203,945 204,745 205,095 204,975 204,365 203,245 206,770 204,925 200,000 7,800 207,800 $ 2,655,000 S 989,635 $ 3,644,635 131 A I N O i a ql O\ V O\ fr M O W fr CO 1� rv= W D\ W D\ O M b W O V O N N M M M M V V W EA N O i a ql O\ V O\ fr M O W fr CO 1� rv= W D\ W D\ O M b W O V O N N M M M M V V W 0 l� M W O m N m m V1 O 7 V N V Vl V P V M N V P N O r-� e m r-� r-� o e N m v L a V Q� c» w w e r-� G~0 oN e e m m n o Si o x w O N e N � v v c Q� 'y EA W W CO M W cO V V M W O W O W D\ D\ 1 O N N P P DA P W W O ti Q� L F FI � ti p V O O O O O O O O O O O .ti O .Ni O ti O O v 132 } } r ------9»/ ; [ o ] \ 2 ) (g / - )}\\)\\\\/J ) 133 Public Safety Police Fire Inspection Services Public Works Public Works Admin Engineering Flood Recovery Culture and Recreation Parks and Rec Admin Recreation Parks Forestry Cemetery CBD Maintenance Library Senior Center Community and Economic Development General Government City Council City Clerk City Attorney City Manager' Personnel Human Rights Finance Government Buildings Energy Conservation Transit' Special Revenue Employee B enefits CIP / Roads Flood Mitigation Grants Community Development UniverCity Program Traffic Engineering Streets MPOJC (formerly JCCOG) Other Shared Revenues Library Development Capital Project Administration Internal Service Funds Information Technology Equipment Central Services Risk Management Business -Type Activities Parking Mass Transit' Wastewater Treatment Water Sanitation Airport Cable Television Stormwater Housing Authority Total Source: City's Financial Plan CITY OF IOWA CITY, IOWA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION Last Ten Fiscal Years Full -Time Equivalent Employees as of June 30 2005 2006 2007 2008 2009 2010 2011 94.25 94.25 96.25 96.25 103.25 103.25 98 56 57 57 57 57 57 66 13.88 14.88 14.88 15.38 15.55 15.55 15.55 2 2 2 2 2 2 2 11.6 11.6 11.6 11.35 11.35 11.35 12.1 _ _ _ _ _ _ 0.4 2 2 2 2 2 2 2 15.17 15.17 15.42 15.42 15.42 15.42 15.42 12 13 13 13 13 13 13 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 42.63 42.63 42.89 43.14 43.14 43.14 43.14 6.31 6.31 6.31 6.31 6.31 6.31 6.31 8.45 8.45 8.45 8.95 9.05 9.05 9.1 7 7 7 7 7 7 7 4 4 4 4 4 4 4 6.6 6.6 6.6 6.6 6 6 5.6 3 3 3 3 3 3 3 4 4 4 4 4 4 4 2.5 2.5 2.5 2.5 2.5 2.5 2.5 26.61 26.75 26.75 26.5 26.3 26.3 26.24 4.96 4.96 4.96 4.96 4.96 4.96 4.96 0.5 0.5 0.5 025 025 025 - 50.5 50.5 50.5 54.75 58.5 58.5 56.25 0.34 0.39 0.39 029 029 0.29 026 3 2 2 1 2 2 _ _ _ _ _ _ 1.6 4.35 4.35 4.35 3.98 3.88 3.88 3.83 5.65 4.15 4.15 4.15 4.15 4.15 4.15 22 23.5 23.5 23.5 25.5 25.5 25.5 6.1 6.6 6.6 6.6 6.6 6.6 6.6 0.8 l 1 1 l l l 3 8 11.75 12 12.3 12.3 12.3 11.3 11.25 11.26 11.26 11.26 11.26 11.26 11.26 0.75 0.75 0.75 0.75 0.75 0.75 0.75 1.32 1.38 1.38 1.73 1.93 1.93 2.01 32.75 32.75 32.75 32.75 33.25 33.25 32.75 27.3 25.5 25.5 25.5 25.6 25.6 25.6 31.7 32.5 32 32.75 32.75 32.75 32.75 34.35 33.85 33.85 34.85 34.85 35.85 35.85 2 1.6 1.6 1.6 1.75 1.75 1.75 6.19 6.19 6.19 6.19 6.44 6.44 6.69 - 0.5 1 2 1.9 1.9 1.9 12.75 13.25 13.25 13.25 13.25 13.25 13.25 599.56 605.37 608.13 614.81 629.03 630.03 633.37 134 2012 2013 2014 97 103 105 65 65 65 15.55 15.55 13.55 2 2 2 12.1 12.1 12.1 0.4 0.4 0.38 2 2 2 15.42 15.42 15.42 13 13 13 3 3 3 3 3 3 3 3 3 43.64 43.63 45.13 6.5 6.5 6.5 9.1 8.4 8.95 7 7 7 4 4 4 5.6 5.6 5.6 3 5 6 4 4 3 2.5 2 2 27.53 23.47 23.97 4.83 4.83 4.83 56.25 0 0 0.55 0.55 0.55 1.6 3.83 3.33 2.98 02 4.15 4.15 4.15 25.5 25.5 25.5 6.6 5.6 5.6 1.6 1.62 1 1 5 6 6 11.8 10.86 9.86 11.26 10.75 10.75 0.75 0.76 0.5 1.8 1.8 1.8 32.75 29.25 26.25 51.75 5125 25.4 25.4 24.4 32.75 32.75 31.75 37.85 37.85 35.85 1.75 1 l 6.63 6.63 6.63 2.1 2.1 2.1 13.25 13.18 12.19 637.74 623.91 615.16 135 e 0 N z 0 H U o d o � O N W 0. U o 9 o U 0 m A F W O a y C7 0 F � N PW. 0 N N 0 r 137 138 ` [ \ 138 m O N N •'� (�1 fel (�1 N N W D N N m fn •'� (�1 fel N O N N Vl �D N N W � O ti Vl W D N O m W D 'y O N ti fn N m fn •'� (�1 fel N O N N Vl �D -ti N N In � N -ti Vl W D\ N D\ b b D\ •'� (�1 fel N O N 9 N v 7 C i.+ o .w rn ri ri � N o � F U N � F H O Ki ri ri o N N o ri � ri o N N o � � C V ti O OOC y � V N � ro 139 140 Eid�lly. CPAs & Independent Aud c -'s =mac_ c t on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Honorable Mayor and Members of the City Council City of Iowa City, Iowa We have audited, in accordance with auditing standards generally accepted in the United Stz,cs and the standards applicable.,, :=a:x:z zcd's contained in Government Auditing Standards_ ss_woc , a Comptroller General of the united Sta'cs, the financial statements of the governmental actir.'ies. ' c business -type activities, each major f_:_" and the aggregate remaining fund information of the City Io,, -a City, Icsva, (City) as of and .or.::e year ended June 30, 2014, and the related notes to the financia: s.a.ements, A:: ich collectively comprise the City's basic financial statements, and have issued our report Internal Ccn_rol Over Financial Reporting In planning and performing ocr audit of the finaro:a. s,a'e:r.c n.s. s;e ca:caro ne Citx's interna' control over f=no.a: reportin_ c- z: control) to es'.. -z. are z77 -0--:a ci-cc-stances for'.ho - .=so c`oxpressing our c-.':7 *--:-.s on nc_ p cso of expressing an crime- on the effectiveness of tnc C y's interna' control Accc-c'.ng`�. �r,e cc no. _x.7 --ss an opinion on the e_-`;x,iveness o"the City's inte-:ial control. Adef:cienc; 'n interna_ cr;- oxs.s ces.an c c-o-ation of control does not aiic'.1, management c- emp1c%cos. '.:_. e no.- F. ccs c _-`perform.n_ their assigned functions, to-o.o:.':_ or do_ect and cc-___ na:c,c s o ..... -a ss. A mater :%,s., 5 _ _ _ .ion o"cefieler.r.es_ :- _..__z c_t sic : .n a reaso::zc.c -: ssio:. :,..F - �. --.� F. —.s.� .._...4::mentof th— _._ "_d, ordeter.__ s . z c _ . a r.° ao_ . _'.cs, . s :, :ass severe than a materia: weakness, ye , i nponant en oug. to merit a ention by fnose c arged wit. governance. Our consideration of internal control over financial reporting was for the limited purpose described in the oaragrapc of tnls sectio as .,;t deslgr�� ._ __. --..,,s contro'. over a- reposing -hat mig. a: �Aeaknoss_s C.v,,. `. cs .a.lons, __. aud;t we did no :'den;'-, z _...._ .:,a _ a' we cons:der to 'c z:,cria: cz;. sses. However, mate.,: weak , ss , _x:.: at .ave no. 141 www.eidebailly.com 1545 Associates Dr., Ste. 101 1 Dubuque, IA 52002 1 T 563.556.1790 1 F 563.557.7842 1 EOE Compliance and Other :Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, we noted a certain immaterial instance of noncompliance which is described in Part IV of the accompanying schedule of findings and questioned costs. Comments involving statutory and other legal matters about the City's operations for the year ended June 30, 2014, are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the City and are reported in Part IV of the accompanying Schedule of Findings and Questioned Costs. Since our audit was based on tests and samples, not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. City's Response to Finding The City's response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The City's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. �A/L7' Dubuque, Iowa December 11. 2014 142 EideBailly® �� CPAs & BUSINESS ADVISORS -cent Auditor's Report on Compliance for Each Major Federal Program and Report -c1 over Compliance Required by OMB Circular A-133 To the Honer; :e Va. c- <>_� Members Council City 0, .,L _:y__ .,a Report on Compliance for Each Major Federal Program We have audited the City of Iowa City, Iowa's (City) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2014. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsib'.:v Management is responsible compliance with the requirements of laws, regulations, contracts and grants appiicabie to its federa. Auditor's Responsibi:-: 0'_' ^JS ['.S:' :5 eX -2JJ a :, ....,a on the c0mplianc.`. fb7 each Of the C: -.,'S .,., a:,._ ce��'2: ==ms bvac C�:-a .s ance requirements referred to abe,. .'; conducted o cc:r.�:ia ce '.:_ acct cance'si:: arc:: standards generally accepted in the ;:-ited States ofAme-:ca: s,,a-dards applica,-:e to 5na-c:a. a:z:_s contained in Government F.ud_.,; �,_ndards, issued by,,.-._ C-nptroller General of the :�::z� S.a_zs: and OMB Circular A-1.33, :' a � ;;, St `ates. asd"on-Profit Organisations. Those s_a:-dards z c' OMB C rcular A_ : 33 -equi e tha_ plan r per`crr..:he auditto obtain reasonable ass=- :cc onco=,..'.ance with r..-rred to above that coca ..a., F a maJor .cce-z. .7 -3a -=n oCec--ec. /.n includes exarr :::icu. c : a :es: basis, evic ::c a :the ; iy's eomplia-oe i:` _ ree�:-c:r.cr.'s and performing suc procedures as we cer.s:-_c%d necessary in the circum, L::::es. .,, rides basis `C- cn on co,;. -�:ia-c- program. However, our audit does not provide a legal determination of the City's Opinion on Each Maior Federal Program In our _ a _ _ .C,va comp:'ed, in all e_�.-espects, with the cora se rec,-,1:7_1's have a c -ac- a-� z c."cct on each of its ma programs;o:_leyca ^cec; Cc":.2ui4. www. : ,,,....v.cc-- 1545 Ass ictes Dc, Ste. 101 1 Dob, 2- :. ]2002 1 1563.556 79G = 563.557.7842 EOE Report on Internal Control over Compliance Management o.` C::\ s :csoo-sio e `o- estab.s::::._ : on. -o: over co -n' a w .., ,:: r cop. ti :ance rec• s enre` tree ::.. to z and pc.:o ra our aucr o` ce.--_ �.:cz. we considereri G 's na! co.:.:o: Ove- �_ e woes o reeccemens a: -:-cc* ar.c ac:: -.a ,rz_-:e--,.^, `�e aud•':..� p.oced::res F77 -,'7_.a_- -.;e -:e z op:nio:. On comp! -an cc for eacc _1. _,..._- : over comniiance in accordance wi.:n OV.3 - _ _ o. ,..e : cs- s---_ __.'c ; on :le . ffec..vc•.-ss o` interna. con.roi we do no. cv,7-_,sS _ .. ;he e`_ec,ivcness o`t.".e Ci y s ....,.:tai controi over com:: ance. deficiency in internal control over compliance exists when the design or operation o` a con.oi over compliance does not allow mana-ement or empioyees_ in the normal course of performing their assigned `tine±i;s.'.c -` c- dc.cc': znc correct, norcompiiance with a wpe o`compliance recuUerrent Ofa `ederz roa-a- on a ti-ciy cars. ' material weakness in internal control over compliance is a deficiency, ,,,,=l'-z.ion of deficiencies, ir• internal control over compliance, such that there is a reasonable css7i::.•<'nz. material noncom -dance with a compliance requirement will not be prevented, or detected _. d, on a time:% zsis. :significant deficiency in internal control over complianc& is a de:�ciccc:. c- a combi,_a_'.c or deficiencies. in internal control over compliance with a Noe ; compliance regi e -en; of a federa. -rod-am that is less sc es than a material wez.chess = c' cc-piiance, yet to me-:_ yen':`. t by those chargee vs:,n governance. Our consideration of ir.:e-cz: co -rol over compliance was for the limited purpose described in the `irst paragraph of this section and 'v, as cot designed to identify all deficiencies in internal control that c-:ght be material weaknesses or sign:"oan': deficiencies. We did not identify any deficiencies in over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. �4L7�0 Dubuque, Iowa December 11, 2014 144 Grantor/Program U.S. Department of Agriculture: Pass-through program from: Iowa Department of Agriculture: Specialty Crop Block Grant Program - Farm Bill U.S. Department of Commerce: Direct program: Economic Adjustment Assistance Economic Adjustment Assistance Total U.S. Department of Commerce U.S. Department of Housing and Urban Development: Direct program: Community Development Block Grants/ Entitlement Grants Community Development Block Grants/ Entitlement Grants Pass-through program from: Iowa Economic Development Authority: Community Development Block Grants/ State's Program and Non -Entitlement Grants in Hawaii Community Development Block Grants/ State's Program and Non -Entitlement Grants in Hawaii Community Development Block Grants/ State's Program and Non -Entitlement Grants in Hawaii Community Development Block Grants/ State's Program and Non -Entitlement Grants in Hawaii Community Development Block Grants/ State's Program and Non -Entitlement Grants in Hawaii Community Development Block Grants/ State's Program and Non -Entitlement Grants in Hawaii City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2014 Federal Pass -Through CFDA Entity Identifying Number Number 10.170 11.307 11.307 14.218 14.218 14.228 14.228 14.228 14.228 14.228 14.228 145 12-25-B-1670 08 -DRI -271 08-DRIEF-276 08 -DRE -010 08 -DRI -273 08-DRHB-225 08 -DRB -204 Federal Expenditures $ 6,882 2,991,861 469,931 3,461,792 583,011 485,190 1,068,201 2,544,127 2,360,595 764,858 717,223 36,900 10,177 6,433,880 City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2014 Federal Pass -Through CFDA Entity Identifying Federal Grantor/Program Number Number Expenditures U.S. Department of Housing and Urban Development: (continued) Direct program: Home Investment Partnerships Program 14.239 $ 248,873 Home Investment Partnerships Program 14.239 216,261 Home Investment Partnerships Program 14.239 196,652 Home Investment Partnerships Program 14.239 15,583 677,369 Public and Indian Housing 14.850 149,559 Public and Indian Housing 14.850 115,778 265,337 Section 8 Housing Choice Vouchers 14.871 6,301,282 Public Housing Capital Fund 14.872 101,252 Public Housing Capital Fund 14.872 53,503 154,755 Total U.S. Department of Housing and Urban Development 14,900,824 U.S. Department of Justice: Pass-through program from: Iowa Department of Justice: Violence Against Women Formula Grants 16.588 VW -14 -51 -CJ 65,515 Direct program: Bulletproof Vest Partnership Program 16.607 2,671 Bulletproof Vest Partnership Program 16.607 485 3.156 Public Safety Partnership and Community Policing Grants Pass-through program from: Governor's Office of Drug Control Policy: Public Safety Partnership and Community Policing Grants 16.710 16.710 146 10-Hotspots/Interdiction 99,210 6,307 105,517 City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2014 147 Federal Pass -Through CFDA Entity Identifying Federal Grantor/Program Number Number Expenditures U.S. Department of Justice: (continued) Direct program: Edward Byrne Memorial Justice Assistance Grant Program 16.738 $ 32,616 Edward Byrne Memorial Justice Assistance Grant Program 16.738 16,817 Edward Byrne Memorial Justice Assistance Grant Program 16.738 12,780 Edward Byrne Memorial Justice Assistance Grant Program 16.738 2,786 Pass-through program from: Governor's Office of Drug Control Policy: Edward Byrne Memorial Justice Assistance Grant Program 16.738 11 -JAG -58470 101,600 166,599 Total U.S. Department of Justice 340,787 U.S. Department of Transportation: Direct program: Airport Improvement Program 20.106 4,500,988 Airport Improvement Program 20.106 493,734 Airport Improvement Program 20.106 28,394 5,023,116 Pass-through program from: Iowa Department of Transportation: Highway Planning and Construction 20.205 BRM -3715(650)--8N-52 315,975 Highway Planning and Construction 20.205 STP -U-3715(637)--70-52 22,658 Iowa Department of Transportation and Metropolitan Planning Organization of Johnson County: Highway Planning and Construction 20.205 14MPO-MPOJC 150,400 489,033 Metropolitan Transportation Planning and State and Non - Metropolitan Planning and Research 20.505 14MPO-MPOJC 39,600 147 Grantor/Program U.S. Department of Transportation: (continued) Direct program: Federal Transit — Formula Grants Transit Services Program Cluster: Pass-through program from: Iowa Department of Transportation: Enhanced Mobility of Seniors and Individuals with Disabilities Job Access and Reverse Commute Program New Freedom Program New Freedom Program Total Transit Services Program Cluster Public Transportation Research City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2014 Federal Pass -Through CFDA Entity Identifying Number Number 20.507 20.513 20.516 20.521 20.521 20.514 Iowa Department of Public Safety: Governor's Traffic Safety Bureau: Alcohol Impaired Driving Countermeasures Incentive Grants 120.601 National Priority Safety Programs Total U.S. Department of Transportation 20.616 148 IA -16-X005-371-14 IA -37-X022-371-13 IA -57-X009-371-14 IA -57-X009-371-13 IA -26-X004-371-12 PAP 13-410, Task 30 PAP 14-405d-M6OT, Task 27 Federal Expenditures $ 1,400,381 119,697 92,881 21,188 10,716 31,904 244,482 243,320 7.457 16,391 7,463,780 City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2014 Federal Pass -Through CFDA Entity Identifying Federal Grantor/Program Number Number Expenditures U.S. Environmental Protection Agency Direct program: Urban Waters Small Grants 66.440 $ 5,926 U.S. Department of Homeland Security: Pass-through program from: Iowa Homeland Security and Emergency Management Division: Disaster Grants — Public Assistance (Presidentially Declared Disasters) 97.036 FEMA DR -4126 -IA 199,874 Disaster Grants — Public Assistance (Presidentially Declared Disasters) 97.036 FEMA DR -4119 -IA 42,572 Disaster Grants — Public Assistance (Presidentially Declared Disasters) 97,036 FEMA DR -4187 -IA 15,292 Disaster Grants — Public Assistance (Presidentially Declared Disasters) 97.036 FEMA -1763 DR -IA 5,667 263,405 Hazard Mitigation Grant 97.039 HMGP-DR-1854-0006 01 33,271 Total U.S. Department of Homeland Security 296,676 Total $ 26,476,667 See Notes to the Schedule of Expenditures of Federal Awards 149 City of Iowa City, Iowa Notes to the Schedule of Expenditures of Federal Awards Year Ended June 30, 2014 Note 1 - Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Iowa City, Iowa, and is presented on the modified accrual basis of accounting for governmental funds and the full accrual basis of accounting for proprietary funds. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. The City received federal awards both directly from federal agencies and indirectly through pass-through entities. Federal financial assistance provided to a subrecipient is treated as an expenditure when it is paid to the subrecipient. Note 2 - Subrecipients Of the federal expenditures presented in the accompanying schedule of expenditures of federal awards, the City provided federal awards to subrecipients as follows: Federal Amount CFDA Provided to Program Title Number Subrecipients Specialty Crop Block Grant Program - Farm Bill 10.170 $ 6,882 Community Development Block Grants/Entitlement Grants 14.218 631,931 Home Investment Partnerships Program 14.239 439,144 Public Safety Partnership and Community Policing Grants 16.710 2,358 Edward Byrne Memorial Justice Assistance Grant Program 16.738 61,548 New Freedom Program 20.521 31,904 150 City of Iowa City, Iowa Schedule of Findings and Questioned Costs Year Ended June 30, 2014 Part I: Summary of the Independent Auditor's Results: Financial Statements Type of auditor's report issued Unmodified Internal control over financial reporting: Material weaknesses identified No Significant deficiencies identified not considered to be material weaknesses None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified No Significant deficiencies identified not considered to be material weaknesses None reported Type of auditors report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133 §.510(a): No Identification of major programs: Name of Federal Program CFDA Number Economic Adjustment Assistance 11.307 Section 8 Housing Choice Vouchers 14.871 Airport Improvement Program 20.106 Dollar threshold used to distinguish between type A and type B programs: $ 794,300 Auditee qualified as low-risk auditee? No Part II: Findings Related to the Financial Statements: There were no findings to report. 151 City of Iowa City, Iowa Schedule of Findings and Questioned Costs Year Ended June 30, 2014 Part III: Findings and Questioned Costs for Federal Awards: There were no findings and questioned costs to report. Part IV: Other Findings Related to Required Statutory Reporting: 2014 -IA -A Certified Budget — Disbursements during the year ended June 30, 2014, did not exceed the amount budgeted. 2014 -IA -B Questionable Expenditures — We noted no expenditures that we believe may fail to meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979. 2014 -IA -C Travel Expense — No expenditures of City money for travel expenses of spouses of City officials or employees were noted. 2014 -IA -D Business Transactions — Business transactions between the City and City officials or employees are detailed as follows: Name, Title, and Transaction Business Connection Description Amount Art Bettis, Spouse of Brenda Nations, Sustainability Coordinator, Landfill Consulting Services 1,500 In accordance with Chapter 362.5(3)0) of the Code of Iowa, the transaction with the Sustainability Coordinator does not appear to represent a conflict of interest since total transaction with the individual did not exceed $1,500 during the fiscal year. 2014 -IA -E Bond Coverage — Surety bond coverage of City officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to ensure the coverage is adequate fot current operations. 2014 -IA -F Council Minutes — No transactions were found that we believe should have been approved in the City Council minutes but were not. 2014 -IA -G Deposits and Investments —No instances of non-compliance with the deposit and investment provisions of Chapters 12B and 12C of the Code of Iowa and the City's investment policy were noted. 2014 -IA -H Urban Renewal Annual Report — The urban renewal annual report was properly approved and certified to the Iowa Department of Management on or before December 1. 2014 -IA -I Revenue Bonds — No instances of non-compliance with the provisions of the City's revenue bond resolutions were noted. 152 City of Iowa City, Iowa Schedule of Findings and Questioned Costs Year Ended June 30, 2014 Part IV: Other Findings Related to Required Statutory Reporting: (continued) 2014 -IA -J Notice of Public Hearing — The notice of public hearing for the Prince Industrial Electric — Project A3457 was published. However, the notice of public hearing was published more than 20 days before the date of the hearing. Recommendation — The notice of public hearing should have been published not less than 4 days and not more than 20 days before the date of the hearing as provided in Chapters 26.12 and 362.3 of the Code of Iowa. Response — Publication dates will be monitored by City staff so that this does not happen in the future. 153 Findings Related to the Financial Statements: There were no findings reported. Findings Related to the Federal Program: There were no findings reported. 154 City of Iowa City, Iowa Corrective Action Plan Year Ended June 30, 2014 There were no prior year federal findings. 155 City of Iowa City, Iowa Summary Schedule of Prior Federal Audit Findings Year Ended June 30, 2014 APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE (This page has been left blank intentionally.) CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Iowa City, State of Iowa (the "Issuer"), in connection with the issuance of $ General Obligation Bonds, Series 2015 (the "Bonds") dated June 2, 2015. The Bonds are being issued pursuant to a Resolution of the Issuer approved on May 5, 2015 (the "Resolution"). The Issuer covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2 - 12(b)(5). SECTION 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Financial Information" shall mean financial information or operating data of the type included in the final Official Statement, provided at least annually by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Business Day" shall mean a day other than a Saturday or a Sunday or a day on which banks in Iowa are authorized or required by law to close. "Dissemination Agent" shall mean the Issuer or any Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation. "Holders" shall mean the registered holders of the Bonds, as recorded in the registration books of the Registrar. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "Municipal Securities Rulemaking Board" or "MSRB" shall mean the Municipal Securities Rulemaking Board, 1900 Duke Street, Suite 600, Alexandria, VA 22314. "National Repository" shall mean the MSRB's Electronic Municipal Market Access website, a/k/a "EMMA" (emma.msrb.org). "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of Iowa. SECTION 3. Provision of Annual Financial Information. (a) The Issuer shall, or shall cause the Dissemination Agent to, not later than two hundred ten (210) days after the end of the Issuer's fiscal year (presently June 30th), commencing with information for the 2014/2015 fiscal year, provide to the National Repository an Annual Financial Information filing consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Financial Information filing must be submitted in such format as is required by the MSRB (currently in "searchable PDF" format). The Annual Financial Information filing may be submitted as a single document or as separate documents comprising a package. The Annual Financial Information filing may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Financial Information filing and later than the date required above for the filing of the Annual Financial Information if they are not available by that date. If the Issuer's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). (b) If the Issuer is unable to provide to the National Repository the Annual Financial Information by the date required in subsection (a), the Issuer shall send a notice to the Municipal Securities Rulemaking Board, if any, in substantially the form attached as Exhibit A. (c) The Dissemination Agent shall: (i) each year file Annual Financial Information with the National Repository; and (ii) (if the Dissemination Agent is other than the Issuer), file a report with the Issuer certifying that the Annual Financial Information has been filed pursuant to this Disclosure Certificate, stating the date it was filed. SECTION 4. Content of Annual Financial Information. The Issuer's Annual Financial Information filing shall contain or incorporate by reference the following: 2 (a) The last available audited financial statements of the Issuer for the prior fiscal year, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under State law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with generally accepted accounting principles, noting the discrepancies therefrom and the effect thereof. If the Issuer's audited financial statements for the preceding years are not available by the time Annual Financial Information is required to be filed pursuant to Section 3(a), the Annual Financial Information filing shall contain unaudited financial statements of the type included in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Financial Information when they become available. (b) A table, schedule or other information prepared as of the end of the preceding fiscal year, of the type contained in the final Official Statement under the captions "City Property Values" and "City Indebtedness". Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been filed with the National Repository. The Issuer shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than 10 Business Days after the day of the occurrence of the event: (1) Principal and interest payment delinquencies; (2) Non-payment related defaults, if material; (3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements relating to the Bonds reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; 3 (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax-exempt status of the Series Bonds, or material events affecting the tax-exempt status of the Bonds; (7) Modifications to rights of Holders of the Bonds, if material; (8) Bond calls (excluding sinking fund mandatory redemptions), if material, and tender offers; (9) Defeasances of the Bonds; (10) Release, substitution, or sale of property securing repayment of the Bonds, if material; (11) Rating changes on the Bonds; (12) Bankruptcy, insolvency, receivership or similar event of the Issuer; (13) The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material. (b) Whenever the Issuer obtains the knowledge of the occurrence of a Listed Event, the Issuer shall determine if the occurrence is subject to notice only if material, and if so shall as soon as possible determine if such event would be material under applicable federal securities laws. (c) If the Issuer determines that knowledge of the occurrence of a Listed Event is not subject to materiality, or determines such occurrence is subject to materiality and would be material under applicable federal securities laws, the Issuer shall promptly, but not later than 10 Business Days after the occurrence of the event, file a notice of such occurrence with the Municipal Securities Rulemaking Board through the filing with the National Repository. SECTION 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in El full of all of the Bonds or upon the Issuer's receipt of an opinion of nationally recognized bond counsel to the effect that, because of legislative action or final judicial action or administrative actions or proceedings, the failure of the Issuer to comply with the terms hereof will not cause Participating Underwriters to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the Issuer. SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Section 3(a), 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) The amendment or waiver either (i) is approved by the Holders of the Bonds in the same manner as provided in the Resolution for amendments to the Resolution with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Issuer shall describe such amendment in the next Annual Financial Information filing, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5 5(c), and (ii) the Annual Financial Information filing for the year in which the change is made will present a comparison or other discussion in narrative form (and also, if feasible, in quantitative form) describing or illustrating the material differences between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Financial Information filing or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Financial Information filing or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Certificate to update such information or include it in any future Annual Financial Information filing or notice of occurrence of a Listed Event. SECTION 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Certificate. Direct, indirect, consequential and punitive damages shall not be recoverable by any person for any default hereunder and are hereby waived to the extent permitted by law. A default under this Disclosure Certificate shall not be deemed an event of default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. 6 Date: day of , 2015. ATTEST: City Clerk CITY OF IOWA CITY, STATE OF IOWA 7 Mayor NOTICE TO NATIONAL REPOSITORY OF FAILURE TO FILE ANNUAL FINANCIAL INFORMATION Name of Issuer: City of Iowa City, Iowa. Name of Bond Issue: $ General Obligation Bonds, Series 2015 Dated Date of Issue: June 2, 2015 NOTICE IS HEREBY GIVEN that the Issuer has not provided Annual Financial Information with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Certificate delivered by the Issuer in connection with the Bonds. The Issuer anticipates that the Annual Financial Information will be filed by Dated: day of CITY OF IOWA CITY, STATE OF IOWA By: Its: 01100836-1\10714-119 OFFICIAL BID FORM TO: City Council of Sale Date: May 5, 2015 City of Iowa City, Iowa 10:00 o'clock A.M. Central Time RE: $7,785,000* General Obligation Bonds, Series 2015 (the "Bonds") For all or none of the above Bonds, in accordance with the NOTICE OF BOND SALE and TERMS OF OFFERING, we will pay you $ (not less than $7,718,828) plus accrued interest to date of delivery for fully registered Bonds bearing interest rates and maturing in the stated years as follows: Coupon Maturity Coupon Maturity 2016 2021 2017 2022 2018 2023 2019 2024 2020 2025 Preliminary; subject to change. The aggregate principal amount of the Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $8,800,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Bonds may be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. We hereby designate that the following Bonds to be aggregated into term bonds maturing on June 1 of the following years and in the following amounts (leave blank if no term bonds are specified): Years Aggregated Maturity Year Aggregate Amount through through through through In making this offer we accept all of the terms and conditions of the NOTICE OF BOND SALE and TERMS OF OFFERING published in the Preliminary Official Statement dated April 21, 2015. In the event of failure to deliver these Bonds in accordance with the TERMS OF OFFERING as printed in the Preliminary Official Statement and made a part hereof, we reserve the right to withdraw our offer. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: TRUE INTEREST COST: Account Manager: Account Members: (Calculated to the dated date of June 2, 2015) By: The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Iowa City, Iowa this 5th day of May 2015. Attest: By: Title: Title: CITY OF IOWA CI UNESCO CITY OF LITERAT Sustainabili Report Prepared by the City of Iowa City Office of Sustainability Servic Spring 2015 Sustainability in social well-being: The Ped Mall in Downtown Iowa City, a public outdoor gathering space 'Ihe City of Iowa City is committed to improving quality of life through sustainability practices that promote social well-being, environmental health, and economic stability. the City Council identified sustainability and inclusivity as overarching goals in its most recent strategic plan, and this report summarizes our 2014 sustainability highlights, as well as initiatives that will be undertaken in 2015. Sustainability in waste reduction: East Side Recycling Center's Environmental Education Center, a place to practice and learn Sustainability in food initiatives: Farmers Markets Learn more! To learn more about Iowa City's sustainability efforts: Visit our website at www.icgov.org/sustainability Follow us on Twitter at @CityofIowaCity and #SustainableIC Friend us on Facebook at www.facebook.com/CityoflowaCity CD N E U 1, sy9�o x.11 I o 6�1E Ee ,E E o a o Illi 2 vi cs� v o d u o c s j o �.,O"o—u, 11I vi cs� o c N c a a e w c =vee �Lo v ��c 5c Y ✓ P j N !' _ O W s H o T y � H i vi cs� o c 3 � c SG�oUJ ��c 5c 0 L O N 7 N s H o T y City of Iowa City Sustainability Initiatives for 2015 STAR Community Rating System Iowa City joined the STAR Community Leadership Program in March, 2015. This is the first national certification program to recognize sustainable communities. This year-long program will allow Iowa City to evaluate measures which define community -scale sustainability and present a vision of how communities can become more healthy, inclusive, and prosperous across seven goal areas. Local Foods Initiative 4 With the success of the Downtown Farmers Market and the community's passion for local foods, the City has developed new local food initiatives. Some of these include: ► The City's new Chadek Green Park opened in April 2015, and will become home to 36 new garden plots for rhe com- munity. ► The City is helping to determine the feasibility of a Food Enterprise Center, which will fpcus on aggregating and dis- tributing locally sourced food and other community ventures. ► The Parks Department is working with Blue Zoncs to develop a neighborhood garden policy that would provide as- sociations or organizations with garden spaces in neighborhood°`parks. Unlike traditional community gardens, no plots would be sold, thereby significantly reducing administrative overhead. All maintenance responsibilities, except for be- fore- and after -season preparations, would be left to the participating neighborhood groups. Waste Reduction Projects In 2014, Iowa City added more items to the list of recyclables for the curbside recycling program and piloted a food waste reduction program. The feasibility of a multi -family recycling mandate is currently under review, and a sf,,ingle recycling pro- gram is being initiated at the Landfill. In addition to these programs, the City received a grant for a "Big'belly" solar -powered trash and recycling compactor pilot in the Downtown area. Energy and Greenhouse Gas Reduction Iowa City has many energy and greenhouse gas reduction plans beginning this year, including a climate adaptation report, changing all streetlights to LED lighting, possible solar panel installation for Ciry-owned buildings, and plans for electric vehicle charging stations. The City also continues to work on energy reduction in City -owned facilities, and TIF -funded projects are now being held to a higher sustainability standard. Bike Share Program The University of Iowa has partnered with the City and has been awarded a grant for the purchase of bike rental stations to be placed around Downtown Iowa City and the University of Iowa campus. Installation of these rental stations are proposed for the spring of 2016 to increase opportunities for alternative modes of transportation. Updated Complete Streets Policy The City is updating its adopted Complete Streets Policy to better articulate the goals and objectives for future improve- ments for pedestrians, cyclists, transit riders, and persons with disabilities. Completion of the policy update is expected in 2015. Other upcoming projects include multiple road diets, more bike lanes, the installation of a pedestrian bridge on Dubuque Street to connect bike trails, and additional street projects scheduled on Sycamore Street, 1st Avenue, and Mor- mon Trek Boulevard. CITY OF IOWA CITY SUSTAINABILITY SERVICES Brenda Nations, Sustainability Coordinator I 319-S87-6161 I brenda-nations@iowa-city.org Follow our progress at: www.icgov.org/sustainability @CityoflowaCity and #SustainableIC www.facebook.com/CityoflowaCity 04-23-15 IP6 � r ,0 CITY OF IOWA CITY 410 East Washington Street Iowa City. Iowa 52240-1826 (3 19) 356-5000 (3 19) 356-5009 FAX www. icgov.org April 16, 2015 TO: The Honorable Mayor and the City Council RE: Civil Service Entrance Examination — Records Technician Under the authority of the Civil Service Commission of Iowa City, Iowa, I do hereby certify the following named person(s) as eligible for the position Records Technician. Katherine Droll IOWA CITY CIVIL SERVICE COMMISSION Lyra . Dickerson, Chair � r 1 IP7 ft 'I CITY OF IOWA CITY 410 East Washington Street Iowa City, Iowa 52240-1826 (3 19) 356-5000 (319) 356-5009 FAX www.icgov.org April 14, 2015 TO: The Honorable Mayor and the City Council RE: Civil Service Entrance Examination — Systems Engineer Under the authority of the Civil Service Commission of Iowa City, Iowa, I do hereby certify the following named person(s) as eligible for the position Systems Engineer. Benjamin Toland IOWA CITY CIVIL SERVICE COMMISSION Lyra W. Dickerson, Chair IP8 Business Name Occupancy (occupancy loads last updated Oct 2008) = University of Iowa Monthly Totals Bar Checks Under2l I PAULA Prev 12 Month Totals Bar Checks Under2l PAULA Under2l PAULA Ratio Ratio (Prev 12 Mo) (Prev 12 Mo) 2 Dogs Pub 120 3 0 0 12 0 0 0 0 Airliner 223 1 0 0 31 7 9 0.2258065 0.2903226 American Legion 140 1 0 0 4 0 0 0 0 Atlas World Grill 165 0 0 0 Bardot Iowa 1 0 0 8 1 0 0.125 0 Baroncini— 0 0 0 Basta 176 0 0 0 Blackstone— 297 0 0 0 Blue Moose— 436 2 1 0 46 1 1 0.0217391 0.0217391 Bluebird Diner 82 0 0 0 Bob's Your Uncle 260 0 0 0 Bo -James 200 0 0 0 16 0 0 0 0 Bread Garden Market & Bakery 0 0 0 Brix 0 0 0 Brothers Bar & Grill, [It's] 556 9 0 1 164 20 29 0.1219512 0.1768293 Brown Bottle, [The]— 289 0 0 0 Buffalo Wild Wings Grill & Bar— 189 0 0 0 1 0 0 0 0 Cactus Mexican Grill 0 0 0 Caliente Night Club 498 0 0 0 6 0 0 0 0 (Carl & Ernie's Pub & Grill 92 1 0 0 4 0 0 0 0 ICarlos O'Kelly's— 299 0 0 0 IChili Yummy Yummy Chili 0 0 0 IChipotle Mexican Grill 119 0 0 0 (Clarion Highlander Hotel 0 0 0 (Clinton St Social Club 1 0 0 5 0 0 0 0 ]Club Car, [The] 56 0 0 0 Thursday, April 16, 2015 Page 1 of 5 Business Name Occupancy (occupancy loads last updated Oct 2008) = University of Iowa Monthly Totals Bar Checks Under2l PAULA Prev 12 Month Totals Bar Checks Under21PAULA Under 21 PAULA Ratio Ratio (Prev 12 Mo) (Prev 12 Mo) Coach's Corner 160 0 0 0 5 0 0 0 0 Colonial Lanes- 502 0 0 0 Dave's Foxhead Tavern 87 0 0 0 10 0 0 0 0 DC's 120 13 2 2 143 46 14 0.3216783 0.0979021 Deadwood, [The] 218 0 0 0 28 0 0 0 0 Devotayy- 45 0 0 0 Donnelly's Pub 49 0 0 0 4 0 0 0 0 Dublin Underground, [The] 57 1 0 0 11 0 0 0 0 Eagle's, [Fraternal Order of] 315 0 0 0 Eden Lounge 0 0 0 13 0 0 0 0 EI Banditos 25 0 0 0 EI Cactus Mexican Cuisine 0 0 0 EI Dorado Mexican Restaurant 104 0 0 0 EI Ranchero Mexican Restaurant 161 0 0 0 Elks #590, [BPO] 205 0 0 0 Englert Theatre- 838 0 0 0 Fieldhouse 178 12 4 0 104 18 6 0.1730769 0.0576923 FilmScene 0 0 0 1 0 0 0 0 First Avenue Club- 280 0 0 0 10 0 2 0 0.2 Formosa Asian Cuisine- 149 0 0 0 Gabes- 261 0 0 0 19 0 0 0 0 George's Buffet 75 0 0 0 17 0 0 0 0 IGivanni's- 158 0 0 0 1 Godfather's Pizza 170 0 0 0 (Graze- 49 0 0 0 IGrizzly's South Side Pub 265 7 0 0 31 0 0 0 0 Thursday, April 16, 2015 Page 2 of 5 St Business Name Occupancy (occupancy loads last updated Oct 2008) = University of Iowa Monthlv Totals Bar Under2l PAULA Checks Prev 12 Month Totals Bar Under2l PAULA Checks Under2l PAULA Ratio Ratio (Prev 12 Mo) (Prev 12 Mo) Hilltop Lounge, [The] 90 7 0 0 32 0 0 0 0 Howling Dogs Bistro 0 0 0 IC Ugly's 72 4 0 0 39 0 0 0 0 India Cafe 100 0 0 0 Iron Hawk 0 0 0 1 0 0 0 0 Jimmy Jack's Rib Shack 71 0 0 0 Jobsite 120 11 0 0 41 0 0 0 0 Joe's Place 281 2 0 0 46 0 0 0 0 Joseph's Steak House— 226 0 0 0 Linn Street Cafe 80 0 0 0 Los Portales 161 0 0 0 Martini's 200 6 0 0 70 37 10 0.5285714 0.1428571 Masala 46 0 0 0 Mekong Restaurant— 89 0 0 0 Micky's— 98 0 0 0 7 0 0 0 0 (Mill Restaurant, [The]— 325 0 0 0 1 0 0 0 0 Moose, [Loyal Order of] 476 0 0 0 I Motley Cow Caf6— 82 0 0 0 Noodles & Company— 0 0 0 IOkoboji Grill- 222 0 0 0 1Old Capitol Brew Works 294 0 0 0 Ione -Twenty -Six 105 0 0 0 (Orchard Green Restaurant— 200 0 0 0 1 Oyama Sushi Japanese Restaurant 87 0 0 0 1 Pagliai's Pizza— 113 0 0 0 I Panchero's (Clinton St)— 62 0 0 0 Thursday, April 16, 2015 Page 3 of 5 FV E C C C C C C C C C C E E C C E E C C C E E C C C C Business Name Occupancy (occupancy loads last updated Oct 2008) = University of Iowa Monthiv Totals Bar Checks Under2l PAULA Prev 12 Month Totals Bar Under2l PAULA Checks -- Re's Under2l PAULA Ratio Ratio (Prev 12 Mo) (Prev 12 Mo) Panchero's Grill (Riverside Dr)- 95 0 0 0 Pints 180 9 1 0 72 14 1 0.1944444 0.0138889 Pit Smokehouse 40 0 0 0 Pizza Arcade 0 0 0 1 0 0 0 0 Pizza Hut- 116 0 0 0 Players 114 0 0 0 Quinton's Bar & Deli 149 0 0 0 12 0 0 0 0 Rice Village 0 0 0 Ride 0 0 0 1 0 0 0 0 Ridge Pub 0 0 0 Riverside Theatre- 118 0 0 0 Saloon- 120 0 0 0 2 0 0 0 0 Sam's Pizza 174 0 0 0 ISanctuary Restaurant, [The] 132 0 0 0 Shakespeare's 90 8 0 0 17 0 0 0 0 (Sheraton 0 0 0 1 0 0 0 0 IShort's Burger & Shine- 56 1 0 0 1 0 0 0 0 (Short's Burger Eastside 0 0 0 Sports Column 400 9 4 0 106 24 21 0.2264151 0.1981132 Studio 13 206 1 0 0 18 0 0 0 0 Summit. [The] 736 9 9 1 110 52 44 0.4727273 0.4 Sushi Popo 84 0 0 0 Szechuan House 0 0 0 ITakanami Restaurant- 148 0 0 0 ITaqueria Acapulco 0 0 0 ITCB 250 8 0 0 73 0 0 0 0 Thursday, April 16, 2015 Page 4 of 5 P C C C C C E E E C C C `";Y�`^lJ:'.b► "#".!►'+:"cs`'...nwIYr��l: Business Name Occupancy Monthly Totals Prev 12 Month Totals Under2l PAULA (occupancy loads last updated Oct 2008) = University of Iowa Bar Under2l PAULA Checks Bar Under2l PAULA Checks Ratio Ratio (Prev 12 Mo) (Prev 12 Mo) Thai Flavors 60 0 0 0 Thai Spice 91 0 0 0 Times Club @ Prairie Lights 60 0 0 0 Trumpet Blossom Cafe 94 0 0 0 Union Bar 854 10 6 0 132 23 41 0.1742424 0.3106061 VFW Post #3949 197 0 0 0 Vine Tavern, [The] 170 1 0 0 14 12 2 0.8571429 0.1428571 Wig & Pen Pizza Pub- 154 0 0 0 (Yacht Club, [Iowa City]- 206 1 0 0 23 0 1 0 0.0434783 (Yen Ching 0 0 0 IZ'Mariks Noodle House 47 0 0 0 139 27 4 1513 255 181 0.1685393 0.1196299 Totals Off Premise 0 0 6 0 0 139 0 0 Grand Totals 10 320 * includes outdoor seating area exception to 21 ordinance Thursday, April 16, 2015 Page 5 of 5 M IOWA CITY TELECOMMUNICATIONS COMMISSION DRAFT MONDAY, MARCH 23,2015--5:30 P.M. CITY CABLE TV OFFICE, 10 S. LINN ST. -TOWER PLACE PARKING FACILITY MEMBERS PRESENT: Alexa Homewood, Nick Kilburg, Bram Elias, Laura Bergus, Matt Butler MEMBERS ABSENT: STAFF PRESENT: Ty Coleman, Mike Brau OTHERS PRESENT: Josh Goding, Bond Drager SUMMARY OF DISCUSSION Coleman reported the City Channel 4 live stream is now available in a format that is accessible on tablets and iPhones. Homewood said that Coleman sent an email earlier to Commissioners with some updates to the proposed PATV contract. Coleman said the draft contract is now being reviewed by the City Manager's office. The legal department has reviewed the contract and made some suggestions.. The section that had dealt with renewal has been altered to reflect the elimination of funding but allows for use of existing resources. This section has not been approved by the City Manager's office. Once PATV and the City Manager's office have approved the form of the contract it will be made available to the public. Several members of the Commission have been involved in the process of reviewing the draft contract. It appears the contract is on track to get before the city council by the end of April. The Commission agreed that they wished to send a letter and minutes of the PATV public comment meeting to the city council urging approval of the contract prior to the city council meeting at which the contract is addressed. Brau reported that a first draft of the local access channel was included in the meeting packet. More analysis and context will be added shortly. APPROVAL OF MINUTES Bergus moved and Kilburg seconded a motion to approve the amended February 23, 2015 minutes. The motion passed unanimously. ANNOUNCEMENTS OF COMMISSIONERS None. SHORT PUBLIC ANNOUNCEMENTS None. CONSUMER ISSUES Homewood noted the complaint report in the meeting packet and that all issues were resolved. MEDIACOM REPORT Coleman said Mediacom informed him that they had nothing to report. LOCAL ACCESS CHANNEL REPORTS Homewood noted that PATV sent a report to Commissioners by email and the City Channel had a report in the meeting packet. Coleman report the City Channel 4 live stream is now available in a format that is accessible on tablets and iPhones. PATV CONTRACT Homewood said that Coleman sent an email earlier to Commissioners with some updates to the proposed PATV contract. Coleman said the draft contract is now being reviewed by the City Manager's office. The legal department has reviewed the contract and made some suggestions. The section that had dealt with renewal has been altered to reflect the elimination of funding but allows for use of existing resources. This section has not been approved by the City Manager's office. Once PATV and the City Manager's office have approved the form of the contract it will be made available to the public. Several members of the Commission have been involved in the process of reviewing the draft contract. It appears the contract is on track to get before the city council by the end of April. The Commission agreed that they wished to send a letter and minutes of the PATV public comment meeting to the city council urging approval of the contract prior to the city council meeting at which the contract is addressed. LOCAL ACCESS CHANNEL SURVEY Brau reported that a first draft was included in the meeting packet. More analysis and context will be added shortly. ADJOURNMENT Kilburg moved and Homewood seconded a motion to adjourn. The motion passed unanimously. Adjournment was at 6:55 p.m. Re spectfully submitted, Michael Brau Cable TV Administrative Aide IOWA CITY TELECOMMUNICATIONS COMMISSION SPECIAL MEETING MONDAY, MARCH 23,2015--5:30 P.M. PUBLIC LIBRARY MEETING ROOM A MEMBERS PRESENT: Alexa Homewood, Nick Kilburg, Bram Elias, Laura Bergus, Matt Butler MEMBERS ABSENT: STAFF PRESENT: Ty Coleman, Mike Brau PUBLIC COMMENTS ON PATV PERFORMANCE Mathew Wiegard said he has made use of PATV's services for 20 years beginning when he was 16 years old. The skills he acquired at PATV gave him the confidence to pursue a degree at the University of Iowa in cultural anthropology where he is engaged in making ethnographic videos. The quality of public access opportunities is one of the things that makes Iowa City unique and contributes to the quality of life enjoyed here. PATV staff are very helpful and do a very good job. Judy Worth said she is a social worker working with people with disabilities at University Hospitals in partnership with Goodwill and the Iowa City Community School District for the "Career Connections" program. "Career Connections" has developed a relationship with PATV in which at risk and students with disabilities can learn video productions skills at PATV. The staff at PATV is very patient and helpful. - The caliber of the equipment is quite good. The job skills and social skills the students learn help them develop and grow as independent individuals. Worth said she also works with the animal shelter and has collaborated with PATV staff to produce a training video for them. The people who utilize PATV are making valued contributions to the community. Rene Paine said PATV brings rich and diverse voices to the community. PATV is a valuable enterprise that allows community members to learn and share. Every effort should be made to sustain PATV as a community resource. Ronnie Jacobs with the Steam Room Fab Lab said PATV staff is very tolerant and do a remarkable job. The Fab Lab enables community members to take and idea and create a product for their own use or to build a business. PATV was one of the first organizations he sought out to partner with. Both seek to give people a place with the tools and education to enable their ideas to come into fruition. PATV is a community resource that the Steam Room wishes to model itself upon. David Supp-Montgomerie said PATV is more than a media organization—it is a hub of our community. Supp-Montgomerie said he moved to Iowa City a little over a year ago to teach in the University of Iowa Communications Studies Department and was referred to PATV as an organization that could help him interface with other community organizations. With the assistance of PATV staff Supp-Montgomerie's "Media and Democracy" class has produced public service announcements for 10 local organizations. Tom Nothnagel said he has worked with PATV since its creation. He has produced over 1000 programs and during that time has processed hundreds of interns and volunteers. Over the yeas he has seen many people of all ages, nationalities, and abilities gain experience in media. PATV is an important community resource. Nothnagel is the president of the PATV board and noted that PATV is well managed. PATV is frugal. PATV is working to reinvent itself over the next three years in preparation for the expiration of the timeframe in which they receive funding from Mediacom. Paul Meyer said he has been working with PATV for only a short time and is interested in the types of programs and content that serves the larger community that will not be produced on commercial television. There are topics such as domestic violence or eastern European politics that are going to offend someone who is a sponsor of that program. A public access channel provides venue for news programs or discussion programs that can deal with topics that will not be discussed in the mainstream media. Tom Gilsenn said PATV is an important community partner for Up Town Bill's, which he manages. PATV has strengthened and expanded their work in numerous ways. In addition to PATV recording and playing back numerous performances that were held at Uptown Bill's, they helped them on a program called "Hello, It's Us." PATV is a great gift in the community. Holly Berkowitz said she has been a producer at PATV for about 20 years. The staff at PATV does a great job. PATV has helped her grow as a person in a number of ways. Pasi Jouhikainen said when he came from Finland 20 years ago PATV served as the first place where became engaged in the community. PATV is unusual in the quality of its equipment, the range of activities one can become engaged, and the level of expertise of the staff. Jouhikainen has visited cities 10 times the size of Iowa City that don't have public access services nearly as good as those at PATV. PATV provides an equal opportunity for all community members. While technology has made it easy for someone to shoot a video on a cell phone and use a computer to upload it to YouTube, there is still a cost associated with the equipment to do so. While PATV does charge dues for membership, that cost can be earned by volunteering time. PATV offers an opportunity for users to develop tangible, marketable skills. PATV helps make Iowa City is a richer community. Alan Stroh said the mass media has been undergoing corporate consolidation concentrating more and more power as well as more control over the message and content. Those at the top have the ability to instantly transmit their point of view in a mass way. People do not have a sophisticated way to present their messages—that's where PATV comes in. The modern television studio is the equivalent of the printing press. Iowa City has access to a modern studio. That is rare and takes a sacrifice on part of the community. PATV gives a voice to the voiceless. Ava Su Gum -Wei (sp?) said PATV enables community members to express themselves. PATV enhances community communication and promotes education. Bill Albert said that he has been a producer for 4 years. Iowa City is proud to be a "City of Literature". Now days literature includes film and video. Iowa City should be proud of the rich community of literature of the spoken word and theater. PATV provides one more part of the "City of Literature" and it should be preserved. James Minims said he is a member of the PATV staff. Until other speakers mentioned it, he had not considered all the communities PATV serves. Among those are youth from the Neighborhood Centers, boy scouts and cub scouts, the City Recreation Department's summer camps, disabilities groups, over 30 different religious organizations, artist and musicians, the Iowa City Community School District, and Arabs and Muslims. These voices will only find a voice on a public access channel. PATV is a valuable resource for the city. Ray Pearson said that PATV has a good staff and good producers. It is important for community for PATV to continue to provide service. Pearson said he is a minister and has worked with PATV for about 5 years. The programs produced have an effect in the community. There are many people who cannot get out to go to church and PATV fills that need. .Lyle Harris said he started working with PATV in 1990. His first program was a children's program produced by children. The children were involved in all aspects of the program and at one point even interviewed the president of the University of Iowa. PATV was a positive influence in those kids lives and contributed to their later success. Harris said his work at PATV helped him overcome his shyness. Harris also produced a talk show for adults. PATV has made a positive impact in many kid's lives and should be maintained. Marc Bauer said he is an intern at PATV. His learning experience at PATV is invaluable and would not be available in many other places. PATV enables many voices be heard that would not otherwise. Megan Hopkins said is an intern at PATV for a few weeks and has already learned many new skills. The impact PATV has in the community and with its clients is easy to see. Homewood thanked everyone for their input. ADJOURNMENT Homewood moved and Kilburg seconded a motion to adjourn. The motion passed unanimously. Adjournment was at 6:30 p.m. Respectfully submitted, �� V'-` Michael Brau Cable TV Administrative Aide 1715 Rochester Court Iowa City, IA 52245-3241 March 20, 2015 Iowa City Telecommunications Commission c/o Ty Coleman 410 E. Washington St. Iowa City, IA 52240 To whom it may concern: I am writing to support Iowa City's public access television station (channel 18). The station provides services that are unavailable through other video outlets. As a handicapped person, I appreciate the fact that it has programs for and produced by the disabled. Terry Cunningham is one of my heroes. I have produced several independent programs that I have submitted to PATV, and I deeply appreciate the public exposure that the channel has provided the organizations for which the videos were produced. I also appreciate the interactive nature of some of the programs, specifically "Tom's Guitar Show." It is definitely unique. Although I have never availed myself of its services, I have friends and acquaintances who use the station's equipment and have been trained by PATV personnel. I urgently beseech the Telecommunications Commission to continue to support Iowa City's PATV. Sincerely, Joseph Brisben PATV is the voice of the voiceless I cannot imagine our democracy in the absence of Public Access Television. Our freedom and its pure democratic practice never before needed the role of PATV more than it needs it now. PATV proved to be a protective shield of the First Amendment against tyranny and censorship since its beginning in the '70s. Through this form of noncommercial massmedia, the general public is invited to create content television programming which is narrowcast through cable TV specialty channels. During the last two decades, the democratic climate of our politics and socioeconomics have become more vulnerable to the germs of partisanship and the subjectivity of the narrow- mindedness that it reflects. Meanwhile, PAN remains able to offer those who have no voice in the national discourse a podium for their free expression. I have enjoyed the support and help that I receive from the devoted group of PATV staff and volunteers; those who spend hours and hours working either for minimal wage or no compensation at all. Our team at the education service of the PATV has been on the air for more than 20 years serving more than 13,000 area students. Without the help we get at PATV, we would have never been able to produce one episode of our successful program, "Education Exchange." As I write this to the leaders who will decide the fate of this indispensable service, I hope you not only will keep PATV alive, but also help it expand and take it to the next step of more effective contributions to our social diversity and our democratic communitydiscourse. Han! Elkadi Iowa City Subject: Fwd: Letter of Support Date: Monday, March 23, 2015 at 12:52:21 PM Central Daylight Time From: contact@patv.tv To: Ixhomewood77@gmail.com, Ty-Coleman@iowa-city.org ----- Forwarded message from ericalynn.blair@gmail.com ----- Date: Tue, 17 Mar 2015 10:43:41 -0500 From: Erica Blair rn> Subject: Letter of Support To: contactepatv.ty Hello PATVers, Below is my letter of support that you may present at the City Council meeting on March 23. 1 love you guys! Erica Dear City Council Members, I'm writing in support of renewing PATV`s agreement with the City through 2018. PATV is an incredible resource to Iowa City. it provides training for a number of media equipment and software, promotes creativity, and gives voice to anyone and everyone in our community. Last summer, when I needed to complete a video project but had no equipment, I turned to PAN. It was amazing to have easy access to professional cameras and editing software, and the staff was knowledgable and eager to help. Because I was able to complete the project, I've since landed several other video projects. PAN has truly helped me on my career path. I feel profound comfort and pride knowing that PAN is in this community, offering so many opportunities for learning and creativity and giving people access to one of the most important tools we have for communication and democracy. Please renew PATV's agreement with the City. Thank you, Erica Blair 427 Clark Street Iowa City, IA 52240 ----- End forwarded message ----- Subject: RAN Recommendation Date: Monday, March 23, 2015 at 9:37:08 PM Central Daylight Time From: Kirk Phillips To: ty-coleman@iowa-city.org Thanks Ty, for accepting this opportunity to write in support of PATV's continued contract with Iowa City. attended your hearing today, but deferred to others who spoke so eloquently about the PAN services for our community. My own comments are based on three types of experience: - As a volunteer with St. Mary's Catholic Church, I worked with PAN staff some time ago to design best processes for recording and airing our services weekly, to many members of our community that can't get to church. We and they truly appreciate the availability of this broadcast. - During the past few months I completed training as a producer, use of their cameras, and editing which will support my producing a documentary about the restoration of our organ at St. Mary's. Their staff are highly skilled in producing, as well as training people like me as I ride a steep learning curve. - As a viewer, I continue to enjoy broadcasts from PAN, particularly the Journey series, Tom's guitar show, and many more. As speakers noted today, the PATV enriches our community with content that cannot be seen on commercial stations. PATV is truly a treasure for Iowa City. welcome your call to my home at (319) 430-9566 or email reply, if I can clarify this strong support for continuing PAN services. Kirk T. Phillips Subject: public tv Date: Wednesday, March 18, 2015 at 10:38:34 AM Central Daylight Time From: Charity Rowley To: ty-coleman@Iowa-city.org Please keep these sources of information open to all of us, especially those of us are not as able to get out to receive these kinds of information! Charity Rowley Oaknoll Residence Iowa City Subject: PAN Comments for Telecommunications Committee Date: Thursday, March 19, 2015 at 2:47:50 PM Central Daylight Time From: Tom Carsner To: ty-coleman@iowa-city-org To the Telecommunications Committee: PAN continues to do a great public service by televising, editing, and rebroadcasting a variety of events by non-profit groups in Iowa City. In the past year I was involved in taping a session with a County Supervisor candidate; taping candidate forums, and broadcasting Sierra Club and Ecopolis events. Sometimes PAN did the taping and editing; sometimes other groups did this. PAN plays a critical role in keeping community and county citizens informed about issues important for public discussion. Tom Carsner 319-338-9335 carsner@mchsi.com Shelter douse March 20, 2015 Iowa City Council 410 E Washington Street Iowa City IA 52240 Dear Iowa City Council, Opening Doors I am writing to encourage you to renew the Agreement for PAN to provide public access services through 2018. PAN has been indispensable for me, Shelter House, and the Fairweather Lodge. Without PATV's help, our organization would not have access to the materials or training needed to create an informational video about the programs we have available. Our current project will be used to inform those who are in need of permanent housing and mental health services about the resources we have available. It is a project that serves an important role in providing an opportunity for individuals in need in the community of Iowa City. PAN provides support to programs like ours, and therefore is a major part of creating positive change in the greater Iowa City community. Thank you for partnering with such an honorable organization. Sincerely; MacKenzie Bih) Fairweather Lodge Marketing AmeriCorps VISTA P.O. Box 3146 Shelter House is a tax exempt 501(c)(3) organization. Asa partner agency of the United Iowa Ci, IA 52244-3146 Way of Johnwn County, we have successfully met all local membership accountability , standards in finance, ethics, governance, and diversity. 319.351-0326 United Way of Johnson County Subject: PAN Date: Saturday, March 21, 2015 at 5:50:06 PM Central Daylight Time From: hhart2@mac.com To: ty-coleman@iowa-city.org I read that the city is asking for public input regarding PATV-Chanel 18. 1 want to register enthusiastic support for: PAN is one of Iowa City's most valuable resources: it offers a wide range of well -produced, interesting and informative programming, along with the opportunity for the pubic to learn production and crate programming. Over the years a number of excellent programs have been offered, both local and a few "imported." As the city moves forward in determining which of its channels to preserve - I hope all will be retained, but most importantly, PAN provides a service that is unique. As fewer outlets are available for local programming and information PAN has continued to offer good quality programs. Holly Hart P O Box 2473 Iowa City, IA 52244 Subject: PAN renewal support letter Date: Monday, March 23, 2015 at 12:19:28 PM Central Daylight Time From: Esther Baker To: ty-coleman@iowa-city.org Dear Mr. Coleman, I have attached a letter in support of renewing the city's agreement with PAN. I believe PATV provides a vital service to the citizens of Iowa City, and I hope you will enter my letter into the record. Thank you, Esther Baker Esther Baker, MBA, MAIE:xecutive Director Girls on the Run of Eastern Iowa IPO Box 32221 Iowa City, lA 52244 www girisontheruniowa or4lPhone., 319.359.8067 J A `L March 23, 2015 Iowa City Telecommunications Commission c/o Ty Coleman 410 E. Washington Iowa City, IA 52240 Dear Members of the Iowa City Telecommunications Commission: I am writing in support of Iowa City's PATV. While public -access television may seem out of fashion in this era of YouTube and phone videos, PATV still plays an extremely vital role in our community. As Executive Director of Girls on the Run of Eastern Iowa, a non-profit, positive youth development program aimed at girls in 3rd -6m grade throughout Johnson County, I have directly benefited from the existence of PATV in Iowa City. I had the good fortune of being given the opportunity to appear on PATV's "Live and Local" program on December 3. My board chairperson and I had an unprecedented half-hour program devoted solely to our organization, a rare opportunity for us to really talk in-depth about our organization and the many ways in which our program transforms the lives of young girls rather than the usual sound bite that we might get from a brief story on a broadcast station's news program. PATV serves as an important resource for members of the community to exercise their rights to free speech, providing a public forum that people otherwise would not have at their disposal to talk about organizations, causes, and points of view that are important to them and contribute to the diversity of our public conversation. It also provides a platform for people to create original content that doesn't exist anywhere else. While anyone can post an amateur video to YouTube, PATV provides an opportunity for the development of creative content using professional -quality production standards and equipment Further, many older citizens prefer to get their information via traditional media outlets as opposed to the Internet and many lower-income individuals do not have access to the Internet in their homes, while they are more likely to have at least basic cable access. Finally, PATV serves as a crucial training ground for individuals wanting to hone their professional skills in the area of video production, on -air announcing, script development, etc. Few opportunities like this exist in most communities. My own early career in broadcasting was kick-started in part by my involvement in a public -access television program while in college in East Lansing, Ml. Thank you for your consideration. I hope you will recognize the vital role PATV plays in the community and will renew the agreement with PATV to provide this important community service to the Iowa City area. Respectfully, Esther Baker, MBA, MA Executive Director Girls on the Run of Eastern Iowa PO Box 3222 Iowa City, IA 52244 www.girlsontheranioWa.org Subject: Public Access TV Comment Date: Wednesday, March 25, 2015 at 9:15:22 PM Central Daylight Time From: MurphyGeerdes To: ty-coleman@iowa-city.org Iowa City has great Public Access TV. In addition to City Council meetings being televised, please consider also televising the Economic Development Committee (of IC Council) meetings. Thanks. Mary Mary Murphy 890 Park Place Iowa City, Iowa 52246 3191400-7464 mg94250mchsl. com TELECOMMUNICATIONS COMMISSION 12 MONTH ATTENDANCE RECORD (X) = Present (0) = Absent (O/C) = Absent/Called (Excused) Elias Ber us Kilburg Butler Homewood 2/24/14 X X X 0 0 3/24/14 X X X X X 6/2/14 0 X X X X 6/23/14 0 X X X X 7/28/14 0 x x x O/c 8/25/14 X X X X X 9/22/14 X X X X o/c 10/27/14 X X o/c o/c X 11/24/14 O/C O/C X X X 1/26/15 X X X X x 2/10/15 X X X o/c X 2/23/15 x x x x X 3/23/15 X X X X x (X) = Present (0) = Absent (O/C) = Absent/Called (Excused)