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HomeMy WebLinkAbout1988-07-26 Info PacketCity of Iowa City MEMORANDUM DATE: July 21, 1988 TO: City Council FROM: City Manager RE: HUD Review Attached is the annual HUD review of our COBG and related programs. Two minor findings are noted and will be corrected to meet federal requirements. 9 RE CE IV ED JUN 221988 a' U.S. Department of Housing and Urban Development 4•''� • Omaha Office. Region VII Braiker/Brandeis Building ..... 210 South 16th Street Omaha. Nebraska 68102-1622 SON t 7 0" Honorable John McDonald Mayor of Iowa City 410 East Washington Iowa City, IA 52240 Dear Mayor McDonald: This will report on the Department of Housing and Urban Development (HDD) monitoring visit on May 17-19, 1988. Programs reviewed included: Community Development Block Grant (CDBG) Rental Rehabilitation, and Section 312. HOD staff participating in the review included: Me. Lorraine McNair and Mr. William Shoemaker, Community Planning and Development Representatives; Me. Melodee Humbert, Rehabilitation Management Specialist; Mr. Stanley Quy, Environmental Officer; Ms. Marie Marino, Equal Opportunity Specialist; and Me. Jane Phillipe and Mr. Fred Jones, Regional Labor Relations Specialiste. Specific areas reviewed included: Program Progress, Compliance with National Objectives, Financial Management, Subrecipiente, Rehabilitation, Acquisition, Environmental Compliance, Labor Standards, and Fair Housing and Equal Opportunity. There were two findings as a result of the monitoring visit. Enclosed is a summary of the areas reviewed. Please respond to any request for additional information within 30 days of the date of this letter. Should you or your staff have any questions regarding the content of this letter, please contact Ms. McNair at 402/221-3809. Sincerely, Joe E ones Director Community Planning and Development Division Enclosure cc: Ms. Marianne Milkman 1133 9 MONITORING SUMMARY CITY OF IOWA CITY, IOWA May 18-20, 1988 PROGRAM PROGRESS 3SNBdX3 Because of the delays by Congress in enacting authorization and appropriation legislation, the City's Fiscal Year (FY) 1988 program is just getting underway. Overall, progress is satisfactory, considering that $4,809,230.46 (86x) of the cumulative Entitlement amount has been drawn down from the letter of credit. COMPLIANCE WITH NATIONAL OBJECTIVES Several activities which were listed in the 1987 Grantee Performance Report (GPR) were reviewed for compliance with national objectives.. Activities which were identified as be low- and moderate -income (LNI) persons included Youth Services acquisition, Coffelt Place renovation United Action for Youth WAY), Mayor's Youth Employment Program (NYE?), and removal of architectural barriers (install accessible doors) at the civic center. Activities listed as elimination of slum/blight include Ralston Creek Bank Stabilization and Plaza Mini Park. An on-site review as well as documentation maintained in the files supports that these activities meet the requirements of 24 CPR 570.901(b)(1) and (2). CONCERN: In the GPR, several activities were shown a both meeting LMI subsf beneit and elimination of slum and blight. In that the designations have equently been corrected, we will refer you to the Guide to Eligible Activities for the Community Development Block Grant (CDBG) Entitlement Program (copy previously furnished) for assistants. This guide not only describes the criteria that must be not and the records which must be maintained to qualify an activity under the national objectives, but it also describes each typo of activity which may be carried out with CDBG funds. You might find that this is a very useful tool which could lessen future monitoring findings, if any. CONCERN: The document used by MYEp to support IMI benefit is extremely vague. What it consists of in a sheet of paper with the family income checked, but the employee for whom the document applied could not be identified. We have suggested that instead of using the employee's name, a .__._ 1_ _ 1133 2 3SN3dX3 li j number coding system could be developed. LMI information must relate to an individual. jFINANCIAL MANAGEMENT SYSTEM: The City is in compliance with Federal standards for grantee management systems. An examination of the accounting records indicates identification of the source and application of funds for grant -supported activities. All costs charged to the program appeared necessary and reasonable. A random test of purchase orders and journals applicable to the CDBG program indicated that, for the transactions tested, all supporting documentation was accounted for and fully supported expenditures, except as follows: FINDING: Payments are advanced to subrecipients without adequate source documents. Standard: Office of Management and Budget Circular (OMB) A-102, Attachment G, states that accounting records must be supported by source documents and that advances made to secondary recipients shall conform substantially to the same standards of timing (immediate need) as the primary recipient. - Discussion: In our review of subrecipient contracts for Elderly Services Agency and UAY, we note that partial payments were made in advance. The source document attached to the accounting record consists of a copy of a page of the contract to justify payment, which is not acceptable. 'rhe City should amend theme contracts to include more frequent payments other than quarterly, and state the types of adequate source documents needed to support such request for payments in the contract. Resolution: Submit your written assurance that the letter of credit method of drawdown procedures will be followed. Submit copies of amended contracts for each subrecipient, and advise this office if such advances were deposited in interest-bearing accounts. SUBRECIPIENTS: Two subrecipients (MYEP and UAY) were visited on-site. We note that subrecipient programs begin six months after the City's CDBG program year (January 1 of each year). This gives the appearance of slow-moving activities; however, they are geared to be in line with the City's fiscal year (FY), which is July I of each year. 1133 3 3SN3dX3 if I We reviewed the books, files, records, and agreements. Both subrecipients' financial records meet Federal standards, and performance is consistent with the terms of the agreement. CONCERN; The City is monitoring its subrecipients, but there is no documentation on file to support the areas monitored. We strongly recommend I that the City obtain written documentation of all on-site monitoring and any follow-up necessary cc clear findings observed, if.any. ACQUISITION There were four acquisition cases in the 1987 program period: 1. United Action for Youth, Inc. 2. Youth Homes, Inc. 3. Crisis Center 4. Community Mental Health Center All were funded, at least in part, with CDBC funds, but all purchases were carried out by subrecipients. Consequently, all acquisitions were "voluntary" and not subject to requirements of the Uniform Relocation' Assistance and Real Property Acquisition Policies Act of 1970, as amended (Uniform Act). RELOCATION The four properties acquired were vacant; consequently, no relocation was necessary. In anticipation of possible relocation not subject to the Uniform Act, the City has an optional relocation plan. It has also recently completed an "Affordable Housing" study dealing with owner -occupied housing. Tenant Assistance - Rental Rehabilitation: Three files representing three properties and twelve tenant households were reviewed. In all cues, the tenant@ in-place before and after rehabilitation were paying affordable rents after rehabilitation, pursuant to Rental Rehabilitation regulations at 24 CPR 511.10(h)(2). Based on the monitoring review, Iowa City's acquisition/relocation and tenant assistance policies are adequate and in compliance with applicable requirements. x/33 9 3SN3dX3 i REHABILITATION The purpose of the monitoring was to assess the City's administration of the Community Development Block Grant (CDBG) Program, Rental Rehabilitation Program (RRP), and Section 312 Rehabilitation (312) Program. The review covered three main areae: Overall Program Management, Pile Reviews, and On -Site Inspections of work in progress and/or completed. Overall Proaram Management: The staff requested that this office review this area and make recommendations as to how they can better serve both the demand and the need for rehabilitation assistance in Iowa City. The staff was especially interested in a major expansion of the 312 program. There is a great deal of 312 funds available and the staff -wishes to avail themselves of this resource in order to more effectively stretch and utilize the scarce CDBG funds. Since our last monitoring visit, one permanent, part-time housing specialist has been added to the staff and Me. Mary Nugent is processing the financial portion of the 312 applications. While production has increased some over last year, the City still can't service the need and demand with only one full-time and one part-time housing specialist. At the exit - conference, it was recommended that the present part-time person be made full-time with consideration to be given to hiring another housing specialist, preferably full-time, if possible. With the current workload and demand for assistance, production cannot increase significantly as both housing specialists are working at full capacity. - The staff also requested that recommendations be made to assist them in further streamlining some of their program functions. There were two areas noted where considerable time could be saved: (1) Utilisation of a computer to produce cost estimates and work write-ups and (2) Elimination of the burdensome and time-consuming process of having the housing commission review all applications for assistance. A great deal of time is lost producing all of the paperwork and copies needed to prepare for theme meetings, and cases are delayed because of the timing of the reviews. It was also noted that the commission has elected to deny assistance to an otherwise fully eligible applicant because they didn't feel the person should receive any assistance. This type of situation cannot be continued; if assistance is to be denied, it must be denied on the basis of a legitimate non-compliance with program standards/requirements and not for personal reasons or preferances. It was recommended that all applications be reviewed in-house with approval being given by Ms. Milkman. The in-house review committee would include, at a minimum, the housing rehabilitation specialists, the 312 finance //3-3 W 3SN3dX3 1 officer, and Ms. Milkman. The Housing Commission would be retained to perform the function for which it was originally established, namely the committee identified in the rehabilitation contracts with whom grievances are to be filed and heard. With the dwindling availability of CDBG funds, it was also recommended that the City amend its program design to allow the it of CDBG and 312 funds where possible, rather than always funding 100 percent of the City's CDBG rehabilitation cases with only CDBG funds. The applications would be analyzed to determine how much the applicant could afford to pay. This amount would be funded with 312 funds rather than CDBG funds. The Block Grant funds would be used to make up the "gap" and be secured behind the 312 loan. It was also noted that there is a large demand for the rehabilitation of rental properties which cannot be accommodated under the RRP. Theme cases could also be candidates for 312 funding. Assuming the after -rehabilitation rents in the units are still affordable to low/moderate-income (LMI) tenants, the City would be increasing the amount of housing assistance it can provide to its citizens. The City's administrative organisation and its capacity to carry out the activities necessary to achieve its property rehabilitation goals is lacking only in that it is "short-staffed" in this area. The staff has done an I excellent job in administering this portion of the City's programs within program constraints. The programs are being administered in compliance with Federal and local regulations and standards. File Reviews: No deficiencies were noted and the information needed was readily available. On -Site Ing actions: Inspections were made at several properties, both under construction and completed. Copies of the inspection reports rare left with staff. Items needing correction are, noted under Section I of the reports. The overall quality of the rehabilitation work is very good. We continue to expect this high level of performance from the City. The one 312 loan under construction (Theo Carver) was inspected. It was found that this job is running somewhat behind schedule solely due to the lack of cooperation on the part of the homeowner. This problem was discussed with Mr. Carver on-site. A problem on this project is that Mr. Carver wants a great deal of money spent on his garage which is almost to the point of being beyond repair. Please be advised that all funds must be used first to 6 3SN3dX31 complete all required rehabilitation of the structure (two dwelling units) before any additional funds can be put into the garage. After all of the work has been completed in the living unite and sufficient 312 and/or personal resources remain, renovation of the garage can be completed. CDBC Rehabilitation: Performance under this program continues to be very good. For the period January 1, 1987, through December 31, 1987, the City obligated $341,338 to rehabilitate approximately 75 units. Not all of these were comprehensive rehabilitations, as this program also provides assistance for paint/siding, weatherization, residential accessibility, emergency repair, and elderly housing assistance. The City presently has 37 cases in various stages of processing and a backlog of 35 applications. LRP: A review of the rental rehabilitation voucher Log found it to be complete and accurate. The Bank Disbursement Statements are also reconciled in a timely manner. As of May 30, 1988, the City has received a total rental rehabilitation allocation of $288,950 of which $276,060 (962) has been committed to specific. projects. $149,520 (523) has been disbursed for completed projects. The City is running a little behind in disbursements for completed projects. This was - discussed with staff and it was requested that, for projects funded with FY 1985 and PY 1986 funds, ongoing contacts be made with the owners/developers of these projects to bring them to completion. Only 80 percent 'of the VY 1985 and 15 percent of the PY 1986 allocation has been disbursed for completed projects. LABOR STANDARDS ADMINISTRATION AND ENFORCEMENT The purpose of this review was to determine whether the City is complying with the administration and enforcement requirements of Federal Labor Standards, which include the Davis -Bacon Act and the D. S. Department of Labor regulations: Title 29 of the Code of Federal Regulations, Part 1 (Procedures of Predetermination of Mage [ate@), Part 3 (Payment and Reporting of Wage), and Part 6 (Labor Standards Provisions). In this regard, the City must adhere to the requirements and instructions contained in: - U. S. ftpartment of Housing and Urban Development (HUD) Handbook V -W 1, IST -1, CHC -1, federal Labor Standards Compliance in Rousing, -4i PO=Uuity Development Programs - HUD Handbook 6509.2, REV -4, Community Plannibg and Monitoring. //33 7 3SNUX3 1 Enclosed is a lint of the associated review items which are based on these handbooks. Scope of the Review: The following is a list of the projects that were reviewed: B -86 -MC -19-0009 Iowa City Crisis Intervention Center B -87 -MC -19-0009 Handicapped Doors - Civic Center B -85 -MC -19-0009 MECCA - telephone installation B -85 -MC -19-0009 MECCA - carpet installation B -85 -MC -19-0009 Plaza Mini Park B -87 -MC -19-0009 Napoleon Park Handicapped Trail B -86 -MC -19-0009 Goodwill Industries Renovation, Phase II 8 -86 -MC -19-0009 Harrison Street Pocket Park B -86 -MC -19-0009 Community Mental Health Center Anne: 3 -86 -MC -19-0009 Handicare Facility Improvements B -85 -MC -19-0009 Creekside Neighborhood Sidewalk 3 -86 -MC -19-0009 Curbs and Ramp . Also, the following Rental Rehabilitation projects: 914 Iova Avenue #87-12-1 412 N Dubuque Street /87-4-1 631 E Davenport/329 N Dodge 187-11-1 1117-1117 1/2 E College 187-8-1 715 Iova Avenue 187-6-1 708 Iova Avenue 187-8-2 In conjunction with this review, the Public Works Department and the Housing Authority were visited. The Housing Authority has not received any Comprehensive Improvement Assistance Program funds. The review did not disclose any negative findings. Observations: I. The City should conduct a closer review of project specifications as they relate to Federal Labor Standards, The City is only required to include the appropriate wage decision and the HUD -4010, Federal Labor Standards Provisions, in the specifications and construction contract. 2. On construction contracts that are funded by CDBC funds, the City is reminded that Section 110 of the Housing and Community Development //33 8 3SN3dX3 1N Act of 1974, as amended, states that "all laborers and mechanics employed by contractors or subcontractors in the performance of construction work financed in whole or in part with assistance under this title . " are covered by Federal Labor Standards. This means that if the City or a sub -recipient earmarks any monies for a construction activity, then the entire project becomes subject to Davie -Bacon and related Acts. ENVIRONMENTAL ASSESSMENT Compliance Determinations: The City of Iowa City is in general compliance with the historic preservation regulations and procedures applicable to the CDBG program. Some comments and recommendations are outlined below. The City is also in general compliance with environmental review regulations and procedures contained in 24 CPR 58, although one finding is outlined below. . PINDING: The City is not transmitting its environmental findings to interested parties for review and comment. • Standard: 24 CFR 58.43 requires that all non-exempt CDBG activities be subject to environmental review and comment by the local news media, individual's and groups interested in the activities, and appropriate local, state, and Federal agencies, including HUD and the Environmental Protective Agency. Discussion: Although the City has consistently provided for such review j and comment by local interest groups and the news media, similar review and consent opportunities used to be provided to appropriate Federal and state agencies. Corrective Action Required: The City should provide an assurance that it ca has instituted a produrs sad sailing list to provide for compliance with 24 CPR 58.43. Other Coemmats/Recommendations: Based on the City's problems in getting an agreement with the State Historical Society on such properties as 210-212 Clinton Street, the following guidance is suggested: 1. All requirements and standards resulting from consultations with the State Historical Society should be documented in writing in the files. 11313 4 3SN3dX3 2. If there are areae of disagreement, the City should document the areas of dispute and support their contentions. 3. Irreconcilable issues or differences of opinion should be forwarded to the Advisory Council on Historic Preservation. 4. After full consideration of the Advisory Council's comments and recommendations, the City should decide whether to proceed with the undertaking and under what requirements and standards. FAIR HOUSING AND EQUAL OPPORTUNITY (FHEO) The purpose of the visit was to monitor the City's 1987 activities as they relate to HUD/FHEO requirements and Handbook 8003. 2, Chapter 4, Paragraph 4-2, Monitoring of Community Development Programs. The areas reviewed under the CDBG program were: Benefit to Minorities and Female -Headed Households, Housing Assistance Plin (HAP) implementation, - Fair Housing Actions, Grantee Employment, Training, llecordkeeping, Employment and Contract Opportunities for Section 3 Residents and Businesses, and - Minority Business Enterprise/Women's Business Enterprise (MBR/WBE) Utilisation. A discussion of each of these areas follows. review of the files for the following activities revealed to what extent minorities/ females and other segments of the population benefited from the program for the period January 1, 1987, through December 31, 1987. Housing Rehabilitation (Owner -Occupied) Comprehensive Rehabilitation: Pour homeowners received a total of $79,700. One was elderly -handicapped who received $22,000 (282). Three were families. One minority, "female -headed" homeowner benefited in the amount of $2,000 (3Z). Weathari ation: Two homeowners (which were families) received $5,000 $2,500 eamh . No feule-heeded homeowmere benefited. Painting/siding: Seven homeowners received $22,900. Two (292) homeowners are female -headed who received $8,500 (37Z). Two (29Z) are elderly who received $8,500 (37Z), of which one is handicapped and three are families. //33 10 3SN3dX3 It Residential Accessibility: Eleven (100%) homeowners are elderly - handicapped who received $45,015. Six (55%) were female -headed who received $12,275 (27%). Emergency Repair: Fifteen homeowners received $27,077. Eleven (73%) are female -headed who received $18,577 (69%). Nine of the 15 (60%) homeowners are elderly who received $15,577 (58X), of which three are handicapped. Four homeowners are families, i Altogether $179,692 of 1987 CDBG funds were awarded for owner -occupied housing rehabilitation. Females received $39,352 (222), elderly received $91,092 (51%), and elderly -handicapped received $78,744 (44%) of the total funds spent. The above is comprised of 39 homeowners which are in Census Tracts 1, 6, 11, 12, 14, 15, 16, 17, and 104. These census tracts represent a total population of 27,925 with 1,171 (4.1%) minorities, compared to the general. population of 50,508 with 3,423 (6.8%) minorities. In the same nine census tracts, homeowners represent a total of 5,494 with 114 (2%) minorities. Of the 114 minority homeowners, the records revealed that only one minority, female owner participated in the above program. Outreach efforts by the grantee to solicit minority homeowners to participate in the program were unsuccessful. Therefore, based on their efforts, the grantee's level of performance is acceptable and the review revealed no disparities in the selection criteria. Females, elderly, and handicapped benefited according to their needs. Housing Assistance Plan Im lamentation: The second year (October 1, 1986, to September 30, 1987 achievements of the three-year RAP goals were reviewed as follows: Rental Proarams Lower Income Households to be Assisted Goal Achieved 1. HUD -Assisted - Section 8 free-standing certificates 25 25 - Rental Rehabilitation Vouchers 6 108 2. CDBG-Assisted 1133 I SSNSdXa. 11 - Rental Rehabilitation 30 - Croup Home for low-income 19 disadvantaged and troubled youth 30 10-15 Owner Programs CDBC-Assisted - Comprehensive Rehabilitation 7 - Home Improvements 4 - Weatherization - Paint Program 1 2 1 1 - Residential Accessibility Grant 8 7 - Housing Modifications for 11 low/moderate-income frail elderly 20 25 The review revealed no disparity in housing assistance provided to minority, elderly, handicapped, or female -headed households which is based on requirements of Title VI, Civil Rights Act of 1964; Title VIII, Civil Rights i Act of 1968, as amended; Section 109, Housing and Community Development. Act of 1974; Section 504, Handicapped; and the Age Discrimination Act of 1975. Pair Housing, (Title VIII and Executive Order 11063): The review s1. cons ited of actions takes by the grantee to provide assisted housing in ■ broad range of locations and to affirmatively further fair housing minorities and women. for The lova City Housing Authority administers 473 certificates of Section 8 existing housing and 193 vouchers which are for scattered site housing spread throughout the county. Marketing is done in accordance with the revised and 463appr certied dficatestworelin used with 10Narch ,available87. At tandinotunder lease. fthe r Minorities are represented at 57 (122). Under the voucher program, 148 vouchers were under less* with 45 available. Minorities are represented at 18 (12a). There are also 62 units of scattered site public housing owed by the City, of which 9 tonal ere occupied by minorities. There were four vacancies. The waiting list consists of 146, of which 11 (8a) are minorities. The following is a summary of the complaint activity for 1987: Informal complaints resolved 6 Formal complaints filed 20 1133 9 12 Areae Number Employment 11 (55%) 4 (20X) 2 (10X) 3 (15X) Formal complaints closed 20 No probable cause 15 Probable cause 4 Satisfactorily resolved 4 Complaint withdrawn 1 3SN3dX3 During FY 1987, $3,207.68 was awarded to four complainants to reiolve their discrimination complaints. It was determined that the grantee has taken specific, substantive actions to carry, out the assurances made to take affirmative action to promote fair housing, and has carried out the actions as set forth in the application to further fair housing in a manner that adequately addresses the fair housing needs of the grantee. Development Act of 1974): The Grantee's 810-4 Report dated May 12, 1988, revealed that the City employs a total of 400 full -tier employees. Females are represented at 120 (302) of the workforce while minorities are represented •t 17 (4Z) of the workforce. Minorities represent 6.8 percent of the general population of Iowa City or 5.2 percent of the general population of Johnson County. The 880-4 Report further revealed that the grantee had employed 21 permanent full-time new hires (of which 6 (292) were female and 2 (IOZ) were minority males) during the pot year. There ars 14 employees in Community Development (five (36%) are males and nine (642) are females). Two permanent new hires were employed during the put year --one male and one female. No minorities are employed in Community Development. The review of the City's employment as related to HUD -funded activities is considered acceptable even though the minority employment (4Z) is not parity to the general population of the City (6.8Z). 1133 9 B 13 3SN3dX3. Demonstrated efforts to solicit minorities in both total City workforce and HUD -funded activities through community outreach (e.g., advertisement, minority newspapers, bulletins, etc. were unsuccessful. The City's employment practices are consistent with the Affirmative Action Policy in Employment adopted by the City, (the minority population of the City is comprised mainly If students (29,000)). and Businesses: The City set a goal of $236,700 (30x) of its 1987 CUBO program budget to be contracted with local businesses through the CDBG program. For the calendar year 1987 (January 1, 1987, to December 31, 1987), $453,451 were awarded to Section 3 contractors which was exceeded by $216,751 (192x) of the goal. It was determined that Section 3 residents have been provided opportunities for training and employment in connection with HUD -funded projects and activities and Section 3 businesses have also been provided opportunities for and received contracts in connection with HUD -assisted projects and activities consistent with 24 CPR, Part 135. Recordkee in : Title I of the Housing and Community Development Act HCDA.of 1974 and the Title I regulation of 24 CPR Part 570.907(7) regarding records pursuant to - Section 109 (Benefits, services by race, ethnicity, and gender) - Section 104(b)(2) (Pair Housing) - Section 3 employment and business utilization i - Title VI, 24 CPR Part 1 an incorporated into the program at Section 104(b)(2) of the HCDA of 1974, as amended - Executive Ordir 11063 and implementing regulation at 24 CPR Part 107.30(a) as referenced in 24 CPR 570.601(c) aro being mainliimed and are acceptable. Rental Rebabilitation Program: Six areas of review were conducted in the Program: U 1133 14 3SN3dX3 1 1. Affirmative Marketing: Good faith efforts were made to inform and solicit applications from persons in the housing market area who are least likely to apply without special outreach in accordance with 24 CFR Part 511 and Section 511.10(m)(2). i 2. Displt lacement and Tenant Assistance: No tenants were displaced as a resuof the Rental Rehabilitation program, but if displacement should become necessary, it will be done in accordance with the iCity's Displacement and Tenant Assistance Policy, which meet* the guidelines of Section 511.10(h)(2). 3. Benefit and Participation: The review revealed that the City is administering Che Rental Rehabilitation program in accordance with Title VI of the Civil Rights Act of 1964, and that property owners and eligible persons were selected as tenants for participation in the program without regard to their race/ethnicity, handicap, and age. 4. Section 3 Business and Employment: Good faith efforts that conform, to Section 3 Business and Employment requirements were made by the grantee. Most contracts for work were awarded to Section 3 contractors. 5. Recordkeeping: Records are being maintained in accordance with the regulations 511.71(a)(2), 511.10(m)(2)(iii), and 511.71(a)(2)(iv). 6. Minority Business Enterprise/WoYo's Business Enterprise (NDE/WBE): The monttoriag review ru foeusad on the following areas of grantee activity (24 CPR Part 511, Section 511.10(m)(1)(0): Efforts by the grantee to encourage the participation of MBEs, WBEs, and minority and women property owners in funded activities. Grantee establishment of a racordkeeping system on the extent (owber and dollar mount) of participation of MBEs, wBEs, and minority and women property owners. The review revealed that during 1987 there were seven projects awarded contracts for a total of $52,940. These seven projects consisted of 19 housing units. There were 7 (31x) households headed by females, for a dollar amount of $19,504 (37Z) of the Rental Rehabilitation amount. During this period, one MBE contract was awarded to ■ female ower in the amount of $5,000. 15 3SN3dX3 Based on the above, the grantee met all nondiscrimination and equal opportunity requirements, and the FEEO staff finds the grantee's performance acceptable. The six areas of review in the Rental Rehabilitation program revealed that the City is in conformance with applicable Civil Rights laws and implementing regulations. N; Fuiar a—iuz. NaAttacnmeet oJ: A suggested goal of $20,000 was established by Naha Office which equates to approximately 3 percent of the City'a allocation of $621,000 for 1987. For the period October 1, 1986, through September 30, 1987, the total MBE participation was 14,095 (70.55) of the $20,000 goal. NBE participation was $2,316. Iowa City has set a goal of $20,000 of its 1988 entitlement allocation to be expended on contract■ with minority businesses. This equates to approximately 3 percent of the City's allocation of $584,000 for 1988. As of the second quarter ending March 31, 1988, the MBE participation was zero. wag participation was $573. Due to the lack of MBE participation, FHEO strongly recommends that the City take an aggressive action to increase MBE participation in order that the Department's goal can be accomplished. At the exit conference, we talked at length of different ways to attract MBE participants. It is our understanding that the City's policy is to hire local contractors (of which there are three minority firm@) in the area. One of the firm's schedule is full for this year, but the other two firma do not have funds for performance and payment bonding. As discussed, the provision Of assistance to facilitate the aforementioned is an eligible administrative cost. Please refer to 24 Gn 570.206(d). //33 6 City of Iowa City _ MEMORANDUM DATE: July 21, 1988 To: City Council FROM: City Manager RE: Newsrack Attaing he ck Thiscmatterehasrious items of been schedulediforrmation discussioncatnyourtinformalaissue. meeting on Monday, July 25. City of Iowa City MEMORANDUM Date: September 28, 1987 To: Mayor and City Council From: Craig Jett n, Design Review Committee Re: Banks f Newspaper D spensers for Iowa City CBD This memo is prepared for Council consideration during discussion of the Legal Department's recent report on the regulation of newsracks on public property, HISTORY OF DESIGN REVIEW COMMITTEE CONSIDERATION In 1981 the City Manager asked the Design Review Committee to suggest guide- lines governing newspaper dispensers on City Plaza. The DRC reviewed avail- able modular styles of dispensers and recommended the size and location of several units within the Plaza area. City staff addressed the mechanics of purchase, lease and maintenance. In 1985 the Committee reviewed the draft ordinance then being considered to ttheirspreviousnr ecomnendationsmachines nregardinublic g rbanksyof Thr members reaf- firmedS'-in the Plaza area, but also recommended' ttML W ftq* t}d* C•pdteal' Business�rOistrict (bounded generally by Iowa Avenue, Lina Street, 8urliegton Street. and South Capitol Street or Madison Street) newspaper vending should be confined to specific locations, selected in consultation with newspaper distributors, with banks recommendedothatwtheper Cityiassurerthe upkeep ofrovided b these uthe nits inethee downntown.so At its September 1987 meeting the ORC discussed the recent Legal Department within the COort and Din be uniform recommended nd grouped together er ins appropriate ensers an public locations. PRESENT LOCATIONS OF NEWSPAPER DISPENSERS IN THE DOWNTOWN On September 11, 1987, a survey of newsracks located in the CBD was taken to update the survey of this same area in August 1985. A map showing the re- sults of the update is attached. A comparison of the two surveys reveals that there has been an increase in the total number of newsracks, from 41 to 54, with minor changes in locations and the mix of newspapers. (NOTE: A survey of approximately the same area in October 1983 showed 20 newsracks.) A notable change since the 1985 survey is the addition of seven newsracks near the Plaza entrance to the Holiday Inn Hotel. Of e 54 in could be several k of counted located �at fthemnortheastabe onprcornerivatepofp Old Capitol Center and at the entrance to the Holiday Inn. //3 � z COMMENTS ON DRAFT ORDINANCE The present draft ordinance would not require newsracks within the CBD to be clustered in modular units at selected locations. It does, however, allow the Plaza area to be governed by the existing regulations (i.e., the City will make available, at a reasonable cost, space in the City -owned newspaper dispenser units on City Plaza). The DRC urges the City Council to consider the Committee's previous and continuing recommendation that newspaper vending on public property within the CBD be limited to specific locations, selected in consultation with newspaper distributors and chosen to reduce clutter, avoid obstruction of public access and still provide ample opportunity for the distribution of newspapers within Iowa City's downtown. The Committee remains ready to work with the Council and newspaper distributors to investigate the types of modular units available and their placement in the CBO. bjl/6 113 L I WSJ C_ `7YT ICPC LOCATION OF NEWSPAPER DISPENSERS UNIVERSITY OF IOWA PENTACREST OWNTOWN 80 )WA CITY, IOWA CIG CRGI + Advertiser (1) ICPC - Iova City Press -Citizen (11) DI USA DY? USA JI 84 NYT - Nev York Times (3) ; 7S.; ICPC CSN - Christian Science Monitor (1) QCT C_ Ann C_ Public USA • USA Today (11) Library USA WSJ . Wall Street Journal Y LAZA DPs ICPC *Attached 4 a..hed to public amenity 9/11/87 CSN DI D:J4 Cao t' rkmq uououe t WSJ LC?C Rame arkinq Rare ICPC CRG 9Y_ CT USA DI QCT CRG USA ICPC ADV + Advertiser (1) ICPC - Iova City Press -Citizen (11) CRC - Cedar Rapids Gazette (4) NYT - Nev York Times (3) CSN - Christian Science Monitor (1) QCT • Quad City Times (2) C_ - Chicago Tribune (5) USA • USA Today (11) D>M - Des Moines Register (7) WSJ . Wall Street Journal (5) *Attached 4 a..hed to public amenity 9/11/87 //3(L 9 City of Iowa City MEMORANDUM Date: July 9, 1985 To: Bob Jansen, City Attorney From: Patt Cain, Associate PlannerQ / Re: Draft Ordinance Regulating Newspaper Vending Machines on Public Property At its meeting of July 3, the Design Review Committee discussed the draft ordinance for regulating newspaper vending machines on public property. The Committee limited its discussion of the proposed ordinance to those issues that would affect placement of newspaper vending machines in the downtown area; the Committee did not discuss the permitting system or fees included in the ordinance as Cammiitee members considered these matters outside their purview. Committee members concurred on three basic recommendations in regard to the draft ordinance: 1. The definition of newspaper vending machine in Section 31-160 should be expanded to include the placement of banks of modular vending machine units. 2. In Section 31-162b, a section should be added to allow placement of newspaper vending machines arranged for pedestrian traffic in the downtown area. The Committee agreed that in areas of considerable pedestrian traffic desirable locations for newspaper vending machines might be adjacent to buildings or landscaping features rather than within 24 inches of the curb. 3. Especially in the. City P.laza and also within the Central Business District (bounded generally by Iowa Avenue, Linn Street, Burlington Street and South Capitol Street or Madison Street), the Committee would like to see specified locations for newspaper vending with banks of vending machines provided by the City. The locations for these units should be chosen in consultation with newspaper distributors and the Design Review Committee. This recommendation is consistent with one made by the Committee several years ago when it recommended that newspaper vending machines should be uniform and grouped together in appropriate locations. (An excerpt from the minutes of a 1981 Design Review Committee meeting is attached.) The Committee also recommended that the City assure the upkeep of the banks of vending machines in the downtown. If the City Council is amenable to having newspapers vended from City -owned banks of machines in the downtown area, the Committee offered to look into the types of modular machines that are available and make recommendations regarding their placement, design and structure. tp2/2 113; F FROM: ORC Minutes 2 May 13, 1981 of these plans. She expressed concern that the plants located in the City Plaza Should be heat tolerant due to the amount of heat -radiating materials in the area. Chiat stated that these plans would be sent to Gretchen Harshbarger for her review and comment. Chiat said these plantings probably would be installed next fall. " The Committee indicated general approval of these plans, subject to the consideration of review of plantings and placement of an additional number of trash receptacles on the Plaza. NEWSPAPER DISPENSERS Chiat presented copies of material on newspaper dispenser styles and a diagram showing potential locations for the dispenser units. The Committee agreed with the proposal that a large dispenser for four to six different newspapers should be sited in the planter opposite the Jefferson Building to replace the individual racks by the Jefferson Building. Several damaged plantings in the planter would be removed and replaced with additional shrubs that would compliment the dispenser unit. The unit would be painted VanDyke Brown. The Committee suggested that if a second dispenser unit was required, it should be smaller and located on College Street. The Committee wanted to know if the 'alcove' in front of Hardee's could be used. Chiat indicated that an agreement would probably be necessary because the alcove is on private property. A second alternative location on College Street near the Clinton Street entrance to City Plaza was then suggested. The issue of who would pay for the dispensers and maintainance was raised. Lilly suggested a letter should be sent to the different newspapers requesting their interest in using the dispenser units. Chiat said he would continue work on the issue. Seiberling asked if the storage mailbox by the Washington Street entrance of the City Plaza could be relocated in a more accessible location for the mail truck. She also wanted to know if a sign could be put on the storage mailbox indicating that the consumer drop mailboxes were in the kiosk. Chiat replied that he would contact the Postal Service with these suggestions. APPOINTMENT OF NEW MEMBERS At the April 21, 1981 City Council meeting, two vacancies for the Design Review Committee were announced. These positions will be filled at the June 2, 1981 City Council meeting. Meeting adjourned. Prepared by: Andrea Hauer Planner/Program Analyst //3X City of Iowa City MEMORANDUM Date: June 26, 1987 To: Honorable Mayor and Members, City Council From: Richard J. Boyle, First Assistant City Attorneyrr Re: Regulation of Newsracks on Public Property BACKGROUND In recent years, unmanned devices for the vending or free distribution of newspapers and periodicals ("newsracks") have proliferated in the City, both on public and private property. The appearance of those devices on public property has raised questions about the appropriateness of regulating them. Regulation of newsracks an City Plaza has already bethat treated by ordinance. City Code of Ordinances Section 9.1-7(1) provides The City will make available, at a reasonable cost, space in the Cit-ownPlaza. In the case of more applications onsthanavailable pace, a newspaperenser units on catection procedure that is deemed fair, reasonable and appropriate by the City shall be estab- lished. stab- 1ished. There is no City -owned newspaper dispenser on City Plaza, although there are a number of newsracks. QUESTIONS PRESENTED 1. May the City require that newsracks on public property be licensed? 2. May the City require that newsracks on City Plaza be placed in modular units? 3. May the City impose size and location standards on newsrack owners? DISCUSSION The answer to all three questions is a conditional yes. There have been a number of recent cases involving attempts by municipalities and other governmental agencies to license and regulate the location of newsracks, and while there are no definitive rules to be applied in all ofsspecifics,nhowever, asbit of background be derived from those case. may be helpful5 Before discussion 113Y- A As a general proposition, states have control of streets, highways, and public property, but they have delegated to municipal corporations and other public agencies responsibility for local streets and public grounds. In Iowa, Code (1985) Section 364.12 provides that cities are `responsible for the care, supervision and control of public grounds, streets, sidewalks...and the city shall keep all public ways, squares, and commons open, in repair, and free from nuisance...' Governments hold public property in trust for the public, and it is generally the rule that they cannot be put to any use inconsistent with the primary purpose for which they were established. In the case of streets, the move- ment of people is the primary purpose and municipalities have no implied power to grant privileges to use streets for private purposes. For example, the Iowa Supreme Court has held that Waterloo did not have authority to authorize operation of a news stand on public sidewalks. Courts recognize that public entities have power io preserve the property under their control for the uses for which it was lawfully dedicated. Cities have a legitimate interest in preserving access to buildings, and maintaining the normal flow of pedestrian and vehicular traffic and it is the duty of public officials to protect public property against inappropriate uses which interefere with those interests. Stated otherwise, public ways (streets, alleys and side- walks) are primarily for the movement of people and cannot be diverted for merely private or commercial use which unreasonably curtails or interferes with the public's use. On the other hand, as stated by the U.S. Supreme Court in Hague Y. C.I.O., 307 U.S. 496, (1939): Wherever the title of streets and parks may rest, they have immemor- ially been held in trust for the use of the public and, time out of mind, have been used for purposes of assembly, communicating thoughts between citizens, and discussing public questions. Such use of the streets and public places has, from ancient times, been part of the privileges, immunities, rights, and liberties of citi- zens. The privilege of a citizen of the United States to use the streets and parks for communication of views on national questions may be regulated in the interest of all; it is not absolute, but relative, and must be exercised in subordination to the general comfort and convenience, and in consonance with peace and good order; but it must not, in the guise of regulation, be abridged or denied. That is, the exercise of First Amendment rights is another legitimate use of streets and parks and, in those places, governments may not prohibit all communicative activity. II Publication of newspapers is protected by the First Amendment guarantee of freedom of the press, and that protection extends to their distribution since the right to publish is meaningless if the right to distribute is curtailed. However, such protection does not free newspaper companies from all regula- tion, nor secure any private property rights. For example, enterprises 113E exercising First Amendment rights are subject to labor laws and zoning laws. Further, the First Amendment does no: create any right to use the proper, c' others. Indeed, "the First Amendment does not guarantee access to governmert property simply because it is owned or controlled by the government." United States Postal Service v. Greenburg h Civic Assn.. While some public property is ra i lona y a orum or p ace o exercise First Amendment rights, such right is not absolute. In Heffron v. International Society for Krishna Consciousness, Inc., the Supreme Court noted that the irst endment does no guaranteethe right to communicate one's views at all times and places or in any manner that may be desired." If the manner of expression is incompat- ible with normal activities at a given time or place, such manner of expres- sion may be regulated by reasonable time, place, and manner restrictions. With the advent of heavy automobile and truck traffic, governments are faced with conflicting demands for unobstructed movement of vehicles and pedestri- ans and use of public property for exercise of First Amendment rights. Are streets for vehicles or for demonstrations? In evaluating attempts to accom- modate those demands, courts have attempted to formulate rules for resolving the conflicts. The first step is to characterize the public property to determine the existence of a right of access and the standards by which limitations on such a right must be evaluated. That is, is the property a traditional public forum? In Members of Cit Council v. Taxpayers for Vincent, the Supreme Court repeated its ongstanding ru a that(104 S. Ct., ii£—p-77134): Public property which is not by tradition or designation a forum for public communication may be reserved by the state for its intended purposes, communicative or otherwise, as long as the regulation on speech is reasonable and not an effort to suppress expression merely because public officials oppose the speaker's views. In Gannett Satellite Inf. Net. v. Metropolitan Transp. Auth., the Court of Appeals approved a leasing scheme for newsracks in commuter railroad sta- tions. The court held that the public areas of such stations constituted public property which was not by tradition or designation a forum for public communication, so the licensing scheme merely had to be reasonable and unre- lated to the content of the publications. An ordinance which makes peaceful enjoyment of a First Amendment right con- tingent upon the uncontrolled will (i.e., discretion) of an official is unconstitutional censorship, or prior restraint upon the enjoyment of those freedoms. Staub v. CitX of Baxley. Therefore, courts will invalidate an ordinance or_r_egulaticm wn1ch vests city officials with discretion to grant, deny, or delay issuing licenses. III Governments may impose reasonable time, place, and manner restrictions upon exercise of First Amendment rights, but only if the restrictions are - (a content neutral, (b) narrowly tailored to serve a significant governmental interest, and (c) leave adequate alternative channels of communication. Perry Educ. Assoc. v. Perry Local Educators' Assoc.. 4 If a city licenses all newsracks, such regulation would seem to be facially content -neutral because it applies equally to all newsracks. Plain Dealer Pub. Co. v. Cit of Lakewood, Ohio, Jacobsen d/b/a/ Solo RFD v. rivaro. iviTNo. 96=43. . owa, (5ov. 26, invo v ng DesMoines' newrack regulations). When dealing with public property which is a traditional public forum - such as for example, the Pentacrest or City Plaza - a government may impose re- strictions upon exercise of First Amendment rights only if the manner of expression is basically incompatible with the normal activity or use of the public property at a particular time and place. In such case, narrowly crafted time, place, and manner regulations may be adopted to prevent undue interference with those interests. Each regulation must be necessary to serve a compelling state interest and must be narrowly drawn to achieve that end. Some significant or compelling governmental interests include - 1. Orderly management of crowds and avoidance of congestion on public streets and sidewalks. 2. Traffic safety and obedience to traffic laws. 3. Unobstructed access to public facilities, such as utility poles. 4. Aesthetics. 5. Injury or property damage (i.e., public health or safety). 6. Prevention of nuisances. With respect to ample alternative channels of communication, in the City Lakewood case, the evidence disclosed there was home delivery throughout comnunffy and numerous 24 hour establishments in which newspapers were sold, thus establishing alternative channels for such communications. In Jacobsen d/b/a Solo RFD v. Crivaro, the Des Moines case, Judge Stuart foun-d--ain-ple alternative c anne s o communication in "Delivery by mail, hone delivery, vendors, or newsracks in locations complying with the ordinance...' He also noted there was no restriction on the right to place newsracks on private property, and said - Although the alternative distribution method may be more costly, the First Amendment does not guarantee a right to the least expensive means of expression. See Reffron, * * * (state need not provide free access to fairgrounds o—r—soT�itation); Kovacs W. Cooper, * * * (city may restrict soundtracks even though they are cheapest means of communication). IV Whether specific regulations are reasonable time, place, or manner restric- tions will depend upon the facts in any given case. They must be narrowly drawn to serve a compelling government interest. In that regard, it is helpful to review two recent court decisions involving newsrack regulation: 113 �Z the Court of Appeals' decision in the City of Lakewood case, and the Des Moines ordinance involve,: in Jacobsen d/b/a Solo RFD and Sincl_e Scene v. Crivaro. In the Lakewood case, the Court of Appeals sustained the city's ban on news - racks in rest ential neighborhoods, finding that the ordinance was narrowly tailored, and agreeing "with the district court's holding that 'traffic safety, proper functioning of a city's safety and sanitation forces, main- taining a clear right-of-way on sidewalks for pedestrians, and aesthetics are all substantial government interests and the subject ordinances reach no further than necessary to accomplish the City's objectives'." The Court also sustained the size and site locational requirements (i.e., placement in rela- tionship to streets, buildings and other objects) and, without deciding, suggested the rental or license fee requirement is constitutional. On the other hand, the Court found unconstitutional - 1. The vesting of discretion in the mayor to grant or deny permits (uncon- stitutional prior restraint is not cured by built-in appeal process); 2. Architectural review of newsrack design (no standards for review, vio- lates First and Fourteenth (due process) amendments); 3. Requirement that permittees indemnify and insure the City against liabil- ity "for any reason whatsoever occasioned upon the installation and use" of a newsrack. Property damage and liability insurance of $100,000 was required, naming the City as an insured. (Not required of other permittees, therefore, requirement places undue burden on newspapers. The Court of Appeals dissenter would have sustained this provision.) In Jacobsen, Judge Stuart sustained the Des Moines regulations relating to newsrack He stated with respect to significant governmental interest, that - [T]his Court is persuaded that "traffic safety... maintaining a clear right-of-way on sidewalks for pedestrians, and aesthetics are all substantial government interests and the subject ordinances reach no further than necessary to accomplish the City's objectives." He also sustained the $10.00 annual license fee per encroachment, noting that while a government cannot ordinarily profit by imposing a fee on exercise of a First Amendment right, fees covering administrative costs are permissible. An interesting variety of size and locational requirements has been approved in the cases, and generally those are designed to prevent obstructions to free passageway of vehicles and pedestrians, thereby advancing a city's interests in traffic safety and clear rights-of-way. For example, the Des Moines ordinance provides that no encroachment (which includes newsracks) shall "unreasonably obstruct the right of travel... or... unreasonably inter- fere or impede the flow of pedestrian or vehicular traffic"; nor may an encroachment occupy more than twenty-five percent of the width of a sidewalk, or be located at street corners within vision clearance triangles. (See also Iowa City Code of Ordinances, Sections 34-24(a) and 36-65(a).) //3x 21 The Des Moines ordinance also providesl that: (b) No newsrack shall be located: (1) Within five feet of any fire hydrant, fire or police alarrt box, or other emergency facility; (2) Within two feet of any marked crosswalk or any driveway; (3) Where it restricts access to a bus shelter or a bus bench; (4) Where it interferes with loading or unloading at the front and rear doors of buses; (5) On any handicapped access ramp; (6) In such a manner as to reduce the clear space for the pas- sageway of pedestrians on sidewalks to a continuous and unobstructed width of less than six feet; (7) On the right-of-way of any street where parking is prohibited for all or any portion of the day or within 50 feet of such street on the right-of-way of any intersecting street,.... (c) Newsracks on public street right-of-way shall only be placed either (a) not more than one foot back from the face of the curb, or (b) not more than six inches from a public utility pole or a traffic sign pole located near the curb, or (c) parallel to the wall of a building and not more than six inches from the wall. Newsracks placed near the curb shall be placed so that the opening through which newspapers or news periodicals are dispensed does not face the curb line. In its skywalk system, Des Moines provides modular units at locations it selects and newspaper and periodical vendors may lease space in those units In which to place their newsracks. Unless extra space is available, vendors are limited to one space per modular unit. They pay annual rent of $10 for each space, and renew leases in March of each year. If demand for a location exceeds spaces available, lots are drawn for spaces. Unallocated space is available first come -first served. In addition to provisions described earlier, the ordinance at issue in Plain Dealer Pub. Co. v. City of Lakewood, contains locational limits similar those in the Des Moines ordinance- Ine District Court and Court of Appeals both held that the following locational, size and other requirements are constitutional. Newsracks - 1. Must be constructed of metal or substantially similar materials. 2. Shall not exceed 50 inches in height nor more than 25 inches in length and width. 3. Shall not be placed in residential districts. --------------- -Similar provisions are found in a model ordinance contained in P. Ball, Extral Extra! Read All About It: First Amendment Problems in the Regula- f�ol^ o n- perm ewspaper en ng ec nes, oluum �a J. L. 183, 20fi //3�1 4. Placed near curbs must be parallel to the curb line, not less than eight- een inches nor more than twenty-four inches from the curb. 6. Shall not be placed within 250 feet of another newsrack for the same newspaper or periodical. 7. Cannot be placed where three newsracks are already located. Lakewood imposes a license fee of $10.00 per device per year, and requires a permittee to maintain the immediate area around each newsrack free of litter and debris. The ordinance also prohibits use of the devices for advertising anything other than the newspaper sold therein. Although the Des Moines ordinance does not require insurance or indemnifica- tion, a reasonable requirement should be upheld. The Lakewood provision was struck down because indemnification and insurance were not required of other users of right-of-way, not because the requirement was suspect. Iowa City requires indemnification and insurance from users of its streets (Code of Ordinance sections 31-47 (excavations) and 31-141 (parades, public rallies, etc.). Further, recent trends in tort law show that placing obstructions on public right-of-way can subject to liability the one placing the obstruction if a vehicle operator runs into the obstruction. In Sisco v. Iowa -Illinois Gas d Elec. Co., the Iowa Court of Appeals held that an obstruction near as roe ma a nuisance, giving rise to liability of a public utility for personal in ury to one whose vehicle leaves the road and runs into the obstruction. It is a small step from imposing liability on a utility placing such an obstruction to imposing liability on a municipality whichep rmits encroachments or obstructions on right-of-way. Since liability may result from placing obstructions or encroachments next to streets, the one placing the obstruction should bear responsibility for any damages arising from such placement, and therefore the City should be Indemnified respecting such liability. CONCLUSION Based upon my analysis of the cases, particularly Crivaro and City of Lakewood, I have redrafted the proposed newsrack regulatory ordinance, a copy of -w %F is attached. That draft reflects the maximum in terms of regula- tions which the City could expect would be upheld by the courts. It does not represent any understanding of what the City Council may want to do vis-a-vis newsracks. Accordingly, I would invite you to review this memo and the proposed ordinance in anticipation of a discussion of the matter during an Informal session in the near future. Based on our discussion of the matter at that session, I will then be able to prepare a draft reflecting the degree of regulation which the Council wishes to impose. /sp 113X ORDINANCE NO. AN ORDINANCE TO AMEND CHAPTER 31 OF THE CITY CODE OF ORDINANCES TO ALLOW US: OF PUBLIC PROPERTY FOR NEWSRACKS, AND ESTABLISHING AN ANNUAL FEE FOR SUCH USE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF IOWA CITY, IOWA: SECTION 1. FINDINGS AND PURPOSE. a. Municipalities hold streets and sidewalks in trust for the public and, under Section 364.12 of the Iowa Code, cannot allow them to be put to any use inconsistent with street or pedestrian traffic use. Nunicipali- ties have no power to authorize any private use of or encroachments upon public ways which prevent unobstructed use of such ways. Interference with such unobstructed use is a nuisance. b. The City Council has discretion to authorize use of City property by individuals and firms, to the exclusion of the public generally, only for such consideration as is deemed fair, the same as any other owner of land, and has exercised that right from time to time, including the granting of a cable television franchise for consideration. c. Newsracks are an important means by which newspapers and other periodi- cals are distributed and by which the public gains access to the same, but such machines should be placed on public property only in such manner that the placement does not interfere with the public's right to have public streets, sidewalks, squares, and common areas open and free from nuisances and visual clutter. d. Due to the large number of newsracks which have recently appeared in the City, the public property has become cluttered and, at times, obstructed by such devices, thereby interfering with the public's rights to have aesthetically pleasing streets, sidewalks, squares, and common areas, which are open and free from nuisances. e. It is the intent of this Article that, in order to promote the health, safety, and general welfare of the population, standards shall be provided to allow newsracks on public property, but only in places which do not interfere with the public's right to free and unobstructed use of such property. SECTION It. ANENDMEIIT. Chapter 31 of the Code of Ordinances, relating to Melts, s, s s, and public places, is hereby amended by adding the following raw Article YIIi - LOCATION OF NEWSRACKS. Section 31-160. Definitions. 'Public property' shall mean the streets, sidewalks, roadways, squares, common areas, or other similar property owned by and located within the City of Iowa City, but for purposes of this Article, shall not include City Plaza. 'Modular newspaper vending machine' shall mean an unmanned device, containing separate compartments, for the vending or free distribution of more than one edition of newspapers or similar periodicals. 113 X ordinance No. Page 2 i "Newsrack" shall mean an unmannec, mechanical device utilized for tre sale or free distribution of newspapers or news periodicals. Section 31-161. Permits Required, It shall be unlawful for any person, group, firm or organization to use any portion of public property for a newsrack without a permit for use of such property. Nothing contained herein shall be deemed to prohibit the placement of modular newspaper vending machines on public property either by the City, or with the consent of the City. Section 31-162. Standards for Location of Newsracks on Public Property. a. A newsrack may be located on public property only in such place and manner that it does not cause any obstruction to the public's free and unobstructed use of such property, or impede the free flow of pedestrian or vehicular traffic in or out of a building. Specifically, no newsrack i may be placed, used, installed or maintained: . (1) Within five (5) feet of any fire hydrant or other emergency facil- ity. (2) On any handicap access ramp. i (3) Within five (5) feet of the intersection of any driveway, alley, or street. (4) Within two hundred fifty (250) feet of another newspaper vending machine containing the same newspaper or news periodical. (5) At any location where the width of paved clear space in any direc- tion for the passageway of pedestrians is reduced to less than six (6) feet. (6) So as to occupy more than 25 percent of the width of the sidewalk. (7) At tngabutting ng hich interferes with or impedes access to any buildipubli b. A newsrack on public street right-of-way shall only be placed either (i) not more than one foot back from the face of the curb, or (ii) riot more than six inches from a public utility pole or a traffic sign pole located near the curb, or (iii) parallel to the wall of a building and not more than six inches from the wall. A newsrack located near the curb shall be placed so that the opening through which newspapers or news periodicals are dispensed does not face the curb line. c. No newsrack shall exceed fifty (50) inches in height and two (2) feet in width or depth. 113 z 4 Ordinance No. Page 3 Section 31-163. Apo,!iCE' o, - Generally. a. An application for a newsrack permit, containing the inforration required by the terms of this A,ticle, may be filed with the City Clerk by any person, group, firm, or organization desiring to locate a newsrack on public property. An application may include all newsracks the applicant wishes to locate on public property, but a separate permit shall be issue"_ for each such device. b. Applications for the original issuance of newsrack permits for newsracks currently located on public property shall be filed within sixty (60) days of the effective date of this ordinance. Applications for addi- tional or new permits may be filed at any time. All applications shall be in such number of copies and in such form as may be prescribed by the City Clerk, and shall be accompanied by the required fee. Section 31-164 Application - Contents. The application form for newspaper vending machine permits shall, in addition to such other information as the City Clerk may deem necessary, contain the following information: a. Name, address and telephone number of the applicant. b. The name, address and telephone number of a responsible person whom the City may notify or contact at any time concerning the newsrack. c. A site plan for each location at which the applicant desires to locate each newsrack. d. Sufficient information to show compliance with Section 31-162. i e. A statement that the applicant shall indemnify, defend and hold harmless the City from and against all claims for damages which in any wey relate to or arise from the use or location of a newspaper vending machine on public property. Section 31-165. Fees. The City Council shall, from time to time, set the amount of the permit fee. The to processing amount of such lic tions andllbe i issuinged permits,on the inspecting expenses enforcing this Article, w* responding to complaints. The fee shall be ten dollars ($10.00) per machine per location per annum. Section 31-166. Issuance of Permit. Following receipt of properly completed applications and fees, the City Clerk fshall orth in Sections31e162Pe Suchermit for each permits shallrack be inethe�formeoftanardset decals with adhesive backing, and shall be displayed on each machine. 113 �z ordinance No. Page 4 Section 31-167. Ratu'e and Scope of Permit. A newsrack permit shall be revocable for cause. It shall not constitute property n_r be subject to attachment and execution, nor be alienable or assignable. A permit shall only relate to the location for which it is issued. A newsrack for which a permit has been issued hereunder may be moved to anothe- location on public property, without a new application and fee, provided the new location meets the requirements of this Article, and further provided a site plan showing the exact new location is filed with the City Clerk no later than the next business day of the City after the move. Section 31-168. Term of Permit. Newsrack permits shall be valid for a period of one year from the date of issuance. Absent a material change of circumstances relating to a machine, permits shall be automatically renewable upon payment of the applicable fee. Section 31-169. Denial or Revocation of Permits - Grounds, Effect. The City Clerk shall make the initial determination as to whether a newsrack permit she'l be denied or revoked, for any of the following reasons: 1. Misrep-esentation of any material fact in the permit application, 2. If the location of a newsrack, in fact, obstructs the public's use of the right-of-way. 3, If the newsrack does not meet the standards set forth in Section 31-162. Section 31-170. Notices and Effect of Denial Revocation or Non -Renewal of Notice of action denying or revoking a permit shall be mailed, postage prepaid, addressed to the permittee at the address shown in the permittee's application, and shall be deemed to have been received three (3) days after the date of mailing. If an original appplication for a permit for a newsrack currently located on public property is denied, or if a newsrack permit is revoked, the owner of such newsrack shall have seven (7) days from the date of receipt of notice of the action denying or revoking such permit within which to remove such newsrack from public property. Further, any newsrack for which a permit is not renewed by the owner shall be removed from public property no later than seven (7) days after expiration of the permit. If the newsrack is not removed within such seven (7) day period, the City may remove it and assess the cost of such removal against the owner of the newsrack. However, no newsrack may be removed while an appeal is pending under Section 31-171. Section 31-171. Appeal and Hearing. The right to a hearing before the City Manager shall be afforded to a newsrack permit applicant whose application is denied, in whole or in part, or to a permittee whose permit is revoked. Any applicant or permittee who is aggrieved by a decision denying or revoking a newsrack permit may, within //3 S/ Ordinance No. Page 5 seven (71 Gays 'of such decision, request, and shall be granted, a permit hearing which shall be conducted in the manner provided in Section 2-186 of the City Co -!e of Ordinances. SECTION III. REPEALER: All ordinances and parts of ordinances in conflict with the provisions of this ordinance are hereby repealed. SECTION IV. SEVERABILITY: If any section, provision or part of the Ordi- nance shall e adjudged o be invalid or unconstitutional, such adjudication shall not affect the validity of the Ordinance as a whole or any section, provision or part thereof not adjudged invalid or unconstitutional. SECTION V. EFFECTIVE DATE: This Ordinance shall be in effect after its final passage, approve a publication as required by law. Passed and approved this MAYOR ATTEST: CITY CLERK 113 � 9 TY RE CE I V E 0 DEC 3 1987 ���ESS=CITIZEN Mary Paris Sher 319 E. Wmhington St. Po Box 2480 Iowa Gly. IA Sn" (319pr.3181 ma w PUN" December 1, 1987 Mr. Steve Atkins City Manager Civic Center 402 E. Washington Street Iowa City, Iowa 52240 Dear Mr. Atkins: I would like to suggest that the enclosed "Proposal for Voluntary Action Regarding Newspaper Vending Machines" will be a more satisfactory alternative than the proposed newsrack ordinance for Iowa City. Your ordinance would establish a complex system of restric- tions on the distribution of newspapers through vending machines and would apply to the many newspaper vending machines located throughout Iowa City. The ordinance poses serious practical and legal problems and would put the newspapers and distributors in a confrontational posture with the city government. We believe that these problems can be avoided and that a constitutionally difficult ordinance regulating all newspaper vending machines is not needed to address your concerns. Instead, we propose to take action on a voluntary basis to address the city government's concerns about newspaper vending machines. In addition, the Press -Citizen is willing to encourage and cooperate with other newspapess n adopting similar proposals. -- we resolve problems with the newsrack locations on a case-by-case basis; -- we "t up a prompt complaint mechanism; -- we provide the City with a statement of indemnification; -- we assess the desirability of installing uniform modular newsracks in the business district. We would like to point out that, even without the proposed ordinance, the police department has the power, properly exercised, to act immediately if a newsrack presents a clear and present wt 113 � Page 2 danger to pedestrian or vehicular traffic. Naturally, we are concerned that this power not be abused, and that our constitu- tional rights be protected by the requirements of due process of law. However, if for example a newspaper vending machine has been pushed from the sidewalk into the street, has been moved into a handicap curb cut, or has blocked access to a fire hydrant, the police are able to act to remove the machine so that it no longer presents a danger. when the police contact us and tell us that a machine presents this type of problem, we respond as soon as we know about it. In conclusion, we are confident that our approach will succeed in addressing the city's concerns. We would like to suggest an additional consideration. At the sight of vending machines dispensing dozens of different newspapers, it is easy to be drawn to the view that the machines represent just another for-profit vendor, taking up valuable space on the city sidewalks. But the face of Iowa City would be sadly changed if the newspaper machines -- a product of the freedom, pluralism, and diversity of viewpoints that is the envy of the world -- were not there. It is an essential characteristic of our system that the press is explicitly cited for protection in the Constitution, and this protection extends to the distribution of newspapers through vending machines. Especially in light of this protection, we are commited to behaving in a responsible manner that respects the needs of everyone else as well. We are glad to answer any questions and we look forward to working with you and the City Council. Sincerely, 1. A' -,Mar arks Stier MPS/gb Enc 1. cc: Charlie Edwards Publisher Des Moines Register John M. Miksich Circulation Director Des Moines Register N Proposal for Voluntary Action Regarding Newspaper Vending Machines The Iowa City Press -Citizen submits this proposal for volun- tary action as an alternative to the proposed newsrack ordinance for Iowa City, Iowa. I. Improvement of problem locations: Problems may arise at particular street corners or other locations concerning placement of newspaper vending machines, including such specific matters as the location of machines in relation to pedestrian traffic and in relation to building entrances and the like. We believe that such problems can and should be resolved on a case-by-case basis. We are prepared to respond promptly to problems identified to us by any city government office, by the police, by a neighborhood group, or by an individual citizen. 2. Establishment of a complaint mechanism: In order to solve I in an efficient manner problems at particular street corners or any other problems, we are glad to provide the name and telephone number of the appropriate contact person at the Press -Citizen to the City Council, to any government office, or to any other group or individual who wants it and to provide each of our newspaper vending machines with a label identifying the machine and providing a telephone number to call with any complaints. We have reminded and will continue to remind the people who actually deliver the newspapers to the machines that we are committed to the operation of clean machines with well-maintained coin mechanisms that are free of litter. //3� 9 - z - In addition, we are willing to cooperate with other newspapers and distributors including the Des Moines Register, USA TODAY, and any others willing to set up appropriate complaint pre- cedures. 3. Provision of statement of indemnification: The Press -Citi- zen will arrange to provide the Iowa City government with an indemnification statement covering newspaper vending machines, so that someone other than the government will bear any costs for personal injury or property damage that may involve the machines. 4. Uniform Modular Newsracks in the Central Business Dis- trict: The Press -Citizen will cooperate with the city government in assessing the desirability and practicality of installing uniform modular newsracks in the Central Business District. Respectfully submitted, Mary P s tier The I C tv Press -Citizen 113 - 9 'AECEI'.-' OCT 151981 uw oepaMWt October 13, 1987 Mr. Steven Atkins City Manager Civic Center 402 E. Washington Street Iowa City, Iowa 52240 Dear Mr. Atkins: Mary Parke Stier of the Iowa City Press -Citizen has asked for our help in responding to the concerns of the City Counsel regarding the placement of newspaper vending machines ("newsracks") in the business district. Along those lines, Mary sent us a copy of the proposed City ordinance as well as the legal memorandum prepared by Mr. Richard Boyle of the City Attorney's office. First of all, let me indicate that we appreciate your concern to maintain the ambiance of the downtown area and to regulate the growing number of newsracks. It was apparent from reading Mr. Boyle'm memorandum that the City is attempting to accomplish theme objectives while staying within the boundaries of some very complex constitutional requirements. It in a great relief to find a city attorney who understands this area well. In the past, we have dealt with many cities that have attempted to achieve similar objectives, but who have chosen to ignore the constitutional implications of their actions. By way of response to Mr. Boyle's memorandum, let me underscore his conclusion that "the right to publish is meaningless if the right to distribute in curtailed." It is for this reason that every case which has considered the application of constitutional rights to newsracks, newsracks were afforded full constitutional protection. That is not to say that newsracks may not be regulated at all, but it does mean that those regulations must comport with constitutional protections. Given the complexity of drafting a city ordinance that satisfies your objectives, and yet does not infringe upon the First Amendment rights of newspaper publishers and distributors, I wonder if your concerns might not be met more easily by the voluntary cooperation of newspaper distributors. For example, we are willing to discuss the possibility of using uniform newsracks in the specially improved downtown area as a means of preserving the ambiance of that area. Furthermore, we are amenable to any suggestions regarding the grouping of newsracks or any other 1100 W%O ewe. ArkgWn, VA 22 20 8 703/284-M Masnp oddnaa; ROAM 7888, WYsiglon, OC 2oo44 Mr. Steve Atkins October 13, 1987 Page Two changes that we could make voluntarily without the City having to resort to a newerack ordinance. Voluntary cooperation between the City and newspaper distributors allows all of us to accomplish our objectives without having to go through the time and expense that would be necessary in order to put a constitutional newerack ordinance into place. It also frees the City from being in the business of purchasing and servicing neweracks, a venture we are better equipped to handle. A newerack ordinance is also unnecessary in terms of public safety and convenience. For example, if a newerack presents a clear and immediate danger to pedestrian or vehicular traffic, Iowa City police already have the power to move the newerack out of danger's way. Of course, that power is limited and care should be taken that it is not abused, but obviously we don't want to present a danger to anyone. If, on the other hand, the newerack is inappropriately placed, too close to a fire hydrant for example, Mary would appreciate a call from you identifying the problem and requesting a change. To summarize, our only objective in to distribute the Press -Citizen effectively. We do not intend to cause any confrontation or initiate any unnecessary litigation. To the extent possible, consistent with effective distribution practices, the Press -Citizen will attempt to resolve all of the City's concerns regarding neweracks. Please feel free to contact Mary or me should you have any questions or suggestions. Very truly gyours, `� r� L�F'1( CJS G�Ca�ai Alice Neff Lucan Assistant General Counsel 113SZ City of Iowa City MEMORANDUM Date: September 28, 1987 To: Mayor and City Council From: Craig Welt, Chairman, Design Review Committee Banks of Newspaper Dispensers for Iowa City C This meso is prepared for Council consideration during discussion of the Legal Department's recent report on the regulation of newsracks on public property. HISTORY OF DESIGN REVIEW COMMITTEE CONSIDERATION In 1981 the City Manager asked the Design Review Committee to suggest guide- lines governing newspaper dispensers on City Plaza. The DRC reviewed avail- able modular styles of dispensers and recommended the size and location of several units within the Plaza area. City staff addressed the mechanics of purchase, lease and maintenance. In 1985 the Committee reviewed the draft ordinance then being considered to regulate newspaper vending machines on public property. The members reaf- firmed their previous recommendations regarding banks of dispensers in the Plaza area, but also recommended that within the Central Business District (bounded generally by Mow Avenue, Linn Street, Burlington Street, and South Capitol Street or Madison Street) newspaper vending should be confined to specific locations, selected in consultation with newspaper distributors, with banks of newspaper dispensers provided by the City. The Committee also recommended that the City assure the upkeep of these units in the downtown. At its September 1987 meeting the DRC discussed the recent Legal Department within the CBort and Dain be uniform and grouped tended that ogether ins appropriate locations. PRESENT PRESENT LOCATIONS OF NENSPAPER DISPENSERS IN THE Wjff 01 On September 11,yy1987, a survey of newsracks located in the CBD was taken to sultseofh theupdateishis same attached. Aiconparison ust Sof the two surveys the re - reveals that there has been an Uerease in the total number of newsracks, from 41 to 54, with minor changes in locations and the mix of newspapers. (NOTE: A survey of approximately the same area in October 1983 showed 20 newsracks.) A notable change since the 1985 survey is the addition of seven newsracks near the Plaza entrance to the Holiday Inn Hotel. Of the 54 newsracks counted in 1987, a few may be on private property. These could be several of those located at the northeast corner of Old Capitol Center and at the entrance to the Holiday Inn. 1135 z COHEIRS ON DRAFI.ORDINANCE The present draft ordinance would not require newsracks within the CBD to be clustered in modular units at selected locations. It does, however, allow the Plaza area to be governed by the existing regulations (i.e., the City will make available, at a reasonable cost, space in the City -owned newspaper dispenser units on City Plaza). The DRC urges the City Council to consider the Committee's previous and continuing recommendation that newspaper vending on public property within the CBD be limited to specific locations, selected in consultation with newspaper distributors and chosen to reduce clutter, avoid obstruction of public access and still provide ample opportunity for the distribution of newspapers within Iowa City's downtown. The Committee remains ready to work with the Council and newspaper distributors to investigate the types of modular units available and their placement in the C8D. bjl/6 WSJ C. MYT ICPC LOCATION OF NEWSPAPER DISPENSERS UNIVERSITY E 11 OF IOWA PENTACREST OWNTOWN NA CITY, IOVYA F�800 Ere �J ; ICPC CRC ` f CRG CT USA DI MYT DI QCT DSR USA 84 * WS � wsJ Inc C.' AD9 Public I Library I r USA LA � ICPC CSM 4(06 CRG DI D.%m Cao t WSJ ICPCB king uoueue t USA CT irking Rawo � �—•I USA ICPC f—'I f—� r1 r� ADV J• (1) CRC Cedar a Cadar Rapipi ds Gazette (4) ICPC Iowa City Press -Citizen (11) CSM—Christian Science Monitor (1) NYT - Now York Times (3) CT m Chicago Tribune (5) QCT - Quad City Times (2) DMR w Des Moines Register (7) RSA - USA Today (11) WSJ . Wall Street Journal (5) *Attached to public nitv 9/11/87 ll3i4 r - Car,-, v k rI — 11Lt� ouC ! r c OarYwrCuDM. OL LOCATION OF NEWSPAPER DISP[M RE S DMR SD WSJ C: NYT ICPC CRG T -D DI NYT DMR USA USJ IC?C USA CSM DI D!SR WS! IC -C I UNIVERSITY OF IOWA PENTACREST (TOWN 1 80 CITY, IOWA 84 v i N r V) o Cao1Q t N r4 inn U uSA Iowa CRC Washington Street T . I r Public Library 1 Burlington Street g� i $ -1q ADV + Advertiser (1) (Il CRG - Cedar Rapids Gazette (4) (S) CSM --Christian Science Monitor (1)(1) CT - Chicago Tribune (5) (4) D}?1 - Des Moines Register (7)(9) DI = Daily Iowan (n) (4) Qr I J 'Ramo *DMR GPG "K ICPC MD 1CRG NYT CT USA DI QCT CRG USA ICPC xd : ravESToas Datty (4) ICPC - Iowa City Press -Citizen NYT - New York T'..:es (3) M-) QCT - Quad City Times (2)(3) 1.SA - USA T_odav (11) (I1) I43J - Wall Street Journal (5) 1983 7-O7'AL =o'(Q &O/B3) *At:tac'-ed tc pub1ic a=F.nity !9 &9 7oML = Sy (9/87) 1905 Tor»L ='iy (9/d8) 9 City of Iowa City MEMORANDUM Date: July 22, 1988 To: City Council From: City Manager Re: Iowa Electric I recently had a conversation with representatives of the top level management at Iowa Electric. They were very concerned about how they handled the Johnson County Host Plan. I provided them with a candid assessment and they assured me they would do their best to improve communications with the City. I also suggested to them that it may be. desirable for them to more frequently communicate activities of their company. It was recognized that they do not provide service to Iowa City residents; however, they do have transmission lines which traverse the city. They are also very actively involved in economic development and any inroads we might make in building that relationship could be beneficial. In response to my request, they have provided a copy of their annual report and asked that it be distributed to members of the Council. They also indicated that they would make an effort to provide additional general information about the company and keep the city advised. bj/pc2 115s- 9 ' A L R E P O R T 3 110 UT I'll 1: COMPANY IE Industries was formed on July 1, 1986. Its principal subsidiary is Iowa Electric Light and Power Company. The other subsidiaries include the Cedar Rapids and Iowa City Railway Company, Industrial Energy Applications, Inc., and IEI Container Services Corp., formed in 1987. IE Industries also has a 27 percent equity interest in Teleconnect Company. Iowa Electric, in its 106th year of operation, remains the primary source of revenue and earnings for the holding company. Iowa Electric provides electric, natural gas, and steam energy for about 275,000 residential, commercial, and industrial customers in over 400 communities in Iowa and a few communities in Nebraska. //.3s 9 1 98 7 III (i II L I (i IIT S Operating revenues (000's) ..................... Net income (000's) ............................ Earnings per average common share ............. Dividends declared per common share ........... Construction expenditures (000's) ............... Funds provided internally (000's) ............... Sales of electricity to customers (Kwh) (0001s) .... Total gas delivered to customers (dekatherms)(000's)......................... Number of common shareholders ............... Number of full-time employees ................. 1 9 8 7 A N N U 1987 10A $ 412,778 $ 429,245 $(16,467) (4) $ 34,076 $ 28,536 $ 5,540 19 $ 2.48 $ 2.13 $ .35 16 $ 1.99 $ 1.95 $ ,04 2 $ 52,887 $ 42,618 $ 10,269 24 $ 34,042 $ 48,863 $(14,821) (30) 4,418,005 4,344,324 73,681 2 27,291 30,513 (3,222) (11) 27,414 29,869 (2,455) (8) 1,591 1,551 40 3 QUARTERLY HIGH, LOW AND CLOSING PRICES OF COMMON STOCK (DOLLARS) COMMON STOCK Qiwrtmly common stock dividends of $.495 and $.485 were paid by the Company during 1987 and 1986, respectively. The Company's common stock is traded on the Netv Ymk Stock Exchange. The accompanying chart shows the range of trading pri= fm the last nao years. 264 244 25 24% 244 24 .. -- 2315 �,�q 23 234 19% 1987 ItiNh ch.inc 0 bmv 24% 244 I A L V 9 R E P O R T IE Industries Inc. (Industries) was formed in July, 1986, to accelerate diversification outside the utility business. Principal subsidiary, Iowa Electric Light and Power Company (Iowa Electric), provides electric, natural gas and steam energy to about 275,000 residential, commercial and industrial customers in more than 400 communities, primarily in Iowa. Diversified businesses include: • Teleconnett Company. IE Industries holds a 27 percent equity interest in this fast-growing telecommunications company. • Cedar Rapids and louvt City Railway Cmnpany (CRANDIC). This wholly-owned subsidiary is well positioned for increased rail traffic and profitable growth. • IEl Container Services Corp. Our newest venture cleans, repairs, and paints railroad cars with state- of-the-art technology. It is a promising, natural adjunct to our transportation business. • Indsutrial Energy Applications, Inc. IEA owns and operates standby generating units. Its joint venture subsidiary, EnDYNA Power Corp., is positioned for significant penetration into the national cogeneration market. Diversification Guidelines • Investments should have the potential of earning a return on equity in excess of that allowed by the utility business, • Investments should feature strong management teams. • IE Industries wants to be actively involved in the business strategy of the ventures, not merely accumulating a portfolio of passive investments. • Synergistic investments are targets, including telecommunications, transportation -related areas and businesses complementary with the electric, gats, and steam operations. A T F I R S T G L A N C E • Investments will preferably impact positively on Iowa's economy and, therefore, on our core business. • IE Industries will avoid capital intensive investments that will dilute its basic earnings power. Long-term Strategy • Utility Price Increases. Increases, on a cumulative basis, should be less than the rate of inflation to maintain and improve our competitive position. Cost containment and demand-side load management will contribute to the attainment of this goal. • Gas and Steam Operations. The gas and steam operations will continue to be aggressively managed to take advantage of opportunities created in these rapidly changing markets. Expansion possibilities will be pursued in both markets. • Marketing and Economic Development Program. Concerted efforts to expand existing businesses and to attract new businesses to our service area will strengthen the core business. • Diversification Effort. IE Industries aims for a significant earnings contribution from diversified businesses, with a target of 50 percent of corporate profits coming from the diversified enterprises within 10 years. • Dividend Policy. The level of dividend increases in the future will reflect not only the performance of the core utility business, but also the opportunities and successes of the diversified businesses. • Higher Stock Valise. Successful implementation of this strategy should, over the long term, increase shareholder value. 5 1139- CIf AI R %IAN''S L E T T E R DEARSHAREHOLDER: It was a good year in 19871 • Electric sales continued to increase, with 4 percent growth for major manufacturers. • Diversified investments posted significant gains, contributing 14 percent of total earnings compared to 11.5 percent in 1986. • Earnings rose from $2.13 to $2.48 per share. • IE Industries' stock price outperformed 92 of the 101 utilities listed on the New York Stock Exchange. • The economy in Iowa showed marked improvement. The theme of this year's annual report, "Serving the Future with a New Energy," was carefully selected and conveys an important dual message: • It reflects a concerted program of proactive management and aggressive marketing of our utility businesses. These businesses will have a strong competitive orientation, strategically seeking growth opportunities in a changing energy market. • It reflects a well -conceived diversification program designed to achieve returns greater than those in our traditional regulated business. This requires us to focus on synergistic diversification opportunities with strong management teams. We have completed the first full year of operation in the holding company, and we are encouraged by the progress made in our diversified businesses. Teleconnect Company's earnings increased dramatically and the Cedar Rapids and Iowa City Railway Company continued to post strong earnings. Other business development also took place in 1987 at a targeted pace. IEI Container Services Corp., a Cedar Rapids based wholly-owned subsidiary, became operational, offering a broad range of services in rail car cleaning and repair. A new business plan has been developed and implemented for Industrial Energy Applications, Inc. Its goal is to expand the operation from local standby generators to the national cogeneration market, through a new joint venture with Brown Engineering Company. We arc also pleased with our investment in Teleconnect Company, one of the fastest-growing telecommunications companies In the nation. Our 1 9 6 7 A N N U additional $2 million investment in 1987 enables us to retain our position as its largest shareholder with a 27 percent equity interest. The actions taken in business expansion followed a well-defined strategic plan with a goal to generate half of our earnings from non-utility businesses in ten years. We have made substantial progress in 1987, and we are prepared to make additional financial commitments on an annual basis in future years. As we implement this long-range corporate strategy, we recognize that our utility business must remain strong, competitive, and financially healthy. The results of the cost containment efforts over the past three years have helped us in stabilizing energy prices. We plan to continue with a disciplined cost containment program to help us maintain our competitive position at the market place. Cost control is essential to our success, but responsiveness to customers is equally important. Our state-of-the-art Customer Service Center now centralizes all service calls 24 hours a day. Field operation has also been streamlined with well- qualified service personnel at 18 commercial offices. Electronic meter reading was implemented to speed up the billing process with higher accuracy and lower costs. Management information systems, particularly useful for budget control and communication networking, provide state-of-the-art tools for employees to make appropriate decisions. The core utility business will not succeed through cost containment alone. Our business plan also includes an aggressive strategy to increase sales. The major ingredients for success are now in place: prices are fully cost -based; marketing programs focus on opportunities and customer responsiveness; economic development initiatives are intensifying. Success is evident! Some 3,000 jobs in our service territory have been created or retained. Encouraging results are pouring in from many cities in our service territory. Electric sales have increased at two to three percent for the last two years, with the major industrial customers setting the pace at four percent. The economy in Iowa is also recovering. Agricultural sector indicators show substantial improvement. Land prices were up 11 percent in 1987 reflecting optimism in the future of farming. Commodity prices for grains have improved A L H L P 0 R T I significantly. Prospects for grain exports are good with the weaker dollar in international markets. For the state as a whole, real personal income increased in both 1986 and 1987, after two years of decline. Non-farm employment increased about 2.7 percent, led by manufacturing, up 4.8 percent, and construction, up 7.6 percent. The Board of Directors raised the common stock dividend to $2.02 per share, up from $1.98 per share a year ago. This is the 12th consecutive year of dividend increases. We hope the dividends will continue to increase in future years, however, we believe future dividends will be determined not only by performance of the core utility business but also by the results of our diversification program. Our stock continues to be attractive to many investors. In 1987, of 101 utilities on the New York Stock Exchange, IE Industries ranked ninth for stock price performance. Our stock price reached a high for the year at $27% per share, just a fraction below our 21 -year high of $273/+, which was recorded in 1986. During the year, the Iowa Electric Board of Directors named three new officers: Richard W. McGaughy as Vice President, Production; Harold W. Rehrauer as Vice President, Engineering; and Thomas R. Seldon as Vice President, Human Resources. Dr. Samuel J. Tuthill, Senior Vice President, Technical Services, retired after having served the company with distinction for the past ten years. Effective February, 1988, Walter E. Brown, President of Kiowa Corp., retired from the Board of Directors and was named Director Emeritus. We are grateful for his years of dedicated service on the Board. Replacing Mr. Brown is Dr. George Daly, Dean of the College of Business Administration at The University of Iowa. We are committed to the aggressive, but prudent, growth of IE Industries. Our goals are to strengthen the core business and to become significantly more diversified. We have made significant progress in both areas. With a dedicated work force and continuing support from our shareholders, we look forward to another year of progress in 1988. Sincerely, Lee Liu 7 /1.35 1'RAR I\ ItL'V11:W FINANCIAL RESULTS The economic climate of our service territory continues to improve. Reflecting that recovery, kilowatt-hour sales volumes from our principal subsidiary, Iowa Electric Light and Power Company, increased about 2 percent. Many manufacturing facilities in our area are operating at high capacity levels, signaling continued growth in 1988. Net income in 1987 rose to $34.1 million from $28.5 million the year before. Earnings per share also increased, to $2.48 from $2.13. Earnings benefited by $0.34 per share from the effects of cermin accounting changes. On the other hand, earnings were reduced by a one-time $3.6 million write-off of financing costs on a canceled coal plant. The return on average common stock equity increased to 13.6 percent in 1987. For the 12th consecutive year, the cash dividend was increased. Construction expenditures last year totaled $52,9 million, with internal funds providing 65 percent. We project construction spending this year to be approximately $53 million, with 70 percent of the funds generated internally. These levels should decline to about $47 million in 1989, and remain relatively stable into the early 1990s. Construction expenditures, for the most part, will be funded internally during the 1989 to 1992 period. CORPORATE COMMITMENTS Customers. The automated Customer Service Center made significant progress during 1987. It now handles all customer calls throughout the operating territory. Our aim is to be even more responsive to customers' needs, improving the value of the service provided to them. Customers can call toll-free, 24 hours a day, for any business, including routine service hook-ups, bill inquiries, and outage reports. Consultants are trained to answer a wide variety of questions on issues ranging from energy usage to pricing policy to general information about the Company. We can point to several examples of our commitment to customers. In July, Iowa Electric conducted a survey to identify better ways to communicate with customers. As a result, we have Incorporated new, more effective communication tools, including monthly customer newsletters, The survey also provided feedback on customer attitudes 8 1 9 8 7 A N N U and opinions about Iowa Electric. The survey indicated that our customers generally give us high marks for service. Seminars were conducted for large commercial and industrial electric and gas customers on topics such as electrical surge protection and transportation of gas. The Marketing Department developed a program of regular contacts with industrial customers to provide a feedback mechanism and to identify profitable sales opportunities. Employees. Throughout the Company, employees participate in the planning and goal -setting process. Task forces are formed periodically to deal with major issues facing the Company. In 1987, the employee suggestion program generated 150 suggestions for cost saving measures. Monetary awards are given to employees who provide suggestions that are implemented. Employees should be rewarded based on the performance of the Company. In 1987, the implemented a 401(k) savings plan, which rewards employees based on the Company's attainment of predetermined goals. Seventy-five percent of our employees are participating in the plan in 1988. Communities. Economic development activities encompass the entire service territory. Our slogan is "IE Means Business." We think we do. List year, 65 firms successfully located or expanded operations in our market area with our assistance. For example, Eastman Kodak announced it will build a $50 million biotechnology center in Cedar Rapids. Party Pac Popcorn increased is workforce in Marshalltown by moving product lines from Greenville, North Carolina. Rockwell International moved an automotive plant from Michigan to Fairfield, Iowa, bringing 140 jobs to that community. The positive pace continues this year. In February, Swift Independent Packing Co. announced a doubling of is pork processing plant in Marshalltown, creating 600 new jobs. To enhance these efforts, Iowa Electric Is linking Is Sales and Business Development Department via computer with community organizations within the service area. The computer system lists available buildings and sites for new business development. Our community efforts are not restricted to economic development. To answer another community need, Iowa Electric became the first A I. N li 1' u N 'I' utility in Iowa to participate in the "Gatekeeper" program. This project, sponsored by mental health and senior citizen agencies, is targeted specifically at problems of the elderly or mentally handicapped. Meter readers and linemen are trained to report anything that looks suspicious to the authorities, so assistance can be provided. Shareholders. As always, we recogni:e it is our responsibility to maximix shareholder value. The primary purpose of our diversification efforts is to register higher returns than from the utility business. In 1987, Industries' stock outperformed all but 8 out of 101 utilities on the New York Stock Exchange, reflecting investor expectations of this company, IOWA ELECTRIC LIGHT AND POWER COMPANY Iowa Electric Light and Power Company is the principal subsidiary of IE Industries. Iowa Electric provides electric, natural gas and steam energy to about 275,000 customers, located primarily in Iowa. Our generation mix remains well balanced. In 1987, fossil units represented 63 percent of generating and purchased power capacity; nuclear, 37 percent. Our pipeline suppliers for natural gas are Northern Natural Gas Company, Natural Gas Pipeline Company of America, and ANR Pipeline Company. Iowa Electric has consistently stressed demand- side load management, earning recognition as a national leader in time -of -day and interruptible service pricing. More than 90 percent of industrial sales are on time -of -day pricing. Over 10 percent of our peak load is interruptible. We also have implemented a seasonal pricing policy. These three programs have produced a total load savings in the ELECTRIC CAPABILITY AND SYSTEM PEAK LOAD lotto Electrpa's 1987 peak load of 978,322 kilmmits ocnmed M July 30. Its additional reserve obligation was 146,748 kilmauts. Availablegem+sting capability at that time was 1,oi9,65o kilowates, supplemented by go,coo kilmmus of purchased capability. In thommit of kilouaas •Capability—Pureh.,q ■summa pwah • Capabilhy—Gennanwt 13 whucr pent, 1 9 8 7 A N N U 150 to 200 megawatt range, equivalent to plant expansion costing in excess of $200 million. Because of these and other efforts, we do not see the need for the construction of major generating facilities within the next decade. This will keep our capital requirements relatively modest. ELECTRIC OPERATIONS Electric revenues rose in 1987 to $303.5 million, from $285.4 million in 1986. These figures reflect higher sales volumes and the impact of the 1986 electric rate increase for the entire year of 1987. In April, 1987, our first electric rate case in three years was decided. We had sought an increase of $43.9 million and were awarded $25.1 million. Significantly, the received favorable treatment on two key issues. First, the Iowa Utilities Board permitted recovery of buy out costs for two coal contracts canceled in 1984 and 1985. Second, the Board also allowed partial recovery of costs associated with canceling a major coal-fired plant in Guthrie County. Even with price increases, cost control measures have allowed electric pricing to lag behind increases in the Consumer Price Index since 1983. This is a significant accomplishment. Our longer-term goal is even more aggressive. In order to remain competitive, we plan to keep cumulative price increases to no more than 50 percent of the inflation rate, while still maintaining our desired earnings level. The gain in kilowatt-hour sales in almost all customer categories last year is n reflection of the growing strength of the Iowa economy. Industrial sales were up 3.1 percent; commercial, 2.2 percent; and residential, 1.4 percent. Our system capacity remains adequate to handle the increased sales. Our largest electric customer, Archer -Daniels - Midland, is constructing cogeneration facilities. While the ultimate impact is uncertain, it will marginally reduce electric profitability. GAS OPERATIONS In 1984, we decided to encourage major customers to purchase their own nntural gas for transportation through our system. If successful, this strategy would promote gas flow through the system, improve margins, and make the gas business even more competitive with other fuels. j A L R E P O R T The results of that strategy became apparent in 1987. Some customers switched to transportation services for their own gas. This, in addition to lower gas prices and mild weather, resulted in lower natural gas revenues for the year. However, the volumes either sold or transported, when adjusted for weather, actually increased for the first time in a decade. This gas strategy of focusing on volumes transported, rather than sales, is working. Major customers have a choice between conventional gas supplies and their own gas purchases. As a result, we are able to maintain and, in many cases, improve margins while providing choices and lower prices to many customers. The natural gas business is one that offers new challenges and opportunities. We are encouraged by the progress of our innovative gas transportation 18, SYSTEM business. We have in place an effective management organization, capable of achieving maximum profitability and results. This organization will be attentive to opportunities to expand these gas operations. Last year, we sold the Fairmont, Minnesota gas operation, which had only 4,500 customers and did not fit into our long-term growth plans. STEAM OPERATIONS We continue to identify and exploit opportunities with our Cedar Rapids steam business. As a result, profits continue to improve, primarily due to sales to new customers such as National Oats. Future committed customers include Eastman Kodak and its new biotechnology plant. Several major industrial firms are currently strong candidates for the profitable expansion of the steam business. /35 Ekrnic Commactal 0T— G= Cammadal O%fua �.s SI �Ey, -Y.; SPIRIT LAKE a4 Gas and Ekxtric , ::, r i� `' Comnw dal Office , *GARNER # .. ... - ,_.. 1=gib, Ekaric Gaaradng ?Al Plants IF�ati a 1 r' Y4 )Y" STORM LAKE IOW .FALLS ;�r'�, : ® • , MANCHESTER ttit, fY MAQUOKETA _ PALO ® WALTHILL l JEFFERSON• MARSHALLTOWN ®, ®�®- DEWITT NEBRASKA + ® AME CEDAR RAPIDS J.N MUSCATINE •ATLANTIC KNOXVILLE: .y# c Q�t CRESTON • FAIRFIELD ,F ... .. . ' v:.. /35 1) 1 0 li H S 11' 1 1: 1) BI S I\ FSS I's TELECONNE(T COMPANY Teleconnect is undoubtedly our most exciting investment. We hold a 27 percent equity interest in this highly innovative telecommunications company. IE Industries has two seats on the Teleconnect Board of Directors. Teleconnect, which is headquartered in Cedar Rapids, has been cited by Inc. magazine for three consecutive years as one of the nation's fastest growing private companies. Its track record is impressive. The company began in 1980 with three people primarily selling telephone systems. In 1982, the company began providing longdistnnce services. The next year, a telemarketing operation was launched. In 1985, Teleconnect designed and marketed its own phone system. A year later, it published its first telephone directory. Effective marketing skills have made Teleconnect a leader in several growth areas, including fiber oprics. It is fast becoming a major player in this attractive field. Through its fiber optic network, Teleconnect has entered selected national markets 1 9 x- A F 8 I from Pittsburgh to Los Angeles and from Minneapolis to Dallas. Teleconnect's digital network allows customers to communicate clearly from coast to coast. In fact, Teleconnect has a higher percentage of calls on digital facilities than any other long-distance company. The network is continually expanding to provide even better service. Employment currently exceeds 1,700. Plans are to expand that number considerably in 1988, mainly in the Cedar Rapids area. CEDAR RAPIDS AND IOCVA CITY RAILWAY COMPANY Our rail subsidiary, CRANDIC, has been an excellent investment. In recent years, we have achieved sizable increases in both line -haul and switching revenues. Importantly, CRANDIC is solidly in the black, with strong net margins. Over the past five years, revenues have grown from $7.5 million to $10.3 million in 1987, while earnings were up 50 percent, from $2.0 million to $3.0 million. A L R E P 0 R T The railroad's success is due to its strategic location and to the growth of area industry. Unquestionably, the continuing expansion of food processors in our service territory bodes well for CRANDIC's long-term prospects. Last year, the railroad improved the rail line to Amana, Iowa, and began operations on that line. This opened new avenues for the transport of coal, limestone and raw materials for manufacturing. CRANDIC's outlook for 1988 is healthy. The railroad should have another excellent year, aided by new freight contracts and a steady increase in other traffic. IEI CONTAINER SERVICES CORP. Our newest subsidiary, IEI Container Services, is a natural extension of the transportation business. This highly automated operation, located in Cedar Rapids, washes and repairs railroad cars, specializing in sanitizing the insides of rail cars used to haul food and food products. Container Services has little j local competition. In fact, no company in the E Midwest can match the state-of-the-art technology used in cleaning cars and recovering waste. The high concentration of local grain and food processors should provide a strong market for the cleaning and repair business. Container Services should be profitable in 1988, an impressive start for a new business. INDUSTRIAL ENERGY APPLICATIONS, INC. Now over three years old, IEA is in the process of moving from the development stage. The subsidiary's initial focus has been installing and operating standby generating units. These standby facilities offer excellent cost reduction opportunities for large commercial and industrial customers, supplying low-cost capacity during times of interruption. Now, however, IEA is expanding its horizons. Through its joint venture subsidiary, EnDYNA Power Corp., IEA plans to compete in the cogeneration business nationwide. NET INCOME FROM MAJOR UNREGULATED INVESTMENTS The net income of Cedar Rapids and Inas City Railuuy Company and Telemnnect Company inauued 43% in 1987 to $4,700000. In thousands of,4dlnrs 11ANAGE%IENT'S DISCUSSION AND A\tALYS IS OF TII E RESULTS OF OPERATIONS A N D F I N A N C I A L C O N D I T I O N ELECTRIC SALES Electric sales Increased a% fTM 1986 to 4418,005,000 kilowatt-hours. Residential sales increased r% and coral sales dmeased 9%. Commercial sales increaser) 2% while indlutrial mleu inaeaserl3%. Sales for resale and other increased x%. The 5-Ywr historical average growth rate is a%. In million; of kitotmrt•hmns 3,500.,] 3,000 A Stria for rrwle w9 mhn ■ Conumrcial c Imhauial ■ Raidmdal and anal FUEL COST Coal prices decreased 9 percent in 1987 follauing a 24 percent decrease in both 1986 and 1985 as the result of the termination of tun long-term coal contracts. Per million 13114'1 em , �' CMI ^ Atr+age a Nudmr 1 9 8 7 A N N U The following discussion analyzes changes in the components of net income during the calendar years 1985 through 1987 for IE Industries and its whollyowned subsidiaries (the Company). RESULTS OF OPERATIONS The results of operations for 1987 were affected by two changes in accounting principles. In 1987, Iowa Electric began recording revenue for service rendered but unbilled at month-end. The cumulative effect as of January 1, 1987 of recording unbilled revenues was an increase in net income of $6,894,000. This change in method of accounting for revenues decreased 1987 electric operating revenues by $602,000 and increased 1987 gas operating revenues by $304,000. (See Consolidated Statements of Income.) In a 1987 Order issued by the Iowa Utilities Board (IUB) in connection with Iowa Electric's electric rate case, the IUB disallowed $5.2 million of allowance for funds used during construction which had been recorded for the cancelled Guthrie County generating station. The disallowed AFC, net of an amount reserved in prior years, was written -off and is reflected in "Interest expense and other • Miscellaneous, net," The Order did allow recovery of the remaining costs associated with cancelled projects, but without rate base treatment. In accordance with SFAS No. 90, Iowa Electric recorded an adjustment in 1987 of $2,347,000, net of income taxes, to discount the future revenues associated with such recoverable costs. Such amount is reflected in the Consolidated Statements of Income as a change in accounting principle. (See Comolldated Statements of Income.) Electric revenues changed due to the following factors: Electric Revenues Increase (Decrease) from Prior Year 1987 1986 1985 (in millions) Rate increases .......... $ 11.3 $ 103 $ — Recovery of fuel costs .... 3.4 (17.1) 1.7 Kwh sales and other ..... 3.3 0.6 _(7.6) Overall electric sales (in Kwh) ........ 1.796 3.6% (0.3)% As Indicated In the above table, electric revenues increased significantly during 1987 but decreased during both 1986 and 1985. The increase In 1987 was primarily due to an increase in electric rates. Increased rates were placed into effect In July, 1986 on an interim basis and May, 1987 on a final basis. Partially offsetting the 9 A L R E P O R T i i 1 i increase was an electric tariff decrease, effective July 1, 1987, filed with the IUB in order to reflect the effects of the Tax Reform Act of 1986. Iowa Electric has an electric energy adjustment clause (EAC) which is designed to currently recover the costs of fuel and the energy portion of purchased power in billings to customers. The primary reason for the decrease in 1986 revenues was the recovery of lower purchased power and fuel costs through the EAC, partially offset by the interim electric rate increase referred to above. Further contributing to the decline in revenues during 1986 and also in 1985 was the effect of an industrial price reduction in July, 1985 and the impact of customers changing to time—of—clay and interruptible rates. The 1985 decrease in electric revenues was also attributable to changes in sales mix. While overall sales of electricity decreased only 0.3% during 1985, revenues were adversely impacted by a shift in sales from residential and rural customers (at higher unit prices) to industrial customers (at lower unit prices). Gas revenues changed due to the following factors: Gas Revenues Increase (Decrease) from Prior Year 1987 1986 1985 (in millions) Rate increases ..........$ 0.5 $ 1.1 $ — Recovery of gas costs ... (29.6) (27.5) (5.4) Sales and other ........ (5.9) (3.4) (3.5) $(35.0) $(29.8) Overall gas sales (in therms)........... (23.4)% (12.1)% (2.0)% Iowa Electric's gas tariffs Include clauses designed to reflect changes in the cost of gas purchased for resale on a current basis. Gas revenues decreased for each of the three years primarily due to reductions in the cost of gas Purchased. Decreases in gas sales also contributed to the decrease In revenues. Gas margins (revenues less cost of gas purchased and the change in the PGA balance) were $20,224,000, $25,905,000 and $20,782,000 for the years 1987.1985, respectively. Mild weather had a significant Impact on the 1987 margin. In 1987, Iowa Electric transported gas for certain industrial customers who purchased their gas directly from pipeline suppliers. In most instances, the fees for transporting this gas maintained previous gas margins. The decrease in gas volumes was only 11% in 1987 when including these transported volumes, GAS SALES Gas sales in 1987 totaled 22,85 r,000 dekathems, a 23% detteav: from ;986. However, total tolumes delite ed, including transported volumes, wore 27,29t,000 dekatherms, an H% dcaeate from t986. Residential and commercial sale; both decreased t6%. Industrial sales decreased 38% but iruhstrial volumes delivered, including transported tulumes, decreased only i%. In nulhom of ddmthtmm v 'v r e'^ v 'fid �adyy✓,�y�K. r�ataj.�'y( n�td4�"iii'i!U?'P.�:Y:... Trmupuartd volume ■ Cmmnercial Imhairiul ■ Reddauiul YEAR-END CAPITALIZATION The Company's capitalization ratios for the last fits years are presem ed below. These ratios are consistent with the Company's long•temu capital structure objectites. in mdlwms of anorin -43. ;.......46 .. 'Connnoncquhy "Preftwedmullnefinmcermrk ■I.rmg•renndel,t 15 ��3s Fuel for production decreased during 1987 and 1986. Although the cost of coal decreased approximately $3,600,000 and $11,000,000 in 1987 and 1986, respectively, the decrease in 1987 was offset by the amortization of coal contract termination costs and increased use of fossil -fueled generation. The 1986 decrease was offset by increased usage of coal and nuclear fuel for generation. Purchased power costs increased during 1987 primarily as the result of energy purchases made during the refueling outage at the Duane Arnold Energy Center (DAEC) and decreased sales to other utilities. A reduction in the cost of capacity purchases under a long-term purchased power contract partially offset the other Items. Purchased power costs decreased in 1986 primarily due to decreases in energy purchases and increases in sales to other utilities. Cheaper fuel costs allowed Iowa Electric to generate more of its needs as well as to sell more power. Combined other operation and maintenance expenses increased during 1987 and 1985. Such increases resulted primarily from higher costs incurred at the DAEC during the refueling outage in both years. Also contributing to the increase In 1985 were increased costs associated with leasing generating facilities. Combined other operation and maintenance expenses decreased during 1986 because of cost control measures implemented by the Company and reduced costs at the DAEC. Partially offsetting such decreases were increases In Insurance premiums and computer equipment costs. Depredation expense decreased in 1987 primarily due to changing the estimated useful life of the DAEC from 28 to 36 years. This decrease was partially offset by the provision for decommissioning. Income from stock transactions of affiliate is explained in Note Ile) of the Notes to Consolidated Financial Statements. Changes in income taxes for the three years are primarily related to a 1987 reduction In the Federal statutory Income tax rate from 46% to 40% and changes in taxable income. See Note 3 for a detailed discussion of income tax matters, including a discussion of SFAS No. 96, Accounting for Income Taxes, released by the Financial Accounting Standards Board in December, 1987. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity Is affected principally by the utility's construction program, by capital requirements relating to maturing debt, reacquisition of securities and sinking fund requirements and by Its diversiflation activldes. The capital resources available to meet these requirements are funds from both internal generation and external financing. Internally generated funds depend on economic conditions and the adequacy of timely rate relief for Iowa Electric. Access to the long-term 1 9 8 7 A N N U and short-term capital and credit markets is necessary for obtaining funds externally. CONSTRUCTION PROGRAM The percentages of construction expenditures provided from internally generated funds were 65%, 100% and 72% for the years 1987.1985, respectively. Construction expenditures for 1988 are expected to approximate $53,000,000, with 70% of the funds expected to be internally generated. The levels of construction are expected to decline by 10% in 1989 and then remain relatively stable into the 1990's. It is estimated that substantially all construction will be funded with internally generated funds for the four year period 1989-1992. LONG-TERM FINANCING The Company will have $96,393,000 of total debt maturities and sinking fund requirements before 1993, including maturities of four First Mortgage Bond issues aggregating $81,790,000. Included in this amount is $35,000,000 relating to the Series V Bonds which mature April 1, 1988. In March, 1988, Iowa Electric plans to privately place a new First Mortgage Bond issue In the amount of $50,000,000. The proceeds will be used to retire the Series V Bonds and repay commercial paper. An additional issuance of First Mortgage Bonds is contemplated during the second half of 1988 depending on market conditions. Iowa Electric would use such proceeds to redeem certain high-cost securities prior to the stated maturity dates. The Indenture pursuant to which Iowa Elkaie's First Mortgage Bonds are Issued contains covenants restricting the amount of additional bonds which may be Issued thereunder. At December 31, 1987, the most restrictive limitations would have permitted Iowa Electric to Issue $107,000,000 of First Mortgage Bonds. The Articles of Incorporation of Iowa Electric authorize and limit the aggregate amount of additional shares of Cumulative Preferred Stock and Cumulative Preference Stock which may be Issued. Under the applicable limitations, at December 31, 1987 lora Electric could issue shares signiflcantly in excess of the number of shares currently authorized for both classes of stock. SHORT-TERM FINANCING For interim financing, Iota Electric is authorized by the Federal Energy Regulatory Commission to issue up to $75,000,000 of short-term notes, of which a maximum of $65,000,000 can be in the form of commercial Paper. This availability of short-term financing provides Iota Electric flexibility in the Issuance of long-term securities, At December 31, 1987, Iota Electric had lines of credit aggregating $51,100,000, Additionally, Industries had a $10,000,000 line of credit. 16 J1135 i A L R E P O R T f 36,946 9,644 5,225 3,701 r 3,313 4,547 Under the rate making principles prescribed by the regulatory commissions to which Iowa Electric is subject, only the historical cost of plant is recoverable in revenues as depreciation. As a result, Iowa Electric has experienced a loss equivalent to the current year's impact of inflation on utility plant. In addition, the regulatory process imposes a substantial time Ing between the time when operating and capiml costs are incurred and when they are recovered. During periods of inflation, this lag, coupled with rates based on historical costs and inadequate rates of return allowed on common equity, produce revenues which do not recover the cost, in temts of purchasing power, of the productive facilities used to provide services to current customers. While the inflation gain related to debt and preferred stock financing reduces the effect of this loss, the common shareholders still experience a net erosion in their investment due to inflation. Since 1984, the inflation rate has ranged from 4% to 1%. SELECTED CONSOLIDATED QUARTERLY FINANCIAL DATA (UNAUDITED) The following unaudited consolidated quarterly dam, in the opinion of the Company, includes all adjustments necessary for the fair presentation of such amounts. 1987 Revenues....................................... Operating income ................................ Income before cumulative effects of changes In amounting principles .......................... Cumulative effects of changes in amounting principles ..................................... Net income ..................................... Earnings per average common share before cumulative effects of changes In accounting principles ............ Cumulative effects of changes in accounting principles...................................... Earnings per average common share ................. 1986 Revenues....................................... Operating income ................................ Net Income ..................................... Earnings per average common share ................. Because the Iowa Electric results of operation arc a significant portion of the consolidated results, the above amounts arc affected by seasonal weather conditions and the timing of utility rate increases. During the four quarters of 1987, electric kilowan- hour sales Increased (decreased) (4.7)%, 6.896, 6.5% and (1.4)% compared to the prior year. These sola were influenced by the mild 1986.1987 winter heating season and the hotter than normal summer cooling season. 17 $105,271 $ 89,980 $120,443 $ 97,084 17,479 8,730 36,946 9,644 5,225 3,701 17,290 3,313 4,547 _ 9,772 3,701 17,290 3,313 0.38 0.27 1.25 0.24 0.34 0.72 0.27 1.25 0.24 $130,215 $ 86,739 $109,436 $102,855 19,018 6,062 31,929 15,262 6,948 1,422 13,653 6,513 0.52 0,11 1.02 0.48 Additionally, the strengthening Iowa economy benefited sales growth for the year. Net income for the flrst quarter of 1987 was beneflted by a change in the method of accounting for utility revenues. Partially offsetting such benefit was the recording of a change in accounting principle as required by SFAS No. 90 to discount future revenues associated with the cancelled Guthrie County generating station. 1c3S Plane Raydiag. Inc, mars garbage into useful !J acts. loan Electric helped the company locate" cur I Falls. 0' The Gnuumer Adtvory Panel pnorides how Electric with impamant input franc asmintoom lenders and avoconers. Imra Electric's When Reilly runs uith Iamel me+nh+Jim Stan at his radio station, KIFG, in Ioun Falls. T IE means business in the communities we serve. In 1987, Iowa Electric assisted 65 businesses in successfully locating or expanding in our service area, resulting in approximately 3,000 jobs. ♦ Party Pae Popetan in Marshallrnm inamomd iu loan unrhfmce by rnnring prmdua lines from Caantilie, Nath Carolina. how Electric assisted Parry Pte in apuali fring f w state axmmnlc detelolonent ynma. Chaimmn Lot J. Nnnnth (left) stands luide the loadoet and Iota, Etalnk's Ran Rider. A (ANow. came) Cnm,at auh annmuni y leaders is a key part of the Imrn Elsaric lookoun of local itarkm nt. Bete lams Electric's Nancy Dmigheny looks my the Jefferson &e and I Jerald nidi publisher/edion Rick Mmain. 4 The C onlxmile Tiros abon• the trees nn the Inun State Unine sit', campus in Anes a here Innis Electric is intolved in the deoelopmenc of the Inca Sane Research Park Grlxrntion. One net,, business located at the Inun State Research Park is Thennnsnus Tochnoloo, Inc. which has a patented one-step symen, for emevi ting tat imulated concrete troll. V The Sales & Business Detelopmrnt staff is risible throughout the IE senate area. Hoe, knurl Electric's Ron Rido (left) talks oath a group frnm Jefl+son Industries, Inc., the mmrmmity's development group. V ♦ Irma Elntric's hydrrn•Imric data in louvt rolls is an Irons landmark in that tvnnranvily, The plant is king refiabi.shal mal will le gnnrming Inmvn in the near fume. ♦ The nmosard Marshallrnm County Co rthowe is a prominent fixture on the morn square in,It, On, llint,it it Inca likvric provides gas tool electric snrice, 19 MJ 2 AUDITORS' REPORT TO THE BOARD OF DIRECTORS OF IE INDUSTRIES INC.: We have examined the consolidated balance sheets and statements of capitalization of IE Industries Inc. (an Iowa corporation) and subsidiary companies as of December 31, 1987 and 1986, and the related consolidated statements of income, retained earnings and changes in financial position for each of the three years in the period ended December 31, 1987. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. As discussed in Note 2, the Office of the Consumer Advocate (Consumer Advocate) has appealed the Iowa Utilities Board's (IUB) order in the Iowa Electric Light and Power Company (Iowa Electric) 1983 electric rate case. The ultimate outcome of the appeal and related refund obligation, if any, is uncemin at this time. On April 2, 1987, the IUB issued a final order approving an annualized increase in retail rates of $25,100,000. Such rates were placed into effect on May 8, 1987. The order addressed, among other issues, whether certain of Iowa Electric's costs would be allowable for recovery in future rates. As discussed in Nota 2 and 11, Iowa Electric has incurred $24,307,000 related to the terminations in 1985 and 1984 of contracts with coal suppliers. The order allowed recovery of these costs over a four year period. As also discussed In Nota 2 and 11, Iowa Electric Incurred 1 9 8 7 A N N U $16,466,000 of construction costs related to cancelled generation projects. The IUB order disallowed recovery of the $5,200,000 allowance for funds used during construction recorded for one of the projects and allowed the balance of such construction casts to be recovered, without rate base treatment, over a ten-year period. The Consumer Advocate has filed a notice of appeal of the IUB's order. Consequentially, the ultimate outcome of these matters is uncertain at this time. In our opinion, subject to the effect of such adjustments, if any, as might have been required to the financial statements had the outcome of the matters referred to in the two preceding paragraphs been known, the financial statements referred to above present fairly the financial position of IE Industries Inc. and subsidiary companies as of December 31, 1987 and 1986, and the results of their operations and the changes in their financial position for each of the three years in the period ended December 31, 1987, in conformity with generally accepted accounting principles which, except for the changes, with which we concur, in the method of accounting for costs of cancelled generating projects as discussed in Note 2 and in the method of accounting for revenues as discussed In Note 1, were applied on a consistent basis. Chicago, Illinois January 29, 1988 9 A L C l' R E P O R T CONSOLIDATED STATEMENTS OF INCOME Operating income .............................................. 72.799 72.271 56.286 Interest expense ................................................ Year Ended December 31 25,305 1987 1986 1985 (2,375) (2,085) (in thousands) 1,812 Revenues: 4,145 Income from stock transactions of affiliate ........................... (2,344) Electric....................................................... $303,491 $285,448 $291,624 Gas .......................................................... 90,171 125,158 154,970 Other ........................................................ 19,116 18,639 15,204 - 412,778 429,245 461,798 Expenses: 1.47 • Pro forma (Notes 1(e) and 2).. 2.14 Gas purchased for resale ......................................... 71,995 99,867 133,394 Fuel for production ............................................. 56,011 57,234 57,660 Purchased power, net ........................................... 49,667 46,565 61,996 Other operation ................................................ 86,050 78,912 78,113 Maintenance .................................................. 24,046 21,188 23,041 Depredation and amortization .................................... 31,784 34,226 32,638 Taxes other than incometuxa.................................... 20,426 18,982 18,670 Operating income .............................................. 72.799 72.271 56.286 Interest expense ................................................ 26,193 25,305 25,581 Allowance for funds used during construction ........................ (1,198) (2,375) (2,085) Preferred and preference dividend requirements of subsidiary ........... 1,812 3,410 4,145 Income from stock transactions of affiliate ........................... (2,344) - - Miscellaneous, net .............................................. 4,237 (1,187) (995) Cumulative effect of change in method of accounting ,a 1M Ic 1c, 14 LAL Income before income taxes and cumulative effects of changes in accounting principles .......................................... 44A99 47.118 29.640 Federal and state income taxa ................................... 14,570 18,582 10,584 Income before cumulative effects of changes in accounting principles .......................................... 29,529 28.536 19,056 Cumulative effect of discounting recoverable cancelled plant eom, net of $1,177,000 income tax benefit ............................ 2,347) - - Cumulative effect as of January 1, 1987 of change in method of accounting for revenues, less income taxes of $4,599,000 .......... 6,13 - - .•... ...�.....-..v ter.•... .................................. • Pro forma (Notes 1(c) and 2) ....................... y. r 29,52 23.64 yr 21102 Average number of common shares outstanding ................... 13.748 I11(B 12.973 Earnings per average common share before cumulative effects o changes in accounting principles ................................ $ 2.14 $ 2.13 $ 1.47 Cumulative effect of discounting recoverable cancelled plant costs ... ( .17) - - Cumulative effect of change in method of accounting for revenues .................................................. .51 - - Earnings per average common share . As reported ................. 2.48 2.13 1.47 • Pro forma (Notes 1(e) and 2).. 2.14 1.76 $ 1.63 The accompanying Notes to Comolidated Financial Statements are an integral pan of these statements. 1 9 8 7 A N N U CONSOLIDATED BALANCE SHEETS The accompanying Notes to Consolidated Financial Statements are an integral part of these statemenu. 22 1135 December 31 ASSETS 1987 1986 (in thousands) Property, plant and equipment, at original cost. Utility - Plant in service - Electric ............................................................... $ 905,252 $ 870,818 Gas.................................................................. 70,842 70,785 Other................................................................ 27,639 22,761 1,003,733 964,364 Less -Accumulated depreciation ............................................ 378,635 354,641. 625,098 609,723 Leased nuclear fuel, net of amortization ....................................... 33,866 41,296 Construction work in progress .............................................. 15,373 16,547 674,337 667,566 Other property, net of accumulated depreciation of $3,066,000 and $2.689,000, respectively ................................................... 23,000 18,200 ..' 697,337 685,766 Current assets Cash..................................................................... 1,407 1,581 j Accounts receivable - Customer, less reserve ..................................................... 35,587 37,957 Other.................................................................. 4,816 7,137 Unbilled revenues.......................................................... 11,224 - Income tax refunds receivable ................................................. 582 1,711 Production fuel, at average cost ................................................ 15,220 14,769 Materials and supplies, at average cost .......................................... 11,625 9,289 Adjustment clause balances ................................................... 2,903 855 -: Prepayments and other ...................................................... 12,816 13,532 96,180 86,831 Deferred charges and other (Note 11) ........................................ 41.360 56,184 ' Investments: ''. Telcuennect Company ....................................................... 24,490 18,414 l Nuclear decommissioning trust fund ........................................... 1,223 - ! Other.................................................................... 4,472 4,015 The accompanying Notes to Consolidated Financial Statements are an integral part of these statemenu. 22 1135 I I A L R E P O R T CAPITALIZATION AND LIABILITIES December 31 1987 1986 35,367 (in thousands) Capitalization (See Consolidated Statements of Capitalization): 2,500 Capital lease obligations .......... Common stock ............................................................ 16,200 ........................................... Longdeb[ maturities Retained earnings ..................... $187,383 $179,578 ....................... ............... Total common equity ................ 71,273 64,192 ....................... .............. Pref rred ofs ary stock orence 258,656 243,770 Rede stockofsu.idiary...................................... Redeemable preference stock of subsidiary 18,320 18,320 ................... ................... -term Long-term deb[.....................................................6....6. 8,000 10,000 4,670 230.471 2(d.o47 Current liabilities: Commercial paper.......................................................... 26,454 35,367 Notes payable ......................... 30,430 2,500 Capital lease obligations .......... 38.460 16,200 ........................................... Longdeb[ maturities 12,937 11,975 Debt inks encs ....................... ................ Debt sinking fund requirements ....... 36,073 850 ......................................... Preference stock sinking fund requirements requirements 1,033 1,033 ...................................... Accounts payable ........................................................... 1,000 1,000 Accrued interest 33,865 37,681 ........................................................... Accrued taxes 4,670 4,722 . , , , .. , , , • • , .. vision ......................................... Accumulated refueling outage provision 16,586 19,380 ......................................... Other..................................................................... 2,437 6,385 12,183 9,993 151,214 111.719 Other long-term liabilities: Capital lease obligations..................................................... .Other.................................................................... 26,454 35,367 12,006 10,206 38.460 45,573 Deferred credits - Accumulated deferred income taxes ............................................ 115,042 111,969 Accumulated deferred investment tax credits ..................................... 44499 44,927 159.941 156,896 Commitments and contingencies (Note 10) $865,062 $851,210 i 1 9 8 7 A N N U CONSOLIDATED STATEMENTS OF CAPITALIZATION December 31 The accompanying Notes to Consolidated Financial Sratemenu are an integral part of these statements 24 3S (in thousands) Common equity: Common stock - no par value - authorized 24,000,000 shares; outstanding 13,883,161 and 13,548,441 shares, respectively ................................ $187,383 $179,578 Retained earnings ($20,414,000 restricted as to payment of cash dividends) ............ 71,273 64,192 258,656 243,770 Cumulative preferred stock: Iowa Electric Light and Power Company - par value $50 per share - authorized 466,406 shares; outstanding 366,406 shares - 6.10% - Outstanding 100,000 shares ...................................... 5,000 5,000 4.80%- Outstanding 146,406 shares ...................................... 7,320 7,320 4.30% - Outstanding 120,000 shares ...................................... 6,000 6,000 18320 18.320 Redeemable cumulative preference stocks Iowa Electric Light and Power Company - par value $100 per share - authorized 700,000 shares - 8.55%- Outstanding 90,000 and 110,000 shares ............................ 9,000 11,000 Less - Amount to be redeemed within one year ............................. 1,000 1,000 8,000 10,000 Long-term debt-. Seder 1986 debentures, 8A%, due 1993 .................................. I ..... 45,000 45,000 Iowa Electric Light and Power Company First mortgage mortgage bonds - Series 1,556%,due 1991 ................................................. 16,000 16,000 Series J,6A%, due 1996 ................................................. 15,000 15,000 Series K, 816%, due 1999 ................................................ 20,000 20,000 Series L, 736%, due 2000 ................................................ 15,000 15,000 Series M, 736%, due 2002 ................................................ 30,000 30,000 Series O, 9.80%, due 1991 ............................................... 3,888 4,921 Series P & Q, 6.70%, due 2006 ........................................... 9,200 9,200 Series R, 8A%, due 2007 ................................................ 25,000 25,000 Series T, 1434%, due 1991 ............................................... 30,000 30,000 Series U, 936%, due 2000 ................................................ 5,300 5,300 Series V,11%,due 1988 ................................................ 35,000 35,000 204,388 205,421 Guarantee of pollution control bonds, 5.73%, $4,400,000 due serially 1988.1994; $10,200,000 due 2003 .................................................. 14,600 15,400 218,988 220,821 Other subsidiaries' debt maturing through 1992 .................................. 4,599 2,100 268,587 267,921 Unamortized debt premium and (discount), net .................................. (1,010) (1,106) 267,577 266,815 Less - Amount due within one year ....................................... 37,106 1,883 230,471 264,932 $515,447 $537,022 The accompanying Notes to Consolidated Financial Sratemenu are an integral part of these statements 24 3S A L R E 1' 0 R T CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION Cash on deposit with trustee ...................................... Year Ended December 31 493 1987 1986 1985 3,239 4,326 (in thousands) (2,787) Cash and equivalents at beginning of period ...................... $ 1,581 $ 8,243 $ 5,334 Funds provided internally: 1,460 Accounts payable ............................................... (3,816) Net income ................................................... 34,076 28,536 19,056 Non-cash items included in net income - 2,416 Investments ................................................... (2,457) Unbilled revenues ............................................ (11,224) - - Disallowed costs associated with Guthrie County generating station ..... 3,615 - - D iscount of recoverable cancelled plant costs ....................... 3,524 - - Depreciation and amortization .................................. 30,385 34,226 32,638 Deferred taxes and investment nix credits .......................... 3,045 3,462 8,815 Amortization of deferred charges ................................ 6,210 5,658 5,441 Refueling outage provision ..................................... (3,948) 4,494 (6,261) (Inwme) loss from Teleconnecr Company investment ............... (4,076) (86) 72 Allowance for equity funds used during construction ................ 195) L271) (1,133) Total funds provided internally .............................. 61,412 75,019 58,628 Less - Dividends on common stock ............................... 27.370 26,156 24,794 Net funds provided internally ............................... 34,042 48,863 33,834 Funds provided from external sources: Issuance of common stock ....................................... 7,805 8,106 9,036 Issuance of long-term debt ....................................... 2,550 46,633 35,278 Net change in commercial paper and short-term notes payable ........... 11,730 (2,580) (4,588) Sinking fund requirements and reduction In longterm debt and preference stock .............................................. (3,884) (61,133) (16,079) Other........................................................ 375 ( ) 316 Net funds from external sources ............................. 18,576 (9,323) 23,963 Cash on deposit with trustee ...................................... - 493 9,849 Accounts receivable ............................................. 5,820 3,239 4,326 Materials, supplies and fuel ....................................... (2,787) 1,020 7,609 Adjustment clause balances ....................................... (2,048) (107) 1,460 Accounts payable ............................................... (3,816) (4,300) 4,090 Accrued taxes ................................................. (2,794) 740 2,416 Investments ................................................... (2,457) (396) (18,902 Deferred charges ............................................... 749 (5,054) (20,149 Other ........................................................ 7,428 781 2,279 Net funds from other changes ............................... 95 (3,584) 2222 Increase(decrease)in funds ..................................... (174) (6,662) 2,909 Cash and equivalents at end of period ............................ $ 1,407 T-1.581 $ 8,243 The accompanying Notes to Coruolidated Finandal Statements are an integral pan of there smtetnents. 25 /3S 1 9 8 7 A N N U CONSOLIDATED STATEMENTS OF RETAINED EARNINGS Year Ended December 31 1987 1986 1985 (in thousands) Balance at beginning of year ..................................... $ 64,192 $ 62,161 $ 67,743 Add: Net income ................................................... 34,076 28,536 19,056 Tax benefit resulting from the deduction of ESOP dividends ............ 375 585 156 98,643 91,282 86,955 Deduct: Cash dividends declared on common stock, at per share rates of $1.99, $1.95, and $1.91, respectively .................................. 27,370 26,156 24,794 Preference stock redemption premiums of subsidiary .................. — 934 — 27,370 27,090 24,794 Balance at end of year ($20,414,000 restricted as to payment of cash dividends) .............. $ 71,273 $ 64,192 $ 62,161 The accompanying Norm to Consolidated Financial Smremenu are an integral pan of these statement. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (a) Basis of Consolidation — The consolidated financial statements include the accounts of IE Industries Inc. (Industries) and its wholly- owned subsidiaries (the Company). The principal operating companies arc Iowa Electric Light and Power Company (Iowa Electric) and the Cedar Rapids and Iowa City Railway Company (CRANDIC). All significant Intercompany balances and transactions have been eliminated from the consolidated financial statements. (b) Regulation — Industries is currently exempt from regulation under the Public Utility Holding Company Act of 1935. Iowa Electric Is subject to regulation by the Iowa Utilities Board (IUB) and the Federal Energy Regulatory Commission (FERC). (c) Accounting for the Investment in Teleconnect Company — Teleconnect Company (Teleconnect) is engaged principally In supplying long distance and telemarketing services. Industries uses the equity method to account for Its investment in Teleconnect and the Consolidated Statements of Income include Industries' portion of Teleconnect's net income. In 1987, Teleconnect privately placed 1,554,000 shares of original Issue common stock. Such shares were sold at a price significantly In excess of book value and Teleconnect thereby experienced an increase in net assets. Accordingly, industries' share of Teleconnect's net assets increased and resulted in the prc-mx credit to "Income from stock transactions of affilinte" as shown In the Consolidated Statements of income. Industries' 27% investment in Teleconnect at December 31, 1987 included $12,600,000 of unamorthed purchase price in excess of book value at the date of acquisition (May, 1985) which is being amortized over a forty year period. (d) Depreciation — iowa Electric's provision for depreciation, except for the Duane Arnold Energy Center (DAEC), is based on straight-line composite rates. The average rate was 3.3% of the cost of depreciable electric property for 1987, 3.7% for 1986 and 3.6% for 1985. The avenge rate for gas property was 3.0% for 1987.1985. The DAEC is currently being depreciated using a remaining life method. In its Order dated April 2, 1987 relating to ]ova Electric's 1986 electric rate ease, the IUB permitted lova Electric to change the original estimated life of the DAEC from 28 to 36 years. Pursuant to the Order, Iowa Electric identified $21,709,000 of the accumulated depreciation as an Internal decommissioning reserve. In addition, the IUB required lova Electric to commence external funding of revenues collected for future decommissioning costs. Based on a study completed In December, 1985, Iowa Electric's 70% share of the cost to decommission the DAEC approximated $107 million in 1985 dollars. (e) Rettmuess— In 1987, lown Electric began accruing revenue for service rendered but unbilled at month,end in order to more properly match monthly revenue with the cost of service provided to customers. This change in method of recording revenue decreased 1987 income by $162,000, before the cumulative effect for prior periods. The cumulative effect of this change and pro forma effects on Income are shown in the Consolidated Statements of Income. The pro forma information presents the financial A L R F. P 0 A T results which would have been experienced had Iowa Electric been accounting for revenues under its current method throughout the periods. (f) Allaruunce for Funds Used During Construction — The allowance for funds used during construction (AFC), which represents the cost during the construction period of funds used for construction purposes, is capitalized by Iowa Electric as a component of the cost of utility plant. The amount of AFC applicable to debt funds and to other (equity) funds, a non-cash item, is computed in accordance with the formula prescribed by FERC. The aggregate gross rates for 1987.1985 were 8.2%, 10.8% and 11.1%, respectively. (g) Adjustment Clauses — Iowa Electric's tariffs include an electric energy adjustment clause (EAC) designed to reflect the current costs of fuel, including nuclear fuel and an estimated cost associated with nuclear waste disposal, and the energy portion of purchased power In billings to customers. The clause is based on the estimated cast of fuel consumed and the estimated energy cost of purchased power for the current month and the immediately preceding month. A correction factor is included to reflect previous over -or - under collections of revenue resulting from variances between the actual cost of fuel consumed and the amount Included in billings to customers. lova Electric records the change in over -or -under collections by charging or crediting other operation expense. The cumulative effect Is reflected In the Consolidated Balance Sheets as a current asset or current liability, pending automatic reflection in future billings to customers. Iowa Electric's gas tariffs also include louses desiimed to reflect changes in the cost of gas purchased for resale on a current basis. These clauses are accounted for in a manner similar to the EAC. (h) Aa mulatcd Refueling Outage Provision — The IUB allows Iowa Electric to collect, as part of is base revenues, funds to offset higher operation and maintenance expenditures during refueling outages at the DAEC. As these revenues are collected, an equivalent amount is charged to other operation and maintenance expenses with a corresponding credit to a reserve. During a refueling outage, such reserve Is reversed to offset the higher expenditures. (i) Income Taxes — Federal Income tax expense includes provisions for deferred taxes to reflect the tax effects of timing differences between when certain toss are recorded in the accounts and are deducted for tax return purposes. As these timing differences reverse, the related accumulated deferred income taxes are reversed to income. lown Electric provides deferred taxes, in accordance with rate making practices, only for timing differences resulting from accelerated tax depreciation for which deferred taxes are required to be provided by the Internal Revenue Code. State deferred income taxes have not been recognized for rate making purposes since June 1, 1981, pursuant to rn order of the IUB. An August 1, 1984 court decision requires that certain accumulated Federal and state deferred income taxes previously 27 provided by Iowa Electric be amortized to income over a seven year period ending in 1990. Iowa Electric also provides Federal and state deferred taxes on cermin other timing differences as indicated in Note 3. Investment tax credits are utilized to offset Federal income taxes which otherwise would be currently payable. Such credits are deferred and are subsequently credited to income over the lives of the property which gave rise to the credits. (2) RATE MATTERS: Tax Refomu Act of 1986 In order to reflect the effects of the Tax Reform Act of 1986, Iowa Electric filed tariffs with the IUB to reduce electric and gas mtes on an annual basis by $5.6 million and $157,000, respectively. Such rate reductions went into effect on July 1, 1987. Although the IUB allowed the $5.6 million reduction in electric rates to be placed into effect, it rejected Iowa Electric's electric filing asserting that such rate reduction was deficient and should be approximately $3.0 million greater. Iowa Electric filed suit with the Iowa District Court for Linn County for judicial review of the alleged deficiency. Iowa Electric has reserved for the amount in dispute. 1986 Electric Rate Case On April 25, 1986, Iowa Electric applied to the IUB for an electric rate !name to be charged to Iowa retail customers. Of the amount requested, $43.9 million on an annual basis, an Interim increase of $19.2 million was allowed by the IUB effective July 24, 1986. On April 2, 1987, the IUB issued is final Order establishing rates based on an Increase of $25.1 million. Such rates were placed into effect on May 8, 1987. In is Order, the IUB disallowed $5.2 million of AFC recorded for the cancelled Guthrie County generating station. The disallowed AFC, net of an amount reserved in prior years, was written -off in 1987 and is reflected in "Interest expense and other - Miscellaneous, net." The disallowance was based on an Interpretation of state law regarding when construction began. lown Electric believes that the IUB is in error on this matter and has appealed to the Stare District Court for relief from this finding. The Order did allow recovery of the remaining Boss associated with cancelled generating projects, but without rate base treatment. In accordance with SFAS No. 90, Iowa Electric recorded nn adjustment In 1987 to discount the future revenues associated with such toss. The cumulative effect of such discounting and pro forma effect on income are shown in the Consolidated Statements of Income. The pro forma information presents the financial results which would have been experienced had Iowa Electric discounted the recoverable cuncelhd plant toss at the date of cancellation in February, 1986. Other adjustments were also recorded in 1987 to reflect the remaining provisions of the rare case settlement. The Consumer Advocate Poed a notice of appeal on Issues In this use that were also appealed in the 1983 rate case (sce discussion following) as well as other issues 1,3.5 initially ralsed in this case, including recovery of a portion of the coal contract termination costs (see Note 11), recovery of certain future nuclear dmornmlssioning expenses, and recovery of a portion of the cancelled Guthrie County generating station costs (see Note 11). Iowa Electric bellevd the probability that the Consumer Advocate will be successful in its appeal is remote. Accordingly, no refund liabilities have been recorded. 1983 Electric Rare Case On June 8, 1987, the Linn County District Court issued its Order relating to Iowa Electric's $44.2 million 1983 electric rate increase, of which $40.0 million on an annual basis was approved by the IUB on August 1, 1984. The Issue appealed by Iowa Electric relating to a single deferred income rax item was derided in Iowa Electric's favor. The Court upheld the IUB on all issues 1 9 8 7 A\\ U appealed by the Consumer Advocate. No rate adjustments were required as a result of the Order. Certain issues appealed to the Linn County District Court by the Consumer Advocate have now been appealed to the Iowa Supreme Court. A significant reduction of the $40.0 million rare increase would be required if all issues were decided against Iowa Electric. A final court derision adverse to Iowa Electric relating to one of the issues would result in an immediate refund obligation. An adverse decision on the remaining appealed issues would result in refund obligations through prospective rate reductions. Iowa Electric is of the opinion that the likelihood of a decision overturning the IUB and Linn County District Court's Orders for any of the Issues remaining on appeal by the Consumer Advocate is remote. Accordingly, no refund liabilities have been recorded. (3) INCOMETAXES: Federal and state income taxes as set forth in the Consolidated Statements of Income are comprised of the following: Year Ended December 31 1987 1986 1985 (in thousands) Federal income taxes: Current ...................................................... $ 11,060 $ 11.786 $ 242 Deferred — Unbilled revenues ............................................. Coal contract termination costs..................................(3,615) 3,590 — (963) — 3,283 Plant abandonments ........................................... (676) 3,998 — Refueling outage provision ...................................... 2,058 (2.067) 2,880 Internal decommissioning ....................................... (6,176) 6,700 — 3,561 — 5,976 Depreciation................................................. Other.......................................................1,489 6.984 1,237 Prior years ................................................... (1,777) (7,153) (7,164) Investment rax credits — Deferred 1.645 4,884 ....................................................1,911 Amortization and other.........................................(1,941) (1.847) (1.670) Total Federal income taxes .................................. 12,623 15,944 9,668 State income taxes[ 3,905 3,289 1,474 Current...................................................... Deferred — Unbilled revenues ............................................. 817 — — Coal contract termination costs .................................. 1,771 — — Plantabandonments...........................................681 — — Refueling outage provision......................................(223) — — Internal decommissioning .......................................(1,685) (484) — (484) — (459) Depreciation ................................................. Other.......................................................846 666 673 Prior years ................................................... (259) (833) (772) Total state income taxes .................................... 5,369 2.638 916 Total Income taxes ........................................ $ 17,992 $ 18,582 $ 10,584 Included in Consolidated Statements of Income as: Federal and state Income taxes .................................... $ 14,570 $ 18,582 $ 10,584 Cumulative effects of changes in accounting principles ................. 3,422 — — $ 17.992 $ 18,582 $ 10,5844 28 A L R E P O R T The overall effective income tax rates shown below were computed by dividing total income rax expense by the income before income taxes. Year Ended December 31 1987 1986 eral income tax rate ................................ 40.0% 46.0% Add (deduct): Allowance for funds used during construction ...................... (0.9) (2.3) (3.2) Amortization of investment tax credits ............................. (3.7) (4.0) (5.8) Amortization of certain accumulated deferred income taxes over five and seven years ........................... (63) (7.5) (12.8) Preferred and preference dividend requirements ofsubsidiary ............................................... 1.4 3.3 6.4 State income taxes, net of Federal benefits .......................... 5.1 4.0 2.6 Other items, net .............................................. (1.0) (0.1) 2.5 Overall effective income tax rate ................................. 34.6% 39.4% 35.7% At December 31, 1987, primarily as a result of rate making practices, Federal and state deferred income taxes have not been provided on cumulative net tax timing differences'of $73,000,000 and $175,000,000, respectively. Iowa Electric believes that the Income taxes payable in the future, due to the reversal of such timing differences, will be recovered through the rate making process. In December, 1987, the Financial Accounting Standards Board issued SFAS No. 96 which establishes accounting and reporting standards for the effects of income taxes. The Company is required to adopt the nese (4) LEASES: Iowa Electric has a nuclear fuel lease covering Its 70% undivided Interest in the nuclear fuel purchased for the DAEC. Future purchases of fuel may also be added to the fuel lease. This capital lease provides for annual one year extensions which Iowa Electric presently intends to exercise to a date not later than December 31, 2023. The credit agreement between the lessor and the bank has a termination date of December 31, 1990, but will continue on n year to year basis unless either party provides at least a three year notice of termination. The maximum amount of financing available under the agreement is currently $80 million. Iowa Electric is responsible for the payment of axes, maintenance, operating cost, risk of loss and insurance relating to the leased fuel. Annual nuclear fuel lease expenses include the cost of fuel, based on the quantity of heat produced for the generation of electric energy, plus the lessor's Interest costs related to fuel in the reactor and administrative expenses. These expenses (included in fuel for production) for 1987.1985 were $11,541,000, $13,708,000 and $9,560,000, respectively. Iowa Electric is operating the Prairie Creek Generating Station, Units 1, 2 and 3, under a ten year capital lease agreement. Iowa Electric expects to purchase the units In accounting and disclosure requirements of SFAS No. 96 prior to 1990. When adopted, the Company will record the cumulative effect of SFAS No. 96. Adjustments to accumulated deferred income taxes will be recorded for additional deferred income rax liabilities not provided as a result of rate making practices and the effects of income tax rate changes. It is expected that such adjustments will be offset primarily by regulatory assets and liabilities. Although the Company has not yet determined the amount of such adjustments, it does not anticipate an adverse impact on the Consolidated Statements of Income. 1988 for approximately $5,500,000.'fie lease payments (included in other operation expenses) for 1987.1985 were $1,101,000 annually. Operating lease rental expenses were $7,852,000, $7,444,000 and $7,242,000 for 1987-1985, respectively. Future minimum lease payments, which include the estimated annual expenses for fuel currently under Iowa Electric's nuclear fuel lease, are as follows: Capital Operating Year Leases To (in thousands) 1988 ................. $ 13,958 $ 3,679 1989 ................. 15,055 3,423 1990 ................. 7,712 3,315 1991 ................. 5,244 3,304 1992 ................. 1,998 3,268 Through 2003 .......... 2,450 34,814 46,417 $ 51,803 Less: Amount representing Interest ... 7,026 Present value of net minimum lease obligations ...... $ 39,391 29 // �� (5) RETIREMENT PLAN: The Company has a non-contributory retirement plan which covers substantially all of its employers. Plan benefits are based on years of service and compensation during the employeeslatter years of employment. Payments made from the pension fund to retired employees and beneficiaries during 1987 totaled $5,852,000. The Company's policy is to expense and fund the pension cost determined cuing the frozen entry age actuarial cost method, provided that this amount is at least equal to the minimum funding requirements mandated by the Employee Retirement Income Security 1 9 8 7 A N N U Act (ERISA) and does not exceed the maximum tax deductible amount for the year. Total pension cost requirements paid to the Trustee were $2,786,000 and $2,535,000 for 1986 and 1985, respectively. As of January 1, 1987, the Company accounts for its retirement plan pursuant to the provisions of SFAS No. 87. However, since Industries' major subsidiary is Iowa Electric, a public utility subject to the provisions of SFAS No. 71, certain adjustments are necessary in order to reflect the amount of annual pension cost allowed in Iowa Electric's most recent rate case. The components of 1987 pension cost are as follows: In addition to providing pension benefits, the Company provides certain healthcare benefits for retired employees. The cost of such benefits Is expensed as claims are paid. Such costs totaled $914,000, $754,000 and $769,000 for 1987.1985, respectively. (in thousands) Service cost.............................................................................. $2,226 Interest cost on projected benefit obligation.................................................... 5,558 Assumed return on plan assets (actual return on plan assets was $4,723,000) ......................... (6,449) Amortintion of unrecognized plan assets as of January 1, 1987 .................................... (261) SFASNo. 87 pension cost.................................................................. 1,074 Adjustment to funding level................................................................. 1,442 Pension cost recognized in the Consolidated Statements of Income ................................. $2,516 A reconciliation of the funded smtus of the Plan under SFAS No. 87 to the amounts recognized in the Consolidated Balance Sheers is presented below: December 31 1987 1986 (in thousands) Fair market value of plan assets ................................................. $ 83,650 $ 82,263 Actuarial present value of benefits rendered to date— Accumulated benefits based on compensation to date, including vested benefits of $52,893,000 and $57,263,000, respectively .................................... 58,436 62,543 Additional benefits based on estimated future salary levels .......................... 13,420 14,503 Projected benefit obligation ................................................... 71,856 77.046 Plan assets in ac ss of projected benefit obligation ................................. 11,794 5,217 Remaining unrecognized net asset existing at January 1, 1987, being amortized over 20 years.............................................................. (4,956) (5,217) Unrecognized net gain ........................................................ (5,396) — Prepaid pension cost recognized in the Consolidated Balance Sheets .................... $ 1,442 $ — Assumed rate of return ....................................................... 8.00°6 8.00% Weighted avenge discount rate of projected benefit obligation ..... . .................. 8.25% 7.50% Assumed rate of increase In future compensation levels .............................. 5.75% 5.75% In addition to providing pension benefits, the Company provides certain healthcare benefits for retired employees. The cost of such benefits Is expensed as claims are paid. Such costs totaled $914,000, $754,000 and $769,000 for 1987.1985, respectively. !, A L R E I' 0 R T i "+ (6) CHANGES IN OUTSTANDING SHARES OF COMMON STOCK: i The following table presents information relating to the issuance of common stock: s Common Stock _ 7 Number of t Preferred Stock, no par value, authorized for r ' Shares Amount 3 Balance, December 1984 ................................................... The 6.10%, 4.80% and 4.30% Series of Iowa Electric (in thousands) Cumulative Preferred Stock are redeemable at the option ces Stock plan issuances*....................................................... 12,672,902 $ 162,436 and $51.00 per share, respectively, plus accrued dividends. Balance, December 31, 1985 ................................................... 499,991 9,036 $2,000,000 in 1987, $4,094,000 In 1986 and $3,094,000 Stock plan issuances* . 13,172,893 171,472 Balance, December 31, 1986 ................................................... 375,548 8,106 Stock plant issuances* .................................................... 13,548,441 1 79,578 Balance, Dezember 31, 1987 ................ 334,720 7,805 ................................... 13,883,161 $ 187,383 *Dividend Reinvestment and Stork Purchase Plan, Employee Stock Purchase Plan, Employees' Srrck Ownership Plan ,r ;• I a Shares reserved for issuance pursuant to the various stock plans towed 1,159,326 at December 31, 1987. s , (7) PREFERRED AND PREFERENCE STOCK; Industries has 5,000,000 shares of Cumulative t Preferred Stock, no par value, authorized for r ' Issuance, of which none is Issued and outstanding at ver v r December 31, 1987. The 6.10%, 4.80% and 4.30% Series of Iowa Electric Cumulative Preferred Stock are redeemable at the option Of Iowa Electric upon 30 days' notice at $51.00,$50.25 . and $51.00 per share, respectively, plus accrued dividends. Iowa Electric Cumulative Preference Stock aggregating _ $2,000,000 in 1987, $4,094,000 In 1986 and $3,094,000 31 in 1985 was redeemed at par under mandatory and optional sinking fund provisions. Annual sinking fund redemptions of $1,000,000 will be required in 1988.1992. The Series 8.55% Cumulative Preference Stock is redeemable at the option of Iowa Electric upon 30 days' notice at $106.41 through October 1, 1988 and at decreasing amounts thereafter. However, no redemption may be made prior to October 1, 1988 by the application of certain monies having a cost to Iowa Eleatic of less than 8.55% per annum. N g (8) LONG-TERM DEBT: Iowa Electric's Indenture securing its First Mortgage Bonds constitutes a direct first mortgage lien upon substantially all tangible public utility property of Iowa Electric. 1 9 8 7 A 8 R U Total sinking fund requirements and debt maturities for 1988.1992 are as follows. The cable pertains to Lown Electric unless otherwise noted. Debt Maturities Sinking Fund Debt Maturity Year Requirements* Issue Date Amount Total 1988 $2,243,000 Series V Il/l/89 600,000 Pollution Control Various 1,899,000 Other Subsidiaries' 11/1/90 600,000 Debt 1989 2,243,000 Pollution Control 1/l/91 16,000,000 Other Subsidiaries' 7/1/91 790,000 Debt 1990 2,083,000 Pollution Control 11/1/91 600,000 Other Subsidiaries' Various 187,000 Debt 1991 1,050,000 Series I Various 187,000 Series O Series T Pollution Control Other Subsidiaries' Debt 1992 1,050,000 Pollution Control Other Subsidiaries' Debt 4/1/88 II/l/88 Various 274,000 $38,317,000 Il/l/89 600,000 Various 1,899,000 4,742,000 11/1/90 600,000 Various 187,000 2,870,000 1/l/91 16,000,000 7/1/91 790,000 11/I/91 30,000,000 11/1/91 600,000 Various 187,000 48,627,000 I1/I/92 600,000 Various 187,000 1,837,000 *Includas annual sinking fioul requirements of $1,210,000 fm the years t988•r989 and $t,g5o,000 fm 1990.1992 which, by terms of the Indenture under which Series 1, J. K, L, M and R Bonds have been issued, may be satisfied by the pledging of additional property. lawn Electric intends to meat the 1988 requiremlmis fm these issues by this means. The Series P, Qand U Bonds secure the obligation of lows Electric with respect to three series of pollution control revenue bonds Issued by three Iowa municipalities. (9) SHORT-TERM BORROIVINGS: At December 31, 1987, Industries had an unused line of credit in the amount of $10,000,000. (10) COMMITMENTS AND CONTINGENCIES: Construction Program The Company's construction program for 1988 anticipates expenditures aggregating approximately $53,000,000 for which substantial commitments have been made. Long -Term Power Purchase Contract Iowa Electric has o purchase power contract, as amended, with the City of Muscatine, Iowa for capacity purchases of 90 Mw through May, 1991 and 70 Mw for the final two years. The cost of such opacity purchases, along with Iowa Electric's proportionate share of operating and maintenance costs, arc reflected in Iowa Electric had lines of credit totaling $5 1, 100,000, of which $30,430,000 was being used to support commercial paper. purchased power in the Consolidated Statements of Income and amounted to $31,134,000 in 1987. Nuclear Fuel lova Electric contracted to purchase foreign uranium hexafiourlda for future processing Into nuclear fuel and on January 4, 1988, Iowa Electric took delivery of 445,000 kilograms at n cost of $27,381,000. Such quantities are expected to fulfill lown Electric's nuclear fuel requirements through 1994, In September, 1985, the U.S. District Cour in Colorado issued a decision in Western Nuclear Inc. v. Huffman holding that the Department of Energy's (DOE) Utility Services Contract which provides for the enrichment of uranium fuel for U.S. nuclear power plants 32 //35, A L R I: P 0 R I violates the DOE's uranium enrichment criteria and is "null and void." Since the ruling, and pending appeal, the DOE has honored its contract to enrich nuclear fuel. On June 5, 1986, the District Court ruled in the same rase that the DOE violated its statutory duty to impose restrictions on the enrichment of foreign umnium for domestic use. On June 20, 1986, the District Court Issued an injunction prohibiting DOE enrichment of foreign uranium for domestic use effective January 1, 1987. Iowa Electric participated with several other U.S. nuclear utilities in an appeal by the DOE and in a request for an injunction staying the effect of the District Court's injunction. The Court of Appeals granted the stay allowing the DOE to fulfill its obligations for enrichment services pending further order of the Court. On July 27, 1987, the Court of Appeals issued its decision finding that the DOE has not implemented restrictions on the enrichment of foreign uranium as required by law. The Court reinstated the injunction prohibiting the DOE from such enrichment activity. On October 8, 1987, the Court granted a stay of mandate pending final disposition by the U.S. Supreme Court. On January 11, 1988, the U.S. Supreme Court granted certforad in the case. It is not expected that the case will be heard until the Court's term beginning October, 1988. Iowa Electric believes the stay of mandate will still be In effect until the Supreme Court's decision. Therefore, Iowa Electric anticipates enrichment of the nuclear fuel delivered in January, 1988 will be provided under the DOE's Utility Services Contract. However, Iowa Electric is monitoring the case closely and may have to cake action to secure foreign enrichment services, in which event the contract with the DOE would hove to be voided or a waiver from the DOE obtained. Iowa Electric has sufficient enriched uranium for the refueling scheduled in late 1988. Nuclear Insurance Programs Pursuant to provisions in various nuclear Insurance policies, Iowa Electric could be assessed retroactive premiums in connection with a future accident at a nuclear facility owned by a utility participating in the particular Insurance plan. With respect to public liability coverage under the Price -Anderson Act, Iowa Electric could be assessed a maximum of $3,500,000 per accident with a maximum of $7,000,000 per year if loses relating to the accidents exceeded $160,000,000. With respect to excess property damage and replacement power coverages, Iowa Electric could be assessed a maximum of $5,000,000 and $833,000, respectively, If the Insurer's losses relating to an accident exceeded its reserves. No such assessments have been made under these policy provisions, legislation Is currently pending in Congress which would significantly Increase the maximum liability under the Price -Anderson Act in the event of a nuclear accident. (11) DEFERRED CHARGES: Coal Contract Termination In October 1984, Iowa Electric exercised n provision in an agreement with a coal supplier to cancel a contract 33 which was to have expired on September 30, 1997. Such action was taken because of lower spot market coal prices and reduced coal requirements. The terms of the agreement specified a contract termination payment of $20,218,000, which was partially offset by prepayments of $6,203,000 made in prior years. In August 1985, Iowa Electric terminated a second contract with another coal supplier which was to have expired March 31, 1986. Such action was taken because of lower spot market coal prices and a reduced need for low sulfur coal. A contract termination payment of $7,293,000 was negotiated, which was partially offset by prepayments of $701,000 made in prior years. In its Order dated April 2, 1987, the IUB allowed recovery of the retail portion of the contract termination payments over a four year period. The IUB disallowed recovery of related interest costs and did not permit inclusion of the unrecorded costs in rate base. The portion relating to wholesale customers is also being recovered in rates currently. Cancelled Plant The costs of cancelled plant ($11,252,000) are being amortized over 10 years commencing in 1987 as they are collected in rates. The rate snaking treatment is discussed in Note 2. (12) GUARANTEES: At December 31, 1987, Industries or its subsidiary, Iowa Electric, have guaranteed $3,200,000 of loans primarily in connection with economic development activities. (13) JOINTLY -OWNED ELECTRIC UTILITY PLANT: Under joint ownership agreements with other Iowa utilities, Iowa Electric has undivided ownership interests In two electric generating stations and related transmission facilities. Each of the respective owners was responsible for the issuance of its own securities to finance its portion of the construction costs. Kilowart- hour generation and operating expenses are divided on the same•, basis as ownership with each owner reflecting its respective costs in its Statements of Income. Information relative to Iowa Electric's ownership Interest in these facilities at December 31, 1987 is as follows: Ottumwa DAEC Unit 1 (in thousands) Utility plant In service .... $374,942 $ 62,054 Accumulated depreciation.......... $117,605 $ 12,888 Construction work In progress........... $ 10,510 $ 58 Plant capacity — Mw .... 500 675 Iowa Electric's share ..... 70% 15% In-service date .......... 1974 1981 t3-� (14) SEGMENTS OF BUSINESS: The principal subsidiary of Industries is Iowa Electric, a utility engaged primarily in the generation, transmission, distribution and sale of electric energy and in the 1 9 8 7 A N N U'. purchase, distribution and sale of natural gas. Certain financial information relating to Industries' segments of business is presented below: Operating results: Revenues- Electric...................................................... Gas........................................................ Railroad..................................................... Operating income- Electric...................................................... Gas........................................................ Railroad..................................................... Other information: Depreciation- Electric...................................................... Gas................................................. ....... Railroad..................................................... Construction expenditures- Electric...................................................... Gas........................................................ Railroad..................................................... Assets - Identifiable assets" - Year Ended December 31 1987 1986 1985 146 (in thousands) $ 34,788 $303,491 $285,448 $291,624 90,401 125,441 155,149 10,270 11,037 7,786 $ 64,185 $ 55,851 3,605 9,112 4,590 5,818 $ 29,159 $ 31,758 2,048 2,021 157 146 $ 41,045 $ 34,788 2,729 1,843 1,696 835 Electric ..................................................... $691,110 $689,327 Gas....................................................... 58,622 54,152 Railroad .................................................... 25,285 22,090 775,017 765,569 Other corporate assets ......................................... 90,045 85,641 Total consolidated assets ...................................... $865,062 $851,210 "Includes net utility plant, leased nuclear fuel, productfon fuel, rnau+iah and supplies, and other identifiable assets. $ 48,677 3,366 3,250 $ 29,657 2,604 135 $ 43,244 2,106 1,442 $686,059 53,059 19,324 758,442 92,476 $850,918 I 1 I 1 34 �/ S 9 A L R E P O R T SELECTED CONSOLIDATED FINANCIAL DATA $865,062 $851,210 $850,918 $831,202 Capitalization (000,000's): 1987 1986 1985 1984 1983 1982 Income statement data (000's): 43 $186 38 Preferred and preference stock .......... 26 4 28 5 51 10 55 11 57 11 60 Operating revenue .................... $412,778 $429,245 $461,798 $476,706 $452,925 $410,913 Operating income .................... 72,799 72,271 56,286 71,966 66,334 68,627 Net income ......................... 34,076 28,536 19,056 30,023 23,289 22,247 Common stock data: $250,562 Income taxes ....................... 3.06 3.00 2.32 3.04 Average number of shares 2.75 Number of Iowa Electric preferred 38% 37% 36% 35% outsmnding(000's) .................. 13,748 13,408 12,973 12,445 10,901 10,339 Earnings per average common share ...... $ 2.48 $ 2.13 $ 1.47 $ 2.41 $ 2.14 $ 2.15 Return on average common equity ....... 13.6% 12.0% 8.2% 13.5% 11.6% 12.3% Dividends declared per common share .... $ 1.99 $ 1.95 $ 1.91 $ 1.855 $ 1.795 $ 1.735 Annual dividend rate at end of year ...... 2.02 1.98 1.94 1.90 1.84 1.78 Market price per common share $ 41,880 Percent of construction expenditures at year-end ......................... 22.63 23.38 20.75 18.00 14.88 15.75 Book value per common share 92% at year-end ......................... 18.63 17.99 17.73 18.16 17.75 17.69 Ratio of market price to book value at year-end ......................... 121% 130% 117% 98% 84% 89% gists too 5537 100 5537 100 5505 100 5505 100 $463 100 Total assets (000's) ................... $865,062 $851,210 $850,918 $831,202 Capitalization (000,000's): - Construction expenditures, $ 905,252 $870,818 Common equity ..................... $259 47 $244 46 $234 43 $230 45 $215 43 $186 38 Preferred and preference stock .......... 26 4 28 5 51 10 55 11 57 11 60 13 Long-term debt ...................... 230 49 265 49 252 47 220 44 233 46 237 49 gists too 5537 100 5537 100 5505 100 5505 100 $463 100 Total assets (000's) ................... $865,062 $851,210 $850,918 $831,202 $800,049 $750,227 Construction expenditures, $ 905,252 $870,818 $838,139 $787,500 $764,696 $729,351 including AFC (000's) ............... $ 52,887 $ 42,618 $ 47,866 $ 39,404 $ 48,110 $ 42,595 Percent of construction expenditures 27,639 22,761 22,512 20,021 14,902 13,170 financed internally from operations ..... 65% 100% 72% 100% 99% 96% Times interest earned before $ 378,635 $354,641 $332,783 $303,233 $275,500 $250,562 Income taxes ....................... 3.06 3.00 2.32 3.04 2.74 2.75 Number of Iowa Electric preferred 38% 37% 36% 35% 33% 31% and preference shareholders ........... 2,161 2,222 2,802 3,006 3,121 3,251 Number of common shareholders ....... 27,414 29,869 32,348 32,805 31,768 31,743 SELECTED FINANCIAL DATA -10, Utility plant in service (000's) - Electric ............................ $ 905,252 $870,818 $838,139 $787,500 $764,696 $729,351 Gas ............................... 70,842 70,785 71,126 69,586 67,173 64,484 Other ............................. 27,639 22,761 22,512 20,021 14,902 13,170 $1,003,733 $964,364 $931,777 $877,107 $846,771 $807,005 Accumulated depreciation (000's) ........ $ 378,635 $354,641 $332,783 $303,233 $275,500 $250,562 Ratio of accumulated depreciation to utility plant In service ...................... 38% 37% 36% 35% 33% 31% AFC as a percent of net income .......... 3% 8% 9% 4% 14% 17% Times interest mored before income taxes ........................ 3.21 3.10 2.32 3.05 2.74 2.67 Construction expenditures, including AFC (000'x) ................ $ 47,649 $ 40,111 $ 45,427 $ 38,793 $ 47,874 $ 41,880 Percent of construction expenditures financed internally from operations ...... 69% 100% 69% 100% 94% 92% 35 //3.S' 1 9 8, A N N U ELECTRIC: OPERATING COMPARISON -18: Five Year Compound Rate of iperattng revenue luuuvsp Residential ....................... $114,395 $100,067 $ 99,309 $ 98,882 $ 92,229 $ 79,721 Rural ........................... 16,826 16,801 16,858 17,233 16,106 15,304 Commercial ...................... 87,996 86,111 86,059 89,500 83,019 73,932 Industrial ........................ 66,448 65,537 70,562 73,629 66,332 63,520 Street lighting and public authorities .. 4,268 4,161 4,346 4,367 4,150 3,770 Total from ultimate consumers .... 289,933 272,677 277,134 283,611 261,836 236,247 Sales for resale .................... 12,556 11,641 13,282 12,883 13,447 9,931 Other ........................... 1,002 1,130 1,208 1,044 911 710 ....." w.- �..-- - ......,. Residential.......................1,232,622 1,215,722 1,174,150 1,209,678 1,272,030 1,186,263 0.8% Rural ........................... 193,908 213,431 208,491 210,958 212,775 221,803 (2.4) Commercial ...................... 1,143,103 1,118,493 1,072,674 1,071,934 1,066,847 1,031,782 2.1 Industrial ........... .........1,485,476 1,440,2761,391,5731,365,9591,290,1681,292,404 2.8 Street lighting and public authorities .. 50,572 48,643 51,117 52,952 55,030 52,664 (0.8) Total to ultimate consumers ...... 4,105,681 4,036,565 3,898,005 3,911,481 3,896,850 3,784,916 1.6 Sales for resale .................... 312,324 307,759 296,629 294,047 322,436 314,973 (0.2) Net generating capability - 4,418,005 4,344,324 4,194,634 4,205,528 4,219,286 4,099,889 1.5 iourees of electric energy (000's Kwh): 8,116 Generated - Fossil, primarily coal .............. 1,946,916 1,844,564 1,524,106 1,079,576 1,608,895 1,602,903 Steam stations - Nuclear* .................... Nuclear ........................ 1,766,319 2,095,334 1,348,821 1,889,865 1,615,878 1,588,391 350,000 Hydro .......................... 5,153 5,595 3,892 5,517 6,309 6,706 350,000 Fossil ....................... 3,718,388 3,945,493 2,876,819 2,974,958 3,231,082 3,198,000 540,750 Purchased and net interchange ....... 1,076,115 751,634 1,705,080 1,588,615 1,377,310 1,248,647 491,250 499,750 4,794,503 4,697,127 4,581,899 4563,573 4,608,392 4,446,647 155,900 Heat rate (Bra per Kwh generated) ... 11,359 11,212 11,495 11,657 11,591 11,610 Net capability at time of 206,354 206,007 205,959 204,712 204,460 204,290 0.2% peak load (Kw) - 175,693 175,502 175,221 175,039 174,002 173,890 Net generating capability - 8,169 8,143 7,891 8,116 8,533 8,097 Steam stations - Nuclear* .................... 350,000 350,000 350,000 350,000 350,000 350,000 Fossil ....................... 513,750 540,750 541,250 492,250 491,250 499,750 Peaking turbines and others ...... 155,900 1.55,900 156,500 155,900 157,800 157,800 1,019,6501,046,650 1,047,750 998,150 999,050 1.007,550 Purchase capability .............. 90,000 100,000 100,000 149,000 201,250 102,504 1,109,650 1,146,650 1,147,750 1,147,150 1,200,300 1,110,054 Net peak load (Kw) - 60 minutes Integrated ............. 978,322 953,926 922,190 966,935 985,456 930,985 1.0% Number of customers at yearend ........................ 206,354 206,007 205,959 204,712 204,460 204,290 0.2% Residential and rural service: Average number of customers ....... 175,693 175,502 175,221 175,039 174,002 173,890 Average annual Kwh sales 8,169 8,143 7,891 8,116 8,533 8,097 per customer .................... Revenue per Kwh sold ............. 9.201 8.181 SAN 8.171 7.301 6.754 Average annual revenue per customer .................... $751.46 $665.91 $662.98 $663.37 $622.60 $546.46 * Re)nesenu louu Electric's 7o% undivided interest in the Duane Amold Energy Center which k operated by lam Electric. A L R E 1' 0 R T GAS OPERATING COMPARISON -10- Five Year Compound Rate of 1987 1986 1985 1984 1983 1982 Growth 9 Operating revenues (000's): $ 45,245 $ 59,153 $ 68,719 $ 73,089 $ $ 65,219 s Residential ....................... Commercial - firm ................ 18,475 23,986 8,433 27,466 11,032 28,995 12,055 28,123 12,041 25985 11,520 -imerruptible ......... 6,086 3,883 11,961 16,324 17,868 19,815 19,250 industrial -firm .................. interruptible 14,455 21,037 30,968 31,456 29,999 26,743 - ........... Total from ultimate consumers ...... 88,144 124,570 588 154,509 461 163,463 433 161,180 1, 046 148,718 ' Other ........................... 2,026 X90,17012$ 5,15815$ 4,970 $163,896 $162,226 $148,945 Energy sales (000's dekatherms} 10,10 151 13,147 15, 13,015 14,320 (5.2)96 Residential ....................... Commercial - firm ................ 4 3 2,713 2,838 5 374 2,840 5,984 3,065 (5.1) (5.8) -interruptible ......... 2,059 626 2,374 3,474 4,293 4,842 5,630 ( 13.6 Industrial - firm .................. -interruptible ........... 5, 699 6,731 8,261 7,986 7,697 7,378 36,377 (4.2) (6.5) Total sales ...................... 22,851 29831 33,928 34,685 34, 112 - - 100+ Industrial - transported volumes ..... 4,440 27,291 682 30,513 - 33,928 - 34,685 34,112 36,377 (4.6) Total volumes delivered ............ Operating stadadrs: § Gas purchased for resaley3,271 28,954 34,507 34125 , 34,894 35,925 (000's dekatherms) ............... Cost of gas purchased for$140 $ 71,995 $ 99,867 $133,394 $136,603 ,844 $ 125,753 resale (000's) .................... Cost per dekatherm of gas purchased $ 3.45 $ 387 $ 4.00 $ 4.04 $ 3.50 for resale ...:....... . $ 3.09 Sendout capability at time of peak demand (de • • • • • • • ' ' • 251,211 ' 263,986 261,291 261,291 246,384 261,221 272,727 273,942 269,455 (5.0)9 out (dekatherms) . . 195,682 Peak daily sendour 220,836 264,772 132,986 133,165 132,587 131,638 (1.4)rA Number of customers at year•end ... 122,351 126,951 Residential service Average number of customers ........ 107,921 110,480 114,372 114,316 113,603 112,92 Average annual dekatherm sales95 109 115 118 115 127 per customer r. Revenue per dekatherm sold ......... $ 439 $ 4.89 $ 5.23 $ 5.44 $ 5.47 $ 4. 55 Average annual revenue . $ 417.87 $ 535.42 $600.84 $ 639.36 $ 626.77 $ 577,54 � per customer ............... .... ANNUAL. REPORT information concerning the Company aril is not in Connection with any rale, offer m This report b published to provide general sale m solicitation of any offer to Mry any smtrities. The statements in this report are famished solely fm ymo informd figures presented, while accepted by the management as reliable in the operations of the Property, are on amtutt hieh immpllies liability on ourd by us against na m an thracy Ot e Part Of out material (act and are not famished by us not to be used by you'ssim of Y Y officers and dCampani against any rithi your ity de mag the securities any State m Federal .The osAa of this paragraph is ro protest and this 37 //3-5� BOARD OF DIRECTORS IE INDUSTRIES INC. AND IOWA ELECTRIC LIGHT AND POWER COMPANY J. Wayne Bevis (C) President, Chief Executive Officer and Director Roboreen Company (Window and Door Manufacturing) Pella, Iowa Dr. George Daly (A) Dean College of Business Administration The Unitwsity of Iowa Iowa City, Iowa Dr. Salomon Levy (C) President S. Levy Incorporated (Engineering/Management C nendting) Campbell, California Lee Liu (N) (E) Chairman of the Board, President and Chief Executive Offi= of the Company Dr. Leo L. Nussbaum (A) President Emeritus Coe College, Cedar Rapids, Iowa St. Petersburg, Florida Robert D. Rap (N) President, Chief locurim Officer and Director Life Investors Inc. (Insurance and Investment Company) Cedar Rapids, Iowa David IZ Reed (N) Attorney and Counselor at Law Kansas City, Missouri J. B. Rehnstrom Senior Vire President—Finance and Secretary of the Company Larry D. Root Senior Vice President— Operations and Production Jana Electric Light and Power Company Henry Royer (C) (E) Chairman of the Board and President The Merchants National Bank of Cedar Rapids Cedar Rapids, Iowa Richard E. Scherling (A) (E) Retired Merchant Cedar Rapids, Iowa IE INDUSTRIES INC. (E) Member Exeaaim Committee (A) Member Audit Committee (N) Member Nominating Committee (C) Memher Compensation Committee DIRECTORS EMERITUS William O. Gray Attorney at [taw Cedar Rapids, Iowa Dr. James A. Van Allen Carter Professor of Physics, Emeritus The Unitenity of Iowa Iowa City, Iowa Walter E. Brown Chairman of the Board Kiowaoration (Valtea Zinc Die Casting) Marshalltown, Iowa 1 9 8 7 A N N U OFFICERS IE INDUSTRIES INC. Lee Liu Chairman of the Board, President and Chief E=utu s Officer J. B. Rehmtrom Senior Vice President—Finance and Secretary Robert J Kucharski Vice President, Treasurer and Assistant Secretary Thomas J. Pimer Vice President and General C cruel William C. Jurgemen Assistant Secretary IOWA ELECTRIC LIGHT AND POWER COMPANY Lee Liu (54.30) Chairman of the Board, President and Chief Exataim Officer _ J. B. Rehmtrom (57.28) Senior Vice President—Finance and Secretary Larry D. Root(51-17) Senior Vice President—Operations and Production Robert J. Kucharski (55.13) Vice President and Treasurer Dr. Robert J. Latham (45.4) Vice Presider[—Corporate Affairs and Planning - Richard W. McGaughy (57-7) Vice President—Production Thomas J. Pimer (46.9) Vice President and General Counsel Harold W. Relmmer (50.15) Vice President—Engineering Thomas R. Seldon (49.1) Vice President —Human Resources William C. Jurgemen (47.29) Assistant Secretary Figures in parenthesis represent age and Years of service. 38 1135' A L R E P O R T SHAREHOLDER INFORMATION ANNUAL MEETING The annual meeting of the shareholders will be held at 2:00 p.m., Central Daylight Time on Tuesday, May 17, 1988 at the ie: Tower, 6th floor, 200 First Street S.E. in Cedar Rapids, Iowa. A proxy statement with respect to this meeting will be mailed on April 8, 1988. All common shareholders are cordially invited to attend. However, those who are unable to attend in person are urged to promptly sign and return their proxy. STOCK EXCHANGE LISTING IE Industries Inc common stock is listed on the New York Stock Exchange under the symbol IEL. Newspaper listings often use the symbol IE IND. GENERAL INQUIRIES Shareholder inquiries, including the replacement of dividend checks, address changes, transfer or reissuance of stock certificates, and requests from the general public for any financial publications may be directed to: IE Industries Inc Attn: Shareholder Services P.O. Box 351 Cedar Rapids, Iowa 52406 1-800.247-9785 or 319.398.7755 wHERE TO BUY AND SELL STOCK Common stock may be purchased and sold privately or on the open market through a brokerage firm. A shareholder enrolled in the Company's Dividend Reinvestment and Stock Purchase Plan can purchase additional common stock with no brokerage fees through the optional cash future of the Plan. Shares held in the Dividend Reinvestment and Stock Purchase Plan ran be sold through the Plan Administrator upon written request of the shareholder, who will receive all proceeds of the sale less any brokerage commission. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN The Company has a Dividend Reinvestment and Stock Purchase Plan which allows shareholders to automatically reinvest their cash dividends in additional shares of common stock. The First National Bank of Chicago acts as the Plan Administrator. A prospectus describing the Plan can be obtained by writing to Shareholder Services. DUPLICATE ACCOUNTS AND MAILINGS Shareholders sometimes receive more than one Annual Report because shares owned by one shareholder may be registered with slight variations in names. The Company is required to mail an Annual Report to each name on the shareholder list unless the shareholder requests that duplicates be eliminated. To eliminate duplicate mailings, please send a written request to Shareholder Services. DIVIDEND PAYMENT DATES Scheduled Dividend Payment and Record Dates for 1988 are: Record Dates Payment Dates March 11, 1988 April 1, 1988 June 10, 1988 July 1. 1988 Sept. 16, 1988 Oct. 1, 1988 Dec. 16, 1988 Jan. 1, 1989 Dividends paid on common stock In 1987 were fully taxable for federal Income tax purposes. 39 1987 FORM 10.1( AVAILABLE ON REQUEST The Company files annually with the Securities and Exchange Commission an Annual Report Form 10•K. This required report contains certain other information not made a part of this report. The Company will be happy to send you a copy of our 1987 Form 10-K without charge. Requests should be made to Shareholder Services. TRANSFER AGENTS The First National Bank of Chicago Chicago, Illinois The Merchants National Bank of Cedar Rapids Cedar Rapids, Iowa IE Indunries Common Stack Iowa Electric Light and Power Company Preferred and Preference Stack REGISTRARS The First National Bank of Chicago Chicago, Illinois Peoples Bank and Trust Company Cedar Rapids, Iowa IE Industries Common Stock loua Electric Light and Power Company Preferted and Preference Stock TRUSTEE The First National Bank of Chicago Chicago, Illinois IE Indiatriea Indenum Imu Electric Light and Power Company Mortgage and Deed of Tnut V3.S City of Iowa City MEMORANDUM Date: July 21, 1988 To: City Council From: City Manager Re: CEBA Grant - Computer Aided Design Software, Inc. (CADSI) You may recall that approximately a year ago, CADSI received approval for a state CEBA grant. We have worked closely with this company and they have recently advised us that the initial projections which led to their request for state assistance appear to be overly optimistic. While there is no appearance that the company has any significant financial diffi- culties they now believe that it would be in their best interest to D9J pursue construction of a new facility. The attached letter is self- explanatory. We recently advised the Iowa Department of Economic Development of their decision and the agreement between CADSI/City of Iowa City and the Iowa Department of Economic Development should be terminated. While this is somewhat of a disappointment, the company assures us of their future interest in expanding. tp3-2 cc: Patt Cain Mom 1-30mi'm //36 6 July 11, 1988 e Patt Cain Economic Development Coordinator g City of Iowa City Civic Center 410 E Washington St. Iowa City, IA 52240 Dear Part: As you are aware the CEBA loan you granted CADSI expires at the end of July. It would be foolhardy of us to attempt to rush out and "do something" at this late date. I believe we have exercised sound fiscal judgement in running CADSI over the past couple of years, and using the current CERA loan would not be in this same vein. At the time we embarked on the original contract it was viewed both by DED and CADSI as an opportunity worth pursuing. CADSI still needs all the help we can get, but it is obviously in both our best interests to Insure success of any actions, not just action for action's sake. CADSiI and appreciate n effort t s put forth on behalf of am hopeful we castillembark onthis Thanks again for your assistance. project at a later date. RLS:rs rte—' Sincerely, Rexford L. Smith President 11" 1111\ -III il:\AI1dl1 li\ :!11�� I city of Iowa city MEMORANDUM Date: July 21, 1988 To: City Council From: City Manager Re: Highway 1 West In May, representatives of the Iowa DOT and City staff met to discuss traffic conditions along Highway 1 West near the commercial area of Jack's, Paul's, etc. The purpose of the meeting was to determine if any traffic improvements could be initiated to alleviate many of the merchant concerns as well as address the general congestion in the area. Accident experience and other traffic volume data were reviewed and a field inspection was made by the IDOT representatives. They have indicated that signalization may be warranted for the intersection of Orchard and Highway 1 West. If the signalization is warranted, following further studies, the project could qualify for State financial assistance. The IDOT representatives have suggested that the City submit the signalization project for consideration, and I have directed the Traffic Engineer to proceed. Conditions along Orchard Street and the frontage road intersection for the access for Carousel Motors were also reviewed. The IDOT representatives were of the opinion that before any intersection signalization could be made, traffic lane improvements may be necessary. This could include a fifth traffic lane for left -turning -vehicles. The IDOT representatives asked for additional information to determine whether such traffic improvements in the area could be substantiated. A widening project would likely be funded in total by the Iowa DOT. If it is justified, the program would be added to their five-year program and would compete for funding based upon the priorities established by the Iowa DOT. In other words, it could be several years before such improvements would be Implemented by IDOT. 113 -2 - Our Traffic Engineering staff is preparing a signalization proposal for Orchard and Highway I West. It is likely that the additional fifth lane/turning lane would be considered by IDOT, but is likely to be much lower in priority. We will continue to monitor the traffic conditions in the area so that at some time in the future we may be in a position to pursue that project. SJA/sp cc: Jim Brachtel, Traffic Engineer I City of Iowa City MEMORANDUM DATE: July 21, 1988 TO: City Council FROM: City Manager RE: Development Assistance Attached is a copy of the new brochure recently prepared to assist Prospective developers. I This is a guide to your local government's land use decision-making process. It attempts to show each step of this process and the average amount of time each step requires. This is a general guide and persons interested in submitting proposals should be aware that some situations may require more time. NOTE: a major assumption of this simplified schedule is that all petitions and proposals meet no concerted resistance or oppositon. Persons interested in submitting proposals are strongly urged to contact the Ciry staff to familiarize themselves further with the local government's land use decision schedule. To discuss your plans with City staff, please call 356-5230. Development Assistance li, Information MI a Rezonfn s g Suhdivislons Planned Developments Large Scale Developmenta :'.e CITY OF IOWA CITY ❑ Pre -Application Conference The pre -application conference is not required, but is highly t 1 daY I recommended to aid in the assurance of a quick efficient process. During this session, the applicant may pick up the application. 0 90 180 0 Application Submission of an application, necessary supplemental materials, and Zdays 1 the appropriate fee at the Civic Center begin the approval process. 0::... 90 I80 13 Planning & Zoning Commission Action The time period forgetting to the formal Planning and Zoning days I EMrequire Commission meeting is approximately 23 days and approval may another 14 days. The applicant is encouraged to attend this 0..,: 90 180 meeting. - ® City Council Action Final approval by the City Council allows the applicant to proceed 30-90 days I with a project. This approval may take between 30 to 90 days from the date of application, depending upon the request... B0 0 Building Permit Application Permits for construction are obtained from the Department of Housing and Inspection Services. The time passed between Council 91 days l action and permit application is determined by. the 0 90 180 contractor/developer. - Q Permit Review & Inspections Approved Building Construction Permits allow the developer to start . 97 days the project, Building prior to this point is not legal _. Qy' 90 180 E3 Inspection & Certificate Upon approval of all the final inspections, the Certificate of of Occupancy Issued Occupancy is issued. The amount of time to occumpany depends 180 days upon the speed of construction. 3 90 180 //3F C E m 0 v a N 'i E O C T .6i F. 7f, J � � N N N g LALn LnLn W v o L M LA Ln M M fun M M vv � O O CL U fT ti. C .� D .o ,7 T P M _ `,.o a E o19 C `� O u _E o 5 ` � 0 9 O /X o 0 o LL dm U o CL f oa � a 0 3 u V 10 Ln T c. a:3 ` -g ° O O v rn Sul m c v ' N C F t p fU CL ° o, rn O B cp c Z+ a Y O O1 c g v n t'i �"r- E D v'oO1 E e eE �' m W IL in av��v2teorso_.� is m W a to ` I -O N to .9 a N C 0 V p ❑ ❑ ❑ 0. ❑ 0 0 0 ❑ ❑ ❑ 11 13 RECEIHoJUL 21 1988 BRUCE D.GODDARD ATTORNEY AT LAW WENT HRANCR 311 IOWA STATE BANE BOILDLYO IOWA CITY 1319, M356 4 IOWA CITY. IOWA 52240 1319.361~041 July 20, 1988 Steve Atkins City Manager Civic Center �v Iowa City, Iowa 52240 Dear Steve: This letter is written in response to the rejection by you, on behalf of the City of Iowa City, of William and Doris Preucil's offer to buy the 100 feet of land immediately to the South of the Preucil School of Music. On behalf of the Preucils, I now submit the enclosed revised offer to buy real estate and acceptance. This second offer to buy increases the purchase price from $4,000.00 originally offered to $7,000.00. I understand that the reason for rejecting the original offer was that this land is considered to be developable as residential property. I question whether this is really developable as residential property, in view of the fact that any house built on this property would, obviously, be located between Preucil School of Music and a city park. Even in its present condition, it is of marginal value as a part, as much of the area is quite gravelly. Again, as I stated in my letter of July 5, 1988, the Preucils are most anxious to get this matter on the agenda as quickly as possible, so your help in this matter would be greatly appreciated. Sin erely, Bru�DGoddard BDG/dp Enclosure A CITY OF IOWA CITY NEWS RELEASE Appointment of Civil Rights Coordinator Contact: Assistant City Manager Ms. Ruby Abebe of Waterloo, Iowa, has been named the new Civil Rights Coordinator for the City of Iowa City. She succeeds Phyllis Alexander who left that position in May to accept a similar position in Allentown, Pennsylvania. Ms. Abebe's appointment was effective July 18, 1988. Ms. Abebe holds a BA degree in English Secondary Education from the University of Iowa and has also completed graduate studies in counseling at the University of Northern Iowa. In 1985, she was appointed by Governor Terry Branstad to serve as a member of the Iowa Civil Rights Commission and was recently elected Chairperson of that seven -member Commission. Dale Helling, Assistant City Manager bj/pc2 /'/ 4 4) CIVIC CENTER 0 410 EAST WASHINGTON STREET • IOWA CITY. IOWA 57710 0 (119) 156.5000 9 City of Iowa city MEMORANDUM DATE: July 21, 1988 TO: City Manager & City Council FROM: Rosemary Vitosh, Director of Finance RE: Parking Ticket Writers The parking ticket writers were repaired and were being used, on the street, by Parking Enforcement Attendants by noon, last Wednesday. The equipment vendor worked with City staff to determine that we had a software problem. It appears that someone had changed the computer program code on the microcomputer thus causing the ticket printers to malfunction. We have, as a result, limited access to the microcomputer to a very few individuals. This will provide additional security in the future. Excluding the software problem, the equipment has been working extremely well and Parking Systems is very satisfied with it. We did today formally accept the equipment and will be paying for it at the end of the month. 0 //r 9 City of Iowa City MEMORANDUM Date: July 20, 1988 To: City Council From: Douglas W. Boot oy, ire for o ousing & Inspection Services Re: Abatement Procedures r Abandoned Buildi gs and Other Nuisances Enclosed in your packet is a proposed ordina a completely revising the nuisance regulations. The need for the revision became apparent when 1 began developing procedures for dealing with the problem of abandoned buildings and found the present ordinance to be inadequate and unenforceable. The proposed ordinance combines most of the City's property -related nuisance abatement procedures into one set of regulations. Furthermore, it provides remedies to correct specific problems (nuisances) through consistent and uniform abatement procedures. Specifically, the proposed ordinance: Combines most of the City's property -related nuisance abatement proce- dures into one chapter. 2. Declares additional problems as nuisances (e.g. abandoned buildings, building construction sites that are not maintained, stormwater deten- tion basins that are not maintained, etc.). (Section 24.101) 3. Defines nuisances more precisely. (Section 24-102) 4. Establishes procedures for 'service of notice' to abate nuisances. Although personal service is required, if after a reasonable effort, personal service cannot be made, the ordinance allows publishing notice in a newspaper and/or posting notice in a conspicuous place on the property. (Section 24-104) 5. Provides an abatement procedure either through administrative or municipal infraction proceedings. Currently this authority is not clearly defined or is scattered throughout several different sections of the Municipal Code. (Section 24-105 and 106) 6. Describes abatement remedies. This ordinance provides numerous remedies (from repair to removal of the nuisance) for the City to use in correct- ing a nuisance. The ordinance also provides that the cost of an abatement action may be assessed against the property. In a municipal infraction proceeding, the fine against the defendant is $100 for the first offense and up to $300 for a repeat offense. (Section 24-107) 7. Provides an emergency abatement procedure. This allows immediate action (without prior notices and opportunity of hearing) by the enforcement officer if a nuisance exists that constitutes an imminent, clear and compelling danger to health, safety or welfare of persons or property. If adopted, this ordinance will ensure a timely correction of nuisances and enable the City to recover direct costs of enforcement. %/7 T. Timmins/D. Boothroy DRAFT 07/22/88 ORDINANCE NO. AN ORDINANCE AMENDING CHAPTER 24 OF THE CODE OF ORDINANCES OF THE CITY OF IOWA CITY, BY REPEALING ARTICLE VI THEREOF ENTITLED "NUISANCES," AND BY ENACTING IN LIEU THEREOF A NEW ARTICLE VI, TO BE CODIFIED THE SAME, CONTAINING NEW DEFINITIONS, STANDARDS AND PROCEDURES FOR THE ABATEMENT OF NUISANCES. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF IOWA CITY, IOWA: SECTION I. That Chapter 24, the Code of Ordinances of the City of Iowa City, Iowa, be, and the same is hereby amended by repealing Article VI thereof entitled "Nuisances," and enacting a new article to be codified the same to read as follows: ARTICLE VI. NUISANCES Sections: 24-101. Nuisances Declared 24-102. Definitions 24-103. Nuisances Prohibited - Authority to Abate 24-104. Notice to Abate - Service 24-105. Abatement by Administrative Proceedings 24-106. Abatement by Municipal Infraction Proceedings 24-107. Abatement Remedies 24-108. Emergency Abatement Procedure 24-109. Penalty Sec. 24-101. Nuisances Declared. Whatever is injurious to the senses, or an obstruction to the free use of property, so as essentially to interfere with the comfortable enjoyment of life or property, is hereby declared to be a nuisance. Nuisances shall include, but not be limited to those activities and items hereafter set forth in this section. (a) Refuse, garbage, noxious substances, hazardous wastes. Refuse, garbage, noxious substances, or hazardous wastes, or other offensive or disagreeable substances thrown, left, or deposited by any person, in or upon any street, avenue, alley, sidewalk, park, public square, public enclosure, lot, vacant or occupied, or upon any pond or pool of water; except for: (1) Refuse deposited and stored in accordance with provisions of the garbage, trash and refuse Chapter 15 of the Code of Ordinances of the City of Iowa City, 9 DRAFT 07/22/88 Ordinance No. Page 2 (2) Compose piles established and maintained with written permission from the Johnson County Public Health Department, (b) Vegetation. Any violation of the vegetation Chapter 34 of the Code !: of Ordinances of the City of Iowa City. F(c) Diseased or damaged trees or shrubs. Any dead, diseased or damaged i F trees or shrubs, which may harbor serious insect or disease pests or - ! disease injurious to other trees is hereby declared a nuisance. Any dead, diseased, damaged, or healthy tree or shrub which is in such a ? state of deterioration that any part of such tree may fall and damage sproperty or cause injury to persons is hereby declared to be a nuisance. (d) Ditch, drain, or stormwater detention basin. Any ditch, drain or' watercourse, which is now or hereafter may be constructed so as to prevent the surface and overflow water from the adjacent lands entering or draining into and through the same. Any stormwater detention basin not maintained in an appropriate manner so as to allow its proper function. (e) Stagnant water. Stagnant water standing on any property. Any property, container, or material kept in such a condition that water can accumulate and stagnate. (f) Vermin harborage.' Conditions which, in the opinion of the enforce- ment officer, are conducive to the harborage or breeding of vermin. (g) Vermin infestations. Infestations of vermin such as rats, mice, skunks, snakes, bats, starlings, pigeons, bees, wasps, cockroaches, or flies. (h) Sanitary sewer facilities. Facilities for the storage or processing of sewage, such as privies, vaults, sewers, private drains, septic tanks, cefspools, drain fields which have failed or do not function properly or which are overflowing, leaking, or emanating odors. Septic tanks, cisterns, cesspools, which are abandoned or no longer in use unless they are emptied and filled with clean fill. Any vault, cesspool, or septic tank which does not comply with the Johnson County Department of Health regulations. (i) Unsecured/unoccupied buildings. Unoccupied buildings or unoccupied portions of buildings, which are unsecured. (j) Dangerous buildings or structures. //T � I DRAFT 07/22/88 Ordinance No. Page 3 i (k) Abandoned buildings. ,f, (1) Hazards. Any thing or condition on the property which, in the determination of the enforcement officer, may contribute to injury of r any person present on the property. Hazards shall include but not be limited to open holes, open foundations, open wells, dangerous trees f' or limbs, abandoned refrigerators, or trapping devices. s (m) Fire hazards. Any thing or condition on the property which in the opinion of the enforcement officer creates a fire hazard or which is in violation of the fire code. (n) Health hazards. Any thing or condition on the property which in the opinion of the enforcement officer creates a health hazard or which is in violation of any health or sanitation law. (o) Noise. Any violation of the noise Chapter 24.4 of the Code of Ordinances of the City of Iowa City. (p) Snow removal. Any violation of Division 3, Ice and Snow Removal, Sections 31-120 - 31-124 of the Code of Ordinances of the City of Iowa City. (q) Junkyard or salvage operations. All junkyard or salvage operations except as permitted by ordinance. (r) Obstruction of right-of-way or public place. The obstructing or encumbering by fences, buildings, structures, signs or otherwise of public streets, alleys, sidewalks, and commons, except as permitted by ordinance. Any use of a public street or sidewalk, or any use of property abutting a public street or sidewalk, which causes large crowds of people to gather so as to obstruct pedestrian or vehicular traffic or other lawful use of streets or sidewalks, except as permitted by ordinance. (s) Inoperable/obsolete vehicle. The storage, parking, leaving, or permitting the storage, parking, or leaving of an inoperable/obsolete j vehicle upon private property within the city for a period in excess of forty-eight (48) hours, unless excepted herein. This subsection shall not apply to any vehicle enclosed within a building on private property or to any vehicle held in connection with a junkyard, or auto and truck oriented use operated in the appropriate zone, pursuant to the zoning laws of the City of Iowa City. 9 DRAFT 07/22/88 Ordinance No. Page 4 (t) Unlawful sale, use, or manufacture of intoxicating liquors. Any building or place in or upon which the unlawful manufacture or sale or keeping with intent to sell, use or give away of intoxicating liquors is carried on or continued or exists. (u) Vehicle parked on private property, The parking of motor vehicles upon private property without the consent of the property owner or responsible party. (v) Mud, dirt, gravel, and other debris. The depositing or allowing the depositing of any mud, dirt, gravel, or other debris in violation of Chapter 31 of the Code of Ordinances of the City of Iowa City. (w) Building construction sites. Building construction sites maintained In violation of the Building Code. (x) Other nuisances. Any nuisance described as such by Chapter 657 of the Code of Iowa. Sec. 24-102. Definitions. (a) Abandoned building. Abandoned building shall mean any building or portion of building which has stood with an incomplete exterior shell for longer than two years or any building or portion thereof which has stood unoccupied for longer than one year and which meets one or more of the following criteria: (1) Unsecured, or (2) Having housing code or building code violations. (b) Dangerous building or structure. Dangerous building or structure shall mean any building or structure determined by the Enforcement Officer to endanger the health, safety, or welfare of persons or property, or which is in violation of the Uniform Code for Abatement of Dangerous Buildings. (c) Enforcement officer. Enforcement officer shall mean the City Manager or employees designated by the City Manager to enforce this article or his/her duly authorized representatives. (d) Hazardous waste. Hazardous waste shall mean those wastes included by definition in Section 455B.411(3)(a) Code of Iowa and the rules of the Iowa Department of Water, Air and Waste Management. (e) Inoperable/obsolete vehicle. An "inoperable/obsolete vehicle" shall be defined as any device in, upon or by which a person or property is or may be transported or drawn upon a highway or street, excepting 7 I DRAFT 07/22/88 Ordinance No. Page 5 devices moved by human power or used exclusively upon stationary rails or tracks, and shall include without limitation motor vehicle, automobile, truck, trailer, motorcycle, tractor, buggy, wagon or any combination thereof, and which is not licensed for the current year as required by law and/or which exhibits any one of the following characteristics: a. Broken glass. Any vehicle or part of a vehicle with a broken windshield, or any other broken glass. b. Broken or loose parts. Any vehicle or part of a vehicle with a broken or loose fender, door, bumper, hood, wheel, steering wheel, trunk top, or tailpipe. c. Missing engine or wheels. Any vehicle which is lacking an engine or one or more wheels or other structural parts which renders such vehicle totally inoperable. d. Habitat for animals or insects. Any vehicle or part of a vehicle which has become a habitat for rats, mice, or snakes or any other vermin or insects. e. Defective or obsolete condition. Any vehicle or part of a vehicle which, because of its defective or obsolete condition, constitutes a threat to the public health and safety. f. Inoperable condition. Any vehicle that is not capable of moving in both forward and reverse gears. (e) Noxious substances. Noxious substances shall mean substances, solid or fluid, which are offensive, detrimental to health, hurtful, or dangerous. Noxious substances shall include but not be limited to any dead animal, or portion thereof, putrid carcass, decayed animal matter, green hides, or any putrid, spoiled, foul, or stinking beef, pork, fish, offal, hides, skins, fat, grease, liquors, human or animal excrement, or manure. (f) Owner. Owner shall mean the person or persons who are the record owners of real property according to the records of the Johnson County department of property taxation. (g) Refuse. Refuse shall mean any putrescible and non-putrescible and combustible and non-combustible waste, including paper, garbage, material resulting from the handling, processing, storage, prepara- tion, serving and consumption of food, vegetable or animal matter, 9 DRAFT 07/22/88 Ordinance No. Page 6 offal, rubbish, plant waste such as tree trimmings or grass cuttings, ashes, incinerator residue, street cleanings, construction debris, and solid industrial and market wastes. (h) Responsible party. A responsible party shall be any one or more of the following: a. Agent, b. Assignee or collector of rents, C. Holder of a contract or deed, d. Mortgagee or vendee in possession, e. Receiver or executor or trustee, f. Lessee, g. Other persons, firm or corporation exercising apparent control' over a property. Sec. 24-103. Nuisances Prohibited - Authority to Abate. The creation or maintenance of a nuisance is unlawful and prohibited and shall constitute a misdemeanor or a municipal infraction. (a) The city manager and enforcement officers designated by the city manager are authorized to abate nuisances in accordance with the procedures set forth in this article. Nuisances may be abated by utilization of either the administrative abatement process or the municipal infraction process, as hereafter provided. Sec. 24-104. Notice to Abate - Service. (a) The City Manager or any enforcement officer designated by the City Manager are hereby authorized to serve upon the owner or responsible party of the property upon which the nuisance is being maintained, or upon the person or persons causing or maintaining the nuisance, a written notice to abate as prescribed below. (b) When service of a notice to abate is required, the following methods of service shall be deemed adequate: (1) By personal service upon the owner and/or responsible party of the property upon which the nuisance exists. (2) If, after reasonable effort, personal service cannot be made, any two of the following methods of service shall be considered adequate: (1) sending the notice by certified mail, return receipt requested to the last known address; (2) publishing the notice once a week for two consecutive weeks in a newspaper of DRAFT 07/22/88 Ordinance No. Page 7 general circulation in the City of Iowa City, Iowa; or (3) by posting the notice in a conspicuous place on the property or t; building. i (3) If an intended recipient of notice cannot be found and if j his/her address cannot be determined after reasonable effort, by posting a copy of the notice in a conspicuous place on the property and by publishing the notice for two consecutive weeks in a newspaper of general circulation in the City of Iowa City. Sec. 24-105. Abatement by Administrative Proceedings. y (a) Content of Notice. In the event the enforcement officer decides to abate a nuisance administratively, the notice to abate shall include the following information: (1) Description of what constitutes a nuisance, citing the appropriate Code section. 4 (2) Description of the action necessary to abate the nuisance. (3) The order to abate within a specified time period. (4) The notice shall advise that, upon failure to comply with the order to abate, the City shall undertake such abatement and that the cost of abatement may be assessed against the property for collection in the same manner as property taxes. (5) The notice shall also advise as to the opportunity for an administrative hearing and that failure to request such a hearing within the time specified in the notice shall constitute a waiver of the right to a hearing and that said notice shall thereafter become a final determination and order to abate. i (b) Administrative hearing. The hearing shall be held before the City Manager or his/her designee, and shall be in accordance with the procedurof of Section 2-184 through Section 2-187, except as herein otherwise provided. The City Manager's determination and order shall be appealable to Johnson County District Court by writ of certiorari. The order shall not be carried out until the time for filing the writ of certiorari has expired. Sec. 24-106. Abatement by Menicipal Infraction proceedings. (a) Content of notice. In the event the enforcement officer decides to abate a nuisance through the municipal infraction process, the notice to abate shall include the following information: 9 DRAFT 07/22/88 Ordinance No. Page 8 (b (a) (b) (1) Description of what constitutes a nuisance, citing the appropriate Code section. (2) Description of the action necessary to abate the nuisance. (3) The order to abate within a specified time period. (4) Explanation that failure to abate the nuisance within the time specified will result in the issuance of a civil citation charging the owner or responsible party with a municipal infraction. (5) Explanation that each day that a nuisance is permitted to continue constitutes a separate offense. (6) Explanation that upon being found guilty of a municipal infrac- tion, the court is authorized to order abatement, assess the costs of abatement against the property and/or enter them as a judgment against the defendant, and assess a civil penalty against the defendant. Issuance of civil citation. In the event that the nuisance is not abated as ordered and within the time specified in the notice to abate, the enforcement officer may issue a civil citation to the property owner or responsible party, charging that person with a municipal infraction. The enforcement officer shall not be required to give notice to -abate prior to issuance of a civil citation for a repeat offense involving the same property and occurring within one year of a prior violation. Sec. 24-107. Abstenient Randies. Abatement may include but shall not be limited to repair, removal, cleaning, extermination, cutting, mowing, grading, sewer repairs, draining, securing, repairing a building or structure, boarding unoccupied buildings, barricading or fencing, removing dangerous portions of buildings or structures, and demolition of dangerous structures or abandoned buildings. The cost of abatement may be assessed against the property for collection in the same manner as property taxes. Abatement costs shall include the cost of removing or eliminating the nuisance, the cost of investigation, such as title searches, inspection, and testing; the cost of notification; filing costs; and other related administrative costs. if an inoperable/obsolete vehicle is not sold //7� I DRAFT 07/22/88 Ordinance No. Page 9 or if the proceeds of such sale or redemption are not sufficient for payment of the cost of abatement, storage, and sale of said inoperable/obsolete vehicle, such cost or the balance of such cost may be assessed against the property for collection in the same manner as a property tax. (c) In a municipal infraction proceeding for the abatement of a nuisance, the following abatement remedies shall be available and may be ordered by the court: (1) Place a judgment against the person and/or property of the defendant for the costs of abatement. (2) Levy a civil penalty (fine) against the defendant of up to one hundred dollars ($100.00) for the first offense and up to two hundred dollars ($200.00) for repeat offenses. (3) Order abatement of the nuisance in any manner as provided in this article. (4) Assess costs of abatement against the property for collection in the same manner as property taxes. Sec. 24-108. Emergency Abatement Procedure. When the enforcement officer determines that a nuisance exists on a property and the nuisance constitutes an imminent clear and compelling danger to health, safety or welfare of persons or property, the enforce- ment officer is authorized to abate or have abated the nuisance without prior notice and opportunity of hearing. Cost of such action may be assessed against the property for collection in the same manner as property tax. However, prior to such assessment, the city shall give a property owner notice by certified mail and the opportunity for an administrative hearing in accordance with the procedures of Section 24- 105. Sec. 24-109. Penalty. Any person or responsible party who violates any provision of this article or fails to comply with a lawful written order issued pursuant to this article is subject to the remedies listed in Section 24-107 and shall be guilty of a simple misdemeanor or municipal infraction. Each day such person or responsible party shall not have complied with the provisions of this article shall be construed as a separate violation and a repeat offense. 9 DRAFT 07/22/88 Ordinance No. Page 10 SECTION II. REPEALER: All ordinances and parts of ordinances in conflict with the provisions of this ordinance are hereby repealed. Those are: SECTION III. SEVERABILITY: If any section, provision or part of the Ordinance shall be adjudged to be invalid or unconstitutional, such adjudication shall not affect the validity of the Ordinance as a whole or any section, provision or part thereof not adjudged invalid or unconstitu- tional. SECTION IV. EFFECTIVE DATE: This Ordinance shall be in effect after its final passage, approval and publication as required by law. Passed and approved this MAYOR ATTEST: CITY CLERK 11 1 City of Iowa City MEMORANDUM Date: 7-21-88 To: City Manager City Council From: Lyle G. Seydel, Housing Coordinator SUBJ: Assisted Housing Rule Changes 1. The final rule to implement a statutory directive to give preference in the provision of Housing Assistance to certain families was published January 15, 1988. HUD implementation notice was published May 12, 1988 and was received by the Iowa City Housing Authority (ICHA) June 20, 1988. The statutory directive was that all PHAs must implement the rule no later than July 13, 1988. The rule has been implemented by the ICHA. We are in the process of changing the Policies for Admission and Participation. Our Policy Booklet was changed in March 1987. There have been some other minor changes that will be incorporated and presented to council for adoption during early September. This statutory amendment is referred to as "Federal Preference". Assistance must be offered first to those eligible persons/families on the waiting list that are; a. Living in Substandard Housing. b. Involuntarily displaced. c. Paying more than 50 percent of family income for rent. All applicants will be offered the opportunity to "Self Declare" a Federal Preference at the time of application. Third party written verification must be obtained at the time a certificate/voucher/unit is actually offered. Implementation by the ICHA will have little effect on current operations and procedures. Perhaps 95% of all applicants do meet at least one of the Federal Preferences, therefore, date of application is the determining factor, The ICHA m_y, permit a maximum of 10% of non preference applicants to receive assistance ahead of those with a Federal Preference. 2. The ICHA was notified by Dee Moines office that the Authority has achieved the status, "Recognised Performer". Copy of the letter is attached. In essence achieving this status means, for the Public Housing Program, fewer inspections and audits by HUD and provides the Authority a little more freedom in Budgetory matters. //�3 RECEIVED JUL - 8 1988 U.S. Department of Housing and Urban Development Des Moines Office. Region VII '. Federal Building 210 Walnut Street Room 259 Des Moines. Iowa 50109-2155 July 6, 1988 Mr. Lyle C. Seydel Housing Coordinator Iowa City Housing Authority Civic Center - 410 East Washington Street Iowa City, IA 52240 Dear Mr. Seydel: SUBJECT: Confirmation of PMA Decontrol Certification I am pleased to confirm the status of your Authority as a Recognized Performer under the Public Housing Decontrol Handbook 7460.5, based upon this office's verification of the Decontrol Certification dated April 22, 1988. The areas of relief identified in Chapter 3 of the Decontrol Handbook are effective for your Authority beginning on July 1, 1988. Note also that the other areas of relief which are applicable to all PHAs, as described in Chapter 4 of the Decontrol Handbook, became effective upon publication of the Decontrol Handbook. If you have any questions or if we can be of any further assistance, please contact Mary Douthard at (515) 284-4840. Sincerely. 670/OQ� Jerry L. Bauer Manager 6 City of Iowa City MEMORANDUM Date: July 13, 1988 To: Iowa City City Council From: Ron O'Neil, Airport Manager Q... Re: Revised Airport Layout Plan The revised Airport Layout Plan (ALP), updating the 1982 Master Plan, is in the final stages of preparation. The Howard R. Green Company will present the final plan for review by the Airport Commission at their July 21, 1988, meeting. Upon presentation and approval by the Commission, ALP will be submitted to the FAA for review and approval. It is the intention of the Commission to submit the plan to the FAA by the last week in July or in early August. The following changes are proposed: 1. Relocating the threshold of Runway 30 475 feet and retract the clear zone accordingly. 2. Displace the threshold on Runway 12 275 feet. 3. Widen the clear zone on Runway 24. 4. Widen the clear zone on Runway 06 and extend the runway 145 feet. This will provide a total runway length of 4,500 feet. These changes will provide the proper layout to proceed with the improvements depicted in the Master Plan. This will allow the Airport to provide for the changing needs of the community and compliment the Comprehensive Plan to promote orderly growth in the Iowa City area. bdw3/12 //0r IOWA CITY & CORALVILLE CONVENTION & VISITORS BUREAU Commerce Center 325 E. Washington July 21, 1988 P.O. Box 2338 Iowa City. Iowa 52244 (319) 337-6592 Mayor and City Council City of Iowa City 410 E. Washington St. Iowa City, IA 52240 Dear Mayor and City Council: Will you consider a supplemental appropriation, from the hotel/ motel tax fund, of $5,000 to be used specifically for the bureau's restricted loan fund? The bureau established a restricted loan fund following the 1985 Junior Olympics to encourage local organizations to bring major events or activities to our community. The money is loaned on the basis of: 1) projected economic impact of the event; 2) projected number of visitors that will overnight in the hotels/ motels, (thus increasing the hotel/motel tax fund). When it is loaned, it is on the basis it will be paid back when the event is concluded. Like all loans, the bureau realizes that may not always be possible. This year we have an extraordinary amount of requests for this loan fund, from a World Ag Expo tourist train to a major national girl's softball tournament. All these events will boost our local economy and are candidates for the loan fund. Please consider a supplemental appropriation of $5,000 this year, with the understanding it will not be used for the bureau's operating or promotional budget.. It will placed in the. restricted loan fund and it sbould always remain there on a revolving basis. Also note, your council has a seat on the bureau's board of directors.(now held by Darrel Courtney) to ensure your bureau allocations are properly utilized. Thank you -and beat wishes. Yours truly, 131J�o Renee Jedlicka Executive Director 11K Heritage Cablevision C•� i46 4ntthgaL Accnuc P.O. Boy 4i� Iowa Citv, Iowa 5224Q il�•3i1.3�8a July 21, 1988 RECEIVED JUL 211988 Mr. Drew Shaffer City of Iowa City 410 East Washington St. Iowa City, Iowa 52240 Dear Drew: Beginning with the August billing, a 5% franchise fee will be added to all Iowa City cable statements. This 5% fee is in accordance with our recent agreement and also the 1984 Cable Act. Thia,%allows for Heritage to recover the increase in franchise fees as well as those fees which are retroactive per this agreement. There will be a short billing message to explain this new line item. If you have any questions, please do not hesitate to call. Sincerely yours, luwAm1. &^/- William L. Slough President and General Manager WLE/je 6 July 19, 1988 HEARTLAND MANAGEMENT COMPANY 534 42nd Simi Des Moines Iowa 50312 Itf 1/is RECEIVED JUL 201988 (515) 274 •4892 The Honorable John McDonald Mayor of Iowa City 410 East Washington Iowa City, Iowa 52240 Dear Mayor McDonald: Our firm manages Cedarwood Apartments in Iowa City. Enclosed is a letter we received from the residents there regarding recent articles in The Iowa Press Citizen. Sincerely Yours, Heartland Management Company gan Roseliep, CP Vice President/General Manager cc: Mr. Lyle Seydel Housing Coordinator City of Iowa City 9 TO: THE CITY EDITOR THE IOWA PRESS CITIZEN FROM: RESIDENTS OF CEDARWOOD APARTMENTS SUBJECT: OUR RIGHT TO PRIVACY We the residents of Cedarwood are very upset with the. articles that ran in your paper July 8th and 9th. It is hard to believe that a paper of your caliber would print such a one-sided story without gathering the facts from the other side. Cedarwood has been made out to look like a ghetto when nothing could be further from the truth. The paper in its effort to paint such a bleak story did not take into consideration how the residents might feel about it. Do you think it will still be easy to hold up our heads with pride after that article? It is quite interesting how your article only printed the view of a minority and even some of them made mention of how their words were taken out of context. The majority of us were not even approached. So much for the hatchet job the reporter did on this story. There is a positive side if anyone would care to listen. The majority of us are not sitting around waiting for someone to wave a magic wand and fix things. We are working, or in school to better ourselves. Some are even choosing to stay home with their children to raise them into fine adults. Some of the mothers are young,but what does age have to do with ones ability to raise children. The majority of us are not young mothers unless you consider late twenties and early thirties young. Any problems that Cedarwood allegedly is facing will only escalate now. Who gave you the right to move in on us? We would prefer to be left alone to live our lives like the rest of the world in the comfort of our own homes without outside interference. We do not want nor have we ever asked for help from Joan Vanderberg or anyone else connected with this Willow Creek Center. Why not donate that money to some worthwhile charity. There are millions of homeless people right here in the United States. Please just leave us in peace. Y,LNY-,% I dL� ole . cc:Daily Iowan Des Moines Register 6 Tribune Cedar Rapids Gazette KGAN-TV KCRG-TV 1leartland Management Barbara Fick Joan Vandenberg 017 City of Iowa City MEMORANDUM Date: July 22, 1988 To: City Council From: City Manager Re: Preucil School I recently received a proposed purchase offer from Preucil for the City owned land immediately adjacent to the School. The attorney representing Preucil made an offer of $4,000 for the land. In order to determine some measure value of this abandoned road right-of-way, our land acquisition specialist reviewed the general property values in the area and has advised me that she believes the land is worth more. I suspect this matter will receive some close public scrutiny, parti- cularly from the neighbors who are opposed to the expansion of Preucil. I intend to contact the Preucils attorney and advise that the offer is unsatisfactory. My strategy in this matter has been to balance the neighborhood interest and general complaints concerning the desirability of permitting the expansion of the Preucil School. Due to the fact that the City government plays a critical role, the sale of the land to Preucil, I assume you wish to make sure a reasonable value is applied to the property. Additionally, any funds that will be generated from the sale could be, based upon your policy decision, channeled directly back to park improvements in the area. I will keep you advised. tp2-6 /TV I 4 r r City of Iowa City MEMORANDUM _ DATE: July 20, 1988 TO: City Council FROM: City Manager RE: Chamber of Commerce Economic Trends 1988 The attached report was prepared for the Chamber of Commerce. An interesting summary report. cc: Department Directors Patt Cain /�Ir�M RECEIVEDJUL 7 198 IOWA C1�1f �� AREA / CHAMBER OF COMMERCE Serving the Iowa City, Coralville, and Johnson County Area July 5, 1988 Re: 1988 Survey of Johnson County Economic Trends Attached is a copy of the 1988 Survey of Johnson County Economic Trends. This survey was prepared by Carlson, Harris, McClure & McWilliams, Inc., at the request of the Iowa City Area Chamber of Commerce as a service to the Chamber membership. Any questions on this survey should be directed to Casey Cook of Carlson, Harris, McClure & McWilliams, Inc., or Pat Grady, Executive Vice President of the Chamber of Commerce. The report focuses upon the University of Iowa enrollments and population changes, retail sales figures, employment statistics, and building permits in the Iowa City/Coralville/Johnson County area. The time period covered ranges from four to eight years. We have included a brief summary of findings on page 1. Additional copies of this report are available at the Chamber office. Reprints of this information are prohibited without the written consent of Carlson, Harris, McClure & McWilliams, Inc. The Chamber would like to thank Carlson, Harris, McClure & McWilliams, Inc., for providing this information. Carlson, Harris, McClure & McWilliams, Inc., is a full service real estate consultation and appraisal company serving the Midwest with offices in Des Moines and Iowa City. They are members of the Iowa City Chamber of Commerce. Iowa City Area Chamber of Commerce P.O. Box 2358 Iowa City, Iowa 52244 319.337.9637 //V-9 9 F Umffggmo �3� rflao I�c�C�Il�po is �fc�C�JgIlIl���afl .s° -: Consultants and Appraisers of Real Estate John W. Judge. SRA RC51dt•Il l l:d 11:InJ lt'! William S. Carlson. MAI Scott D. Harris, MAI, SRPA. SRA Judy Zwanziger Clifford T. McClure. MAI, SRA 14r1r =on ober,, 'ltd E. McWilliams. MAI, SRA Harry A. Wine ln¢ar. nvM1IAI Jrnn CITY AND REGIONAL INFORMATION summary The greater Iowa City population has increased slightly, despite losses in population statewide over the past five years. This is due to the higher number of students which has offset the drop in non -student population. Radical changes in the enrollments have not been evident despite declines in the college age population. It would appear the University is attracting a larger proportion of a declining applicant pool. Even so, enrollment in the next five years can be expected to decline by 18 to 2% per year. Since the student population comprises approximately three fifth of the total population, city wide population will decrease as a result. Despite serious problems in the State's agricultural economy, Iowa City has been insulated by the worst effects. Expansion in the public sector economy generated more than half of the new jobs between 1980 and 1984. Recent employment figures indicate a loss in public sector jobs from 1985 to 1987, which has been offset by increases in private employment. Sustained job growth over the next five years is unlikely in view of the declines in the public sector. Iowa City and Coralville are continuing to attract retail sales from smaller towns and outside the county. This trend should continue, but unlike years past, it is no longer accelerating. Johnson County has proven its ability to compete successfully with Linn County over the past two years. Modest growth is likely in this sector. Construction is likely to be stable. Single family construction has continued to be strong. The previous glut in multi -family housing has been absorbed and a healthy balance has been restored between supply and demand. The declines in enrollment and population should increase vacancy factors slightly and slow rental increases. This impact will be felt more strongly by units located more than a mile from the University. 800 Midland Financial Building ■ Des Molncs, Imre 50909 ■ 51512.61.2257 loin City - Cedar Rapids Office: Bryan "Casey" Cook 2 P.O. Box 27 0 Iowa City. town 522.14 ■ 3101351•20P1-0 Location, General Description Iowa City is located in east central Iowa approximately, one hour west of the Mississippi River via Interstate 80. It is the county seat and population center of Johnson County. Iowa City is within one day ground traveling distance to many of the Midwest's major population centers, such as Chicago, Milwaukee, St. Louis, Kansas city, Omaha, The Quad Cities, and The Twin cities. Iowa City lies 30 miles south of Cedar Rapids and 110 miles east of Des Moines. Due to the physical proximity of Coralville and Iowa City, many services and factors influencing trends and markets are common to both. The University of Iowa is the dominant characteristic and the arbiter of future trends in the city and regional economy. The University of Iowa Enrollment Enrollment at the University of Iowa increased from 1980 to 1984 by 4,612 students or 18%. The fall enrollment in 1985 was the first decline. This subsequent trend has continued through the spring of 1987. The enrollments are summarized on the following table. UNIVERSITY OF IOWA ENROLLMENT 1980 25,100 1981 26,464 1982 28,140 1983 29,599 1984 29,712 1985 29,651 1986 29,504 1987 29,133 Figures reflect fall enrollments. Source: Registrar 335-0217 According to Mr. David Jensen of Kirkwood Community College, the total number of high school seniors who immediately attended college dropped from 22,808 in 1980 to 21,540 in 1984 or approximately 5.6%. These declines were not felt by the University of Iowa, which saw enrollments increase 18% over the same time period. These increases are thought to be caused by the return of older students who did not attend college immediately after high school. Enrollment for 1987 dropped 371 students from the previous year. This drop indicates the trend of enrollments for approximately the next five years beginning in 1985. The University predicts Caaflg�cri, IEa88fl©, RE@Cfimu@ Lo RE, @u.iEZEEaaLg, -aI:/4 drops in enrollment, which are considerably more drastic than historical trends indicate. Considering the number of students living off campus and the number of students per household, a 371 drop in enrollment will cause demand for apartments to drop by approximately 8o units. Public Schools The Iowa City Community School System provides a quality education to the community, as indicated by a history of high rankings in various scholastic tests and the relatively large number of national merit scholars. Two high schools, two junior high schools, and 15 elementary schools serve the area. Additionally, private education is available from two Catholic schools serving grades 1 through 12. Coralville is included in the Iowa City School District. Public school's enrollments have been as follows: 1980 8,451 1981 8,256 1982 8,259 1983 8,226 1984 8,278 1985 8,481 1986 8,660 1987 8,819 since 1984, annual increases are slightly over 2%. This is a positive sign, although continued increases are necessary for the enrollment trend to have a significant impact on the local economy. Enrollments have recouped losses experienced in the early Bo's. Population Characteristics According to figures published by the State Demographer's office, the population of the Iowa City metro area, including University Heights, Coralville, and Iowa City, has increased from 1980 to 1984 by 2.5% or 1,586 individuals. This trend runs counter to nearly all of the major metropolitan areas in the state. only Council Bluffs was able to maintain its population through the early 801s. The higher population in Iowa City is attributable to the increase in the University enrollments during that time period. It should be emphasized that population figures include both students living off campus and those living in University owned housing. Based on historical data and projections by the University of Iowa's Office of Academic Affairs, declines in enrollment are expected over the next five years. Unless these declines are made up in economic expansion in the private sector, Iowa City will experience a declining population. Retail Sales Comparisons show that despite the growing strength of the Cedar Rapids' economy, Iowa City has begun to hold its market position in terms of actual retail sales growth in 1986 and 1987. The 1987 sales figures show increases in Linn County (Cedar Rapids) at 6.32* compared to Johnson County at 10.08%. In 1986, the growth rate was 3:50% for Linn and 3.41% for Johnson. County Retail Sales Expressed in $,000's (City) 1984 1985 1986 1987 ---------------------------------------------------------- Percentage Change Polk 2,477,747 2,617,999 2,815,296 3,055,115 (Des Moines) 5.66% .7.54% 8.52% Linn 1,062,947 1,137,896 1,177,697 1,252,167 (Cedar Rapids) 7.05% 3.50% 6.32% Scott 919,087 985,001 1,007,055 1,033,880 (Davenport) 7.17% 2.24% 2.66% Black Hawk 692,216 701,204 684,307 710,522 (Waterloo) 1.30% -2.41% 3.83% Woodbury 583,756 594,906 601,706 631,238 (Sioux City) 1.91% 1.14* 4.91% Dubuque 450,331 457,978 476,718 500,638 (Dubuque) 1.70% 4.09% 5.021% Pottawattami 345,160 352,290 352,174 386,699 (Council Bluffs) 2.07% -.03% 9.80% Johnson 424,458 441,737 456,819 502,854 (Iowa City) 4.07% 3.41% 10.08% State 14,180,662 14,542,220 14,789,014 15,588,804 2.55% 1.70% 5.41% In the past year, Iowa City added a 45,000 square foot Econo Foods grocery store with an adjacent strip mall, which adds Offiano mo ffi©Srtt,©, Ilvil@GamB© G2 5 another 55,000 square feet. A new Target Store opened in the Coralville strip in late 1987. Retail sales should continue to grow in Iowa City, but at a slower pace than Cedar Rapids and at the expense of the smaller towns in Johnson County. The exception to this trend is Coralville. The table below demonstrates the relative changes between Coralville, Iowa City, and the rest of Johnson County. The increasing percentage of total county sales flowing to Coralville and Iowa City has finally slowed after three years of acceleration. RETAIL SALES, JOHNSON COUNTY TOWNS 6 CITIES axsvaaaasmo--�-----�aa�aas�aa�saxase 1984 1985 1986 1987 Change Sales Sales Sales Sales 86 to 87 ($000) ($000) ($000) ($000) Iowa City $319,876 $339,345 $353,077 $391,725 10.95% Coralville $66,448 $67,716 $72,644 $78,006 7.38% Lone Tree $1,805 $1,939 $1,868 $1,777 -4.87% Oxford $1,500 $1,446 $1,573 $1,576 .19% Solon $3,881 $3,786 $4,046 $4,297 6.20% Hills $2,109 $2,222 $2,103 $2,861 36.04% North Liberty $4,155 $3,326 $3,114 $3,721 19.49% Swisher $2,237 $1,850 $1,155 $1,871 61.99% Tiffin $1,476 $1,594 $1,628 $1,725 5196% Total $403,487 $423,224 $441,208 $487,559 10.51% Information for both tables is from the Iowa State Sales and Use Tax Reports Published by the Department of Revenue, Research and Management Services Division. Industrial Base and Employment Total employment has increased approximately 2.6% per year from 1981 to 1987. In terms of creating new jobs, the relative importance of the government sector has declined significantly since 1985 with a loss of 800 jobs. The manufacturing sectors along with retail and wholesale trade have remained fairly constant. Losses in government employment has been offset by private expansion in service, construction, and financial services, as well as, utilities and transportation. Unemployment has exceeded 5% only once in the past six years. Total employment increased from 1986 to 1987 by 700 jobs. These figures are summarized on the following table. //O9 JOHNSON COUNTY EMPLOYMENT Mfg Retail/Service/ Govt Fin/RE/ Trans/ Total Whtsale Constr Ins i 1981 3,450 8,220 7,360 21,650 1,130 930 42,740 1982 3,260 8,320 7,500 22,630 1,150 870 43,730 1983 3,700 8,500 7,900 23,100 1,200 900 45,300 1984 3,790 8,080 6,700 23,360 1,190 890 44,010 1985 4,000 8,900 8,100 24,700 1,300 1,100 48,100 1986 3,700 9,100 8,900 24,400 1,500 1,100 48,700 1987 4,000 9,100 9,400 23,900 1,700 1,300 49,400 %Change 8.11% .00% 5.62% -2.05% 13.333 18.18% 1.44% (1986-1987) Source: Iowa City Job Service, Tom Bullington 351-1035 State Job Service, Ann Wagner 515-281-8182 Figures reflect average annual employment as of year end. Housing The -Iowa City-Coralville area generates a large demand for rental housing due to the student population. According to the University, approximately Sat of the students live off campus, 10.1% commute, and the remainder live in dorms, Greek houses, or University owned family housing. This would suggest that students create a demand for approximately 6,800 privately owned units at assuming an average of 2.5 students per unit. According to the Iowa City Building Department, the various components for Iowa City of the total housing stock as of April, 1986, are as follows: Owner Occupied Renter Occupied Single Family 7,223 692 Duplex N/A 1,770 Mobile Home 1,107 N/A Rooming Houses N/A 1,704 Multi-Family N/A 7,066 In a three year period beginning in 1982, the metro area saw construction of 2,600 multi family units. This represented (5mBIl@(DM , IvaErs6@p REC&0;s8s0 Q RE@INEEL fiEffLg, %/41% I 9 an increase in multi -family housing stock of over 408. The following table summarizes building permits issued since 1980. This table includes Iowa City, Coralville, and the single family permits for unincorporated Johnson County. Single family construction has fluctuated in two year cycles and is currently experiencing strength. Multi -family housing boomed between 1982 and 1984. In recent years, multi -family housing in Coralville has come to a near standstill, while Iowa City construction has dropped to a fraction of 1984 levels. Recent construction has concentrated within one mile of the Pentacrest. (Pentacrest is the term used to describe the five buildings which formed the original University of Iowa Campus. This is commonly considered the center of the city.) 1 a JOHNSON COUNTY BUILDING PERMIT INFORMATION Single & Duplexes Multi -Family -------------- Avg $/ Units Avg $/ Unit Unit IOWA CITY $34,609 $4,464,600 1980 73 $60,446 1981 95 $63,799 1982 46 $67,621 1983 145 $62,941 1984 148 $68,185 1985 59 $81,395 1986 82 $85,458 1987 115 $78,368 CORALVILLE $34,609 $4,464,600 1980 17 $59,262 1981 12 $75,940 1982 8 N/A 1983 24 $60,498 1984 21 $64,162 1985 23 $60,604 1986 24 $73,312 1987 33 $75,970 UNINCORPORATED JOHNSON CITY 1980 54 $65,815 1981 50 $55,229 1982 35 $60,257 1983 83 $79,161 1984 68 $77,481 1985 60 $92,566 1986 80 $89,901 1987 84 $102,778 Total 129 $34,609 $4,464,600 132 $28,835 $3,806,187 612 $25,128 $15,378,336 925 $24,707 $22,853,975 277 $25,021 $6,930,817 94 $30,847 $2,899,618 72 $31,232 $2,248,692 33 $26,515 $875,000 57 $35,202 140 $26,539 192 $25,907 397 $25,386 197 $20,816 12 $39,791 12 $30,167 6 $31,667 $2,006,500 $3,715,480 $4,974,144 $10,078,242 $4,100,752 $477,492 $362,000 $190,000 N TOTAL 1980 144 $62,320 186 $34,791 1981 157 $61,998 272 $27,653 1982 89 $58,647 804 $25,314 1983 252 $68,051 1,322 $24,911 1984 237 $70,496 474 $23,273 1985 142 $82,748 106 $31,860 1986 186 $85,802 84 $31,080 1987 232 $86,865 39 $27,308 Iowa City Building Dept, 356-5122 Coralville Building Dept, 356-1266 Johnson County P&Z, Joe Lilledahl 3566083 $6,471,100 $7,521,667 $20,352,480 $32,932,217 $11,031,569 $3,377,110 $2,610,692 $1,065,000 Q&Era©eM, M&0ffE@r RE@0am0(4 Q a.,7rc. --- //�4% 9 The Iowa City Planning Department has tracked the affects of this construction in terms of vacancies and rents. The 1986 survey of 3,598 units revealed the following: Vacancy Rates By Location Units 1986 1984 1982 Iowa City 997 2.21 2.48 .33 (1 mile of Pentacrest) Iowa City 1,655 4.83 4.73 2.23 (over 1 mile) Coralville 946 11.13 6.63 3.23 vacancy rates are generally higher in one bedroom and efficiency units located in larger complexes. A subsequent survey was made in November of 1986. While there were slight increases in rents, the vacancy factors in Coralville were considerably less. Two of the larger projects, which showed 59 vacant units, had only 12 vacancies seven months later. Planners estimate a current vacancy rate in Coralville to be in the 73 range. Iowa City's vacancies have increased, but are not thought to exceed 43. Units within one mile of the Pentacrest are thought to be unchanged. Rent is tied most closely to dollars per bedroom rather than dollars per square foot or per unit. This is because the dollars per bedroom is most nearly connected to dollars per student occupant. The following chart demonstrates changes in rents in the local metro area. Efficiency April 1986 $218 April 1984 $214 3 Chancre 1.9 One Bedroom $291 $282 3.1 Two Bedroom $407 $399 2.0 Three Bedroom $546 $531 2.8 Single family dwellings have held their value and increased slightly, according to the multiple listing service. Construction activity is generally controlled by local developers, and supply and demand are thought to be in equilibrium. According to the Iowa City Comprehensive Plan, there are currently 723 acres of developable residential land and 85 acres of vacant commercial land. After the construction of the sewer project, total developable land will increase to //0 1,553 acres of residential, 214 acres of commercial, and 193 acres of industrial. This is projected to accommodate future growth for the next 40 years at current rates of population increase and assuming a density of 15 people per acre. Facilities Due to the University, the metro area has access to numerous cultural and recreational activities. These include the v Hancher Auditorium, which offers some of the world's foremost classical musicians, dance troupes, broadway musicals, and pop entertainment. The University of Iowa sports facilities include Rinnick Stadium, Carver Arena, and the field house which is open to the public free of charge. The University Hospital is a state owned institution run in conjunction with the University of Iowa medical schools. It p is one of the largest teaching hospitals in the world. Two major hospitals are located in the immediate region. The $ hospitals generate a strong demand for professional help which will continue despite recent small declines. Utilities According to the Iowa City Comprehensive Planning Report, the corporate limits include 13,864 acres. Approximately 34% of that total is undeveloped due to lack of adequate sewer capacity. The design capacity of the sanitary sewer plant j is currently 8,000,000 gallons per day. peak loads have been double this capacity and average loads are approximately 9,500,000 gallons per day, Increases in the cost of water and sewer have been instituted and the necessary bonding has been approved. Reconstruction of the existing plant and construction of a new facility are currently underway. Completion is expected within the next two years. capacity for other utilities including gas, water, electricity, and telephone are adequate. Topography Iowa City is traversed by the Iowa River. Topography is rolling near the river, which forms a valley through the City. Topography away from the river is gently rolling to level. G©sIl©om, Massfl©, R2@QIlM1r© £3 Iu'I®�flIlLf arc, Z", //y9 Climate The climate is moderate to extreme. Average winter temperature is 23.7 degrees and average summer temperature is 72.6 degrees. Average annual rainfall is 33.7 inches and average snowfall is 30.2 inches. The high humidity tends to accentuate the extremes of hot and cold. Transportation Interstate #80 is a major expressway that runs from Jersey City, New Jersey to San Francisco, California. Interstate 380 connects to I-80, three miles to the west of Coralville, and runs to Cedar Rapids, 30 miles to the north. This will eventually connect to 1-35, providing a link to the Minneapolis/St. Paul area. The metro area is also served by Highways 1, 6, and 218. The new Highway 218 connects to I-380 forming a bypass around Iowa City. This has reduced traffic from Highways 1, 6, and 218 through Iowa City and Coralville. With the completion of the 218 bypass, the highway system is now adequate to serve both current needs and foreseeable growth. Iowa City is served by the Crandic Railroad and the Iowa Railroad. Passenger service is not available. The Iowa City airport is restricted to private planes and limited charter service: A runway extension is currently under way to accommodate larger planes and to regain compliance with FAA guidelines. However, this is not expected to become an j important air travel hub. The Cedar Rapids Airport, which serves over 12 commercial carriers, is 25 miles to the north. This facility has expanded dramatically in recent years with the completion of a new terminal and the addition of both national and regional carriers. //0 DANIEL BRAY 732 SPENCER DRIVE IOWA CITY, IOWA52240 319•3SI.6580 1:Jr.:•;.;Pld:l July 21, 1988 Mr. Barry Beagle ' • Planning 6 Program Development City Offices - East Washington Iowa City, Iowa 52240 Dear Barry: This is a fan letter. Thank you for treating us so courteously during the recent zoning dispute which troubled our neighborhood. Your Professional approach to problem solving was magnificent. As you develop a new definition of neighborhood business within CH -1 zoning, would you kindly send me a copy? I will distribute it among my neighbors to keep them informed. Likewise if there is any new activity for the development of the Mormon Trek/Benton parcel, would you be so kind as to keep me informed? I am glad that Iowa City has public employees like you. Thank you again. Very truly yours, t anie1 L. B ay DLB/cg cc: Karen Franklin 6 t' THE CHRONICLE of Higher Education. June 29, 1988 a $1.95 Volume XXX/V, Number 11 Despise Wall Street Woes, Giving to'Charil ' Totaled $93 -Billion; a Record, in 1987 - Big Science Projects Face Major Delays in Construction The stock -mance collapse me cox n• torm, sources of the philanthropic world's ' - ttj h cost, doubt about financing - $ biM' rens of 198),wer<aml a damginl 1 lead Cungrm to Withhold funds , to the nation" charities a had bun ea• "F` His Oar by KIN MCDONAID peered, a new study has found. Amedgon individuals. foundations, cor•'- Individuals 1720 S76D' _ WASHINGTON Smdnl carts of new scientific facilities positions, and atates gave an ,slimmed 593.W-billim Io [badly Int year, the high - Bequests,' S.i fl0 and doubts about whether their eonslme- C3 mount ever recorded, according 10111- Foundations.. 5.9 6.4 , lion can be financed here forced Congress, to delay onst u«ion of several big prof arra from Giving USA• the uPort of the study.Thelotalwu Jmosl Wbillionmore Corpentions 4.5 /.5 eels Sought by scientists and the Reagan . than that of 1916. Tobi $67.9 $917 Administration. In s lave that illoxinto the present .' The repast, which war released by the ,,,; ,.v ,, ..,:,•,..wrv.. American Auoci>lion of Fund -Raising :. ', ...e w.... oral n. nn.,m.o.., ' •'' ° hatrolon of m,mben of Congress,. Nmse and Senate neloliatan lug week ' Counsel Trost for Philanthropy, provides .. • •' the fin, glimpse or charitable giving in ,'•, duction for non -itemizers. Other develop- ' " look the unusual position of providing co lone" for the construction of new sden- 1957, Including Cady Information on the ...•,lents, such as scandds Involving Iekrl• cash's effects on philanthropy. Sion evandisn, had fund reisen worded, ,. the Eticigy fificit lbJl Markel The 73rd annual edition crib, Giving USA :, loo. I. fi«a119g9,Dep hunt's .. • repots war hsuedlaslweek.' Bol the fund-rehing association's report... " Many leaders oforganized philanthropy "lied those facmn"non.news," October 1. The action, ifsigned into law, would eF predicted That living would fall in 1987 be- "u's significant that in spite of all the the market crash and changes in talk about the stock market and tax restively postpone the croslmJlon of the S/.4billion Superconducting Supenolli- "use of laxlaws that eliminated the chadtsble de- Crammed on Pay, A77 da. ainside accelerator that Macy physi- cist, ray is needed to maintain the Amcor an lead In high<ollly physics. Science Among Top Concerns 11 Ould .110 delay the Stan orating bit. Education and Education liekel items requested by President Rea - Conference Communist Party. Ban' such As the 5106miilion Compact lg• at Moscow of ninon Tokamak, a nuclearfmlon device By PATRICIA LECIIAS the needs of the time;' the document says, aaoscow even though "much attention has been ilyPrin• planned for Princeton Univen"ce [on Plasma Physics Uboratory, and the ProPOW, to seek major improvements paid" to its development in the three years 3660million Advanced Photon Source, an rat the Univey or aecelmmnil r "In Soviet education and science ase among ince Mikhail S. Gorbachev came 10 Pow- The topics to be considered here this '' ". Similarly it says, "the material bele of planned Chicago's Agoene Notional leboralory. main week at the Communist Pony's first nn Soviet seience still lap behind" the court. Although lobbyists seeking supped rot ,hose projects were pleased ,hal law. Ilan) conference since 1911. try's needs. Canlnued an Page All A preconference paper approved by the Focus on Science Academy Cenlnl Committee says the pany'e «o- metric and soaW stramgY is "based on , The document lresls,duulion, rcltngo, spading up scknOfie and technological a ndcultulelsoccof Hianuorconcemto progress:' But the paper useN that "no be discussed M the four. -day meeting. .b[e suntid changes" have auned In - which will be attended by 5,006 delegates those or... in The tut few years• despite from throughout the Soviet Union. the «ealion of hundreds of «1.amh and The paper calls an the Soviet Academy produ«ton orpnluliond• as well a offi-' of Sciences to "make • growing coniribu. claidmund, for higher stsnduds. lion" toward achieving "major break - ,& Soviet education remains "far behind Continued on Page A77 The landmark Bakke Decision, eDe delata a views oraffr n uve action are as poduized now as were the Supreme Court" 10 years ago: PAJcAN. is opinion: The ruling" lack of Ina• pact: Pagc of. Tozon-Colon Bathes Escalate as Beleagrreral Cities Assail College Tax Exenil5tionls ay OOLDIEDLUMENMK :•' Coell Univenhy heath that II eonldbutts Cullum. Iridlee. Cam, d ; 1 lux, tlimul. ion, and economic stability to the rural community ' 1 t Around usage, N.Y.' Some loa4lovcmmenl JfieW, there are hireling nlha loudly, a : however, [hat a large donation of "Id, hard gosh to The county Ueuury would be on even more neighborly su lum. In Syraeurc event yea,$ Seo, city oriciah west more direct. ' They sent Symov, UnivC tally a PVOpenYgax bill rot I1•millton on the Cartier Dome, iia Indoor s odium, and IM gal coed in tette the 575-milllon building when the university re ruled la pay. 1[ Ilk (met Test, or legal and Political wrangling Io teaohe the dispute—Including period of more than la months when campus offelds banned atl non•univtnily events at the sudium. That „mgerd local merchants and hotel owners, who passed the chyto orals Unonshe. hon Maida •compo trash can nor, reach a ahem. At. .• The National College of Education In Com need un Pat, A19 �I OOVIMMgal A 114111141 Town -Gown Rifts Over College Tax Exemptions Grow ConNnwdpmm Poll A l +'tical scientists *be recently Lon• MII. Donald E. Lifson, a mamber or irselfin an even sought, pnWas lm curled• studs d 15 campua.lown the county Bond of Repreuma.w, When the dale a [rhea Ye to W c > rclnmmab gnu p to unireni[Y'a sires, wants the unirmity to pay the rhe forever New bier W&s1 Ilian cann'bntion It rem an was a yen for the Scholl in Nmhtek for t11. Fiore 3c Wmlionedinllhecawpesl,n ssi matcountyd add. Along rlca decade. Alone whh direct pry. (or ate an ,d)u by pia, IWI let6a.:l in tache axis meals farspecific:Cont, leasee, the re d ddt there mponera by pasiry a . law [tut routs Curve required sherd• pararlileal pears lobe an she d+r. Many nciCa ties in,ry financial .every now mm 0, to kat mMyue oro. are urea use the pnareting&wyrmtlMYtonu l love several lad loremms,a for fire is sm0p re fresscetiOn, fele.- Tom In "o (tete 4 Town aUR... my Is Cat the comrc public seneol eduea. hoped Olds the am- 9d,,Obhryaway' ir.f.1 uoun.tradition. J lion.., reluctant. Fi,bharki be orpo Ms would be gin lm A, mvcnean I,manuariry. N mmulanuekry her I, hor1,. 11 has pecan. unity that a ISICS or dust down, suits plant thus down amore e< of other fM,Om lowed community 354.01usi toward com City. Wldbdneinmoreueedmlhe Litt. rcr la an imtitulbn that milts their tat hese, sAildsue and housing pregnm,. In ansa Lily or.CounterW eA.losing asp WanA. Brawn, a march addition, it maintains IS it., d renkea• "We were really IA<n back that the associate a,'". he Cismdl Institute for street os she camp.,, • servla. it [hey weren't slated to bar, u, in she Said aM Research. Cit. Cart core, about Sbmhlion ay tar. somm Uri[y;' says Nasional Cd- its. he says. "ase searching out new Cornell also reported paying lose's David 0. McC,ecry, vice• mancesofrevcnut, and the major in. f 119.000 In county property saxes an p.esideal fee development sod come. doslry in low. hop,cm to be a ani• property is uses for nonsdumtiond ...ieslimna. ..We thoulhl wed be "Or p.rMaea. welcomed with opemrmrnan asset noahomfew can .,it In sere.... Mr. Ltnon,ek.M,dgo lhO hil Ica the community." however. Nunhwr,lem University/ requested sum "might seem sods. P+oPea/-Tse lapin Evan+un Research pork, healed on siouv" But he says it would be out a 10 acres of tumlut university land, par with the paymai made by Car. N,Iimul College may have been was founded in 1994, in pas to help moil', "peer, institutions;' as he calls wrpriked that Northfield waved, bill put some valuable land back on the Harvard on[ ...ily ark the Musa• al them realist of aninrimion. gut in roily, according to It, executive ehaela Institute of Technology. many college administrator,. city of- director, Ronald C. Kyti.k. The¢• Uel yearthin, maNcraities paid the fclals. arts aspects on las issues this lion followed several yen of seek- City of Cambridge 5970.000 and .free. higher education any that lad moniouLrelations between the uni- 5900,000, raNctively. govemmenrs arc becoming lea an. vanity and officals of the Chicago Ocher county lawmakers also are .mored of IM t&sstampl course, suburb, including attempts by the looking (or a greaser contribution and universities in their midst. ape• city 10 levy a within is on students. from Cowell, although nor at ... w. eiallY len such heavily lued comma• A study conduered in I9M by ily as much as Mr. Urr seeks. cots• a Cambridge. Mau., where Nrwark, nor.,(mond the or 56 cities They ay they cook eape,idly pe the teattulions Occupy huMreds of car&suhe eauaryehal were home to the money for Ike county landfill, arts of valuable red cleat'. college• and universities• only 10 per which will probably cost 55 -million From Burlington, vs., to Bede+ 1. $10 mh it.. more to op,ntu In she Jay. Cal., property -1,a battles have Ocst Few years to comply with new Men Patina up in recent ..,n. In mod caret. when the demaM, "Illere's only one m 1. himenul mnl,,ds. Cornell airy that coma be paid on pinions ofthe billionaire in contributes plenty of mrhaa, to she landfill and should consider eunuib� .in", .4 used fon specific educe (Caul p,pmu, the college or ons. Tompkins County and mina some money to help pry for im. renily offer, a pymeni to Co.,.. that's Cornell pmrern,nI, there, Cay, Robert Wal• fuse. another member oflht Board of are Mainly fee the lost cotes—aMR""Urricolira. to Into University" placate critics. John F. Bums., vice-president Tower -goons battle, have always for imiveniiy relations m Comalh. been a problem for higher education, ay+ if the county char,,, a fee for and is, disputes are a common nal received any kind ofMyocra he dumping Irish, the university will soureeofdisco.d. But same expects make upfur the lack ofux payments. pay Its fair shore, but he believes Mliew that mon and more colleges "It's she exception, very definite. Cornell Is already mote tenuous and universities may ten have m lY. nlherlhan the Me,"says Mayor than may mheflocd coasacmpkill. deal with IoW lar fithis. They note William M. Redd of Newark, the fusion, that member, ofCunStess have been chairman of the Univessity Commit. The real question, as Mr. Bur. paying allensip to the complains of Allies Caucus of the National Lalue nal, Is why Mr. Lifson Is mpking .m.lbMsinim owns. for eumpIc. of CINs,. Newark Is home of the Cowell, and nor.1her[usx<mm In. may dwhmm belle,, Ihel the la• Untvorit, of Delaware, which each uilaiom. such a thea College, aempt dams deollelet and uni.er. year contributes about f100.00010 where Mr. Unon leaches. titin pnovketmunfdndancote In lkcily. Mr. Luton, a fleu Comdl undo. tbeak,dilamanndnlffom lra,t No study on a similar sole hes aewhahawiedtopublicirehiseon• services to computers. been compinod since 19114, sol II Is seen• by writing Io Comes alumni "II Is heating up;" pays Jamas L ditcull to&state whether the gil&s• clubs and national newspapers and Semkori,, rit, president far for. Ilan has chanted much duce than. maa,inet, he, simple reply. emmencol and community.train at In she site several month,, how. , "There's only one billionaire In Morquelta 1.1.1"ralel'. ever, she National League of Cities Tompkins County and that. Cornell ON factor likely to fuel she hostl• Nmr to conduct a comprehensive University. It doesn't make vi Ivy between concert ad their home• study or., Than JW cities to deter• tense to to net she smaller Mu• towns lathe rapid rheinemullencnb mine the kinds of financial town.• IOcd' occurdnll a many public college, and unirersiein. Modems Cay they are Insisted tu such inoicolloea be. Came, They shuts relatively low rex• hien. But In the municipinies where the Institutions ct localtd, larger or, re"nomis mean woe fialBe, greater demand for Indent hunts, poli,, and fire protealan, and other com- munity masa. Those is urea... nor always outweighed by student spending al groceries .,it depart• men stores. To some city ofActh, Nrtkularly those In Calif ncla *here'tate lead• era are Icahn, to decide wh,ih,, to build • new campus, and where it should be IOcaled, the value of a dor• rete campullual Isn't worth the coil. Rather than oak tae or other peg• mem, 10 Unrest The costa, official, in cities that already have mmNs,l have Men c rmnilns 1.1", new n. Mesion To a minimum. A romp of Comely Unirenhy M Ism belt, made by,ollgea and ural• No -Risk Introductory Offer `Ye ,Dan drum practices' 9 A, As Congress candden new lues The Cosecant that colleges cone on the business activities of our. In place of rues may help ole local 1,1,..d In the face of new lues Mlilial Mille,, hire pl ev,ryon, N. on charitable donations and Interest li...a they are necesary, or also on student loam—dodge represlM• pmNr. •Ilm aymuuull by local &.4m. Air. Smkovlls of Macquarie up Circus on pepenY•tu Issues Is nor private colleges and universities their chid Use worry right now. But wereynnled to asm,tion, Ins heap they are .,[,hire warily, promote divndly In higher edoCa• "Ons Could Cay it is a licking it., shun. Today, so many M+e,ecooduy bomb." cap Sheldon E. Steinbach, Institutions ere financed by The pub. ,tatter counsel for lie American lie that some ftut that she private Council on Education. Imliwliom no loner, .,,it helm fl.yhflllrn• Year Sought ' 9 from auto,, My ...posse in shat;' says Mr. At Cowell, the fuse Is already S.nkmrllc,"I,.'Phonny.'" bumi.l ,ban". We ImOtulinn has ..... .olun- For the I'll two Ynn,I.wmakm sacral to makes co t hmhon to the In T.r ins County have Men City or Muwmkee. "Ile • rine I Mndn, the mnianity To lenge h+ choose not laelaa,-' het...Calling contribution to cover be ea+t of The Ila "Climacteric p.seeit nl.", strikesthe eoumy provide+. M.rgtnt."eom,i2, m;,hill," The most ouhpken ethic of Cor- Cuneinurd an rat.. In, post June 19,IYAA a 711/chmnldsof111111orWunllan 1 A10 Beginning this Fall... The Chronicle Of Philanthropy TIIST, NnAm1nOPY-One ofAmerla'smosl ncwswonhyenterprissevwlll have a serious newspaper of Its own. TbrrCbran(cleof PbQanduopywill serve this newssurved field the same wry Its sister publ scat ton, The Oronlcle ofillagAer Edrrmrbn, serves academe. Today philanthropic and charluble Imslitu000s face perhaps theirgreaest challenges. The uncertain ecwwmy has clouded the future delving. Government has forced philanthropy to take on Rimer burdens than mer befi as officials some to Incense regulation. Bnlnmses are complaining about "unfaircompnition" Donors ate being asked to give to more and more ausm. People In nonprofit organizations have had no my way to keep up with developments like those. But that is about to lunge. T(xOnonlcleo/PLt4andirtpywill cover all die news of mrpanl< and Individual giving, foundations, fund alft.sai atlon, regulation, management, and many more topic. Published mery other week on a ful<lodng schedule, It will be timely, authoritative, and my to rad. And above all, It will make sure that professionals have the Information thin they must lure to function effectively. litre's the kind of inficrmatlon you'll get: • Newgranu by major foundations and corporations. r Idea that have worked foroders In fundraising public relations, and marketing • The newel drinking ongmcfning boards and volunteers. • Summaries of new books. • statistic: Results ofthe joint rmmrch,presented In • Thelalcal Mlings by fcdeal and surecour • AnealcrulveaIendarofineningsandod • Changes In passel pollclesand rams. • Summaries of foundadom'annualeponx = smrzm tali Mtwi,F—"3 L`A €ages.] t!r.' ;n //s/ No -Risk Introductory Offer `Ye To be it Fear dn5 cola arab tdrM Yfld cogent o/pdtbmbrpy, hem mad In e ids moron erns ro maeT row. well bill year Ac"r begin paw, ArdV �I YOSM m.atpin.11, smurwvk ktt wme -terkel-an de bilk M. k, and owe nothing(F1; �041 me/4) 50 lar me star (24 luum)—a mery of 110 a f.T r,e car neiner puke of 157 50 C Bill me 11400 fur its mrnb U y hues) ISI �ply[wa)Jj ri Y pv �. Craw..,. �— rev, Uw es aerw 1 The Cluonlde of M01m0uopy ' ass Note, nwd res.., Nr, w.enor Wwri DC tan nor as sex EL': "L'r7�':�L'3L"?:C"=7F�'.�€''111wr(:i•.Zo.: //s/ A?O • The Chronicle of higher Edumdon • June 29, 1988 Town -Gown Battles Escalate as Cities Assail Tax Breaks ComlwrdJrom Pr ... duty Payr to Ne eommurdly through ice culmral and alhl[Iic offainP.nd iluub,ln- slal Paris,. Mr. Swkoriu says. It the Univsviy made • payment to IN city, it would w actcowledp lol.11= w1i'alkn, he say.. "If you do that. you might as well be .handed. laa•payin, entity." Cmme.ticot Reimburses Clda Ta bade[ We plica n public to- stttociom as wc0 as private wlisp, and universities. In Bu.Bnpon, for i..pk. eilh un1 voted Iwo years W to require w4xcmpt imdludom such as the Univenily or Vermont m MY wove poplar lues. The city', 601,nte to The Imoemp mtu+of Ike 4101, true campus wa quickly MUedin the 1,{idmm[,bu1 il,ha,r linucudnt marc w moxy W cal diminished. ,The mayor Bu.linpon. Beraud Scarcest, says he wishes Vamonl'+ hwm sal. would adopt a propam Nat Connecticut has Used for in, ,at to years to help it, anhersiy wwm. n, 'lot, prorlds cities with Q Nr c wt of the prop ny still they I.. because of the piece... of us.• uemp) listings ions within their boundaries. Au result mistral Kogr'ln, known In Co.necticuu Igi+laia circle+ u the "New Ilaven bill" Moue that city ....Ni a the biggest grant. Con. nenicut ql nd, more than $36mi1• Bon to delmbun, ice cilia. New Ha - vin, home to Yde Unhnsily, the YaloNew Hare. Medical Center, 'ind other colkin sad hmpiuls, ear pcu to receive almost 38.3 -million from the program nal Year. partly ..result oflobbyint by the city and Yale', president, Benno C. Schmldt, Jr., the legislature In - created The 2lmburs,men1 from H per sent lis s.0 pet Int Ian Yeu. "11 is definitdY n In .... live pro pami' lay, Steven D. Cold, direc- tor of fiscal studio for the Naianal Conference of Skit Legislatures. While polieymakers from other miss has, .,,passed interest In the nhmbunemen% p.opuo. Conn,cli• cut hthoutht lobe [be onlyalle that .operates silk, for nes Intl w• ante they arc home to w2a[mpl wllqu and ualani0 s. Iiowaa, u apem note, simple ,ufmbY•,ute or dlyby<ily tom• parisnns cam be d ... pave. For marpie, In the Cornell study, Michigan Sine Univenfly and Por• due University might appal miserly for [cponingno PsopenY•na Pap "menu To East IAndmg or Ur.yate, Ind. But Pordue official told the Comdl mmehas that They spent fy54.000 a year to open[, lb& own e department. 'Policies, Nal Principle- [; Both inuimliom contribute money to The public -schools budpt Tis help Ply fonts sou Ned".tin, the ehil• drat of manitd students who live In 1.4-c"mpl rolleie houdnt. Ranine or that, the simah-o a fairness is fu more complicated than ,h might a fiat appal 1aY, Mr. Our— ,v.., of Cowell. If local 10amment officials Intend To demand paymen[s, they should fon n.mirr, how. col•' Ise or unirenhy burden% and bene - 5u lar homerown, he says. "If Ihue'1 a principle here, 11 ,should be applied uniformly." ma Mr. Bumex. "Dlhmvise It's not a principle, it.. politics:' Government S Pohl YaO $50 -Million Investment Pledge loXeiu Haven: Abdel or Token? ... W awir.COMM. The Mays sad his it that ibis Non are the fish to admit that this tilt he, bit trmba roar y h Downtown R, e1iM1. boom, mn upo'Inc New Nov. Gives. ws owl, nmJellnorthern.. wish bco4 stort.,cafh.. 1Dl vocia a..- wcomtn{ moa and more nums- ous. 'm the uboci system nIs in mart Mm. s t mo by in 1 is in poar+Mpe, van money m ,hells the sco sa saInat pop(,vita uos I. h sauce. d The1la,, liluli l in the oily .000 .asp's blip. C cutomnl city 1, b. to Us U.N.'lY, u will s uory- mlother ofand forty peraantcriin hd isumompt ns! fromliza the icy while the inle sobstdias the lily for r po party ran a am knln, In, . property owner s.th kB paring a w nuc IMI .,no the Mayor alb "<o0scalory." So why Is t Yat Biagio DIsJthe acg to Proud IMI Yale. which Is the silts largest contribute otyto lion. dchntl emntdbute • penny to Amp c elftt toil of ew.Id- Ing fire proestreet doming, ..it the, public ,vks to It, acres of Simple..fie lie ptopenY7 believes the t . Corparthat t announcement , saran in h uit wmbmInvestcen. million d Awning, shopping an• en, and olhar oily itlo-year gel ori is. piolnu over •thatperiod it s would idea, ant IMI calker lilies would be luckhmi to for the . The Havoc Iamrodthe.,nolle, I...t than t,...1.re, hawser, is Int 1Mn anirenal. 'Would Neter Be Bludgeoo.d' Some city aldermen and commv oily activists say they w.m to see whether Yale will lava% In pan pam+ that moa d'oenly help Ne city's .,city, while Mayor DBJe- to', Mgt outspoken polilial mala dismiss the mare demure a little more than to catch. in NMI, a. la0ins. "Every mayor time Roger Sher- man has elamared for payment, in Vers of Utes from Yale"' say, Mr. ITLIclo. But he sats he recognized Zhao "Yale wO.IJ never w Mad- 'eoned into wbml loo." Even In 1955, when • city tom• mime lamed a I.dv that showed sol used lional par center to Pd. chcw,d "Yale bshing;' a 1VUI-I +poo of some of the dot, wlili• dins, and won a commitment from the onivudry's Imna+ that they would Invest 15Bmllllon ohheir 17• billion endowment In city plojens ova the e,..1 dead,. If Yale had coaribtrud ,ante kind of payment to eompnurt for It, urs of city anica. II would Mmly ,how up In the lilt t 5716 million mood budlll, says Mr. Di. Lina. But the 530,mill1on that 11 tieing Inve,jed In adorn rdale devdnp- mens Ocj,N will hap sensate more conllmnlnn Ihloughoul the oily,which could mean that the lar bare will pow, he sty+. While Yale make, no dual mn- Inbislion Inch, lair. it don pay lot - a am on in ned... finical pI.Nr y and such facilities n the Yale Bowl, its sladium. Thal amount lul year was Ghoul $5110.000. Yale has Inve,l,d in New Boren daelopmenl befog. 11 helped 6 panel . downtown shopping mall and an apartment mmples. for ea• ample. 0.1 the Initiative, an• bounced to a group of ,pee lne fsom..rOil the eoumry by Mr. Di. Lkmand Yale Pr..Went Dennis C. Schmidt. 1,., an the New Ifaven Gain, mark. the 6111 time The unb veli, has publicly,milul.tld a A- m.bf ammllment To the city. Mayor DHJclo also hopes that Yale will Invest some of IT, money I. ch, Immnted developmenn of low• .it modtaloincome hmg- Inl. possibly In The mmlly black and poor Marvell dShbchond IMT holders the nisnhwat edge of the crawling Yale campus. Unl• verily officials u. mnaidning ouch n Invalmenl, bol mribm, Io arta that they are operating a rin from which They expect a fair is. tum. not a ebadly Program. "It" a wonderful thing;' Is, claim, Mr. DiLlao, who eomiden the initiative . model for The seal ors of city..Nas ly "Who... Mayor 1:611c of crilics di,apee. "It's kind of a Inksnhm;' say. Matthew Ilan11".. a hi{h.sa141n1 malhemalics and aims. Teacher whose, umucce, hilly apimT MI. DUO. in 1957. , "Nk have horrible poveaY in this city, We have hunger Pmbb I.Ou"a.y,Mr. Dmenst ...Nak. Ing ham . secondhand easy chair In The guidance offs, of The IW yesi.nld Wool buildin{ when he leaches. Yale's wmmunity mm• mirmml. he says, won't help re• sol., thou Problems. "NON., in it aid. -We weh come applialkm, from local eom- muniy groups; "says Mr. Breen• nein."neyeouldinvolineondm for their faculty memwa:' Bulla R. Gltenw00c whoalso I..cb s the high school. says New )oven would have been sol - I,, used if Yple had at Inst epndloconldbulnnamounllhal was tocol io what the city spends to educate in ....... louldy lSoehil• dmn dnud,ms who lire in homing for was ,d audnls. Thal houdng is tsua<mpl. Like Mb Baan - ,join. she an for city office in 1957 on the Gran Pant ticket. which trimmed In campaign with "Tc Yale" pecan. "We don't take it a, a very sd- out oR.. wows II'. may invest sed art, 10 Yun;' say. Ms. Gamwood, commenting on the way Yale aniicots have ifmclured the inasllnenl plan. The Initiative I, "directly li,d to Yale's wnefil;' she adds. Yak's money managers don't diervlt lhal. Sw they say Yale ih.ld.'l be Mimed for nal souring problem+ II he, ml mused and..... tel at IUs As. Needn't Be • Biu' Chip Fee the New Haven Inil -fla, Yale Is heading It, ladirimal in. .nlment cried., rayl Millis Ryam,diall., ofirst crisis Invest .,is the univa+ity, A New In• vs. pnj,,l need tel w as much of a NI chip a the Y.k..md 717 Firm Avenue huildin{in Annhamn how Inown n the Sleukn Gn'l M1di s) 1. merit a finamlal mm - mutual. The nmmal In... umm Inks ¢mulling all defib to be In the ,rye of 15 -million and k7Bmillim. as wen as mohmhkn, y.i.0 hr valmem, in hall and ywn- mc.a. also could be waived. Enhancing Gmpla P<rirr,eln What make as appopdaa New Ion.. Inifolire goiell? An aywa• mend building thol could haove um dant, or faeully memwna • mW chomping Into .a amaq Ihme uMI cmmldcnflon."Wed ted to ways to enhance the Intimater of Ilia campu.;' my, favid F. Sm. ...'lxoelate vke•pasiden, of [be in.enm,ma office. In • phnu, he sap. Yak will invest in deal,that s.2 "in the mi ands. cnllthened salfimt2u." So fu. Yak bar agreed to invest H.2 -million in • 1I06milltcn Io- )<a of a de.cloper who plans to areas. hi,jaic building and cm ,jrvcl 530 spammaln and cads, oinking in a fmrblak arca or downtown known as Nimh Square. f7b.1 imalmant was Wmed be - full the iniliatire was wgun. but may still count as Pan of the SSB million.) The university also has promitcd 13 -million toward a 176 million plan 1. ronren an old high uhool roar she Yatc•New, Haven Medial Center into a conference ,enter and hotel complex. tl,e fan that the P,oRn may +Iso include tom, apanmcm,— olludint some, that will be a av,cl for low. aid modenle•inwme (,masa it the cily real... the (,deal tomb it i, ceeHn{—war pan of the ton skit for Yale. my+Mr. Sw,nan. The university also hops that it, highly publidad commilmml will it.. cher .als+tae dlveblwn and Islamic lis the city. "Generally, we fad thal New lover's time has come:"says Ms. try.n. "A few yan ago. New Ib. vco wont even on mon develop ell map$.*' ' Mesnwhil'. inrhe ince, neighbor hood of Di.well, which horde+, the Imp n, residents are hoping IMI Yale will sprinkle . little of the ire Isimenr their way, say, William IPele) Gas. .•auliv, director of the Ciawell Community Dcvekp ment Corporation. Stanley RoJga., is mamwr of the Board of AMerma, myW -11 world really be m enrichment a New If am if they would give On move money for low• and nmJlr- alrincome housinL" It, says his emmliluenla rad amnments IhY and os. less han H100a month. William W. Ginswa, New If.. ten's development administrant, also hopes that the university Is- vaBinthal poiatdndaMnthal Might nor offer high ala of rerun. Bmevn if it dossn'T, w talions the initiative already has IoM did sends To the city. Real error, it ... I. opo m .tonin{ to milk, the city .1 they had Ml wrola he aryl Yale'+ commitment, he says. "lends a very rowerful maror." Bath he aid Mayor DLied say new dealopmmwboul I NO rod. lion has ban added to the as rdt tine the Alas. took ofRcr Is 19A2—keep,the lily fromhatinpn mil sun, which might drive and middlesoo midenu. Crines or the k iliatia do nm anll, understand what it was is tended to do. say, at,. Gin,bea "I don't think thea tel ev,, a ,ntemem Thar Yale'. money -a, suing to solve New I ...... pd. kml" —0rlo, auwlwma lIS/ City of Iowa City MEMORANDUM Date: July 15, 1988 To: City Council From: Patt Cain, Economic Development Coordinator Inn Re: Annual Report on Iowa City Tax Abatement The attached table summarizes use of tax abatement within Iowa City. These data were supplied by Dan Hudson, City Assessor. Remember that the partial exemption applies only to actual value added by new construction of eligible real estate. In 1988, there were five applicants for tax abatement, all of which met requirements for approval. If you have any questions about this material, please call me at 356-5235. b,]/pct Attachment 9 TAM ABATEMENT IN IOWA CITY Assessed Value Iowa City Tax Year of Type of Added by Iowa City Tax Savings to Firm' Paid b Firm on Im rovement Applicant Application Property Improvement 1986 1987 1988 1989 1990 198 1987 198 1 89 Millard Warehouse 1985 Commercial/ $486,440 $3,824 $3,370 $2,560 $1,274 $2,248 $3,128 2710 Hwy. 6 East Warehouse 1986 338,800 2,934 2,378 978 1,584 1987 1,375,880 12,068 4,022 1988 220,840 Plumbers Supply Co. 1985 Commercial/ 270,690 2,128 1,876 1,424 710 1,250 1,742 2020 S. Riverside Dr. Distribution Center MacBride Addition 1986 Industrial 288,940 2,502 2,028 834 1,352 2325 Heinz Road Economy Advertising 1986 Industrial 200,000 1,732 1,404 578 936 2800 Hwy. 6 East 1987 1,234,570 10,828 3,610 Gringer Feed 8 Grain 1987 Industrial 136,950 1,202 400 2144 Old Hwy. 218 S. Blooming Prairie 1987 Commercial 125,060 1,098 366 Warehouse Distribution Center 1988 68,680 • " Sheller Globe Corp. 1987 Industrial 64,900 570 190 2500 Hwy. 6 East 1908 37,680 • " Lyle Miller Co. 1988 Industrial 293,500 Thoams 6 Betts Corp. 1988 Industrial 21.230 TOTALS $5,164,160 $5,952 $12,414 $35,560 $1,984 $5,888 $17,330 *First year of taxes paid on Improvement. --------------- 'Calculated by: Assessed Value x % Exemption x Rollback Adjustment x Tax Rate for Iowa City [75% in Year 1 [98.7948% for [$10.60932 per $1,000 60% in Year 2 1986-87 only] assessed value to 45% in Year 3 1986-87; $11.54919 in 30% in Year 4 in 1987-88; $11.69523 15% in Year 5 in 1988-893