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2018-04-19 Info Packet
� r � CITY OF IOWA CITY www.icgov.org City Council Information Packet April 19, 2018 IN Council Tentative Meeting Schedule Miscellaneous IP2 Memo from Management Intern and Assistant to the City Manager: Participatory Budgeting IP3 Memo from Budget & Compliance Office: Quarterly Financial Summary for Period Ending March 31, 2018 IN Press Release: Iowa Opportunity Zones IP5 Press Release: Moody's assigns Aaa to Iowa City, IA's GOs; outlook stable IP6 Joint Meeting Minutes: April 16 IP7 Copy of news release: Community Police Review Board Community Forum: April 23 I128 Invitation: Mental Health First Aid Class May 23 & 25 Draft Minutes IP9 Community Police Review Board: April 17 IP10 Historic Preservation Commission: March 8 IP11 Housing & Community Development Commission: March 15 IP12 Planning & Zoning Commission: April 2 P �i ®07 ®r®�� CITY OF IOWA CITY Date City Council Tentative Meeting Schedule IN Subject to change April 19, 2018 Time Meetina Location Tuesday, May 1, 2018 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, May 15, 2018 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, May 29, 2018 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Special Formal Meeting Tuesday, July 3, 2018 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, July 17, 2018 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, August 7, 2018 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, August 21, 2018 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting r r ®�r CITY OF IOWA CITY MEMORANDUM Date: April 18, 2018 To: City Council From: Mariah Kauder; Management Intern Simon Andrew, Assistant to the City Manager Re: Participatory Budgeting Introduction City Council has directed staff to identify ways to increase public participation in the budget process. Engaging residents in the budget's development is often referred to as participatory budgeting. Participatory budgeting can take on many forms and varies widely across cities. The FY2019 budget was certified in March and staff has already started to contemplate the process for the FY2020 budget. Two frameworks for participatory budgeting are described below, referred to for the purpose of this memo as 'public engagement' and 'direct allocation.' The biggest difference between the two frameworks is that the public engagement process is geared toward educating residents and soliciting input on the budget as a whole or specific projects, akin to the City's public engagement model for master planning processes; whereas residents or committees directly decide how to spend a specific amount set aside for them from the budget in the direct allocation format, which is similar to the City's current Program for Improving Neighborhoods (PIN) grant, Aid to Agencies, and Social Justice and Racial Equity grant processes. Framework I — Public Engagement Overview The first form of participatory budgeting entails collecting input from the community at large during the annual preparation of the budget. In this scenario, cities hold one or more meetings to educate residents about how the budget gets developed and walk them through its core components. During the process, city staff listen to resident concerns, recommendations, and general comments through discussion and possibly other interactive engagement. This form of community engagement presents a partnership approach to include residents in decision-making for the entire budget rather than separating a section of the budget to be placed under resident direction. Such an approach is similar to the type of engagement that occurs in the planning process when residents have the opportunity to recommend and prioritize projects. Though not branded as budget meetings, much of our capital budget has been informed by the Bicycle Master Plan, Parks Master Plan, and Downtown Master Plan public processes. Many other significant capital projects include public forums and open houses; plans and budgets are often modified to reflect public input received. Other examples include the upcoming recommendations from the U4 -7'J-18 IP2 April 18, 2018 Page 2 Climate Action and Adaptation Steering Committee and the Affordable Housing Action Plan open house. And while not explicitly tied to the budget, public input Council receives during the Strategic Planning process, Council listening posts, and our communitywide survey help inform budget priorities and specific funding items often arise out of these discussions. There is an opportunity to better educate the public of the financial implications of the budgetary decisions that come out of these processes year-round, tying them more directly to budget development. The FY2019 budget process also included two public engagement events that were new for Iowa City. Branding our Saturday budget work session as 'Breakfast on a Budget' and inviting the public to attend the overview presentation resulted in the largest public turnout we have had for this meeting. Council and staff received feedback from the public on budgeting priorities based on this presentation. Staff also received numerous comments from residents that they had a much better understanding of the City's finances and budget process. Staff also conducted a Facebook Live event, during which the City Manager, Public Works Director, and Parks and Recreation Director provided information and solicited questions on projects in the proposed capital budget. Staff also received positive feedback on this event; engaging residents directly and in real time was appreciated. Cities across the country are exploring new ways to engage residents during budget development. The events and processes noted above are a good foundation upon which to build to increase the public's awareness and involvement in the budget process. Cities should be mindful that the chosen engagement method may solicit input from different parts of the community and not rely on one single approach. Lengthy in person meetings, social media platforms, or mail -in surveys may all see participation rates that differ across income levels or age groups, for instance. Efforts should be inclusive and take advantage of multiple ways for the public to engage. Two examples from other communities are identified below. Examples The City of Evanston, Illinois, held a Multi -Media Community Budget Outreach meeting in September 2017 for their fiscal year beginning January 1 5`. Evanston started holding such a meeting in 2016. Overall, they have had a positive experience and did not make any changes after the first year. During the meeting, the City presented on general facts about Evanston, the budgeting process, current revenues and expenditures, updates on capital projects, and challenges in the budget followed by time for questions and discussion. The workshop was broadcast on live tv, and the video was later posted to their website. Residents were encouraged to share their budget -related ideas and feedback before, during, and after the meeting by mail, email, calls/texts, on Facebook and Twitter, and via an online form on the city website. Evanston's presentation can be viewed at https://www.citvofevanston.org/home/showdocument?id=26293. 2. The City of Des Moines implemented a resident engagement series called Speak Up DSM for its FY2018 budget development that was repeated with some modification for the FY2019 budget. In the first series, six in-person workshops were held at various locations around the city to review the budget from September 2016 to February 2017. For FY2019, the City of Des Moines started the process later in November 2017 and held a total of two April 18, 2018 Page 3 in-person workshops, one live streaming presentation, and four Council workshops on the budget. The FY2018 series focused on learning what services residents liked, whereas the series for FY2019 was aimed more at reviewing the previous year and general education on how the budget works. The FY2018 series offered residents the chance to rank projects they would like to see prioritized by the City of Des Moines, with each project broken down to the dollar amount by which the city portion of their tax bill would be affected. The workshops utilized an interactive polling application through which residents could vote on their smartphones with results displayed live on-screen. City staff highlighted that residents can influence budgeting decisions beyond the budget -specific engagement sessions through participating in other meetings and surveys, such as the park and recreation master plan, resident satisfaction survey, and city council meetings. City of Des Moines staff have expressed that their budget series was successful because their engagement reached beyond the usual meeting attendees and helped residents understand the relationship between taxes and expanded services. Benefits that came out of the events included relationship building with residents, cross departmental collaboration, positive PR, and a record number of engaged residents. On the other hand, it was emphasized that the amount of time required to organize and implement such a lengthy process stretched staff capacity. Another challenge was that departments ended up feeling as if they were competing for funding, rather than collaboratively developing and prioritizing budget requests. Evaluation Advantages of utilizing the Public Engagement method include enhanced public education of the overall budgeting process and involvement of residents from across the city. However, difficulties arise when it comes to scheduling such lengthy events at times of the day convenient to many residents. Hosting a series of meetings as Des Moines has done can be problematic given workshops build on each other and residents cannot be expected to attend all sessions. This challenge is further reflected in the significant outreach that would be necessary to garner broad- based involvement at any one budget workshop beyond those residents already accustomed to attending public input meetings. Residents have already expended a significant amount of time advocating for projects during master planning processes. To ask them to do so again in order to fund those projects has the potential to become redundant and turn folks away from the process. Master planning aside, residents have opportunities to influence budget decisions by other means throughout the year, such as involvement in boards and commissions or attending City Council meetings. Iowa City residents also can sign up for a Finance Department email listsery to receive updates related to public input meetings, budget amendments, etc. Again, it is critical to engage a diverse population using multiple formats. Framework II — Direct Allocation Overview April 18, 2018 Page 4 A second method of participatory budgeting is similar to several grant allocation processes currently in place in Iowa City. It should be noted that Iowa City's grant programs generally provide funding for projects to be completed by the residents independent from the City, whereas, the model of participatory budgeting described below entails residents crafting projects for the City to implement. The program can vary widely across locations and is used in 1,500 sites globally, including cities, neighborhoods, and schools. Generally, residents directly select projects to be funded from an allocated portion of the city budget. This process can take place at the city or neighborhood level depending on the size of the community. City Council designates a certain amount of discretionary funds, with defined parameters, to be used for projects that are proposed, debated, and selected entirely by residents or committees. Often a number of residents volunteer to draft proposals for each of the ideas before a vote is taken and city staff implement the project(s). There are some differences between the City's current direct allocation methods and those found in other cities. PIN grant allocation allocations are approved by the Neighborhood Council after receiving recommendations from a staff committee. Social Justice and Racial Equity grant allocation recommendations are made by the Human Rights Commission, while aid provided for area agencies are recommended by the Housing and Community Development Commission. In all cases, the City Council can amend these recommendations at their discretion. Below are two examples of direct allocation from other cities. Examples The City of Chicago, IL, uses this form of participatory budgeting through a multi -ward program in which residents vote to fund projects including street and sidewalk repairs, bike lanes, playground and park improvements, murals, street lights, and tree plantings, among other community projects. Chicago partners with a non-profit organization called The Participatory Budgeting Project. The Participatory Budgeting Project works with elected officials and community partners to provide technical assistance and network building. Known now as PB Chicago, it is also supported by the University of Chicago's Great Cities Institute. 2. City-wide participatory budgeting of this style was implemented in 2012 in Vallejo, California. Home to 120,000 residents, the City of Vallejo has engaged over 15,000 residents during the last three budget cycles while allocating over $6.7 million to fund 25 projects. Vallejo also works with The Participatory Budgeting Project. A few of the roles for which residents can volunteer include Budget Delegate, Steering Committee Member, Meeting Facilitator, Poll Worker, or Ballot Counter. The City of Vallejo designates several pages on its website to information about how to get involved with their participatory budgeting process, as a well as a link to their newsletter dedicated to this topic. All residents of the City of Vallejo at least 14 years of age or older are eligible to vote for projects. Evaluation The direct allocation method is beneficial in that residents take on a great deal of ownership in the projects they choose to fund. This enhanced sense of ownership makes projects more likely April 18, 2018 Page 5 to be well-received and successful upon completion. On the other hand, direct allocation can potentially lead to a small number of interested parties making funding decisions, not necessarily representing the community as a whole. Moreover, this method inherently focuses residents' attention on a few specific projects rather than enabling them to evaluate the big picture and consider how projects relate to one another. Additionally, with residents typically designing their own projects in the direct allocation framework, they are susceptible to duplicating efforts if they are not familiar with the range of projects currently in the works by the city that could already be on track to fulfill their goals. In sum, public engagement and direct allocation are two distinct approaches to increase resident participation in budget development. Public input meetings offer residents insight into how city staff develop the entire budget and give them a chance to have a voice in the process. In contrast, direct allocation provides residents the opportunity to determine projects to give to the city for implementation from a specific funding allocation within the city budget. Recommendations Because of the merits of both methods and similar approaches already in place in Iowa City's budget process, staff recommend taking the following approach to establish a more robust participatory budgeting process and will proceed with these enhancements without further direction from Council. 1. Ensure master planning processes are understood to impact budgetary decisions and as a form of participatory budgeting, as well as creating more robust forms of interaction during the budget process, capitalizing on the FY2019 Facebook Live event. This approach empowers residents through enhanced awareness of their role in the budgeting process and is a reminder that such decisions are being shaped throughout the year and not only when the budget is being written. Receiving resident feedback in this manner allows for more timely input when it is most meaningful. Furthermore, it validates master planning processes and perhaps engages a larger portion of the community. Project advocates are more likely to be engaged when the planning process is targeted to something they already care about rather than a generic call for input on the budget as a whole. It also avoids forcing residents to invest in communicating their priorities twice, during planning processes and during budget development. Staff is modifying the PIN grant process for the upcoming year to be available beyond only neighborhood associations in order to broaden the use of the program and garner more widespread participation. Ten percent ($2,000) of the program's budget will be set aside for applications throughout the year and applicants for these funds will not need to be neighborhood associations. Projects in Invest Health neighborhoods will be targeted and will have a $500 cap. Ideally, enabling residents who are not active in neighborhood associations to apply for funds outside of the prescribed timeline for applications will broaden the appeal of the program. Council increased the budgeted amount for the Social Justice and Racial Equity grant program for FY2019, with recommendations made by the Human Rights Commission. Aid to Agency funding with recommendations made by the Housing and Community Development Commission will also continue in FY2019. IP3 r ^I.® CITY OF IOWA CITY MEMORANDUM Date: April 17, 2018 To: City Manager, City Council From: Jacklyn Budding, Budget & Compliance Officer Re: Quarterly Financial Summary for Period Ending March 31, 2018 Introduction Attached to this memorandum are the City's quarterly financial reports as of March 31, 2018. The quarterly financial report includes combined summaries of all fund balances, revenues, and expenditures for Fiscal Year 2018 through the end of the third quarter, which is 75% of the way through the fiscal year. The March quarterly report also incorporates the budget amendments that were approved during the Fiscal Year 2019 budget process. Some of the highlights of the City's financial activity are discussed below. Revenue Analysis This revenue analysis pertains to the revenue reports, Revenues by Fund and Revenues by Type, on pages 4-6. In these two reports, the actual revenues would ideally be near 75% of budget since we have completed three-fourths of the fiscal year; however, due to accruals and timing differences, many of these percentages may be above or below 75%. A few examples of revenues that are below the 75% mark include property tax revenue which is at 58.1% of budget and reflects the timing of the property tax receipts. The second half property taxes are due in April and should increase this percentage substantially. Also, on page 6, under Other Financing Sources, Debt Sales revenue is at 0% of budget. We are currently preparing to sell the 2018 general obligation bonds which will bring this revenue source up to 100% of budget. Under Charges for Fees & Services, Building & Development fees are at 189.3% of budget and Police Services is at 259.1% of budget on page 5. Building & Development fees includes construction from last summer and fall and is a good indicator of the amount of construction activity underway. Additionally, an Affordable Housing Fee in Lieu of was received in the amount of approximately $405,000 that was not previously budgeted. Police Services is at 259.1% of budget due to additional hours the University of Iowa has been contracting for during this fiscal year. In addition, under Intergovernmental on page 5, State 28E Agreements are at 115.3% of budget primarily due to the timing of the receipt of the Fire Contract with the University of Iowa. Disaster Assistance Revenue is at 316.2% due to the receipt of FEMA funding for the reimbursement of FY13 Flooding Projects. Under Miscellaneous, the Contributions & Donations is at 136.8% of budget due to the receipt of the Data Driven Justice grant. Funds with budget anomalies on page 4 worth noting; the Risk Management fund has actual revenues at 104.6% due to the timing of the entries made for loss reserve payments to intra -city charges, and the CDBG Fund and Home Fund revenues are at 38.6% and 44.2%, respectively. These funds' revenues are below budget primarily due to the timing of the grant activity. These percentages could change quickly depending on when the Federal funds are received. Finally, the Governmental Projects fund has revenues at only 1.1% of budget due to the timing of the Bond issuance. This fund should come up closer to budget after the bond sale this Spring. As of March 31, the combined total actual revenue for all budgetary funds is $100,821,862 or 59.8% of budget. Overall, the City's revenues are not substantially different than projected, and the anomalies and budget variances can be explained. Expenditure Analysis This expenditure analysis pertains to the expenditure reports, Expenditures by Fund and Expenditures by Fund by Department on pages 7-9. The analysis of the City's expenditures for Fiscal Year 2018 through March is similar to the analysis for the City's revenues. We generally expect the actual expenditure levels to be around 75% of budget at this time of year. Some funds have expenditure activity through the third quarter that differs significantly from the 75% mark. The following funds have a significant expenditure variance above or below 75%: • CDBG Fund and HOME Fund expenditures are at 37.7% and 46.1%, respectively, due to the timing of the payout of loans and grants to applicants. • Debt Service Fund expenditures are at 28.6%, because the general obligation bond principal payments are not due until June 1. • Housing Authority Fund expenditures are at 91.3% of budget primarily due to the payment of landlord rents, which have historically been over budget. • Governmental Projects expenditures are at 23.3% and Enterprise Projects expenditures are at 32.4% because many of the capital projects are scheduled for construction this spring. • Risk Management Fund expenditures are at 97% because of several large claims within General Liability and Worker's Compensation. Overall, the combined total actual expenditures for all budgetary funds through March are $125,229,584 or 50.8% of budget. The City's expenditures through the third quarter have a few major anomalies; however, these can be readily explained. Conclusion Generally, there are no major concerns to report with the City's fund balances at the end of March. One fund, the Community Development Block Grant (CDBG) Fund, is presented (on page 3) with negative fund balance at -$36,236. This negative fund balance should be reversed following the next receipt of CDBG funds. The other fund balances appear to be near expectations. Additional information is available from the Finance Department upon request. City of Iowa City Fund Summary Fiscal Year 2018 through March 31, 2018 Beginning Ending Restricted, Unassigned Fund Year -to -Date Transfers Year -to -Date Transfers Fund Committed, Fund Balance Revenues In Expenditures Out Balance Assigned Balance Budgetary Funds General Fund 10" General Fund $ 40,724,250 $ 32,019,824 $ 7,750,028 $ 38,091,722 $ 9,293,141 $ 33,109,240 $ 9,820,322 $ 23,288,918 Special Revenue Funds 2100 Community Dev Block Gree (90,569) 339,030 - 284,697 - (36,236) - (36,236) 2110 HOME 113,005 501,023 - 512,715 4,924 96,389 - 96,389 2200 Road Use Tax Fund 5,714,241 6,038,351 334,945 4,425,445 4,136,114 3,525,979 - 3,525,979 2300 Other Shared Revenue 82,485 243,349 (15,220) 288,363 - 22,251 - 22,251 2350 Metra Planning Org of J.C. 256,738 200,577 207,154 435,912 - 228,556 - 228,556 2400 Employee Benefits 2,520,948 6,931,827 - 900,310 7,890,330 662,135 - 662,135 2500 Affordable Housing Fund 468,102 405,135 650,000 325,000 - 1,198,237 - 1,198,237 2510 Peninsula Apartments 143,381 55,081 - 35,592 - 162,871 - 162,871 26" Tax Increment Financing 482,246 1,424,613 25,781 8 - 1,932,632 476,815 1,455,817 2820 SSMID-Downtown District - 194,353 - 188,553 - 5,799 - 5,799 Debt Service Fund 5"• Debt Service 7,232,185 7,558,056 256 3,873,973 - 10,916,525 1,331,975 9,584,549 Enterprise Funds 710' Parking 11,082,223 6,939,997 2,275,205 2,863,091 2,946,688 14,487,646 7,486,999 7,000,647 715` Mass Transit 6,427,042 4,949,056 2,536,707 8,329,950 - 5,582,856 629,877 4,952,979 720* Wastewater 25,193,871 8,947,368 3,103,201 14,172,469 5,264,790 17,807,182 7,884,951 9,922,231 730* Water 18,111,079 6,700,090 1,362,882 12,439,240 2,915,357 10,819,454 3,146,289 7,673,165 7400 Refuse Collection 1,351,518 2,368,071 457 2,276,636 486,141 957,269 - 957,269 750' Landfill 26,735,286 4,876,389 826,200 3,419,826 2,766,056 26,251,994 24,174,828 2,077,166 7600 Airport 308,219 251,903 82,265 316,236 (1,403) 327,555 100,000 227,555 7700 Slonm Water 1,031,911 1,092,197 86 375,273 642,568 1,106,354 - 1,106,354 79" Housing Authority 6,756,668 7,249,870 4,924 7,519,081 35,084 6,457,297 3,119,577 3,337,720 Capital Project Funds Governmental Projects 43,433,631 174,705 13,667,384 17,930,988 24,878 39,319,854 - 39,319,854 Enterprise Projects 13,294,586 1,360,996 4,694,400 6,224,505 11988 13,123,489 - 13,123,489 Total Budgetary Funds $211,373,048 $ 100,821,862 $37,506,655 $ 125,229,584 $36,406,655 $ 188,065,327 $ 58,171,632 $129,893,695 Non -Budgetary Funds Capital Project Funds Internal Service Projects $ - $ - $ - $ - $ - $ - $ - $ - Internal Service Funds 810* Equipment 13,165,375 4,982,662 - 3,787,012 1,100,000 13,261,025 12,047,617 1,213,408 8200 Risk Management 3,803,525 1,674,045 - 1,433,145 - 4,044,424 - 4,044,424 830' Information Technology 2,539,463 1,862,869 - 1,489,474 - 2,912,858 535,514 2,377,344 8400 Central Services 708,450 162,307 - 109,537 - 761,220 - 761,220 8500 Health Insurance Reserves 10,821,196 6,205,122 - 5,626,145 - 11,400,172 4,844,311 6,555,861 8600 Dental Insurance Reserves 147,348 304,495 - 265,343 - 186,500 - 186,500 Total Non -Budgetary Funds $ 31,185,356 $ 15,191,499 $ - $ 12,710,656 $ 1,100,000 $ 32,566,199 $ 17,427,442 $ 15,138,757 Total All Funds $242,558,405 $ 116,013,361 $37,506,655 $ 137,940,240 $37,506,655 $220,631,526 $ 75,599,074 $145,032,452 3 City of Iowa City Revenues by Fund Fiscal Year 2018 through March 31, 2018 n 2017 2018 2018 2018 Actual Budget Revised Actual Variance Percent Budgetary Fund Revenues General Fund 10'• General Fund $ 51,151,026 $ 51,270,355 $ 52,540,780 $ 32,019,824 $ (20,520,956) 60.9% Special Revenue Funds 2100 Community Dev, Block Grant 1,020,981 693,031 879,069 339,030 (540,039) 38.6% 2110 HOME 305,087 486,444 1,134,122 501,023 (633,099) 44.2% 2200 Road Use Tax Fund 8,803,148 8,393,630 8,393,630 6,038,351 (2,355,279) 71.9% 2300 Other Shared Revenue 577,060 - 348,153 243,349 (104,804) 69.9% 2350 Metro Planning Org of Johnson Cc 295,966 306,820 306,820 200,577 (106,243) 65.4% 2400 Employee Benefits 11,145,984 11,496,472 11,496,472 6,931,827 (4,564,645) 60.3% 2500 Affordable Housing Fund 3,926 - - 405,135 405,135 0.0% 2510 Peninsula Apartments 77,516 74,155 74,155 55,081 (19,074) 74.3% 26" Tax Increment Financing 2,230,731 2,333,912 2,454,719 1,424,613 (1,030,106) 58.0% 2820 SSMID-Downtown District 318,343 355,350 355,350 194,353 (160,997) 54.7% Debt Service Fund 5'• Debt Service 14,353,841 13,223,418 13,223,418 7,558,056 (5,665,362) 57.2% Enterprise Funds 710• Parking 5,527,930 5,922,530 8,601,699 6,939,997 (1,661,702) 80.7% 715• Mass Transit 4,812,638 4,193,204 8,040,687 4,949,056 (3,091,631) 61.6% 720* Wastewater 17,883,190 12,589,340 12,589,340 8,947,368 (3,641,972) 71.1% 730* Water 14,934,666 9,268,096 9,268,096 6,700,090 (2,568,006) 72.3% 7400 Refuse Collection 3,159,783 3,411,689 3,411,689 2,368,071 (1,043,618) 69.4% 750• Landfill 7,089,948 6,234,063 6,234,063 4,876,389 (1,357,674) 78.2% 7600 Airport 348,499 359,500 359,500 251,903 (107,597) 70.1% 7700 Storm Water 1,688,423 1,483,550 1,483,550 1,092,197 (391,353) 73.6% 79•• Housing Authority 9,103,051 8,769,397 8,769,397 7,249,870 (1,519,527) 82.7% Capital Project Funds Governmental Projects 34,506,605 16,997,084 16,548,987 174,705 (16,374,282) 1.1% Enterprise Projects 4,492,040 3,529,110 2,080,681 1,360,996 (719,685) 65.4% Total Budgetary Revenues $193,830,381 $161,391,150 $168,594,377 $100,821,862 $ (67,772,515) 59.8% Non -Budgetary Fund Revenues Capital Project Funds Internal Service Projects $ 174 $ - $ - $ - 0.0% Internal Service Funds 810* Equipment 6,099,982 6,106,291 6,139,844 4,982,662 (1,157,182) 81.2% 8200 Risk Management 1,625,495 1,600,954 1,600,954 1,674,045 73,091 104.6% 830' Information Technology 2,147,457 2,270,295 2,270,295 1,862,869 (407,426) 82.1% 8400 Central Services 241,819 239,151 205,948 162,307 (43,641) 78.8% 8500 Health Insurance Reserves 8,136,943 8,746,421 8,746,421 6,205,122 (2,541,299) 70.9% 8600 Dental Insurance Reserves 384,243 396,674 396,674 304,495 (92,179) 76.8% Total Non -Budgetary Revenues $ 18,636,114 $ 19,359,786 $ 19,360,136 $ 15,191,499 $ (4,168,637) 78.5% Total Revenues - All Funds $ 212,466,494 $180,750,936 $187,954,513 $116,013,361 $ (71,941,152) 61.7% n City of Iowa City Revenues by Type Fiscal Year 2018 through March 31, 2018 Licenses, Permits, & Fees: 2017 2018 2018 2018 (7,854,619) 49.9% General Use Permits Actual Budget Revised Actual Variance Percent Budgetary Fund Revenues 111,438 92,740 92,740 80,122 (12,618) 86.4% Property Taxes $ 55,357,358 $ 56,458,399 $ 56,458,399 $ 32,780,647 $ (23,677,752) 58.1% Other City Texas: 685,659 692,140 692,140 347,437 (344,703) 50.2°/ TIF Revenues 2,226,302 2,333,912 2,454,719 1,418,662 (1,036,057) 57.8°/ Gas/Electnc Excise Taxes 726,457 681,149 681,149 342,323 (338,826) 50.3% Mobile Home Taxes 65,153 65,480 65,480 41,936 (23,544) 64.0% Hotel/Motel Taxes 1,136,712 1,078,760 1,136,260 596,313 (539,947) 52.5% Utility Franchise Tax 939,387 895,000 895,000 493,800 (401,200) 55.2% Subtotal 5,094,011 5,054,301 5,232,608 2,893,035 (2,339,573) 55.3% Licenses, Permits, & Fees: 12,147,485 14,280,110 15,692,449 7,837,830 (7,854,619) 49.9% General Use Permits 104,296 82,510 82,510 51,276 (31,235) 62.1% Food& Liquor Licenses 111,438 92,740 92,740 80,122 (12,618) 86.4% Professional License 12,015 18,710 18,710 5,735 (12,975) 30.7% Franchise Fees 685,659 692,140 692,140 347,437 (344,703) 50.2°/ Construction Permits &Insp Fees 2,578,024 1,639,240 1,639,240 1,458,546 (180,694) 89.0% Misc Lic & Permits 39,951 36,320 36,320 31,943 (4,377) 87.9% Subtotal 3,531,383 2,561,660 2,561,660 1,975,058 (586,602) 77.1% Intergovernmental Fed Intergovemment Revenue 12,147,485 14,280,110 15,692,449 7,837,830 (7,854,619) 49.9% Property Tax Credits 1,590,863 1,603,881 1,603,881 781,311 (822,570) 48.7% Road Use Tax 8,672,279 8,320,120 8,320,120 5,967,272 (2,352,848) 71.7% State 28E Agreements 1,813,044 1,687,575 1,687,575 1,946,439 258,864 115.3% Operating Grants 139,474 81,850 81,850 73,825 (8,025) 90.2% Disaster Assistance 217,718 - 34,815 110,085 75,270 316.2% Other State Grants 12,999,581 2,295,514 6,701,770 4,492,993 (2,208,777) 67.0% Local 28E Agreements 1,418,467 1,005,860 1,005,860 962,278 (43,582) 95.7% Subtotal 38,998,911 29,274,910 35,128,320 22,172,033 (12,956,287) 63.1% Charges For Fees And Services Building & Development 969,936 445,620 425,620 805,554 379,934 189.3% Police Services 143,562 37,237 37,237 96,494 59,257 259.1% Animal Care Services 11,545 10,400 10,400 8,065 (2,335) 77.5% Fire Services 10,370 8,660 8,660 6,852 (1,809) 79.1% Transit Fees 1,260,923 1,299,190 1,299,190 852,326 (446,864) 65.6% Culture & Recreation 780,147 820,454 820,454 455,407 (365,047) 55.5% Misc Charges For Services 72,138 68,628 68,628 50,270 (18,358) 73.3% Water Charges 9,279,458 9,102,056 9,102,056 6,568,390 (2,533,666) 72.2% Wastewater Charges 12,276,259 12,214,720 12,214,720 8,698,366 (3,516,354) 71.2% Refuse Charges 3,588,837 3,772,349 3,772,349 2,719,010 (1,053,339) 72.1% Landfill Charges 6,273,574 5,686,860 5,686,860 4,283,664 (1,403,196) 75.3% Stone Water Charges 1,522,294 1,477,710 1,477,710 1,070,686 (407,024) 72.5% Parking Charges 5,910,725 6,319,394 6,319,394 4,839,666 (1,479,728) 76.6% Subtotal 42,099,767 41,263,278 41,243,278 30,454,749 (10,788,529) 73.8% Miscellaneous: Code Enforcement 238,295 253,180 253,180 158,193 (94,987) 62.5% Parking Fines 578,713 549,580 549,580 339,037 (210,543) 61.7% Library Fines & Fees 154,425 155,520 155,520 107,206 (48,314) 68.9% Contributions & Donations 705,917 377,972 422,972 578,821 155,849 136.8% Printed Materials 43,411 48,400 48,400 32,217 (16,183) 66.6% Animal Adoption 12,015 14,190 14,190 10,610 (3,580) 74.8% Misc Merchandise 55,052 54,930 54,930 46,144 (8,786) 84.0% Intra -City Charges 3,795,296 4,226,884 4,226,884 2,901,770 (1,325,114) 68.7% Other Misc Revenue 2,118,650 779,349 956,349 601,984 (354,365) 62.9% Special Assessments 1,087 1,000 1,000 367 (633) 36.7% Subtotal $ 7,702,861 $ 6,461,005 $ 6,683,005 $ 4,776,349 $ (1,906,656) 71.5% City of Iowa City Revenues by Type Fiscal Year 2018 through March 31, 2018 2017 2018 2018 2018 Actual Budget Revised Actual Variance Percent Use Of Money And Property Interest Revenues $ 1,551,921 $ 1,022,383 $ 1,022,763 $ 938,561 $ (84,202) 91.8% Rents 1,370,376 1,307,630 1,317,630 985,886 (331,744) 74.8% Royalties & Commissions 140,491 94,950 98,950 77,139 (21,811) 78.0% Subtotal 3,062,788 2,424,963 2,439,343 2,001,585 (437,758) 82.1% Other Financial Sources: Debt Sales 33,795,498 14,671,084 11,753,500 - (11,753,500) 0.0% Sale Of Assets 3,081,294 1,956,508 5,829,222 2,999,067 (2,830,155) 51.4% Loans 1,106,510 1,265,042 1,265,042 769,340 (495,702) 60.8% Subtotal 37,983,302 17,892,634 18,847,764 3,768,406 (15,079,358) 20.0% Total Budgetary Revenues $193,830,381 $161,391,150 $168,594,377 $100,821,862 (67,772,515) 59.8% Non -Budgetary Fund Revenues Capital Project Funds $ 174 $ - $ - $ - $ - 0.0% Internal Service Funds 18,635,940 19,359,786 19,360,136 15,191,499 (4,168,637) 78.5% Total Non -Budgetary Revenues $ 18,636,114 $ 19,359,786 $ 19,360,136 $ 15,191,499 $ (4,168,637) 78.5% Total Revenues - All Funds $212,466,494 $180,750,936 $187,954,513 $116,013,361 $ (71,941,152) 61.7% 0 City of Iowa City Expenditures by Fund Fiscal Year 2018 through March 31, 2018 Enterprise Funds 720' Wastevraler 2017 2018 2018 2018 1,695,034 89.3% 730* Water Actual Budget Revised Actual Variance Percent Budgetary Fund Expenditures 3,053,376 3,427,206 3,427,206 2,276,636 1,150,571 66.4% General Fund 4,973,964 4,902,903 5,053,302 3,419,826 1,633,476 67.7% 10" General Fund $ 51,413,370 $ 56,552,008 $ 57,894,311 $ 38,091,722 $ 19,802,589 65.8% Special Revenue Funds 747,069 518,983 518,983 375,273 143,710 72.3% 2100 Community Dev Block Grant 1,390,132 568,686 754,724 284,697 470,027 37.7% 2110 HOME 192,082 465,444 1,113,122 512,715 600,407 46.1% 2200 Road Use Tax Fund 5,262,429 6,221,226 6,487,226 4,425,445 2,061,781 68.2% 2300 Other Shared Revenue 652,152 - 375,158 288,363 86,795 76.9% 2350 Metro Planning Org of Johnson Co. 609,907 633,977 633,977 435,912 198,065 68.8% 2400 Employee Benefits 868,301 1,243,475 1,243,475 900,310 343,165 72.4% 2500 Affordable Housing Fund 500,000 650,000 650,000 325,000 325,000 50.0% 2510 Peninsula Apartments 59,023 53,557 53,557 35,592 17,965 66.5% 26`• Tax Increment Financing - 332,365 332,373 8 332,365 0.0% 2820 SSMID-Downtown District 318,343 355,350 355,350 188,553 166,797 53.1% Debt Service Fund 1,236,127 1,472,081 1,472,081 1,433,145 38,936 97.4% 5"` Debt Service 15,218,289 14,256,417 13,564,492 3,873,973 9,690,519 28.6% Enterprise Funds 720' Wastevraler 21,260,750 10,601,444 15,867,503 14,172,469 1,695,034 89.3% 730* Water 12,372,374 8,465,881 14,290,160 12,439,240 1,850,920 87.0% 7400 Refuse Collection 3,053,376 3,427,206 3,427,206 2,276,636 1,150,571 66.4% 750' Landfill 4,973,964 4,902,903 5,053,302 3,419,826 1,633,476 67.7% 7600 Airport 665,802 369,187 399,387 316,236 83,151 79.2% 7700 Storm Water 747,069 518,983 518,983 375,273 143,710 72.3% 79" Housing Authority 8,651,207 8,201,363 8,231,390 7,519,081 712,309 91.3% Capital Project Funds Governmental Projects 32,902,808 32,530,291 77,077,677 17,930,988 59,146,689 23.3% Enterprise Projects 3.657.836 8,825,015 19,187,686 6,224,505 12,963,181 32.4% Total Budgetary Expenditures $175,931,866 $173,318,414 $246,613,898 $125,229,584 $121,384,314 50.8% Non -Budgetary Funds Expenditures Capital Project Funds Internal Service Projects $ 61,633 $ - $ - $ - - 0.0% Internal Service Funds 810' Equipment 4,683,979 4,543,387 5,537,501 3,787,012 1,750,489 68.4% 8200 Risk Management 1,236,127 1,472,081 1,472,081 1,433,145 38,936 97.4% 830' Information Technology 1,624,715 2,217,207 2,217,207 1,489,474 727,733 67.2% 8400 Central Services 201,065 262,163 228,960 109,537 119,423 47.8% 8500 Health Insurance Reserves 7,218,542 8,341,355 8,341,355 5,626,145 2,715,210 67.4% 8600 Dental Insurance Reserves 374,002 399,386 399,386 265,343 134,043 66.4% Total Non -Budgetary Expenditures $ 15,400,061 $ 17,235,579 $ 18,196,490 $ 12,710,656 $ 5,485,834 69.9% Total Expenditures - All Funds $191,331,927 $190,553,993 $264,810,388 $137,940,240 $126,870,148 52.1% 7 City of Iowa City Expenditures by Fund by Department Fiscal Year 2018 through March 31, 2018 2017 2018 2018 2018 Actual Budget Revised Actual Variance Percent Budgetary Funds Expenditures General Fund 10^ General Fund City Council $ 110,152 $ 108,590 $ 113,859 $ 82,895 $ 30,964 72.8% City Clerk 500,977 595,728 617,503 363,555 253,948 58.9% City Attorney 733,337 762,815 762,815 559,188 203,627 73.3% City Manager 2,148,884 4,087,474 3,738,272 2,254,177 1,484,095 60.3% Finance 3,655,228 4,349,981 4,604,557 2,992,870 1,611,687 65.0% Police 13,114,628 13,827,954 13,827,024 10,048,164 3,778,860 72.7% Fire 7,716,864 8,169,242 8,209,242 5,867,063 2,342,179 71.5% Parks & Recreation 7,812,840 8,139,582 8,305,351 5,557,298 2,748,053 66.9% Library 6,269,424 6,526,560 6,561,560 4,634,744 1,926,816 70.6% Senior Center 899,254 949,924 1,010,055 654,969 355,086 64.8% Neighborhood& Development Services 6,074,193 5,788,055 6,888,970 3,350,984 3,537,986 48.6% Public Works 1,757,925 2,384,366 2,393,366 1,388,387 1,004,979 58.0% Transportation & Resource Management 619,664 861,737 861,737 337,428 524,309 39.2% Total General Fund 51,413,370 56,552,008 57,894,311 38,091,722 19,802,589 65.8% Special Revenue Funds 2100 Community Dev Block Grant Neighborhood& Development Services 1,390,132 568,686 754,724 284,697 470,027 37.7% 2110 HOME Neighborhood& Development Services 192,082 465,444 1,113,122 512,715 600,407 46.1% 2200 Road Use Tax Fund Public Works 5,262,429 6,221,226 6,487,226 4,425,445 2,061,781 68.2% 2300 Other Shared Revenue Neighborhood& Development Services 652,152 - 375,158 288,363 86,795 76.9% 2350 Metro Planning Org of Johnson Co Neighborhood & Development Services 609,907 633,977 633,977 435,912 198,065 68.8% 2400 Employee Benefits Finance 868,301 1,243,475 1,243,475 900,310 343,165 72.4% 2500 Affordable Housing Fund Neighborhood & Development Services 500,000 650,000 650,000 325,000 325,000 50.0% 2510 Peninsula Apartments Neighborhood & Development Services 59,023 53,557 53,557 35,592 17,965 66.5% 26" Tax Increment Financing Finance - 332,365 332,373 8 332,365 0.0% 2820 SSMID-Downtown District Finance 318,343 355,350 355,350 188,553 166,797 53.1% Total Special Revenue Funds 9,852,369 10,524,080 11,998,962 7,396,595 4,602,367 61.6% Debt Service Fund 5"• Debt Service Finance 15,218,289 14,256,417 13,564,492 3,873,973 9,690,519 28.6% Total Debt Service Fund 15,218,289 14,256,417 13,564,492 3,873,973 9,690,519 28.6% 8 City of Iowa City Expenditures by Fund by Department Fiscal Year 2018 through March 31, 2018 kt 2017 2018 2018 2018 Actual Budget Revised Actual Variance Percent Enterprise Funds 710' Parking Transportation 8 Resource Management $ 4,235,036 $ 6,941,622 $ 7,040,622 $ 2,863,091 $ 4,177,531 40.7% 715' Mass Transit Transportation 8 Resource Management 6,927,616 7,202,014 12,062,217 8,329,950 3,732,267 69.1% 720' Wastewater Public Works 21,260,750 10,601,444 15,867,503 14,172,469 1,695,034 89.3% 730' Water Public Works 12,372,374 8,465,881 14,290,160 12,439,240 1,850,920 87.0% 7400 Refuse Collection Transportation 8 Resource Management 3,053,376 3,427,206 3,427,206 2,276,636 1,150,571 66.4% 750' Landfill Transportation 8 Resource Management 4,973,964 4,902,903 5,053,302 3,419,826 1,633,476 67.7% 7600 Airport Airport Operations 665,802 369,187 399,387 316,236 83,151 79.2% 7700 Storm Water Public Works 747,069 518,983 518,983 375,273 143,710 72.3% 79" Housing Authority Neighborhood 8 Development Services 8,651,207 8,201,363 8,231,390 7,519,081 712,309 91.3% Total Enterprise Funds 62,887,194 50,630,603 66,890,770 51,711,801 15,178,969 77.3% Capital Project Funds Governmental Projects 32,902,808 32,530,291 77,077,677 17,930,988 59,146,689 23.3% Enterprise Projects 3,657,836 8,825,015 19,187,686 6,224,505 12,963,181 32.4% Total Capital Project Funds 36,560,644 41,355,306 96,265,363 24,155,493 72,109,870 25.1% Total Budgetary Expenditures $175,931,866 $173,318,414 $246,613,898 $125,229,584 $121,384,314 50.8% Non -Budgetary Funds Expenditures Capital Project Funds Internal Service Projects $ 61,633 $ - $ - $ - $ 0.0% Total Capital Project Funds 61,633 - - - - 0.0% Internal Service Funds 810' Equipment Public Works 4,683,979 4,543,387 5,537,501 3,787,012 1,750,489 68.4% 8200 Risk Management Finance 1,236,127 1,472,081 1,472,081 1,433,145 38,936 97.4% 830' Information Technology Finance 1,624,715 2,217,207 2,217,207 1,489,474 727,733 67.2% 8400 Central Services Finance 201,065 262,163 228,960 109,537 119,423 47.8% 8500 Health Insurance Reserves Finance 7,218,542 8,341,355 8,341,355 5,626,145 2,715,210 67.4% 8600 Dental Insurance Reserves Finance 374,002 399,386 399,386 265,343 134,043 66.4% Total Internal service Funds 15,338,429 17,235,579 18,196,490 12,710,656 5,485,834 69.9% Total Non -Budgetary Expenditures $ 15,400,061 $ 17,235,579 $ 18,196,490 S 12,710,656 $ 5,485,834 69.9% Total Expenditures - All Funds $191,331,927 $190,553,993 $264,810,388 $137,940,240 $126,870,148 52.1% kt -Za-Trr IP4 OFFICE OF THE GOVERNOR Governor Kim Reynolds * Lt. Governor Adam Gregg EMBARGOED UNTIL: Thursday, April 19, 2018 at 8 a.m. CT CONTACT: Brenna Smith, (515) 281-5211 Jacque Matsen, Iowa Economic Development Authority, (515) 348-6245 Gov. Reynolds, Lt. Gov. Gregg announce nominations for Iowa Opportunity Zones (DES MOINES) — Gov. Kim Reynolds and Lt. Gov. Adam Gregg, along with the Iowa Economic Development Authority (IEDA), announced the 62 Iowa census tract nominations for Opportunity Zones designation on Thursday. Opportunity Zones is a new economic development program administered by the U.S. Department of the Treasury. The program was established within the Tax Cuts and Jobs Act of 2017 to encourage long-term investments in low-income zones by providing investors with a capital gains tax deferral. "I am pleased we were able to quickly mobilize a fair, robust and competitive process to select these communities," Gov. Reynolds said. "I'm looking forward to seeing the Iowa Opportunity Zones experience investment and growth that might not otherwise occur in these deserving areas." The zones are comprised of U.S. Census tracts where the poverty rate is 20 percent or greater and/or family income is less than 80 percent of the area's median income. The governor of each state is permitted to designate 25 percent of its "low income community census tracts" (LIC) as Opportunity Zones, subject to approval from the U.S. Treasury. Iowa has 247 eligible LICs, of which a maximum of 62 can be nominated. Once designated, the tracts will be in place for 10 years. Cities, counties and communities with eligible LICs in Iowa were invited to apply in late February. A seven -member committee reviewed and scored the 108 tract applications received by the IEDA based on the communities' past successes, unemployment rate, economic hardship and importantly, their vision for leveraging the program to make meaningful improvements. "It is evident by the number of applications we received that this program is a needed addition to our economic development efforts," Lt. Gov. Gregg said. "I'm excited to see the plans outlined by the selected communities come to life." The list of 62 finalists was submitted by the committee to the governor's office and will now be forwarded to the U.S. Treasury for review and final certification. The IEDA is awaiting additional information from the U.S. Treasury on the process that will follow after the nominations achieve designation status. A full list of the 62 Iowa tracts that have been nominated and any future updates to Iowa's Opportunity Zones program, may be found at: iowaeconomicdevelopment.com/opportunitVzones. 200 East Grand Avenue I Des Moines, Iowa 50309 USA I Phone: 515.725.3000 iowaeconomicdevelopment. com April 18, 2018 Honorable Jim Throgmorton, Mayor City of Iowa City 410 E. Washington Street Iowa City, Iowa 52240 RE: Opportunity Zone Application Dear Mayor Throgmorton, 1()WA, inA ' I am pleased to inform you that Governor Kim Reynolds has nominated the following LIC tract(s) your community applied for to be designated as Opportunity Zones: • 19103001700 • 19103001400 Nominations are due to the U.S. Treasury on April 20, 2018. The U.S. Treasury will notify the Governor if the tracts nominated have been selected as Opportunity Zones. After selection, the next step will be for the U.S. Treasury and the IRS to provide define the opportunity zone investment process. Once that has been established, more information will be provided to your community. Sincerely, Debo ah ur Director Governor Kim Reynolds I Lt. Governor Adam Gregg I Director Debi V Durham �" MOODY'S INVESTORS SERVICE Rating Action: Moody's assigns Aaa to Iowa City, IA's GOs; outlook stable Global Credit Research - 18 Apr 2018 New York, April 18, 2018 — Moody's Investors Service assigns an Aaa rating to City of Iowa City, IA's $8.9 million General Obligation Bonds, Series 2018A and $3.1 million Taxable General Obligation Bonds, Series 2018B. We maintain the Aaa rating on the city's outstanding GOULT debt. Following the upcoming sales, the city will have $51.9 million of GOULT debt outstanding. The outlook is stable. RATINGS RATIONALE The Aaa GO rating reflects the city's large and growing tax base; stabilizing presence of the University of Iowa, which is a key economic driver of the region; very healthy financial position; and prudent fiscal management. These strengths offset the city s somewhat heightened leverage, which reflects capital borrowing and participation in two statewide cost-sharing retirement plans. RATING OUTLOOK The stable outlook reflects our expectations that the city's tax base will remain sound given ongoing economic development and the institutional stability provided by the University of Iowa. The outlook also reflects our expectation that the city's financial profile will remain healthy given prudent financial management and stable operations. FACTORS THAT COULD LEAD TO A DOWNGRADE - Weakening of the city's tax base or resident income indices - Material reductions of operating reserves or available liquidity - Growth in the city's debt or pension burden LEGAL SECURITY The city's GOULT debt is secured by a dedicated property tax levy, which is unlimited as to rate or amount. USE OF PROCEEDS The Series 2018A bonds will provide funds to pay costs for various street construction and reconstruction projects; park and sidewalk improvements; and improvements to a public works building and City Hall. The Series 2018B bonds will provide funds for updates to Black Hawk mini park along with renovations to the downtown Pedestrian Mall. PROFILE Iowa City is a growing municipality and county seat of Johnson County (Aa2). As of 2015, the city had an estimated population of 73,415. METHODOLOGY The principal methodology used in these ratings was US Local Government General Obligation Debt published in December 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology. REGULATORY DISCLOSURES For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com. Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review. Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating. Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating. Francis Mamo Lead Analyst Regional PFG Chicago Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street New York 10007 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Alexandra Parker MANAGING DIRECTOR Regional PFG Dallas JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 MOODY'S INVESTORS SERVICE © 2018 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, WOODY'S"). All rights reserved. CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. 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("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively. MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements New Issue Investment Rating: Date of Sale: Tuesday, May 1, 2018 (Alternative Bid Methods) Moody's Investors Service ... Aaa Series 2018A 10:00 - 10:30 A.M., C.D.T. (Internet) 10:30 A.M., C.D.T. (Sealed Bids) Series 2018B (Taxable) 10:30 - 11:00 A.M., C.D.T. (Internet) 11:00 A.M., C.D.T. (Sealed Bids) Official Statement Assuming compliance with certain covenants, in the opinion of Ahlers & Cooney, P.C., Bond Counsel, under present law and assuming continued compliance with the requirements of the Internal Revenue Code of 1986, as amended (the "Code ), the interest on the Series 1018A Tax -Exempt Bonds is excludable from gross income for federal income tax purposes. Interest on the Tax -Exempt Bonds is excludable from gross income for federal income lax purposes and is not an item of tax preference for purposes of the federal alternative minimum his; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations for taxable years beginning before January]. 1018. Interest on the Tax -Exempt Bonds is not exempt from present Iowa income taxes. The Tax -Exempt Bonds will be designatedas "qual fed taxc empt obligations". See"TAXMATTERS — TAX-EXEMPT BONDS (SERIES 201")" herein for a more detailed discussion. Interest on the Taxable Bonds is includable in gross income of the owners thereof forpurpwesoffederalincometaxation. See"TAXABILITY OFINTEREST— TAXABLE BONDS (SERIES 20I8B)"herein ! CITY OF IOWA CITY Johnson County Iowa "W-- $8,895,000* General Obligation Bonds, Series 2018A CITY OF IOWA CITY $3100,000*Taxable General Obligation Bonds, Series 2018B Dated Date of Delivery Book -Entry Bank Qualified Tax -Exempt Bonds (Series 2018A) Due as Described Herein The $8,895,000' General Obligation Bonds, Series 2018A (the "Tax -Exempt Bonds" or the "Series 2018A Bonds"); and the $3,100,000' Taxable General Obligation Bonds, Series 2018B (the "Taxable Bonds" or the "Series 2018B Bonds", and collectively with the Series 2018A Bonds, the `Bonds") are being issued by the City of Iowa City, Johnson County, Iowa (the "City"). Interest is payable semiannually on June 1 and December 1 of each year, commencing December 1, 2018. Interest is calculated based on a 360 - day year of twelve 30 -day months. The Bonds will be issued using a book -entry system. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The ownership of one fully registered Bond for each maturity and series will be registered in the name of Cede & Co., as nominee for DTC and no physical delivery of Bonds will be made to purchasers. The Bonds will mature on June 1 in the years and amounts as set forth herein. OPTIONAL REDEMPTION The Tax -Exempt Bonds due June 1, 2019 - 2024, inclusive, are not subject to optional redemption. The Tax -Exempt Bonds due June 1, 2025 - 2028, inclusive, are callable in whole or in part on any date on or after June 1, 2024, at a price of par and accrued interest. If less than all the Tax -Exempt Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. See "OPTIONAL REDEMPTION" herein. The Taxable Bonds are not subject to optional redemption prior to maturity. PURPOSE, LEGALITY AND SECURITY The Bond proceeds are expected to be used to: (i) finance the cost of various essential and general corporate purpose capital improvements, and (u) pay the costs of issuing the Bonds. See "THE PROJECT" herein. In the opinion of Bond Counsel, Ahlers & Cooney, P.C., Des Moines, Iowa, the Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property within the corporate limits of the City without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors' rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise ofjudicial discretion. The City intends to designate the Tax -Exempt Bonds as "qualified tax-exempt obligations" pursuant to the small issuer exception provided by Section 265(b)(3) of the Internal Revenue Code of 1986. This Official Statement is dated April 18, 2018, and has been prepared under the authority of the City. An electronic copy of this Official Statement is available from the www.st)eerfnancial.com web site under "Official Statement Sales Calendar". Additional copies may be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 E. Washington Street, Iowa City, Iowa 52240, or from the Registered Municipal Advisors to the City. 'Speer Financial, Inc. QQBWatwa YlRimALAlw®l.wnAYJO® �,,. asxareuuusnm. m�.lw. �'waqu)0 wo •Y� sly aariw� nr.r alA w� 9I0�0bLLwlY,.w11�0•wA,01q(�tlVA wlw TY,.i Qw/ YIiIR ti/.OIA f 4AO1 'Subject to principal adjustment in accordance with the Official Terms of Offering. For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, this document, as the same may be supplemented or corrected by the City from time to time (collectively, the "Official Statement"), may be treated as an Official Statement with respect to the Bonds described herein that is deemed near final as of the date hereof (or the date of any such supplement or correction) by the City. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law or deemed appropriate by the City, shall constitute a "Final Official Statement" of the City with respect to the Bonds, as that term is defined in Rule 15c2-12. Any such addendum or addenda shall, on and after the date thereof, be fully incorporated herein and made a part hereof by reference. Alternatively, such final terms of the Bonds and other information may be included in a separate document entitled "Final Official Statement" rather than through supplementing the Official Statement by an addendum or addenda. No dealer, broker, salesman or other person has been authorized by the City to give any information or to make any representations with respect to the Bonds other than as contained in the Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the City and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EM-IER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CITY SINCE THE RESPECTIVE DATES THEREOF. References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement, they will be furnished on request. This Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful. TABLE OF CONTENTS Page BONDISSUE SUMMARY....................................................................................................................................................1 $8,895,000* GENERAL OBLIGATION BONDS, SERIES 2018A..............................................................................2 $3,100,000* TAXABLE GENERAL OBLIGATION BONDS, SERIES 2018B..........................................................3 BONDHOLDERS' RISKS.....................................................................................................................................................4 SecondaryMarket...............................................................................................................................................................4 RatingsLoss........................................................................................................................................................................4 Forward -Looking Statements..............................................................................................................................................5 Tax Matters, Bank Qualification and Loss of Tax Exemption (SERIES 2018A)............................................................... 5 DTC -Beneficial Owners..................................................................................................................................................... 5 ContinuingDisclosure........................................................................................................................................................ 6 Suitabilityof Investment.....................................................................................................................................................6 Bankruptcy.......................................................................................................................................................................... 6 FederalTax Legislation...................................................................................................................................................... 6 TaxLevy Procedures.......................................................................................................................................................... 7 Federal and State Immigration Initiatives........................................................................................................................... 7 OtherFactors....................................................................................................................................................................... 7 THECITY.............................................................................................................................................................................. 8 CityOrganization and Services........................................................................................................................................... 8 CommunityLife.................................................................................................................................................................. 8 Education............................................................................................................................................................................ 8 Transportation..................................................................................................................................................................... 9 SOCIOECONOMICINFORMATION..................................................................................................................................9 Population........................................................................................................................................................................... 9 Employment........................................................................................................................................................................ 9 Recent Economic Developments...................................................t.................................................................................. l l BuildingPermits............................................................................................................................................................... I 1 Housing.............................................................................................................................................................................11 Income...............................................................................................................................................................................12 Agriculture........................................................................................................................................................................13 RetailSales........................................................................................................................................................................13 THEPROJECT.....................................................................................................................................................................14 DEFAULTRECORD...........................................................................................................................................................14 SHORT-TERM BORROWING...........................................................................................................................................14 DEBTINFORMATION.......................................................................................................................................................14 DEBTLIMIT....................................................................................................................................................................15 DIRECTDEBT.................................................................................................................................................................15 PROPERTY ASSESSMENT AND TAX INFORMATION................................................................................................17 PropertyTax Assessment.................................................................................................................................................. 17 PropertyTax Collection....................................................................................................................................................18 LevyLimits.......................................................................................................................................................................20 TaxLevy Procedures........................................................................................................................................................21 UtilityProperty Tax Replacement.................................................................................................................................... 21 TaxIncrement Financing..................................................................................................................................................21 Legislation.......................................................................................................................................................................... 22 FINANCIALINFORMATION............................................................................................................................................23 FinancialReports..............................................................................................................................................................23 No Consent or Updated Information Requested of the Auditor........................................................................................23 SummaryFinancial Information....................................................................................................................................... 23 EMPLOYEE RETIREMENT AND OTHER POST EMPLOYMENT BENEFIT OBLIGATIONS...................................27 Pensions............................................................................................................................................................................27 Other Post -Employment Benefits(OPEB)........................................................................................................................29 REGISTRATION, TRANSFER AND EXCHANGE........................................................................................................... 29 TAX MATTERS —TAX-EXEMPT BONDS (SERIES 2018A)..........................................................................................30 TaxExemption..................................................................................................................................................................30 Qualified Tax -Exempt Obligations — Tax -Exempt Bonds................................................................................................31 Tax Accounting Treatment of Discount and Premium on Certain Bonds........................................................................31 OtherTax Advice.............................................................................................................................................................. 31 Audits................................................................................................................................................................................ 31 Reportingand Withholding...............................................................................................................................................32 TaxLegislation................................................................................................................................................................. 32 Enforcement...................................................................................................................................................................... 32 Opinion............................................................................................................................................................................. 33 TAXABILITY OF INTEREST — TAXABLE BONDS (SERIES 2018B)........................................................................... 33 General.............................................................................................................................................................................. 33 InterestIncome Taxable.................................................................................................................................................... 33 Sale, Exchange, or Other Disposition...............................................................................................................................33 Backup Withholding and Information Reporting............................................................................................................. 34 Enforcement...................................................................................................................................................................... 34 Opinions............................................................................................................................................................................ 34 CONTINUINGDISCLOSURE............................................................................................................................................35 OPTIONALREDEMPTION................................................................................................................................................ 35 LITIGATION........................................................................................................................................................................ 35 LEGALMATTERS..............................................................................................................................................................36 OFFICIAL STATEMENT AUTHORIZATION.................................................................................................................. 36 INVESTMENTRATING.....................................................................................................................................................36 UNDERWRITING...............................................................................................................................................................37 MUNICIPALADVISOR......................................................................................................................................................37 CERTIFICATION................................................................................................................................................................ 37 APPENDIX A -FISCAL YEAR 2017 AUDITED FINANCIAL STATEMENTS APPENDIX B -DESCRIBING BOOK -ENTRY -ONLY ISSUANCE APPENDIX C -DRAFT FORM OF LEGAL OPINION APPENDIX D -DRAFT FORM OF CONTINUING DISCLOSURE CERTIFICATE OFFICIAL BID FORMS OFFICIAL TERMS OF OFFERINGS City oflowa City, Johnson County, lova $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bonds, Series 10188 BOND ISSUE SUMMARY This Bond Issue Summary is expressly qualified by the entire Official Statement, including the Official Terms of Offering and the Official Bid Forms, which are provided for the convenience of potential investors and which should be reviewed in their entirety by potential investors. The following descriptions apply equally to the Bonds. Other terms specific to each series are provided separately herein. Issuer: City of Iowa City, Johnson County Iowa. Dated Date: Date of delivery (expected to be on or about June 1, 2018). Interest Due: Each June 1 and December 1, commencing December 1, 2018. Authorization: The Bonds are being issued pursuant to authority established in Code of Iowa, Chapter 384, and all laws amendatory thereof and supplementary thereto, and in conformity with a resolution of the City Council duly passed and approved. Security: The Bonds are valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property therein without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors' rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. Investment Rating: The Bonds have been rated "Arta" by Moody's Investors Service, New York, New York. See "INVESTMENT RATING" herein. Bond Registrar/Paying Agent: U.S. Bank, St. Paul, Minnesota. Delivery: The Bonds are expected to be delivered on or about June 1, 2018. Book -Entry Form: The Bonds will be registered in the name of Cede & Co. as nominee for The Depository Trust Company ("DTC"), New York, New York. DTC will act as securities depository of the Bonds. See APPENDIX B herein. Denomination: $5,000 or integral multiples thereof. Municipal Advisor: Speer Financial, Inc., Waterloo, Iowa and Chicago, Illinois. The remainder of this page was left blank intentionally. City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bonds, Series 2018B $8,895,000* GENERAL OBLIGATION BONDS, SERIES 2018A AMOUNTS*, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Due Interest Price or CUSIP Principal Due Interest Price or CUSIP Amoun' June 1 Rate Yield Number(1) Amount* June 1 Rate Yield Number(1) $810,000........... 2019 % % $895,000........... 2024 825,000........... 2020 % % 915,000........... 2025 840,000........... 2021 % % 940,000........... 2026 855,000........... 2022 % % 960,000........... 2027 -off % 875,000........... 2023 % % 980,000........... 2028 Any consecutive nmaaities may be aggregated into tern, bonds at the option ofthe bidder, in which case the rnm,datury redemption provisions shall be on rite same schedule as above. Issue: $8,895,000* General Obligation Bonds, Series 2018A. Principal Due: Serially each June 1, commencing June 1, 2019 through 2028, as detailed above. Optional Redemption: The Tax -Exempt Bonds maturing on or after June 1, 2025, are callable at the option of the City on any date on or after June 1, 2024, at a price of par plus accrued interest. See "OPTIONAL REDEMPTION" herein. Purpose: The proceeds of the Tax -Exempt Bonds will be used to: (i) finance the cost of various essential and general corporate purpose capital improvements, and (ii) pay the costs of issuing the Tax -Exempt Bonds. See "THE PROJECT" herein. Tax Matters: Ahlers & Cooney, P.C., Des Moines, Iowa, will provide an opinion as to the tax exemption of the Tax -Exempt Bonds as discussed under "TAX MATTERS — TAX- EXEMPT BONDS (SERIES 2018A)" in this Official Statement. Interest on the Tax - Exempt Bonds is not exempt from present State of Iowa income taxes. See APPENDIX C for a draft form of legal opinion for the Tax -Exempt Bonds. Bank Qualified: The City intends to designate the Tax -Exempt Bonds as "qualified tax-exempt obligations". *Subject to principal adjustment in accordance with the Oficial Terms of Offering. (1) CUSIP numbers appearing in this ficial Statement have been provided by lite CUSIP Service Bureau, which is managed on beha/f of the American Bankers Association by S&P Capital lQ a part of McGraw Hill Financial Inc. The City is not responsible for the selection of CUSIP numbers and makes no representation as to their correctness on the Bonds or as set forth above. City of Iowa City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 1018A S3,100,000• Taxable General Obligation Bonds, Series 2018B $3,100,000* TAXABLE GENERAL OBLIGATION BONDS, SERIES 2018B AMOUNTS*, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Due Interest Price or CUSIP Principal Due Interest Priceor CUSIP Amount' June 1 Rate Yield Number(l) Amount' June 1 Rate Yield Number(l) $2,100,000......... 2019 % % $1,000,000......... 2020 % % Any consecutive maturities mnv be aggregated into term bonds at the option ofthe bidder, in which case the mandatory redemption provBlous shall be on thesana schedide ar above. Issue: $3,100,000* Taxable General Obligation Bonds, Series 2018B. Principal Due: Serially each June 1, commencing June 1, 2019 through 2020, as detailed above. No Optional Redemption: The Taxable Bonds are not subject to optional redemption prior to maturity. Purpose: The proceeds of the Taxable Bonds will be used to: (i) finance the cost of various essential and general corporate purpose capital improvements; and (ii) pay the costs of issuing the Taxable Bonds. See "THE PROJECT" herein. Tax Matters: The interest to be paid on the Taxable Bonds is subject to federal and Iowa state income taxes as discussed under "TAXABILITY OF INTEREST — TAXABLE BONDS (SERIES 2018B)" in this Official Statement. See APPENDIX C for a draft form of legal opinion for the Taxable Bonds. *Subject to principal adjustment in accordance with the ficial Terms of Offering. (1) CUSIP numbers appearing in this ficial Statement have been provided by the CUSIP Service Bureau, which is managed on behalf of the American Bankers Association by S&P Capital IQ, apart of McGraw Hill Financial Inc. The City is not responsiblefor the selection of CUSIP numbers and makes no representation as to their correctness on the Bonds or as setforth above. City oflowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 1018A $3,100,000• Taxable General Obligation Bonds, Series 1018B Kingsley Botchway II Mazahir Salih Geoff Frain City Manager Dennis Bockenstedt Finance Director Secondary Market CITY OF IOWA CITY JOHNSON COUNTY, IOWA Jim Throgmorton Mayor Council Members Rockne Cole Pauline Taylor Officials BONDHOLDERS' RISKS Susan Mims John Thomas Kellie Fruehling City Clerk Eleanor M. Dilkes, Esq. City Attorney There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history of economic prospects connected with a particular issue, and secondary marketing practices in connection with a particular bond or note issue are suspended or terminated. Additionally, prices of bond or note issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price of the Bonds. Ratings Loss Moody's Investors Service, Inc. ("Moody's") has assigned a rating of "Aaa" to the Bonds. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance that the rating will continue for any given period of time, or that such rating will not be revised, suspended or withdrawn, if, in the judgment of Moody's, circumstances so warrant. A revision, suspension or withdrawal of a rating may have an adverse effect on the market price of the Bonds. 0 City oflowa City, Johnson County, Iowa 58,895,000• General Obligation Bands, Series 1018A $3,100,000• Taxable General Obligation Bands, Series 1018B Additional regulation of rating agencies could materially alter the methodology, rating levels, and types of ratings available, for example, and these changes, if ever, could materially affect the market value of the Bonds. Forward -Looking Statements This Official Statement contains statements relating to future results that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words "estimate," "forecast," "intend," "expect' and similar expressions identify forward-looking statements. Any forward-looking statement is subject to uncertainty. Accordingly, such statements are subject to risks that could cause actual results to differ, possibly materially, from those contemplated in such forward-looking statements. Inevitably, some assumptions used to develop forward-looking statements will not be realized or unanticipated events and circumstances may occur. Therefore, investors should be aware that there are likely to be differences between forward looking statements and the actual results. These differences could be material and could impact the availability of funds of the City to pay debt service when due on the Bonds. Tax Matters, Bank Qualification and Loss of Tax Exemption (SERIES 2018A) As discussed under the heading "TAX MATTERS — TAX-EXEMPT BONDS (SERIES 2018A)" herein, the interest on the Tax -Exempt Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Tax -Exempt Bonds, as a result of acts or omissions of the City in violation of its covenants in the Resolution. Should such an event of taxability occur, the Tax -Exempt Bonds would not be subject to a special prepayment and would remain outstanding until maturity or until prepaid under the prepayment provisions contained in the Tax -Exempt Bonds, and there is no provision for an adjustment of the interest rate on the Tax -Exempt Bonds. The City intends to designate the Tax -Exempt Bonds as "qualified tax-exempt obligations" under the exception provided in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). The City has further covenanted to comply with certain other requirements, which affords banks and certain other financial institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. Actions, or inactions, by the City in violation of its covenants could affect the designation, which could also affect the pricing and marketability of the Tax -Exempt Bonds. It is possible that legislation will be proposed or introduced that could result in changes in the way that tax exemption is calculated, or whether interest on certain securities are exempt from taxation at all. Prospective purchasers should consult with their own tax advisors regarding any pending or proposed federal income tax legislation. The likelihood of any pending or future legislation being enacted or whether the currently proposed terms of any pending legislation will be altered or removed during the legislative process cannot be reliably predicted. It is also possible that actions of the City after the closing of the Tax -Exempt Bonds will alter the tax status of the Tax -Exempt Bonds, and, in the extreme, remove the tax exempt status from the Tax -Exempt Bonds. In that instance, the Tax -Exempt Bonds are not subject to mandatory prepayment, and the interest rate on the Tax -Exempt Bonds does not increase or otherwise reset. A determination of taxability on the Tax -Exempt Bonds, after closing of the Tax -Exempt Bonds, could materially adversely affect the value and marketability of the Tax -Exempt Bonds. DTC -Beneficial Owners Beneficial Owners of the Bonds may experience some delay in the receipt of distributions of principal of and interest on the Bonds since such distributions will be forwarded by the Paying Agent to DTC and DTC will credit such distributions to the accounts of the Participants which will thereafter credit them to the accounts of the Beneficial Owner either directly or indirectly through indirect Participants. Neither the City nor the Paying Agent will have any responsibility or obligation to assure that any such notice or payment is forwarded by DTC to any Participants or by any Participant to any Beneficial Owner. City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 1018A $3,100,000• Taxable General Obligation Bonds, Series 1018E In addition, since transactions in the Bonds can be effected only through DTC Participants, indirect participants and certain banks, the ability of a Beneficial Owner to pledge the Bonds to persons or entities that do not participate in the DTC system, or otherwise to take actions in respect of such Bonds, may be limited due to lack of a physical certificate. Beneficial Owners will be permitted to exercise the rights of registered Owners only indirectly through DTC and the Participants. See APPENDIX B — Describing Book -Entry Only Issuance. Continuing Disclosure A failure by the City to comply with continuing disclosure obligations (see "CONTINUING DISCLOSURE" herein) will not constitute an event of default on the Bonds. Any such failure must be disclosed in accordance with Rule 15c2-12 (the "Rule") adopted by the Securities and Exchange Commission (the "Commission") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and may adversely affect the transferability and liquidity of the Bonds and their market price. Suitability of Investment The interest rate bome by the Bonds is intended to compensate the investor for assuming the risk of investing in the Bonds. Each prospective investor should carefully examine this Official Statement and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Bonds are an appropriate investment for such investor. Bankruptcy The rights and remedies of the Bondholders may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditors' rights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against local governments. The various opinions of counsel to be delivered with respect to the Bonds will be similarly qualified. Federal Tax Legislation From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals pending in Congress that could, if enacted, alter or amend one or more of the federal tax matters described herein in certain respects or would adversely affect the market value of the Tax -Exempt Bonds or otherwise prevent holders of the Tax -Exempt Bonds from realizing the full benefit of the tax exemption of interest on the Tax -Exempt Bonds. Further such proposals may impact the marketability or market value of the Tax -Exempt Bonds simply by being proposed. It cannot be predicted whether or in what forms any of such proposals, either pending or that may be introduced, may be enacted and there can be no assurance that such proposals will not apply to the Tax -Exempt Bonds. In addition regulatory actions are from time to time announced or proposed, and litigation threatened or commenced, which if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Tax -Exempt Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Tax -Exempt Bonds would be impacted thereby. City of Iowa City, Johnson County, Iowa $8,895,000• General Obligation Bonds, Series 2078A $3,100,000* Taxable General Obligation Bonds, Series 2018E Tax Levy Procedures The Bonds are general obligations of the City, payable from and secured by a continuing ad valorem tax levied against all of the taxable property valuation within the City. See "PROPERTY ASSESSMENT AND TAX INFORMATION" herein for more details. As part of the budgetary process each fiscal year, the City will have an obligation to request a debt service levy to be applied against all of the taxable property within the City. A failure on the part of the City to make a timely levy request or a levy request by the City that is inaccurate or is insufficient to make full payments of the debt service of the Bonds for a particular fiscal year may cause Bondholders to experience delay in the receipt of distributions of principal of and/or interest on the Bonds. In the event of a default in the payment of principal of or interest on the Bonds, there is no provision for acceleration of maturity of the principal of the Bonds. Consequently, the remedies of the owners of the Bonds (consisting primarily of an action in the nature of mandamus requiring the City and certain other public officials to perform the terms of the resolution for the Bonds) may have to be enforced from year to year. Federal and State Immigration Initiatives Various federal executive orders, and a recently enacted state law (SF 48 1) which becomes effective July 1, 2018 (collectively "ICE Enforcement Initiatives"), impose requirements intended to promote compliance with the federal immigration detainment processes, and prohibit local entities from restricting enforcement of immigration law. Some of the ICE Enforcement Initiatives impose various penalties for noncompliance, including the loss of state and/or federal funding under certain circumstances. The loss of state and/or federal funds in any significant amount could negatively impact the City's overall financial position and may affect its rating. November of 2017 the Department of Justice (DOJ) sent letters to 29 jurisdictions indicating that these jurisdictions may have laws, policies, or practices that violate 8 U.S.C. 1373, the federal statute that prohibits cities from restricting their employees from sending or receiving information from ICE regarding immigration status. On January 14, 2018 the DOJ sent letters to 23 jurisdictions seeking the production of documents that could show whether each jurisdiction is unlawfully restricting information sharing by its law enforcement officers with federal immigration authorities. The City was not a recipient of either letter. As required by SF 481, the City is reviewing its policies to assure compliance with SF 481, and will update them as necessary by the January 1, 2019 deadline. The Bonds are not secured by state or federal funds, but instead are secured by a debt service levy upon real property within the jurisdictional limits of the City. Iowa Code section 76.2 provides that when an Iowa political subdivision issues general obligation bonds, "the governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding twenty years. A certified copy of this resolution shall be filed with the county auditor or the auditors of the counties in which the political subdivision is located, and the filing shall make it a duty of the auditors to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full." Other Factors An investment in the Bonds involves an element of risk. The foregoing is intended only as a summary of certain risk factors attendant to an investment in the Bonds. In order for potential investors to identify risk factors and make an informed investment decision, potential investors should become thoroughly familiar with this entire Official Statement and the Appendices hereto. City oflowa City, Johnson County, Iowa $8,895,000• General Obligation Bonds, Series 1018A $3,100,000" Taxable General Obligation Bonds, Series 1018E THE CITY The City is located in East Central Iowa and was incorporated in 1853 under the laws of the state of Iowa (the "State") and operates under the Council/Manager form of government. The 2010 Census reported population at 67,862, which is 9% increase over the 2000 Census population of 62,220. The City is the largest City in Johnson County (the "County") and serves as the County seat. City Organization and Services The City is governed by a seven member Council and each member serves a four-year term. Elections are held every two years, allowing for continuation in office of at least three members in each biennial election. The Council members are elected at large, but three members are nominated from specific districts and the remaining four members are nominated at large. The Mayor is elected by the Council from its own members for a two-year term. The City Manager, City Attorney and City Clerk are appointed by the City Council. The City Manager is the chief administrative officer for the City. Currently the City employs approximately 545 full-time, 58 permanent part-time and 365 temporary employees, including a police force of 80 sworn personnel and a fire department of 64 fire fighters. The City considers its employee relations to be good. The City currently maintains labor agreements with the American Federation of State, County, and Municipal Employees ("AFSCME") which contract expires June 30, 2021; with Police ("PLRO") which contract expires June 30, 2019; and Fire fighters ("IAFF") which contract expires June 30, 2019. The City provides a broad range of services to its citizens including general government, public safety, streets, parks, and cultural facilities. It also operates an airport, a mass transportation system, parking facilities, water treatment, wastewater treatment, storm water collection, sanitation collection and disposal (including landfill operations), cable television, and a housing authority. Community Life The City was the first North American City to be awarded the City of Literature in North America by UNESCO in 2008, which has a goal of fostering cultural diversity. The City hosts a variety of cultural events, such as the Iowa Writers' Workshop, whose graduates include John Irving, Flannery O'Connor, T.C. Boyle; the International Writing Program; the Non -Fiction Writing Program; the Iowa Playwrights' Workshop; and the Iowa Summer Writing Festival. A variety of events sponsored by the City include the Summer of the Arts program, a festival of the arts, a nationally renowned jazz festival, open-air summer movies and free concerts in the pedestrian mall. The City Book Festival, the Iowa Biennial Exhibition, and The Landlocked Film Festival are events hosted by the City. The newly reopened Hancher Auditorium hosts nationally touring theater, dance and musical shows, and has commissioned more than 100 works of music, theater and dance during the last 20 years. Education Public education to the City is provided by the Iowa City Community School District (the "District"), with certified enrollment of 14,197 for Fiscal Year 2017-18. There are approximately 2,345 full and part-time employees of the District. The District owns and operates several pre-school sites, twenty elementary schools, three middle schools, two senior high schools, and one alternative school for ninth through twelfth graders. Education is also provided through the Clear Creek — Amana Community School District, with certified enrollment of 2,192 for Fiscal Year 2017-18. Four year college programs and vocational training are available throughout the area including the University of Iowa and Kirkwood Community College. City ojlowa City, Johnson County, Iowa 58,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bonds, Series 2018B Transportation The City is approximately 115 miles east of the City of Des Moines, 20 miles southeast of the City of Cedar Rapids and 55 miles northwest of the City of Davenport. The Eastern Iowa Airport is located 20 miles from downtown Iowa City and is served by a number of national and regional air carriers. A general aviation airport, Iowa City Municipal Airport is located on the south side of the City. The Iowa Interstate Railway, and Cedar Rapids and Iowa City Railway provide the City's rail service. Bus transportation is provided by Iowa City Transit, Coralville Transit, and the University of Iowa. There is also a system of paved bicycle paths in the City along the Iowa River and some main roads in the City have paved bicycle shoulders. SOCIOECONOMIC INFORMATION The following demographic information is for the City. Additional comparisons are made with the County and the State. Population The following table reflects population trends for the City, the County and the State. Population Comparison(1) Note: (1) Source: U.S. Bureau of the Census Employment Following are lists of large employers located in the City. Major City Employers(1) Name The Percent The Percent The Percent Year city Change County Change State Change 1970 ..................... 46,850 n/a 72,127 n/a 2,824,376 n/a 1980 ..................... 50,508 7.81% 81,717 13.30% 2,913,808 3.17% 1990 ..................... 59,735 18.27% 96,119 17.62% 2,776,755 (4.70%) 2000 ..................... 62,220 4.16% 111,006 15.49% 2,926,324 5.39% 2010 ..................... 67,862 9.07% 130,882 17.91% 3,046,355 4.10% Note: (1) Source: U.S. Bureau of the Census Employment Following are lists of large employers located in the City. Major City Employers(1) Name Product/Service Universityof Iowa...................................................................... Education......................................................................................... University of Iowa Hospitals....................................................... Healthcare ........................................................................................ Iowa City Veterans Health Care System .................................... Health Services................................................................................ Iowa City Community School District ......................................... Education......................................................................................... MercyHospital........................................................................... Health Services................................................................................ ACT, Inc.................................................................................... Education Programs ......................................................................... Hy-Vee(3).................................................................................. Grocery ............................................................................................. Pearson Educational Measurement ........................................... Educational Testing Services ............................................................ Cityof Iowa City ........................................................................ Government...................................................................................... SystemsUnlimited.....................................................................Assisted Living .................................................................................. Procter & Gamble...................................................................... Health and Beauty Products............................................................. Johnson County Administration.................................................Government...................................................................................... Oral B Laboratories...................................................................Toothbrush Manufacturer.................................................................. Alpla of Iowa..............................................................................Plastic Bottle Manufacturer............................................................... United Natural Foods.................................................................Organic Food Distribution ................................................................. International Automotive Components.......................................Auto Interior Components................................................................. Notes: (1) Source: the City. (2) Number of employees includes all full-time, part-time and seasonal employees. (3) Number of employees includes locations in Iowa City and Coralville. Approximate Emolovment(21 19,651 10,459 2,300 1,844 1,347 1,244 1,222 1,150 975 890 590 544 540 360 340 305 City ofIowa City, Johnson County, lova $8,895,000" General Obligation Bonds, Series 2018A $3,100,000" Taxable General Obligation Bonds, Series 2018E The following tables show employment by industry and by occupation for the City, the County and the State as reported by the U.S. Census Bureau 2012 - 2016 American Community Survey 5 -year estimated values. Employment By Industry(1) Classification Agriculture, forestry, fishing and hunting, and mining ........................... Construction........................................................................................ Manufacturing...................................................................................... Wholesaletrade.................................................................................. Retailtrade.......................................................................................... Transportation and warehousing, and utilities ...................................... Finance and insurance, and real estate and rental and leasing ............ Professional, scientific, and management, and administrative and waste management services............................................................ Educational services, and health care and social assistance ............... Arts, entertainment, and recreation, and accommodation and foodservices.................................................................................... Other services, except public administration ........................................ Public administration........................................................................... Total.................................................................................................. The City Number Percent 92 0.2% 1,458 3.6% 2,826 7.0% 495 1.2% 3,782 9.3% 852 2.1% 704 1.7% 1,626 4.0% 3,032 7.5% 18,342 45.2% 5,420 13.4% 1,360 3.4% 593 1.5% 40,582 100.0% The Coun Number Percent 863 1.19/6 3,619 4.5% 6,475 8.0% 1,366 1.7% 7,859 9.8% 2,465 3.1% 1,244 1.5% 4,456 5.5% 6,252 7.8% 33,429 41.6% 8,168 10.2% 2,561 3.2% 1.67 2.1% 80,436 100.0% Note: (1) Source: U. S. Bureau of the Census, American Community Survey 5 -Year Estimates from 2012 - 2016. Employment By Occupation(I) Classification Management, business, science, and arts occupations ....................... Service occupations............................................................................ Sales and office occupations............................................................... Natural resources, construction, and maintenance occupations........... Production, transportation, and material moving occupations .............. Note: States. The City Number Percent 18,969 46.79/0 8,275 20.4% 7,952 19.6% 1,576 3.9% 3.810 9.4% 40,582 100.0% The County Number Percen 37,097 46.1% 14,334 17.8% 16,932 21.1% 4,349 5.4% 7.724 9.6% 80,436 100.0% (1) Source: U. S. Bureau of the Census, American Community Survey 5 -Year Estimates from 2012 - 2016. The State Number Percent 61,676 3.9% 98,744 6.2% 241,775 15.2% 45,637 2.9% 184,920 11.7% 73,083 4.6% 27,781 1.8% 120,220 7.6% 114,113 7.2% 386,743 24.4% 115,726 7.3% 67,384 4.2% 49.376 3.1% 1,587,178 100.0% The State Number Percent 554,422 34.9% 261,576 16.5% 364,658 23.0% 148,783 9.4% 257,739 1 1,587,178 100.0% The following shows the annual average unemployment rates for the City, the County, the State and the United Annual Average Unemployment Rates(I)(2) Calendar The The The United Year Cry Coun State States 2008 ........................ 2.8% 3.0% 4.29/0 5.8% 2009 ........................ 4.0% 4.5% 6.4% 9.3% 2010 ........................ 3.9% 4.2% 6.0% 9.6% 2011 ........................ 3.7% 4.0% 5.5% 8.9% 2012 ........................ 3.5% 3.7% 5.0% 8.1% 2013 ........................ 3.3% 3.4% 4.7% 7.4% 2014 ........................ 3.0% 3.1% 4.2% 6.2% 2015 ........................ 2.6% 2.7% 3.8% 5.3% 2016 ........................ 2.4% 2.6% 3.6% 4.9% 2017 ........................ 2.5% 2.5% 3.1% 4.4% 2018(3) .................... 2.1% 2.3% 3.5% 4.1% Notes: (1) Source: Iowa Workforce Development and U.S. Bureau of Labor Statistics. (2) Not seasonally adjusted. (3) Preliminary rates for the month of February 2018. 10 City of lowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bonds, Series 10188 Recent Economic Developments In February 2018, Procter and Gamble announced that in approximately two years they would be shifting their beauty care products production from Iowa City to their West Virginia plant. This will eventually reduce the workforce down from approximately 600 to 100 employees. This may also have an impact on nearby businesses that produce bottles and labels for this production plant in Iowa City. Procter and Gamble has added and is expanding an electric toothbrush plant in Iowa City which is expected to employ several hundred employees. It currently has added approximately 150 employees. The estimated investment of this new facility is approximately $100 million. Building Permits New construction building permits valuation have averaged $157,271,477 over the last 5 years in the City, excluding the value of land. City Building Permits(]) (Excludes the Value of Land) Calendar Percent 877 6.3% 774 5.6% 2,419 Year: 2013 2014 2015 2016 2017 2018(2) New Construction 3.2% 39 0.3% 13,883 100.0% No. of New Permits .................................... 248 250 184 262 239 47 Valuation: .................................................. $151,138,166 $124,416,182 $106,350,572 $295,339,497 $109,112,969 $45,147,531 Remodeling Repair and Additions: No. of New Permits: ................................... 467 453 461 532 479 94 Valuation :.................................................. $ 33.738.686 $ 28.163.030 $ 31.960.941 $ 93.087.526 $107.705.044 $12.567.877 Total Permits ............................................. 715 703 645 794 718 141 Total Valuations ......................................... $184,876,852 $152,579,212 $138,311,513 $388,427,023 $216,818,013 $57,715,408 Notes: (1) Source: the City. (2) As of March 31, 2018. Housing The U.S. Census Bureau 5 -year estimated values reported that the median value of the City's owner -occupied homes was $191,100. This compares to $202,400 for the County and $132,800 for the State. The following table represents the five year average market value of specified owner -occupied units for the City, the County and the State at the time of the 2012 - 2016 American Community Survey. Value Less than $50,000 ............................... $50,000 to $99,999 .............................. $100,000 to $149,999 .......................... $150,000 to $199,999 .......................... $200,000 to $299,999 .......................... $300,000 to $499,999 .......................... $500,000 to $999,999 .......................... $1,000,000 or more ............................. Total.................................................. Home Values(]) The Ci Number Percent 877 6.3% 774 5.6% 2,419 17.4% 3,455 24.9% 3,841 27.7% 2,038 14.7% 440 3.2% 39 0.3% 13,883 100.0% The Coun Number Percen 2,936 8.8% 2,010 6.1% 4,818 14.5% 6,599 19.9% 8,752 26.4% 6,285 18.9% 1,477 4.4% 332 1.0% 33,209 100.0% The State Number Percent 94,855 10.7% 210,180 23.8% 198,528 22.5% 151,979 17.2% 139,989 15.9% 65,586 7.4% 17,262 2.0% 4.740 0.5% 883,119 100.0% Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5 -year estimates 2012 - 2016. I1 City oflowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bonds, Series 2018E Mortgage Status Housing units with a mortgage ............. Housing units without a mortgage........ Total.................................................. Mortgage Status(]) The City Percent Number Percen 9,237 66.5% 4 646 33.5% 13,883 100.0% The County Number Percen 22,800 68.7% 10_409 31_3% 33,209 100.0% The State Number Percen 537,848 60.9% 345,271 39.1% 883,119 100.0% Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5 -year estimates 2012 - 2016. Income The U.S. Census Bureau 5 -year estimated values reported that the City had a median family income of $77,939. This compares to $86,086 for the County and $69,419 for the State. The following table represents the distribution of family incomes for the City, the County and the State at the time of the 2012 - 2016 American Community Survey. Income Less than $10,000 ............................... $10,000 to $14,999 .............................. $15,000 to $24,999 .............................. $25,000 to $34,999 .............................. $35,000 to $49,999 .............................. $50,000 to $74,999 .............................. $75,000 to $99,999 .............................. $100,000 to $149,999 .......................... $150,000 to $199,999 .......................... $200,000 or more ................................ Total.................................................. Family Income(]) The Ci Number Percent 623 4.7% 426 3.2% 857 6.5% 581 4.4% 1,786 13.5% 2,057 15.6% 1,949 14.7% 2,646 20.0% 1,086 8.2% 1212 9.2% 13,223 100.0% The Coun Number Percent 1,003 3.2% 618 2.0% 1,457 4.7% 1,289 4.1% 3,590 11.5% 4,856 15.6% 5,345 17.2% 7,063 22.7% 2,878 9.2% 3 022 9.7% 31,121 100.0% The State Number Percent 26,246 3.3% 17,702 2.2% 48,901 6.1% 64,651 8.1% 104,560 13.1% 173,454 21.7% 138,749 17.4% 141,473 17.7% 45,120 5.6% 37.808 4.7% 798,664 100.0% Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5 -year estimates 2012 to 2016. The U.S. Census Bureau 5 -year estimated values reported that the City had a median household income of $42,720. This compares to $56,808 for the County and $54,570 for the State. The following table represents the distribution of household incomes for the City, the County and the State at the time of the 2012 - 2016 American Community Survey. Household Income(]) The Coun Number The City 5,868 Income Number Percen Less than $10,000 ................................... 4,547 15.4% $10,000 to $14,999 .................................. 2,134 7.2% $15,000 to $24,999 .................................. 3,287 11.1% $25,000 to $34,999 .................................. 2,605 8.8% $35,000 to $49,999 .................................. 4,011 13.6% $50,000 to $74,999 .................................. 3,933 13.3% $75,000 to $99,999 .................................. 3,093 10.5% $100,000 to $149,999 .............................. 3,213 10.9% $150,000 to $199,999 .............................. 1,288 4.4% $200,000 or more .......... :......................... 1y60 4.9% Total ...................................................... 29,571 100.0% The Coun Number Percen 5,868 10.4% 2,799 5.0% 5,022 8.9% 4,668 8.3% 7,032 12.4% 8,600 15.2% 7,443 13.2% 8,347 14.8% 3,249 5.7% 3.515 6.2% 56,543 100.0% The State Number Percent 75,624 6.1% 60,809 4.9% 126,359 10.2% 129,439 10.4% 175,853 14.2% 246,562 19.8% 172,210 13.9% 162,741 13.1% 49,988 4.0% 43.056 3.5% 1,242,641 100.0% Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5 -year estimates 2012 - 2016. 12 City of lowa City, Johnson County, Iowa $8,895,000" General Obligation Bonds, Series 1018A $3,100,000' Taxable General Obligation Bonds, Series 1018B Agriculture Shown below is information on the agricultural value of the County and the statewide average. Average Value Per Acre(/) 2013 2014 2015 2016 2017 Average Value Per Acre: Johnson County ......................................... $9,763 $9,758 $9,114 $8,636 $8,769 State of Iowa .............................................. 8,716 7,943 7,633 7,183 7,326 Note: (1) Source: Cooperative Extension Service - Iowa State University. Retail Sales The Department of Revenue of the State of Iowa provides retail sales figures based on sales tax reports for years ending June 30. The Department of Revenue figures provide recent data to confirm trends in retail sales activity in the City. Retail Taxable Sales(]) Fiscal Year Taxable Annual Percent Ending June 30 Sales -) Change+t 2008(2) ......................... $958,509,729 nla 2009 ............................. 905,139,461 (5.57%) 2010 ............................. 725,329,723 (19.87%) 2011 ............................. 741,407,021 2.22% 2012 ............................. 767,122,555 3.47% 2013 ............................. 793,201,342 3.40% 2014 ............................. 811,039,164 2.25% 2015 ............................. 838,853,686 3.43% 2016 ............................. 853,258, 347 1.72% 2017 ............................. 874,928,988 2.54% Growth from 2008 to 2017 ......................................... (8.72%) Notes: (1) Source: the Iowa Department of Revenue. (2) Fiscal year 2008 amounts reflect a year ending March 31st. (3) Percentage change based on 2007 Taxable Sales of $934,971,428. The remainder of this page was left blank intentionally. 13 City oflowa City, Johnson County, Iowa $8,895,000' General Obligation Bands, Series 1018A $3,100,000• Taxable General Obligation Bands, Series 1018E THE PROJECT Bond proceeds will be used to: (i) finance the cost of various essential and general corporate purpose capital improvements (the "Project"); and (ii) pay the costs of issuance of the Bonds. More specifically, the Project includes the financing of the costs acquisition, construction, reconstruction, and improvement of real and personal property, useful for the protection of property in the City from the effects of flood waters, including construction and improvement of embankments and the development and beautification of the banks and other areas adjacent to flood control improvements; opening, widening, extending, grading, and draining of the right-of-way of streets, highways, avenues, alleys and public grounds, and market places, and the removal and replacement of dead or diseased trees thereon; the construction, reconstruction, and repairing of any street improvements, bridges, grade crossing separations and approaches; the acquisition, installation, and repair of sidewalks, culverts, retaining walls, storm sewers, sanitary sewers, water service lines, street lighting, and traffic control devices; and the acquisition of any real estate needed for any of the foregoing purposes; rehabilitation and improvement of parks already owned, including the removal, replacement and planting of trees in the parks, and facilities, equipment, and improvements commonly found in city parks; provide funds to pay the costs of acquisition, construction, reconstruction, enlargement, improvement, and equipping of city halls, recreation grounds, recreation buildings, juvenile playgrounds, recreation centers, and parks, and the acquisition of any real estate necessary; and provide funds to pay the costs of acquisition, construction, reconstruction, enlargement, improvement, and equipping of portions of the new public works facility. DEFAULT RECORD The City has no record of default and has met its debt repayment obligations promptly. SHORT-TERM BORROWING The City has not issued tax anticipation warrants or revenue anticipation notes during the last five years to meet its short-term current year cash flow requirements. DEBT INFORMATION After issuance of the Bonds, the City will have outstanding $51,880,000 principal amount of general obligation debt (after June 1, 2018 principal payment and redemption of the Series 2010B bonds). In addition, the City has outstanding approximately $15,065,000 (after June 1, 2018 principal payment) principal amount of debt paid from net revenues of the City's Urban Renewal areas; $11,775,000 principal amount of debt paid from net revenues of the Municipal Water System; $16,010,000 principal amount of debt paid from net revenues of the Municipal Sewer System and $11,958,305 (after June 1, 2018 payment and early redemption of $2,000,000) principal amount of debt paid from net revenues of the Municipal Parking System. In Fiscal Year 2017, the City entered into a lease agreement as lessee for financing the acquisition of a parking ramp valued at $15,497,867. For more information please see Notes to Financial Statements. The City does not expect to issue any additional general obligation debt in calendar year 2018. 14 City ofIowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000' Taxable General Obligation Bonds, Series 2018B DEBT LIMIT Article XI, Section 3 of the State of Iowa Constitution limits the amount of debt outstanding at any time of any county, municipality or other political subdivision to no more than 5% of the actual value of all taxable property within the corporate limits, as taken from the last state and county tax list. The debt limit for the City, based on its 2016 valuation currently applicable to the Fiscal Year 2017-18 is as follows: DIRECT DEBT 2016 Actual Valuation of Property Legal Debt Limit of 5% ................. Legal Debt Limit .......................... $5,494,476,735 0.05 $ 274,723,837 Less: TIF Revenue Debt Subject to Debt Limit ...................... (15,065,000) Less: Total G.O. Debt Subject to Debt Limit .......................... (51,880,000) Less: Other Loans................................................................. (1,154,000) Less: Other Legal Indebtedness (TIF Rebates) ..................... (25.024.2871 Total Applicable Debt............................................................ (93.123.2871 Net Debt Limit....................................................................... $ 181,600,550 Summary of General Obligation and Tax Increment Debt(1)(2) (Principal Only) General Obligation Series 2011 C ...................................................... $ 3,850,000 Series 2012A ....................................................... 3,865,000 Series 2013A ....................................................... 4,185,000 Series 2014 ......................................................... 5,785,000 Series 2015 ......................................................... 5,655,000 Series 2016A ....................................................... 7,680,000 Series 2017A ....................................................... 8,865,000 The Tax -Exempt Bonds(3)................................... 8,895,000 The Taxable Bonds(3)......................................... 3.100.000 Total General Obligation(3).............................. $51,880,000 Tax Increment Financing Revenue: Series 2012D ...................................................... $ 2,260,000 Series 2016E ....................................................... 12.805.000 Total Tax Increment ......................................... $15,065,000 Notes: (1) Source: the City. (2) After the June 1, 2018 principal payments on the outstanding debt and redemption of the outstanding Series 2010B bonds on June 1, 2018. (3) Subject to change. The remainder of this page was left blank intentionally. 15 City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000' Taxable General Obligation Bonds, Series 2018B General Obligation Debt(I)(2) (Principal Only) Fiscal Year Ending Series Series Series Series Series Series Series June 30 2011C 2012A 2013A 2014 2015 2016A 2017A 2019 ........................................... $1,240,000 $ 930,000 $ 805,000 $ 910,000 $ 740,000 $ 895,000 $ 905,000 2020 ........................................... 1,280,000 955,000 820,000 925,000 765,000 910,000 920,000 2021 ........................................... 1,330,000 975,000 835,000 950,000 785,000 930,000 940,000 2022 ........................................... 0 1,005,000 855,000 970,000 805,000 950,000 955,000 2023 ........................................... 0 0 870,000 1,000,000 830,000 965,000 980,000 2024 ........................................... 0 0 0 1,030,000 850,000 985,000 1,000,000 2025 ........................................... 0 0 0 0 880,000 1,010,000 1,025,000 2026 ........................................... 0 0 0 0 0 1,035,000 1,055,000 2027 ........................................... 0 0 0 0 0 0 1,085,000 2028 ........................................... 0 0 0 0 0 0 0 Total ......................................... $3,850,000 $3,865,000 $4,185,000 $5,785,000 $5,655,000 $7,680,000 $8,865,000 Fiscal Year Outstanding The The Total Ending General Obligation Tax -Exempt Taxable General Obligation Cumulative Retirement(3) I June 30 Debt Bonds(3) Bonds(3) Debt(3) Amount Percent 2019 ........................................... T6,425,000 $ 810,000 $2,100,000 $ 9,335,000 $ 9,335,000 17.99% $ 2020 ........................................... 6,575,000 825,000 1,000,000 8,400,000 17,735,000 34.18% 2021 ........................................... 6,745,000 840,000 0 7,585,000 25,320,000 48.80% 2022 ........................................... 5,540,000 855,000 0 6,395,000 31,715,000 61.13% 2023 ........................................... 4,645,000 875,000 0 5,520,000 37,235,000 71.77% 2024 ........................................... 3,865,000 895,000 0 4,760,000 41,995,000 80.95% 2025 ........................................... 2,915,000 915,000 0 3,830,000 45,825,000 88.33% 2026 ........................................... 2,090,000 940,000 0 3,030,000 48,855,000 94.17% 2027 ........................................... 1,085,000 960,000 0 2,045,000 50,900,000 98.11% 2028 ........................................... 0 980.000 0 980,000 51,880,000 100.00% Total ......................................... $39,885,000 $8,895,000 $3,100,000 $51,880,000 Notes: (1) Source: the City. (2) After the June 1, 2018 principal payments on the outstanding debt and redemption of the outstanding Series 20108 bonds on June 1, 2018. (3) Subject to change. 16 City of Iowa City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 2018A $3,100,000' Taxable General Obligation Bonds, Series 2018B STATEMENT OF BONDED INDEBTEDNESS(1)(2) City Actual Value, January 1, 2016............................................................................................................................................................. Multi- Ag Land Fiscal Year $5,494,476,735 City Taxable Value, January 1, 2016.......................................................................................................................................................... & Buildings Commercial 2009/10 ................ 45.5893% N/A $3,542,852,278 100.0000% 2010/11 ................ 46.9094% N/A 66.2715% 100.0000% Per Capita 48.5299% N/A Applicable 100.0000% Ratio to City Ratio to City (2010 Pop. 57.5411% Total Percent Amount Actual Value Taxable Value 67,862) Direct Bonded Debt(3)(4) ............................... $ 51,880,000 100.00% $ 51,880,000 0.94% 1.469/6 $ 764.49 TIF Revenue Debt(4)..................................... 15,065,000 100.00% 15,065,000 0.27% 0.43% 221.99 Overlapping Debt: 2017/18 ................ 56.9391% 82.5000% 47.4996% 90.0000% 2018/19 ................ Iowa City Community School District ............. $ 69,175,000 56.87% $ 39,339,823 0.72% 1.11% 579.70 Clear Creek-Amana Community School Dist. 68,790,000 3.67% 2,524,593 0.05% 0.07% 37.20 Kirkwood Community College(5)................... 133,162,559 14.11% 18,784,299 0.34% 0.53% 276.80 Johnson County ............................................ 10.970.000 42.09% 4.617.273 0.08% 0.13% 68.04 Total Overlapping Bonded Debt ................... $282,097,559 $ 65.270.926 1.19% 1.840% $ 961.82 Total Direct and Overlapping Bonded Debt(3)...........................................$132,215,926 2.41% 3.98% $1,948.31 Per Capita Actual Value Per Capita Taxable Valt $80,965.44 $52,206.72 Notes: (1) Source: the City, Audited Financial Statements and EMMA for the County, School Districts and Community College. (2) As of the date of issuance for the Direct Bonded Debt and March 30, 2018 for Overlapping Debt. (3) Subject to change. (4) After the June 1, 2018 principal payments on the outstanding debt and redemption of the outstanding Series 2010B bonds on June 1, 2018. (5) Excludes $33,665,000 in Industrial New Jobs Training Certificates, which are expected to be paid by proceeds from anticipated job credits from withholding taxes. PROPERTY ASSESSMENT AND TAX INFORMATION Property Tax Assessment In compliance with Section 441.21 of the Code of Iowa, as amended, the State Director of Revenue annually directs all county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The final values, called Actual Valuation, are then adjusted by the County Auditor. Taxable Valuation subject to tax levy is then determined by the application of State determined rollback percentages, principally to residential property. Beginning in 1978, the State required a reduction in Actual Valuation to reduce the impact of inflation on its residents. The resulting value is defined as the Taxable Valuation. Such rollback percentages may be changed in future years. Certain historical rollback percentages for residential, multi -residential, agricultural and commercial valuations are as follows: Percentages for Taxable Valuation After Rollbacks(1) 17 Multi- Ag Land Fiscal Year Residential Residential(2) & Buildings Commercial 2009/10 ................ 45.5893% N/A 93.8568% 100.0000% 2010/11 ................ 46.9094% N/A 66.2715% 100.0000% 2011112 ................ 48.5299% N/A 69.0152% 100.0000% 2012/13 ................ 50.7518% N/A 57.5411% 100.0000% 2013/14 ................ 52.8166% N/A 59.9334% 100.0000% 2014/15 ................ 54.4002% N/A 43.3997% 95.0000% 2015116 ................ 55.7335% N/A 44.7021% 90.0000% 2016/17 ................ 55.6259% 86.2500% 46.1068% 90.0000% 2017/18 ................ 56.9391% 82.5000% 47.4996% 90.0000% 2018/19 ................ 55.6209% 78.7500% 54.4480% 90.0000% Notes: (1) Source: the Iowa Department of Revenue. (2) New category beginning with fiscal year 2017. 17 City of Iowa City, Johnson County, Iowa $8,895,000• General Obligation Bonds, Series 1018A $3,100,000* Taxable General Obligation Bonds, Series 1018E Property is assessed on a calendar year basis. The assessments finalized as of January I of each year are applied to the following tax year. For example, the assessments finalized on January 1, 2016, are used to calculate tax liability for the tax year starting July 1, 2017 through June 30, 2018. Property Tax Collection Each county is required by State law to collect all tax levies within its jurisdiction and remit, before the fifteenth of each month, the amount collected through the last day of the preceding month to underlying units of government, including the City. Property tax payments are made at the office of each county treasurer in full or one-half by September 30 and March 31, pursuant to the Code of Iowa, Sections 445.36 and 445.37. Where the first half of any property tax has not been paid by October 1, such installment becomes delinquent. If the second installment is not paid, it becomes delinquent on April 1. Delinquent taxes and special assessments are subject to a penalty at the rate of one and one-half percent per month, to a maximum of eighteen percent per annum. If taxes are not paid when due, the property may be offered at the regular tax sale on the third Tuesday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property, and funds so received are applied to the payment of taxes. A property owner may redeem from the regular tax sale, but failing redemption within two years, the tax sale purchaser is entitled to a deed which in general conveys the title free and clear of all liens except future installments of taxes. Property Valuations and Trend of Valuations Actual (100%) Valuations for the City(1)(2) The remainder of this page was left blank intentionally. 18 Preliminary Fiscal Year: 2014/15 2015116 2016/17 2017118 2018/19 Property Class Levy Year: 2013 2014 2015 2016 2017 Residential........................................................ $3,495,700,460 $3,617,590,930 $3,893,541,900 $4,011,317,530 $4,279,194,820 Agricultural........................................................ 3,680,920 3,553,520 3,720,671 3,425,692 2,625,810 Commercial....................................................... 1,157,640,090 1,155,761,766 856,972,664 877,491,737 964,588,039 Industrial........................................................... 80,494,880 76,495,918 79,053,598 79,474,988 74,013,639 Multi-residential(3)............................................. 0 0 415,208,021 420,082,751 482,118,763 Railroads........................................................... 3,827,506 4,015,580 4,096,577 3,984,932 3,549,414 Utilities without Gas and Electric(4) ................... 9,599,528 8,239,789 7,375,066 6,734,894 7,099,293 Gas and Electric Utility(4).................................. 78,642,915 87,728,294 92,987,351 94,582,279 97,050,716 Other................................................................. 0 0 15,839 17,328 340 Less: Military Exemption ................................... (2.939.1221 (2.828,002) (2,727.9941 (2,635.3961 (2,579,836) Total................................................................ $4,826,647,177 $4,950,557,795 $5,350,243,693 $5,494,476,735 $5,907,660,998 Percent Change +(-) ........................................ 3.39%(5) 2.57% 8.07% 2.70% 7.52% Notes: (1) Source: Iowa Department of Management. (2) Includes tax increment finance (TIF) valuations used in the following amounts: January 1: 2013 2014 2015 2016 2017 TIF Valuation ............................... $21,131,574 $42,307,287 $72,650,838 $80,559,947 $85,379,369 (3) New Class as of January 1, 2015, previously reported as Commercial Property. (4) See "PROPERTY TAX INFORMATION - Utility Property Tax Replacement' herein. (5) Based on 2012 Actual Valuation of $4,668,318,992. The remainder of this page was left blank intentionally. 18 City of Iowa City, Johnson County, Iowa 58,895,000* General Obligation Bonds, Series 2018A 83,100,000* Taxable General Obligation Bands, Series 10188 For the January 1, 2017 levy year, the City's Taxable Valuation was comprised of approximately 64% residential, 23% commercial, 2% industrial, 10% multi -residential, 1% utilities and less than 1% agriculture and military exemption. Property Valuations and Trend of Valuations Taxable ("Rollback") Valuations for the City(1)(2) The following shows the trend in the City's tax extensions and collections. Levies and Tax Collections(/) Levy Fiscal Amount Amount Percent Year Preliminary Fiscal Year: 2014/15 2015/16 2016/17 2017/18 2018119 Property Class Levy Year: 2013 2014 2015 2016 2017 Residential........................................................ $1,901,667,703 $2,016,210,314 $2,165,817,742 $2,284,007,603 $2,380,126,625 Agricultural ........................................................ 1,597,501 1,588,496 1,706,955 1,618, 090 1,429, 547 Commercial....................................................... 1,099,758,752 1,040,185,590 771,275,414 789,742,578 868,129,247 Industrial........................................................... 76,470,143 68,846,326 71,148,238 71,527,489 66,612,275 Multi-residential(3)............................................. 0 0 358,117,010 346,568,385 379,668,606 Railroads........................................................... 3,636,130 3,614,022 3,686,919 3,586,439 3,194,473 Utilities without Gas and Electric(4)................... 9,599,528 8,239,789 7,375,066 6,734,894 7,099,293 Gas and Electric Utility(4).................................. 47,004,994 46,785,426 44,986,783 41,702,196 41,797,475 Less: Military Exemption ................................... (2.939.1221 (2,828,0021 (2.727.994) (2,635.3961 (2.579.8361 Total................................................................ $3,136,795,629 $3,182,641,961 $3,421,386,133 $3,542,852,278 $3,745,477,705 Percent Change +(-) ........................................ 3.32%(5) 1.40% 7.50% 3.55% 5.72% Notes: (1) Source: Iowa Department of Management. (2) Includes tax increment finance (TIF) valuations used in the following amounts: January1: 2013 2014 2015 2016 2017 TIF Valuation ............................... $21,131,574 $33,331,128 $72,650,838 $80,559,947 $85,379,369 (3) New Class as of January 1, 2015, previously reported as Commercial Property. (4) See "PROPERTY TAX INFORMATION - Utility Property Tax Replacement' herein. (5) Based on 2012 Taxable Valuation of $3,036,012,368. The following shows the trend in the City's tax extensions and collections. Levies and Tax Collections(/) Levy Fiscal Amount Amount Percent Year Year Levied Collected(2) Collected 2010 ............... 2011-12 .............. $49,589,988 $49,543,860 99.91% 2011 ............... 2012-13 .............. 50,407,375 50,419,618 100.02% 2012 ............... 2013-14 .............. 50,307,189 50,051,577 99.49% 2013 ............... 2014-15 .............. 51,608,730 51,496,353 97.70% 2014 ............... 2015-16 .............. 52,033,966 52,020,805 99.97% 2015 ............... 2016-17 .............. 55,330,223 55,357,357 100.05% 2016 ............... 2017-18 .............. 56,458,399 -An Collection - - Notes: (1) Source: the State of Iowa Department of Management and the City. Does not include Levies or Collections for Utility Replacement. Does not include levies and collections for the City's tax increment finance district. (2) Includes delinquent taxes. The remainder of this page was left blank intentionally. 19 City oflowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 1018A $3,100,000• Taxable General Obligation Bonds, Series 1018B Larger Taxpayers(]) Notes: (1) Source: the County. (2) Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. Levy Limits Normal municipal operations and maintenance costs are generally funded through the corporate property tax levy. Iowa State Code does not allow the municipal general fund to be taxed above $5.10 per thousand dollars of taxable value in any one year. In addition to the General Fund, there are several other tax funds that the City can create and use for specific purposes. The property tax rates for the City from levy year 2012 through levy year 2016 are shown below: Tax Rates Levy Years 2012 - 2016(1)(2) (Per $1,000 Actual Valuation) Fiscal Year: 2013/14 Levy Year 2016 Taxpayer Name Business/Service Taxable Valuation(2) American College Testing, Inc (aka ACT, Inc.) ..............Commercial................................................................. Levy Year: 2012 $ 47,791,285 MidAmerican Energy ..................................................... Utility ........................................................................... 39.414,550 Ann S Gerdin Revocable Trust......................................Commercial................................................................. 22,836,294 MidWestOne Bank ......................................................... Banking....................................................................... 21,066,264 Dealer Properties IC LLC...............................................Commercial................................................................. $ 8.10000 18,888,867 Procter & Gamble Hair Care LLC...................................Industrial...................................................................... $ 8.10000 16,459,144 BBCS-Hawkeye Housing LLC.......................................Apartments.................................................................. 0.00000 15,327.864 Vesper Iowa City LLC....................................................Apartments.................................................................. 0.00000 14,357.871 AlplaInc........................................................................Industrial...................................................................... 4.02965 13,949.217 National Computer Systems Inc ..................................... Commercial................................................................. 12.814.893 Total................................................................................................................................................................. 3.16331 $222,906,249 Ten Largest Taxpayers as Percent of City's 2016 Taxable Valuation ($3,542,852,278) .................................... 6.29% Notes: (1) Source: the County. (2) Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. Levy Limits Normal municipal operations and maintenance costs are generally funded through the corporate property tax levy. Iowa State Code does not allow the municipal general fund to be taxed above $5.10 per thousand dollars of taxable value in any one year. In addition to the General Fund, there are several other tax funds that the City can create and use for specific purposes. The property tax rates for the City from levy year 2012 through levy year 2016 are shown below: Tax Rates Levy Years 2012 - 2016(1)(2) (Per $1,000 Actual Valuation) 20 Fiscal Year: 2013/14 2014/15 2015/16 2016117 2017/18 Levy Year: 2012 2013 2014 2015 2016 City: General Fund ..................................................... $ 8.10000 $ 8.10000 $ 8.10000 $ 8.10000 $ 8.10000 Emergency Levy ................................................. 0.00000 0.00000 0.00000 0.00000 0.00000 Debt Service Fund .............................................. 4.02965 4.12963 3.92833 3.82846 3.57846 Employee Benefits ............................................. 3.16331 2.96331 3.11277 3.14415 3.14415 Capital improvement .......................................... 0.00000 0.00000 0.00000 0.00000 0.00000 Other.................................................................. 1.51226 1.51226 1.50986 1.51044 1.51044 Total City .......................................................... $16.80522 $16.70520 $16.65096 $16.58305 $16.33305 Johnson County ................................................. $6.73712 $6.74168 $6.90337 $6.77140 $6.85143 Iowa City Community School District .................. 13.68792 13.69999 13.86773 13.98935 13.95855 Kirkwood............................................................ 1.06473 1.05754 1.06125 1.08048 1.13174 Other.................................................................. 0.34363 0.32315 0.32784 0.32450 0.33036 Total Tax Rate(3)............................................. $38.63862 $38.52756 $38.81115 $38.74878 $38.60513 Notes: (1) Source: Iowa Department of Management. (2) Does not include the tax rate for agriculture. (3) Taxpayers In the Iowa City Community School District area. 20 City oflowa City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 1018A $3,100,000" Triable General Obligation Bonds, Series 1018B Tax Levy Procedures The Bonds are general obligations of the City, payable from and secured by a continuing ad valorem tax levied against all of the property valuation within the City. As part of the budgetary process each fiscal year, the City will have an obligation to request a debt service levy to be applied against all of the taxable property within the City. A failure on the part of the City to make a timely levy request or a levy request by the City that is inaccurate or is insufficient to make full payments of the debt service of the Bonds for a particular fiscal year may cause Bond holders to experience delay in the receipt of distributions of principal of and/or interest on the Bonds. In the event of a default in the payment of principal of or interest on the Bonds, there is no provision for acceleration of maturity of the principal of the Bonds. Consequently, the remedies of the owners of the Bonds (consisting primarily of an action in the nature of mandamus requiring the City and certain other public officials to perform the terms of the resolution for the Bonds) may have to be enforced from year to year. Notwithstanding the foregoing, Iowa Code section 76.2 provides when an Iowa political subdivision issues bonds, "the governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding twenty years. A certified copy of this resolution shall be filed with the county auditor or auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditor(s) to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full." Utility Property Tax Replacement Property owned by entities involved primarily in the production, delivery, service and sale of electricity and natural gas ("Utilities") pay a replacement tax based upon the delivery of energy by Utilities in lieu of property taxes. All replacement taxes are allocated among local taxing bodies by the State Department of Revenue and the Department of Management. This allocation is made in accordance with a general allocation formula developed by the Department of Management on the basis of general property tax equivalents. Utility properties paying the replacement tax are exempt from the levy of property tax by political subdivisions. In addition to the replacement tax, Utility property will continue to be valued by a special method as provided in the statute and taxed at the rate of three cents per one thousand dollars for the general fund of the State. By statute, the replacement tax collected by the State and allocated among local taxing bodies (including the City) shall be treated as property tax when received and shall be disposed of by the county treasurer as taxes on real estate. It is possible that the general obligation debt capacity of the City could be adjudicated to be proportionately reduced in future years if Utility property were determined to be other than "taxable property" for purposes of computing the City's debt limit under Article XI of the Constitution of the State of Iowa. There can be no assurance that future legislation will not (i) operate to reduce the amount of debt the City can issue or (ii) adversely affect the City's ability to levy taxes in the future for the payment of the principal of and interest on its outstanding debt obligations, including the Bonds. Approximately 1 % of the City's levy year 2017 taxable valuation currently is utility property. Tax Increment Financing The Code of Iowa currently authorizes the use of two types of tax increment financing by local taxing districts in the State of Iowa. The first type allows local governments to establish TIF districts to be established for the purposes of financing designated urban renewal projects which contribute to the urban redevelopment and economic development of the immediate area. The taxable valuation for this type of TIF district in the City for levy year 2017 was $85,379,369. 21 City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 10I8A $3,100,000* Taxable General Obligation Bonds, Series 10188 The second type of tax increment financing was authorized by state legislative action in the mid -1980's. The area community colleges can establish TIF districts by contract with specific local businesses and industries to provide jobs training programming for new employees of existing expanding businesses or employees of new businesses. The revenues from these job training TIF districts then retires the debt incurred from the issuance of jobs training certificates which finance the cost of jobs training programming over a maximum often years. Upon payment of all jobs training certificates, the district dissolves and the incremental value from the new or expanded business reverts to the general tax base. There is no current valuation for this second type of TIF district. Legislation From time to time, legislative proposals are pending in Congress and the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described herein. It cannot be predicted whether or in what forms any of such proposals, either pending or that may be introduced, may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for taxes levied by the City or have an adverse impact on the future tax collections of the City. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed federal or state tax legislation. The opinions expressed by Bond Counsel are based upon existing legislation as of the date of issuance and delivery of the Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending federal or state tax legislation. During the 2013 legislative session, the Iowa General Assembly enacted Senate File 295 (the "Act"), which the Governor signed into law on June 12, 2013. Among other things, the Act (i) reduces the maximum annual taxable value growth percent, due to revaluation of existing residential and agricultural property to 3%, (ii) assigns a "rollback" (the percentage of a property's value that is subject to tax) to commercial, industrial and railroad property of 90%, (iii) creates a new property tax classification for multi -residential properties (apartments, nursing homes, assisted living facilities and certain other rental property) and assigns a declining rollback percentage to such properties for each year until the residential rollback percentage is reached in the 2022 assessment year, after which the rollback percentage for such properties will be equal to the residential rollback percentage each assessment year, and (iv) exempts a specified portion of the assessed value of telecommunication properties. The Act includes a standing appropriation to replace some of the tax revenues lost by local governments, including tax increment districts, resulting from the new rollback for commercial and industrial property. Beginning in fiscal year 2018 the standing appropriation cannot exceed the actual 2017 appropriation amount. The appropriation does not replace losses to local governments resulting from the Act's provisions that reduce the annual revaluation growth limit for residential and agricultural properties to 3%, the gradual transition for multi -residential properties from the residential rollback percentage (currently 53% of market value), or the reduction in the percentage of telecommunications property that is subject to taxation. Given the wide scope of the statutory changes, and the State's discretion in establishing the annual replacement amount that is appropriated each year commencing in fiscal 2018, the impact of the Act on the City's future property tax collections is uncertain and the City has not attempted to quantify the financial impact of the Act's provisions on the City's future operations. It has been projected by Moody's Investor Service that local governments in Iowa are likely to experience sizeable reductions in tax revenues collected starting in fiscal 20181. According to Moody's, local governments that may experience disproportionately higher revenue losses include regions that have a substantial commercial base, a large share of multi -residential developments (such as college towns), or significant amounts of telecommunications property. 1 US Public Finance Weekly Credit Outlook, May 30, 2013, Moody's Investors Service. 22 City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A S3,100,000• Taxable General Obligation Bonds, Series 1018B Notwithstanding any decrease in property tax revenues that may result from the Act, Iowa Code section 76.2 provides that when an Iowa political subdivision issues bonds, "[t]he governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding twenty years. A certified copy of this resolution shall be filed with the county auditor or the auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditors to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full." From time to time, other legislative proposals may be considered by the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described in this Official Statement. It cannot be predicted whether or in what forms any of such proposals may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for the levy of taxes by the City. FINANCIAL INFORMATION Financial Reports The City's financial statements are audited annually by certified public accountants. The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governments. See APPENDIX A for more detail. No Consent or Updated Information Requested of the Auditor The tables and excerpts (collectively, the "Excerpted Financial Information") contained in this "FINANCIAL INFORMATION" section are from the CAFR of the City, including the CAFR for the fiscal year ended June 30, 2017 (the "2017 CAFR"). The 2017 CAFR has been audited by EideBailly, LLP, Certified Public Accountants, Dubuque, Iowa, (the "Auditor"), and received by the City Council. The City has not requested the Auditor to update information contained in the Excerpted Financial Information and the 2017 CAFR; nor has the City requested that the Auditor consent to the use of the Excerpted Financial Information and the 2017 CAFR in this Official Statement. The inclusion of the Excerpted Financial Information and the 2017 CAFR in this Official Statement in and of itself is not intended to demonstrate the fiscal condition of the City since the date of the 2017 CAFR. Questions or inquiries relating to financial information of the City since the date of the 2017 CAFR should be directed to the City. Summary Financial Information The following tables are summaries and do not purport to be the complete audits, copies of which are available upon request. See APPENDIX A for the City's 2017 CAFR. The City expects its total General Fund balance for the fiscal year ending June 30, 2018 to decrease by approximately $8,775,000. The decrease is due in part to transfers of approximately $8,022,000 to the City's gateway street construction project from local options sales tax monies (restricted). The City has approved a budget for fiscal year 2019 with a decrease to its General Fund of approximately $2,270,000. The decrease is due in part to transfers for capital projects. 23 City of Iowa City, Johnson Cowry, Iowa $8,895,000' General Obligation Bonds, Series 2018A $3, 100,000* Taxable General Obligation Bonds, Series 2018B Statement of Net Position Governmental Activities(1) (Amounts Expressed in Thousands) ASSETS: Equity in Pooled Cash and Investments .................................. Receivables: PropertyTax.......................................................................... Accounts and Unbilled Usage ................................................ Interest.................................................................................. Notes..................................................................................... Internal Balances..................................................................... Due from Other Governments ................................................. PrepaidItem............................................................................ Inventories............................................................................... Assets Held for Resale............................................................ Restricted Assets: Equity in Pooled Cash and Investments ................................. Other Post Employment Benefits Asset ................................... Capital Assets: Land and Construction in Progress ........................................ Other Capital Assets (Net of Accumulated Depredation)......... TotalAssets....................................................................... DEFERRED OUTFLOWS OF RESOURCES:(2) Pension Related Deferred Outflows .................... LIABILITIES: Accounts Payable.................................................................... ContractsPayable................................................................... Accrued Liabilities................................................................... Interest Payable...................................................................... Deposits.................................................................................. Advances from Grantors.......................................................... Due to Other Governments...................................................... NotesPayable......................................................................... Unearned Revenue(2)............................................................. Noncurrent Liabilities: Due Within One Year: Employee Vested Benefits ................................................... BondsPayable.................................................................... Due in more than One Year: Employee Vested Benefits ................................................... Net Pension Liability ............................................................ Other Post Employment Benefits Obligation ........................ NotesPayable..................................................................... BondsPayable.................................................................... Total Liabilities................................................................... Audited as of Jun 2013 2014 2015 2016 2017 $ 63,252 $ 60,279 $ 63,571 $ 84,052 $111,030 50,808 51,828 52,240 55,482 56,639 1,448 530 718 953 820 69 165 364 284 428 17,105 17,787 17,308 16,252 5,524 (11,321) (11,066) (12,127) (13,688) (15,494) 9,796 7,410 10,298 5,987 4,519 0 0 0 10 811 659 597 656 688 730 703 2,108 2,170 582 750 29,601 46,909 45,981 36,914 24,560 24 23 25 40 35 46,058 38,211 48,032 48,275 52,545 136.205 149.443 151.620 158,947 173.598 $344,407 $364.224 $380.856 $394,778 $416.495 $ $0 6.76 7 7,192 13,131 $ 3,287 $ 2,523 $ 2,296 $ 3,374 $ 2,127 2,689 1,418 5,468 2,773 2,521 2,942 3,964 4,145 4,143 4,182 156 190 168 110 133 1,021 1,068 1,078 1,715 1,230 0 29 69 47 144 18 36 636 402 42 538 1,943 2,004 582 663 61,144 0 0 0 0 1,161 1,163 1,148 1,185 1,252 10,347 11,780 11,255 10,384 8,230 950 941 928 947 989 0 0 24,556 30,539 39,080 2,386 2,659 2,932 3,227 3,660 211 211 211 211 211 49.957 54.969 50.785 48.105 59.509 $136,807 $ 82, $107.67 $107.7$123.973 2,590 DEFERRED INFLOWS OF RESOURCES:(2) Unavailable Revenues: Pension Related Deferred Inflows .......................................... $ 0 $ 0 $ 10,791 $ 3,740 $ 1,603 Succeeding Year Property Taxes .......................................... 0 51,609 52,035 55,330 56,459 Notes..................................................................................... 0 11,523 11,422 11.226 0 Grants................................................................................... 0 0 0 12 Total Defamed Inflows of Resources .................................. S 0 $ 63.132 $ 74.248 $ 70.308 $ 58.062 NET POSITION: Net Investment in Capital Assets ............................................. $133,989 $138,482 $153,729 $163,362 $183,651 Restricted for or by: Employee Benefits................................................................. 2,073 1,713 1,593 1,671 2,810 Capital Projects..................................................................... 13,319 30,692 27,014 31,456 30,856 Debt Service .......................................................................... 6,527 6,718 6,921 6,463 7,221 Police .................................................................................... 0 529 510 458 349 Other Purposes..................................................................... 948 306 409 1,657 2,590 Grant Agreement................................................................... 0 0 0 449 3,850 Unrestricted............................................................................. 50.744 39.758 15.52 18.402 16.264 Total Net Position.............................................................. 24Z 00 18 205 96 22 'L 59 Notes: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2013 through 2017. (2) Format change in 2014. 24 City of Iowa City, Johnson Couny, Iowa $8,895,000* General Obligation Bonds, Series 1018A $3,100,000* Taxable General Obligation Bonds, Series 2018B Statement of Activities Governmental Activities(I) (Amounts Expressed in Thousands) Net Position End of Year ......................................................... Note: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2013 through 2017 The remainder of this page was left blank intentionally. 25 Audited for the Year Ended June 30 2013 2014 2015 2016 2017 FUNCTION/PROGRAMS: Governmental Activities: Public Safety ......................................................................... $ (16,496) $ (18,609) $ (16,991) $ (15,969) $ (18,053) Public Works......................................................................... (4,835) (2,901) 8,350 998 6,746 Culture and Recreation.......................................................... (12,265) (15,349) (13,208) (13,535) (14,573) Community and Economic Development ............................... (6,178) (7,414) (6,101) (4,322) (6,264) General Government............................................................. (4,750) (4,657) (4,777) (4,986) (4,600) Interest on Long -Term Debt ................................................... (2,237 (1,797) (1.517) (1.287) (1.481) Total Governmental Activities .............................................. $(46,761 $(50.727) $(34,244) $09.103) $(38,225 General Revenues: Property Taxes, Levied for General Purposes ....................... $ 51,017 $ 50,551 $ 52,205 $ 53,114 $ 57,649 Hotel/Motel Tax..................................................................... 6,589 6,745 1,057 1,079 1,137 Gas and Electric Tax............................................................. 872 967 851 764 726 Utility Franchise Tax.............................................................. 819 780 902 874 939 Grants and Contributions Not Restricted to Specific Purposes................................................................. 8,858 466 1,048 2,080 1,583 Earnings on Investments....................................................... 916 1,031 1,188 1,045 1,397 Gain on Disposal of Capital Assets ........................................ 841 973 135 218 2,151 Miscellaneous........................................................................ 1,312 1,651 5,518 4,464 3,369 Transfers................................................................................. 4,390 4,353 (10,057) (6,395) (7.053) Reassignment of Cable Television to Govemmental Activities................................................................................ (110,-485 (6.192) 0 82 0 Total General Revenues and Transfers ............................... $ 65,131 $ 61.325 $ 52.847 57 32 $ 61.898 Changes In Net Position .................................................... $ 18,370 $ 10,598 $ 18,603 $ 18,222 $ 23,673 Net Position Beginning of Year ................................................ 189.230 207.600 187.093 205.69¢ 223,9118 Net Position End of Year ......................................................... Note: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2013 through 2017 The remainder of this page was left blank intentionally. 25 City oflowa City, Johnson County, Iowa 58,895,000' General Obligation Bonds, Series 10M $3,700,000" Taxable General Obligation Bonds, Series 2018B Balance Sheet General Fund(1) (Amounts Expressed in Thousands) The remainder of this page was left blank intentionally. 26 Audited as of June 30 2013 2014 2015 2016 2017 ASSETS: Equity in Pooled Cash and Investments .................................... $18,744 $19,461 $19,001 $30,214 $32,500 Receivables: Property Taxes........................................................................ 28,869 29,610 29,922 31,825 32,965 Accounts and Unbilled Usage .................................................. 248 281 250 449 410 Interest.................................................................................... 44 100 217 163 161 Notes....................................................................................... 1.139 1,281 1,340 1,305 1,292 Advances to Other Funds.......................................................... 148 686 2,681 0 0 Due from Other Governments.................................................... 3,927 2,112 1,859 1,758 1,887 Prepaid Item.............................................................................. 0 0 0 10 719 Assets Held for Resale.............................................................. 538 1,943 2,005 582 750 Restricted Assets: Equity in Pooled Cash and Investments ................................... 25.788 30.047 30.141 21.277 10.268 TotalAssets....................................................................... LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES: Liabilities: Accounts Payable.................................................................... $ 1,219 $ 1,251 $ 1,328 $ 1,376 $ 1,191 Accrued Liabilities.................................................................... 692 823 867 1,141 1,321 Due to Other Governments...................................................... 15 36 312 29 38 Interest Payable...................................................................... 5 36 37 0 4 Notes Payable......................................................................... 538 1,943 2,004 582 663 Deferred Revenue(2)............................................................... 31,423 0 0 0 0 Liabilities Payable from Restricted Assets: Deposits............................................................................... 938 1,030 1,072 1,710 1,224 Advances from Grantors ....................................................... 0 27 0 7 Total Liabilities................................................................... 534.830 $ 5.119 S 5.667 $ 4.838 $ 4. DEFERRED INFLOWS OF RESOURCES:(2) Unavailable Revenues: Succeeding Year Property Taxes .......................................... $ 0 $29,486 $29,805 $31,739 $32,863 Notes..................................................................................... 0 1,281 1,340 1.305 0 Grants................................................................................... 0 375 82 15 6 Other..................................................................................... 1.351 1.393 1.434 1.539 Total Deferred Inflows of Resources .................................... 1 0 $32,493 $32.620 $34,493 $34.408 FUND BALANCES: Nonspendable......................................................................... $ 69 $ 69 $ 69 $ 69 $ 788 Restricted................................................................................ 25,689 26,533 25,291 18,975 9,974 Committed............................................................................... 0 0 0 4.699 5,199 Assigned................................................................................. 1,744 3,400 4.483 1.143 1,342 Unassigned............................................................................. 17.113 17,907 19.286 2336 24.793 Total Fund Balances.......................................................... 544.615 $47,909 $49,129 $48,252 S42.096 Total Liabilities, Deferred Inflows of Resources and Fund Balances.......................................................... S7Q Ads S85 1 8Z 6 87 8 95 Notes: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2013 through 2017. (2) Format change in 2014. The remainder of this page was left blank intentionally. 26 City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxoble General Obligation Bonds, Series 1018B Statement of Revenues, Expenditures and Changes in Fund Balance General Fund(]) (Amounts Expressed in Thousands) EMPLOYEE RETIREMENT AND OTHER POST EMPLOYMENT BENEFIT OBLIGATIONS Pensions The City contributes to the Municipal Fire and Police Retirement System of Iowa Plan ("MFPRSI"). Membership is mandatory for fire fighters and police officers covered by the provisions of Chapter 411 of the Code of Iowa. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by MFPRSI. MFPRSI issues a stand-alone financial report which is available to the public by mail at 7155 Lake Drive, Suite #201, West Des Moines, Iowa 50266 or at www.mfDrsi.org. See APPENDIX A - Note 7 for more information. At June 30, 2017, the City reported a liability of $23,116,697 for its proportionate share of the net pension liability. The City also contributes to the Iowa Public Employees' Retirement System ("IPERS"), which is a state-wide multiple -employer cost-sharing defined benefit pension plan administered by the State of Iowa. IPERS provides retirement and death benefits which are established by State statute to plan members and beneficiaries. IPERS benefits are established under Iowa Code, Chapter 97B and the administrative rules thereunder. IPERS plan members are required to contribute a percentage of their annual salary, in addition to the City being required to make annual contributions to IPERS. Contribution amounts are set by State statute. The City's share is payable from the applicable funds of the City. All contributions are on a current basis. See APPENDIX A - Note 7 for additional information on IPERS. 27 Audited Fiscal Year Ended June 30 2013 2014 2015 2016 2017 REVENUES: Taxes........................................................................................ $ 38,886 $ 31,388 $ 31.909 $ 32,229 $ 34,290 Licenses and Permits ................................................................ 1,784 1,660 1,806 3,056 3,521 Intergovernmental..................................................................... 2,871 2,790 3,487 3,830 3,574 Charges for Service ................................................................... 1,462 1.321 1,460 1,543 1,665 Fines and Forfeits...................................................................... 0 0 0 760 750 Use of Money and Property ....................................................... 557 677 845 749 839 Miscellaneous............................................................................ 4.762 4.578 5.835 1.430 1.692 Total Revenues....................................................................... $ 50.322 $42,414 $ 45.342 $43,597 $ 46.331 EXPENDITURES: Current: Public Safety........................................................................... $ 19,685 $ 20,802 $ 21,087 $ 20,967 $ 22,005 Public Works........................................................................... 1,159 1,150 1,624 1,312 1,803 Cultural and Recreation........................................................... 12,299 12,687 11,698 12,038 12,890 Community and Economic Development ................................. 2,076 2,390 3,187 2,842 3,074 General Government............................................................... 6,751 6,680 7,093 5,479 5,471 Capital Outlay............................................................................ 1.916 3.255 3.333 1.651 1.463 Total Expenditures................................................................... $43.886 ,L45.8fl4 $ 48,022 $44.28 $46.206 Excess (Deficiency) of Revenues Over (Under) Expenditures........................................................................... 6,43 (4,550) $ (2.6801 $ (6921 375 Other Financing Sources (Uses): Issuance of Debt....................................................................... $ 0 $ 981 $ 0 $ 0 $ 0 Sale of Capital Assets............................................................... 496 1,684 164 252 268 Premiums on Issuance of Bonds ............................................... 0 19 0 0 0 Transfers In............................................................................... 9,329 9.152 8,780 10,692 10,725 Transfers Out............................................................................1( 1.5941 (3.992) (5.0441 1� 1..� 3 Total Other Financing Sources and (Uses) .............................. (1,769) 7,844 3,900 185 $ (7.030) Net Change in Fund Balances ................................................... $ 4,667 $ 3,294 $ 1,220 $ (877) $ (7,405) Fund Balances - Beginning.......................................................$39,948 $44,615 $47,909 49 129 $49,501 2) Fund Balances - Ending............................................................ i Notes: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2013 through 2017. (2) Restated. EMPLOYEE RETIREMENT AND OTHER POST EMPLOYMENT BENEFIT OBLIGATIONS Pensions The City contributes to the Municipal Fire and Police Retirement System of Iowa Plan ("MFPRSI"). Membership is mandatory for fire fighters and police officers covered by the provisions of Chapter 411 of the Code of Iowa. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by MFPRSI. MFPRSI issues a stand-alone financial report which is available to the public by mail at 7155 Lake Drive, Suite #201, West Des Moines, Iowa 50266 or at www.mfDrsi.org. See APPENDIX A - Note 7 for more information. At June 30, 2017, the City reported a liability of $23,116,697 for its proportionate share of the net pension liability. The City also contributes to the Iowa Public Employees' Retirement System ("IPERS"), which is a state-wide multiple -employer cost-sharing defined benefit pension plan administered by the State of Iowa. IPERS provides retirement and death benefits which are established by State statute to plan members and beneficiaries. IPERS benefits are established under Iowa Code, Chapter 97B and the administrative rules thereunder. IPERS plan members are required to contribute a percentage of their annual salary, in addition to the City being required to make annual contributions to IPERS. Contribution amounts are set by State statute. The City's share is payable from the applicable funds of the City. All contributions are on a current basis. See APPENDIX A - Note 7 for additional information on IPERS. 27 City of lava City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 2018A $3, 100,000* ratable General Obligation Bonds, Series 2018E The following table sets forth the contributions made by the City and employees to IPERS for the period indicated The City has always made their full statutorily required contributions to IPERS. The City cannot predict the levels of funding that will be required in the future. The City cannot predict the levels of funding that will be required in the future as any IPERS unfunded pension benefit obligation could be reflected in future years in higher contribution rates. The investment of moneys, assumptions underlying the same and the administration of IPERS is not subject to the direction of the City. Thus, it is not possible to predict, control or prepare for future unfunded accrued actuarial liabilities of IPERS ("UAALs"). The UALL is the difference between total actuarially accrued liabilities and actuarially calculated assets available for the payment of such benefits. The UAAL is based on assumptions as to retirement age, mortality, projected salary increases attributed to inflation, across-the-board raises and merit raises, adjustments, cost -of -living adjustments, valuation of current assets, investment return and other matters. Such UAAL could be substantial in the future, requiring significantly increased contributions from the City which could affect other budgetary matters. The following table sets forth certain information about the funding status of IPERS that has been extracted from the comprehensive annual financial reports of IPERS for fiscal years noted below (collectively, the "IPERS CAFRs). A complete copy of the Reports can be obtained by visiting IPERS website at: http://www.iMrs.orIz. % of Payroll % of Payroll Fiscal Year Paid by the City Paid by Emolovee 2014 ........................... 8.93% 5.95% 2015 ........................... 8.93% 5.95% 2016 ........................... 8.93% 5.95% 2017 ........................... 8.93% 5.95% 2018 ........................... 8.93% 5.95% The City cannot predict the levels of funding that will be required in the future as any IPERS unfunded pension benefit obligation could be reflected in future years in higher contribution rates. The investment of moneys, assumptions underlying the same and the administration of IPERS is not subject to the direction of the City. Thus, it is not possible to predict, control or prepare for future unfunded accrued actuarial liabilities of IPERS ("UAALs"). The UALL is the difference between total actuarially accrued liabilities and actuarially calculated assets available for the payment of such benefits. The UAAL is based on assumptions as to retirement age, mortality, projected salary increases attributed to inflation, across-the-board raises and merit raises, adjustments, cost -of -living adjustments, valuation of current assets, investment return and other matters. Such UAAL could be substantial in the future, requiring significantly increased contributions from the City which could affect other budgetary matters. The following table sets forth certain information about the funding status of IPERS that has been extracted from the comprehensive annual financial reports of IPERS for fiscal years noted below (collectively, the "IPERS CAFRs). A complete copy of the Reports can be obtained by visiting IPERS website at: http://www.iMrs.orIz. Unfunded Funded UAAL as a Actuarial Ratio Funded Accrued Liability (Market 15.88% Covered Unfunded Actuarial Ratio Covered (Actuarial Value) fcl-fbl i41�1 Payroll fdl Accrued Liability (Actuarial Valuation Actuarial Value Market Value Actuarial Accrued (Actuarial Value) Value) Date of Assets fal of Assets fbl Liability lcl fG-Fall fal fcl 2013..... $24,711,096,187 $24,756,663,715 $30,498,342,320 $5,787,246,133 81.02% 2014..... 26,460,428,085 28,038,549,893 32,004,456,088 5,544,028,003 82.68% 2015..... 27,915,379,103 28,429,834,829 33,370,318,731 5,454,939,628 83.65% 2016..... 29,033,696,587 28,326,433,656 34,619,749,147 5,586,052,560 83.86% 2017..... 30,472,423,914 30,779,116,326 37,440,382,029 6,967,958,115 81.39% Source: IPERS Reports. Unfunded Funded UAAL as a Actuarial Ratio Percentage of Accrued Liability (Market 15.88% Covered (Market Value) Value) Covered (Actuarial Value) fcl-fbl i41�1 Payroll fdl f1b_al/fcll $5,741,678,605 81.17%$6,880,131,134 84.12% 3,965,906,195 87.61% 7,099,277,280 78.09% 4,940,483,902 85.19% 7,326,348,141 74.46% 6,293,315,491 81.82% 7,556,515,720 73.92% 6,661,265,703 82.21% 7,863,160,443 88.62% According to IPERS, the market value investment return on program assets is as follows: Fiscal Year Ended Investment June 30 2013............................................................ Return % 10.12% 2014............................................................ 15.88% 2015............................................................ 3.96% 2016............................................................ 2.15% 2017............................................................ 11.70% Source: IPERS Reports Bond Counsel, Disclosure Counsel, the City and the Municipal Advisor undertake no responsibility for and make no representations as to the accuracy or completeness of the information available from the IPERS discussed above or included on the 1PERS website, including, but not limited to, updates of such information on the Auditor of State's website or links to other website site or links to other websites through the IPERS website. 28 City of lowa City, Johnson Cowry, Iowa $8,895,000' General Obligation Bonds, Series 2018A 83,100,000' Taxable General Obligation Bonds, Series 20188 The City reported a liability of $24,938,496 as of June 30, 2017 for its proportionate share of the net pension liability for IPERS. The net pension liability is the amount by which the total actuarial liability exceeds the pension plan's net assets or fiduciary net position (essentially the market value) available for paying benefits. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's share of contributions to the pension plan relative to the contributions of all IPERS participating employers. As of June 30, 2016, the City's collective proportion was 0.3962696%. For additional information, see the City's Audited Financial Statements for Fiscal Year Ending June 30, 2017 in APPENDIX A. Other Post -Employment Benefits (OPEB) In June 2004, the Governmental Accounting Standards Board ("GASB") issued GASB 45, which address how state and local governments are required to account for and report their costs and obligations related to other post -employment benefits ("OPEB"), defined to include post-retirement healthcare benefits. GASB 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pension establishes financial reporting standards designed to measure, recognize and display OPEB costs. OPEB costs would become measurable on an accrual basis of accounting, and contribution rates (actuarially determined) would be prescribed for funding such costs. The provisions of GASB 45 do not require governments to fund their OPEBs. The City may establish its OPEB liability at zero as of the beginning of the initial year of implementation; however the unfunded actuarial liability is required to be amortized over future periods. As of July 1, 2016, the most recent valuation date for the period July 1, 2016 through June 30, 2017, the actuarial accrued liability was $6,560,682, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of $6,560,682. The covered payroll (annual payroll of active employees covered by the plan) was $37,814,968 and the ratio of the UAAL to covered payroll was 17.3%. As of June 30, 2017, there were no trust fund assets. As of the July 1, 2016 actuarial valuation date, the entry -age normal method was used. See APPENDIX A — Notes (7) and (S) herein for further discussion of the City's employee retirement benefit obligations. REGISTRATION, TRANSFER AND EXCHANGE See also APPENDIX B - BOOK -ENTRY SYSTEM for information on registration, transfer and exchange of book -entry bonds. The Bonds will be initially issued as book -entry bonds. The City shall cause books (the "Bond Register") for the registration and for the transfer of the Bonds to be kept at the principal office maintained for the purpose by the Bond Registrar in St. Paul, Minnesota. The City will authorize to be prepared, and the Bond Registrar shall keep custody of, multiple bond blanks executed by the City for use in the transfer and exchange of Bonds. Any Bond may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Bond Resolution. Upon surrender for transfer or exchange of any Bond at the principal office maintained for the purpose by the Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by the registered owner or such owner's attorney duly authorized in writing, the City shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Bond or Bonds of the same maturity and interest rate of authorized denominations, for a like aggregate principal amount. The execution by the City of any fully registered Bond shall constitute full and due authorization of such Bond, and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such Bond, provided, however, the principal amount of outstanding Bonds of each maturity authenticated by the Bond Registrar shall not exceed the authorized principal amount of Bonds for such maturity less Bonds previously paid. 29 City oflawa City, Johnson County, Iowa $8,895,000* General Obligation Bands, Series 2018A $3,100,000* Tawble General Obligation Bonds, Series 2018B The Bond Registrar shall not be required to transfer or exchange any Bond following the close of business on the: fifteenth day of the month next preceding an interest payment date on such bond (known as the record date), nor to transfer or exchange any Bond after notice calling such Bond for redemption has been mailed, nor during a period of fifteen days next preceding mailing of a notice of redemption of any Bonds. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bonds shall be made only to or upon the order of the registered owner thereof or such owner's legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of Bonds, but the City or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds except in the case of the issuance of a Bond or Bonds for the unredeemed portion of a bond surrendered for redemption. TAX MATTERS — TAX-EXEMPT BONDS (SERIES 2018A) Tax Exemption Federal tax law contains a number of requirements and restrictions that apply to the Tax -Exempt Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of Tax -Exempt Bond proceeds and facilities financed with Tax -Exempt Bond proceeds, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the interest on the Tax -Exempt Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Tax -Exempt Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Tax -Exempt Bonds. Subject to the City's compliance with the above -referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Tax -Exempt Bonds is excludable from gross income for federal income tax purposes. Interest on the Tax -Exempt Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations for taxable years beginning before January 1, 2018. Prospective purchasers of the Tax -Exempt Bonds should be aware that ownership of the Tax -Exempt Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Bond Counsel will not express any opinion as to such collateral tax consequences. Prospective purchasers of the Tax -Exempt Bonds should consult their tax advisors as to collateral federal income tax consequences. The interest on the Tax -Exempt Bonds is not exempt from present Iowa income taxes. Ownership of the Tax - Exempt Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Tax -Exempt Bonds. Prospective purchasers of the Tax -Exempt Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. 30 City of10 a City, Johnson Counry, Iowa $8,895.000' General Obligation Bonds, Series 1018A $3,100,000' Taxable General Obligation Bonds, Series 1018B Qualified Tax -Exempt Obligations — Tax -Exempt Bonds The City does not reasonably expect to issue more than $10,000,000 in tax-exempt obligations in calendar year 2018 which must be taken into account and accordingly, will designate the Tax -Exempt Bonds as "qualified tax-exempt obligations" under the exception provided in Section 265(bx3) of the Internal Revenue Code of 1986, as amended (the "Code"), which affords banks and certain other financial institutions more favorable treatment of their deduction for interest expense than would otherwise be allowed under Section 265(b)(2) of the Code. Tax Accounting Treatment of Discount and Premium on Certain Bonds The initial public offering price of certain Tax -Exempt Bonds may be less than the amount payable on such Tax - Exempt Bonds at maturity ("Discount Bonds"). Owners of Discount Bonds should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Bonds for income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Bonds. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment. The initial public offering price of certain Bonds may be greater than the amount of such Bonds at maturity ("Premium Bonds"). An amount equal to the difference between the initial public offering price of Premium Bonds (assuming that a substantial amount of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes a premium to the initial purchaser of such Premium Bonds. Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Bonds for income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Bonds. Other Tax Advice In addition to the income tax consequences described above, potential investors should consider the additional tax consequences of the acquisition, ownership, and disposition of the Tax -Exempt Bonds. For instance, state income tax law may differ substantially from state to state, and the foregoing is not intended to describe any aspect of the income tax laws of any state. Therefore, potential investors should consult their own tax advisors with respect to federal tax issues herein covered by the opinion and with respect to the various state tax consequences of an investment in Tax - Exempt Bonds. Audits The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Tax -Exempt Bonds. If an audit is commenced, under current procedures the Service may treat the City as a taxpayer and the Tax -Exempt Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome. 31 City ofIowa City, Johnson Cowry. Iowa $8,895,000* General Obligation Bonds, Series 10189 83, 100,000* Taxable General Obligation Bonds, Series 1018B Reporting and Withholding Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. Tax Legislation On December 22, 2017 Public Law 115-97, the Tax Cuts and Jobs Act ("MA"), was signed into law. The TCJA and other future legislative proposals may prevent owners of the Tax -Exempt Bonds from realizing the same benefits as under former law with respect to the tax status of interest on the Tax -Exempt Bonds. Also, the TCJA and other future legislative proposals, or clarification of the Code, may affect the market price for, or marketability of, the Tax -Exempt Bonds. Prospective purchasers of the Tax -Exempt Bonds should consult their own tax advisors regarding the TCJA and other pending or proposed tax legislation, as to which Bond Counsel expresses no opinion. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Tax -Exempt Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. Enforcement Owners of the Tax -Exempt Bonds shall have and possess all the rights of action and remedies afforded by the common law, the Constitution and statutes of the State of Iowa and of the United States of America for the enforcement of payment of the Tax -Exempt Bonds, including, but not limited to, the right to a proceeding in law or in equity by suit, action or mandamus to enforce and compel performance of the duties required by Iowa law and the Resolution authorizing issuance of the Tax -Exempt Bonds (the "Bond Resolution"). There is no bond trustee or similar person to monitor or enforce the terms of the Bond Resolution. In the event of a default in the payment of principal of or interest on the Tax -Exempt Bonds, there is no provision for acceleration of maturity of the principal of the Tax -Exempt Bonds. Consequently, the remedies of the owners of the Tax -Exempt Bonds may have to be enforced year to year. The obligation to pay general ad valorem property taxes is secured by a statutory lien upon the taxed property, but is not an obligation for which a property owner may be held personally liable in the event of a deficiency. The owners of the Tax -Exempt Bonds cannot foreclose on property within the boundaries of the Issuer or sell such property in order to pay the debt service on the Tax -Exempt Bonds. In addition, the enforceability of the rights and remedies of owners of the Tax -Exempt Bonds may be subject to limitation as set forth in Bond Counsel's opinion. The opinion to be delivered concurrently with the delivery of the Tax -Exempt Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by general principles of equity and public policy and by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally, and to the exercise of judicial discretion, which may result in delay, in appropriate cases. No representation is made, and no assurance is given, that the enforcement of any remedies with respect to such assets will result in sufficient funds to pay all amounts due under the Bond Resolution, including principal of and interest on the Tax -Exempt Bonds. 32 City of Iowa City, Johnson County, Iowa S8,895,000' General Obligation Bonds, Series 2018A $3, 100,000* Taxable General Obligation Bonds, Series 2018B Opinion Bond Counsel's opinion is not a guarantee of a result, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the City described in this section. No ruling has been sought from the Service with respect to the matters addressed in the opinion of Bond Counsel and Bond Counsel's opinion is not binding on the Service. Bond Counsel assumes no obligation to update its opinion after the issue date to reflect any further action, fact or circumstance, or change in law or interpretation, or otherwise. See APPENDIX C for a draft form of legal opinion for the Bonds. ALL POTENTIAL PURCHASERS OF THE BONDS SHOULD CONSULT WITH THEIR TAX ADVISORS WITH RESPECT TO FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF OWNERSHIP OF THE TAX-EXEMPT BONDS (INCLUDING BUT NOT LIMITED TO THOSE LISTED ABOVE). TAXABILITY OF INTEREST — TAXABLE BONDS (SERIES 2018B) General The following discussion is a summary of certain Federal income tax consequences relating to the purchase, ownership, and disposition of the Taxable Bonds. This discussion does not purport to deal with all aspects of Federal income taxation that may affect particular investors in light of their individual circumstances, and is limited to investors who hold the Taxable Bonds as capital assets under Section 1221 of the Code, which generally means property held for investment. Prospective investors, particularly those subject to special rules, should consult their tax advisors regarding the consequences of purchasing, owning, and disposing of the Taxable Bonds for Federal income tax purposes, and for State and local tax purposes. Interest Income Taxable In general, interest on the Taxable Bonds is includable in the gross income of the owners thereof as ordinary interest income for Federal income tax purposes. Except for original issue discount, which accrues under special rules, interest income on the Taxable Bonds is so included in the gross income of the owners when accrued or received in accordance with the owner's regular method of Federal tax accounting. Sale, Exchange, or Other Disposition In general, upon the sale, exchange, or redemption of a Taxable Bond, an owner will recognize taxable gain or loss in an amount equal to the difference between the amount realized and the owner's adjusted tax basis in the Taxable Bond. An owner's adjusted tax basis in a Taxable Bond generally will equal the owner's initial cost of the Taxable Bond, plus any accrued original issue discount and accrued market discount previously included in the owner's taxable income. Such gain or loss generally will be capital gain or loss. Such gain or loss generally will be long-term capital gain or loss if the owner has held the Taxable Bond for more than one year. Subject to various special rules, the Code currently provides preferential treatment for certain net long-term capital gains realized by individuals and generally limits the use by any taxpayer of capital losses to reduce ordinary income. 33 City of Iowa City, Johnson County, Iowa $8,895,000• General Obligation Bonds, Series 2018A $3,100,000• Tawble General Obligation Bonds, Series 2018B Backup Withholding and Information Reporting In general, information reporting requirements will apply to non -corporate owners of Taxable Bonds with respect to payments of the principal of and interest on the Taxable Bonds and proceeds of sale of such Taxable Bonds before maturity. Backup withholding at a rate of 28% generally will apply to such payments unless the owner: (i) is a corporation or other exempt recipient and, when required, demonstrates that fact, or (ii) provides a correct taxpayer identification number, certifies under penalties of perjury when required that such owner is not subject to backup withholding, and has not been notified by the IRS that it has failed to report all interest and dividends required to be shown on its Federal income tax returns. Purchasers of the Taxable Bonds should consult their own tax advisors with respect to impacts of the taxability of interest. Enforcement Holders of the Taxable Bonds shall have and possess all the rights of action and remedies afforded by the common law, the Constitution and statutes of the State of Iowa and of the United States of America for the enforcement of payment of the Taxable Bonds, including, but not limited to, the right to a proceeding in law or in equity by suit, action or mandamus to enforce and compel performance of the duties required by Iowa law and the resolutions authorizing issuance of the Taxable Bonds (the "Taxable Bond Resolutions".) The practical realization of any rights upon any default will depend upon the exercise of various remedies specified in the Taxable Bond Resolutions. The remedies available to the owners of the Taxable Bonds upon an event of default under the Taxable Bond Resolutions, in certain respects, may require judicial action, which is often subject to discretion and delay. Under existing law, including specifically the federal bankruptcy code, certain of the remedies specified in the Taxable Bond Resolutions may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in these documents. The legal opinions to be delivered concurrently with the delivery of the Taxable Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by general principles of equity and public policy and by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. No representation is made, and no assurance is given, that the enforcement of any remedies with respect to such assets will result in sufficient funds to pay all amounts due under the Taxable Bond Resolutions, including principal of and interest on the Taxable Bonds. Opinions Bond Counsel's opinion is not a guarantee of a result, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the City described in this section. No ruling has been sought from the Service with respect to the matters addressed in the opinion of Bond Counsel and Bond Counsel's opinion is not binding on the Service. Bond Counsel assumes no obligation to update its opinion after the issue date to reflect any further action, fact or circumstance, or change in law or interpretation, or otherwise. See "APPENDIX C" for forms of Bond Counsel opinions for the Taxable Bonds. ALL POTENTIAL PURCHASERS OF THE TAXABLE BONDS SHOULD CONSULT WITH THEIR TAX ADVISORS WITH RESPECT TO FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF OWNERSHIP OF THE TAXABLE BONDS (INCLUDING BUT NOT LIMITED TO THOSE LISTED ABOVE). 34 City of Iowa City, Johnson County, Iowa 58,895,000• General Obligation Bonds, Series 1018A $3,100,000• Taxable General Obligation Bonds, Series 1018B CONTINUING DISCLOSURE For the purpose of complying with Rule 15c2-12 of the Securities Exchange Commission, as amended and interpreted from time to time (the "Rule"), the City will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Bonds to provide reports of specified information and notice of the occurrence of certain events, as hereinafter described (the "Disclosure Covenants"). The information to be provided on an annual basis, and the events as to which notice is to be given, is set forth in "APPENDIX D — Form of Continuing Disclosure Certificate". This covenant is being made by the City to assist the Underwriter(s) in complying with the Rule. Breach of the Disclosure Covenants will not constitute a default or an "Event of Default" under the Bonds or Resolution, respectively. A broker or dealer is to consider a known breach of the Disclosure Covenants, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the Disclosure Covenants may adversely affect the transferability and liquidity of the Bonds and their market price. In the past five years, for the fiscal years ending June 30 of 2013, 2014 and 2015, certain financial information and operating data ("Debt Ratio (overlapping)", "City Funds on Hand" and "General Fund Budget"), while contained in the timely filed CAFRs, were not presented in the same format and indexed in the "Annual Financial Information and Operating Data" portion of the EMMA system. The City has taken steps to ensure future filing of this information in compliance with the applicable undertakings. Bond Counsel expresses no opinion as to whether the Undertaking complies with the requirements of Section (b)(5) of the Rule. OPTIONAL REDEMPTION The Tax -Exempt Bonds due June 1, 2019 - 2024 inclusive, are not subject to optional redemption. Tax -Exempt Bonds due June 1, 2025 - 2028, inclusive, are callable in whole or in part on any date on or after June 1, 2024, at a price of par and accrued interest. If less than all the Tax -Exempt Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the City and within any maturity by lot. Thirty days' written notice of redemption shall be given to the registered owner of the Tax -Exempt Bond. Failure to give written notice to any registered owner of the Bonds or any defect therein shall not affect the validity of any proceedings for the redemption of the Bonds. All Bonds or portions thereof called for redemption will cease to bear interest after the specified redemption date, provided funds for their redemption are on deposit at the place of payment. Written notice will be deemed completed upon transmission to the owner of record. The Taxable Bonds are not subject to optional redemption prior to maturity. LITIGATION There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the issuance or sale thereof. There is no litigation now pending, or to the knowledge of the City, threatened against the City that is expected to materially impact the financial condition of the City. 35 City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 1018A $3,100,000* Taxable General Obligation Bonds, Series 1018B LEGAL MATTERS The Bonds are subject to approval as to certain legal matters by Ahlers & Cooney, P.C., Des Moines, Iowa, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official Statement except for guidance concerning the sections regarding "TAX MATTERS — TAX-EXEMPT BONDS (SERIES 2018A)" and "TAXABILITY OF INTEREST — TAXABLE BONDS (SERIES 201811"), and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel has not examined nor attempted to examine or verify any of the financial or statistical statements, or data contained in this Official Statement, and will express no opinion with respect thereto. The "FORMS OF LEGAL OPINIONS" as set out in APPENDIX C to this Official Statement will be delivered at closing The legal opinion to be delivered concurrently with the delivery of the Bonds expresses the professional judgment of the attorneys rendering the opinion as to legal issues expressly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of the result indicated by that expression of professional judgment, or of the transaction on which the opinion is rendered, or of the future performance of parties to the transaction. Nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. In addition, the enforceability of the rights and remedies of owners of the Bonds may be subject to limitation as set forth in the Bond Counsel's opinion. The opinion will state, in part, that the obligation of the City with respect to the Bonds may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and to the exercise of judicial discretion in appropriate cases. OFFICIAL STATEMENT AUTHORIZATION This Official Statement has been authorized for distribution to prospective purchasers of the Bonds. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the City, and all expressions of opinion, whether or not so stated, are intended only as such. This Official Statement is not to be construed as a contract or agreement amongst the City, the Underwriter, or the holders of any of the Bonds. Any statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as opinions and not as representations of fact. The information and expressions of opinions contained herein are subject to change without notice and neither the delivery of this Official Statement or the sale of the Bonds made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. The information contained in this Official Statement is not guaranteed. INVESTMENT RATING The Bonds have been rated "Aaa" by Moody's Investors Service, New York, New York. The City has supplied certain information and material concerning the Bonds and the City to the rating service shown on the cover page, including certain information and materials which may not have been included in this Official Statement, as part of its application for an investment rating on the Bonds. A rating reflects only the views of the rating agency assigning such rating and an explanation of the significance of such rating may be obtained from such rating agency. Generally, such rating service bases its rating on such information and material, and also on such investigations, studies and assumptions that it may undertake independently. There is no assurance that such rating will continue for any given period of time or that it may not be lowered or withdrawn entirely by such rating service if, in its judgment, circumstances so warrant. Any such downward change in or withdrawal of such rating may have an adverse effect on the secondary market price of the Bonds. An explanation of the significance of the investment rating may be obtained from the rating agency: Moody's Investors Service, 7 World Trade Center at 250 Greenwich Street, New York, New York 10007, telephone 212-553-1658. 36 City ofIowa City, Johnson County. Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bonds, Series 2018E ON 1151,410 R No I\ The Tax -Exempt Bonds were offered for sale by the City at a public, competitive sale on Tuesday, May 1, 2018. The best bid submitted at the sale was submitted by (the "Tax -Exempt Bonds Underwriter"). The City awarded the contract for sale of the Tax -Exempt Bonds to the Tax -Exempt Underwriter at a price of $ (reflecting the par amount of $. plus a reoffering premium of $ , and less the Tax -Exempt Underwriter's discount of The Tax -Exempt Underwriter has represented to the City that the Tax -Exempt Bonds have been subsequently re -offered to the public initially at the yields or prices set forth in the Final Official Statement. The Taxable Bonds were offered for sale by the City at a public, competitive sale on Tuesday, May 1, 2018. The best bid submitted at the sale was submitted by (the "Taxable Bonds Underwriter"). The City awarded the contract for sale of the Taxable Bonds to the Taxable Underwriter at a price of $ (reflecting the par amount of $ , plus a reoffering premium of $ , and less the Taxable Underwriter's discount of The Taxable Underwriter has represented to the City that the Taxable Bonds have been subsequently re -offered to the public initially at the yields or prices set forth in the Final Official Statement. MUNICIPAL ADVISOR The City has engaged Speer Financial, Inc. as municipal advisor (the "Municipal Advisor") in connection with the issuance and sale of the Bonds. The Municipal Advisor is a Registered Municipal Advisor in accordance with the rules of the MSRB. The Municipal Advisor will not participate in the underwriting of the Bonds. The financial information included in the Official Statement has been compiled by the Municipal Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Municipal Advisor is not a firm of certified public accountants and does not serve in that capacity or provide accounting services in connection with the Bonds. The Municipal Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement, nor is the Municipal Advisor obligated by the City's continuing disclosure undertaking. CERTIFICATION I have examined this Official Statement dated April 18, 2018, for the $8,895,000* General Obligation Bonds, Series 2018A and the $3,100,000* Taxable General Obligation Bonds, Series 201813, believe it to be true and correct and will provide to the purchaser(s) of the Bonds at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge and belief, information in the Official Statement was at the time of acceptance of the bid for the Bonds and, including any addenda thereto, was at the time of delivery of the Bonds true and correct in all material respects and does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. *Subject to change. 37 /s/ DENNIS BOCKENSTEDT Finance Director CITY OF IOWA CITY Johnson County, Iowa City of 1"a City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Tamble General Obligation Bonds, Series 2018B APPENDIX A CITY OF IOWA CITY JOHNSON COUNTY, IOWA FISCAL YEAR 2017 COMPREHENSIVE ANNUAL FINANCIAL REPORT I �j ,I to 1, 1 M6140011, // I .1. Comprehensive Annual Financial Report COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF IOWA CITY, IOWA FOR THE FISCAL YEAR ENDED JUNE 30, 2017 PREPARED BY: FINANCE DEPARTMENT CITY OF IOWA CITY, IOWA Introductory Section Tab CITY OF IOWA CITY, IOWA TABLE OF CONTENTS June 30, 2017 Page INTRODUCTORY SECTION Tableof contents................................................................................................................................ 1 Letterof transmittal............................................................................................................................ 3 Certificate of Achievement for Excellence in Financial Reporting ................................................... 12 Cityorganizational chart .................................................................................................................... 13 Cityofficials....................................................................................................................................... 14 FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT......................................................................................... 15 MANAGEMENT'S DISCUSSION AND ANALYSIS.................................................................... 19 BASIC FINANCIAL STATEMENTS Government -wide financial statements Statementof net position............................................................................................................. 30 Statementof activities.................................................................................................................. 32 Fund financial statements Balance sheet — governmental funds............................................................................................ 34 Reconciliation of the balance sheet of the governmental funds to the statement of net position. 35 Statement of revenues, expenditures, and changes in fund balances — governmental funds ....... 36 Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental funds to the statement of activities..................................................................... 37 Statement of net position — proprietary funds.............................................................................. 38 Statement of revenues, expenses, and changes in fund net position — proprietary funds ............ 40 Statement of cash flows — proprietary funds................................................................................ 42 Statement of fiduciary assets and liabilities................................................................................. 44 Notes to financial statements.......................................................................................................... 46 REQUIRED SUPPLEMENTARY INFORMATION Budgetary comparison schedule — budget and actual — all governmental funds and enterprise funds— budgetary basis.................................................................................... 88 Budgetary comparison schedule — budget to GAAP reconciliation ................................... 90 Note to required supplementary information — budgetary reporting ................................... 91 Schedule of the City's proportionate share of MFPRSI net pension liability ........................ 93 Schedule of City's MFPRSI contributions............................................................... 94 Note to required supplementary information — MFPRSI pension liability ........................... 96 Schedule of the City's proportionate share of IPERS net pension liability .......................... 97 Schedule of City's IPERS contributions.................................................................. 98 Note to required supplementary information — IPERS pension liability ............................. 100 Required supplementary information — schedule of funding progress for health and dental plans.......................................................................................................... 101 COMBINING FUND STATEMENTS Combining balance sheet — nonmajor governmental funds............................................................ 104 Combining statement of revenues, expenditures, and changes in fund balances — nonmajor governmentalfunds...................................................................................................................... 105 Combining statement of net position — nonmajor enterprise funds ................................................ 108 Combining statement of revenues, expenses, and changes in fund net position — nonmajor enterprisefunds............................................................................................................................ 109 Combining statement of cash flows — nonmajor enterprise funds .................................................. 110 Combining statement of net position — internal service funds ........................................................ 112 Combining statement of revenues, expenses, and changes in fund net position — internal service funds............................................................................................................................................. 113 CITY OF IOWA CITY, IOWA TABLE OF CONTENTS June 30, 2017 Page COMBINING FUND STATEMENTS (continued) Combining statement of cash flows — internal service fund............................................................ 114 Statement of changes in assets and liabilities — agency funds......................................................... 116 STATISTICAL SECTION (UNAUDITED) Netposition by component................................................................................................................. 119 Changesin net position...................................................................................................................... 120 Fund balances — governmental funds................................................................................................. 122 Changes in fund balances — governmental funds............................................................................... 123 General government tax revenues by source...................................................................................... 124 Assessed and taxable value of property .............................................................................................. 125 Property tax rates — direct and overlapping governments.................................................................. 126 Property tax budgets and collections.................................................................................................. 127 Principaltaxpayers............................................................................................................................. 128 Principal water system customers...................................................................................................... 130 Sales history and total water charges.................................................................................................. 131 Principal sewer system customers...................................................................................................... 132 Sales history and total sewer charges................................................................................................. 133 Ratios of outstanding debt bytype..................................................................................................... 134 Ratios of general obligation bonded debt to assessed value and net bonded debt per capita ............. 135 Ratio of annual debt service expenditures for general bonded debt to total general governmental expenditures..................................................................................................................................... 136 Computation of direct and overlapping debt...................................................................................... 137 Legal debt margin information........................................................................................................... 138 General obligation debt annual maturity schedule............................................................................. 139 Schedule of revenue bond coverage................................................................................................... 140 Revenue debt annual maturity schedule............................................................................................. 141 Revenue debt annual maturity by funding source.............................................................................. 142 Demographic and economic statistics................................................................................................ 144 Principalemployers............................................................................................................................ 145 Full-time equivalent city government employees by function........................................................... 146 Operating indicators by function........................................................................................................ 148 Capitalassets by function................................................................................................................... 149 COMPLIANCE SECTION Independent auditor's report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government AuditingStandards............................................................................................................................. 151 Independent auditor's report on compliance for each major federal program and report on internal control over compliance required by the Uniform Guidance............................................................. 153 Schedule of expenditures of federal awards....................................................................................... 155 Notes to the schedule of expenditures of federal awards................................................................... 159 Schedule of findings and questioned costs......................................................................................... 160 December 11, 2017 To the Citizens, Honorable Mayor, Members of the City Council and City Manager City of Iowa City, Iowa ► t t CITY OF IOWA CITY The Comprehensive Annual Financial Report (CAFR) of the City of Iowa City, Iowa (the City) for the fiscal year ended June 30, 2017 is submitted herewith in accordance with the provisions of Chapter 11 of the Code of Iowa. The City's Finance Department prepared this report. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rest with the City. I believe the information, as presented, is accurate in all material respects and presented in a manner designed to fairly present the financial position and results of operations of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included. Management assumes full responsibility for the completeness and reliability of all of the information presented in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements will be free of any material misstatement. Eide Bailly, LLP, a firm of independent public accountants has issued an unmodified ("clean") opinion on the City's financial statements for the year ended June 30, 2017. Their opinion is included in the Financial Section of this report. The City is required to undergo an annual single audit in conformity with the provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Information to comply with the Uniform Guidance and "Government Auditing Standards" is included in the Compliance Section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Iowa City was incorporated April 6, 1853. The City is governed by a seven member Council; each member serves a four-year term. Elections are held every two years allowing for continuation in office of at least three members at each biennial election. The Council members are elected at large, with three members nominated from specific districts and the remaining four members nominated at large. The Council elects the Mayor from its own members for a two-year term. The City Council is the legislative body and makes all policy determinations for the City through the enactment of ordinances and resolutions. It also adopts a budget to determine how the City will obtain and spend its funds. The Council appoints members of boards, commissions and committees. The City Manager is the chief administrative officer for the City and is appointed by the City Council. The City Manager implements policy decisions of the City Council and enforces City ordinances. In addition, the City Manager appoints and directly supervises the directors of the City's operating departments and supervises the administration of the City's personnel system. The City Manager supervises 493 full-time and 44 part-time permanent municipal employees and 405 temporary employees, including a police force of 80 sworn personnel and a fire department of 64 firefighters. The City Clerk is appointed by the City Council and reports to the Council. The City Clerk's Office administers the City government's documentation, City licenses and permits, and provides information from the Municipal Code and City Ordinances to the public and other City departments. The City Clerk's Office is also responsible for distributing and maintaining accurate records of all City Council proceedings. The Clerk supervises 3 full-time employees and 1 temporary employee. The City Attorney is also appointed by the City Council and works at the direction of the City Council. The City Attorney supervises the City Attorney's Office, including 4 Assistant City Attorneys and 2 other full-time employees. In addition, the City Attorney acts as Chief Legal Counsel to the City Council, City Manager, the various City departments and staff, and most City commissions, committees and boards. The City provides a full range of services including police and fire protection, construction and maintenance of roads, streets and infrastructure, inspection and licensing functions, a municipal airport, library, recreational activities, and cultural events. The City owns and operates its water supply and distribution system and sewage collection and treatment system with secondary treatment also provided. Virtually the entire City has separate storm and sanitary sewer systems. The City operates a municipal off-street and on -street parking system in the downtown area. The City also operates a transit system. The annual budget serves as the foundation for the City's financial planning and control. All departments of the City are required to submit requests for appropriation to the City Manager in October. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the Council for review in December. The Council is required to hold a public hearing on the proposed budget and to adopt a final budget no later than March 15. The appropriated budget is prepared by fund, function (e.g., Public Safety), and department (e.g., Police). The City adopts a three-year financial plan that includes both operations and capital improvements. This three-year plan permits a more comprehensive review of the City's financial condition, allowing analysis of the current and future needs and requirements. During preparation of the plan, careful review is made of property tax levy rates, utility and user fee requirements, ending cash balances by fund, debt service obligations, bond financing needs, capital outlay for equipment purchases and major capital improvement projects. The state requires at least a one-year operating budget. While legal spending control is exercised at a state mandated function level, management control is set at the Department Manager level. Encumbrance accounting is utilized in all funds for budgetary control. Appropriations that are not spent lapse at the end of the year. H Information Useful in Assessing the Government's Economic Condition The City's economic strength is based on the educational sector, medical services, and diversified manufacturing. The University of Iowa and the University of Iowa Hospital and Clinics are the City's largest employers with over 27,300 employees. The University of Iowa had a record high enrollment in fall 2017 of 33,564 students. The academic and research missions of the University, along with the health care services provided at its hospitals and clinics, have a tremendously positive economic impact on the area. The City also has a significant number of national and international businesses, including Fortune 500 companies. The City continues to see sustained production in our major local industries; ACT Inc., NCS Pearson, and Proctor & Gamble. Continued economic development efforts with the Iowa City and Coralville Chambers of Commerce, private interests, the University of Iowa, other surrounding communities, and participation as a member of the Iowa City Area Development Group, have also produced positive results with the retention and expansion of businesses. In addition, Iowa's Creative Corridor is a seven -county alliance surrounding Iowa City and has been identified as one of the major growth areas for new business development in the State of Iowa. This Corridor gives employers workforce access to a region uniquely Iowan, founded with a manufacturing heritage, but actively seeking new frontiers and opportunities in information technology, biotechnology and bioprocessing, renewable energy, insurance and financial services, advanced manufacturing, and educational services. Continued developments within Iowa City and the region have a favorable impact upon the City's economy. As a whole, the City's economy continues to grow. Established firms continue to prosper and expand in Iowa City and there are opportunities for growth of new businesses. Overall, employment has remained steady as evidenced in the unemployment rate for Iowa City, which continues to remain low at 2.9% for the month of June 2017, as compared to 3.2% for the State of Iowa, and 4.4% for the national average. The rate of new housing construction increased in comparison to the prior year based on the number of building permits issued. This consisted of 172 new single-family houses in 2016 as compared to 137 in 2015; multi -family dwelling units added during fiscal year 2016 was 556, compared to 499 in 2015; and mixed commercial/residential developments added 340 dwelling units in 2016 versus 47 residential units in 2015. Altogether these housing additions totaled 1,068 units valued at $206,478,670 in 2016 versus a total of 683 units valued at $92,701,042 in 2015. In addition to an increase in residential construction in 2016, the City also had an increase in commercial construction. The value of permits for commercial construction increased by $50,415,500 to $62,656,986 from 2015 to 2016, and the value of remodeling permits for residential and commercial increased by $62,046,685 to $93,087,526 from 2015 to 2016. According to the 2010 census, the population of Iowa City is 67,862. This is an increase of 5,672 or 9.1% as compared to the 2000 census. Iowa City population in 2016 is estimated to be 74,398 by the U.S. Census Bureau. The stability of the University of Iowa coupled with historically steady employment by the City's multi -sector base of manufacturing and service industries, helped insulate the City from any significant negative economic impacts of the national recession. The City's property valuations continue to rise and along with the low unemployment rate, this is indicative of the City's relative economic stability. Major Initiatives The City of Iowa City, with the assistance of the University of Iowa's Institute of Public Affairs, completed the City's Strategic Plan. The strategic planning process involved multiple steps, including gathering input from the general public, front-line City staff, department directors, and the City Council. The Strategic Plan establishes the following organizational priorities, programs, policies, and initiatives: Promote a Strong and Resilient Local Economy • Identify how the City and local partners can effectively market and grow the local foods economy • Review and consider amending the City's Tax Increment Finance (TIF) policy • Promote neighborhood commercial districts and build stronger relations with business owners throughout the community • Work closely with the University of Iowa and Kirkwood Community College on future facilities and economic development opportunities, especially in the Riverfront Crossings District • Work closely with the ICCSD, Kirkwood Community College, labor organizations, Iowa Works and others to explore the feasibility of an industrial arts/crafts facility in Iowa City • Proactively seek opportunities to facilitate development of our interstate entryways in a manner consistent with this strategic plan • Develop programs aimed to enhance small business development and retention with a focus on diverse communities 2. Encourage a Vibrant and Walkable Urban Core • Consider creating a new City Council committee with a focus on the sustainable built environment • Support historic preservation efforts • Initiate public dialogue about the meaning and importance of a walkable neighborhood and how to achieve it • Encourage diverse housing types and price points for a variety of income levels 3. Foster Healthy Neighborhoods throughout the Citv • Consider amending the City's Annexation Policy to require the provision of affordable housing in residential/mixed-use areas • Evaluate the implementation of a Form Based Code in one or two parts of the community • Develop strategies to diversify the membership of neighborhood associations • Substantially improve access and use of public spaces through improvements to sidewalks, streetscapes, parks, and schools 4. Maintain a Solid Financial Foundation • Continue to monitor the impact of the 2013 property tax reform and evaluate alternative revenue sources as determined necessary • Continue to build the City's Emergency Fund • Monitor potential changes to Moody's rating criteria and maintain the City's Aaa bond rating • Continue to reduce the City's property tax levy • Maintain healthy fund balances throughout the City's diverse operations 5. Enhance Community Engagement and Intergovernmental Relations • Provide timely and appropriate input on the ICCSD's planned 2017 bond referendum • Televise regular City Council work sessions • Significantly improve the Council and Staff's ability to engage with diverse populations on complex or controversial topics 6. Promote Environmental Sustainability • Raise Iowa City's Bicycle Friendly Community status from Silver to Gold by 2017 and aspire toward a Platinum status in the future • Evaluate and consider implementation of a plastic bag policy • Undertake a project in FY 2017 that achieves a significant measurable carbon emission reduction • Set a substantive and achievable goal for reducing city-wide carbon emissions by 2030, and create an ad -hoe climate change task force, potentially under an umbrella STAR Communities committee, to devise a cost-effective strategy for achieving the goal • Collaborate with community partners on sustainability efforts Advance Social Justice and Racial Equity • Develop and implement a racial / socioeconomic equity review toolkit • Support the Housing First initiative and other local homeless efforts including the temporary winter shelter • Consider creating a City Council committee with a focus on social justice and racial equity • Evaluate initiatives to effectively engage the community's youth • Identify and implement an achievable goal to reduce disproportionality in arrests • Create a racial equity grant program • Develop a partnership with the University of Iowa and other key stakeholders that will aid efforts to recruit and retain a greater minority workforce • Identify a substantive and achievable goal for the provision of affordable housing in Iowa City and implement strategies to achieve this goal The City Council has also promoted private investment and re -development of other targeted areas throughout the community. The areas that are currently being focused on include the Riverfront Crossings area, the Downtown District, the Towncrest commercial area, and the Riverside Drive commercial area. The Riverfront Crossing area is an initiative to revitalize the area south of Iowa City's downtown district. This area was hard hit by flooding in 2008 and ideas for improving the district were initiated as part of a combined flood mitigation plan. The new district will feature a riverfront park with walking and biking trails, a variety of housing options near shopping, restaurants, a state-of-the-art recital hall and recreational facilities and is a short walk to downtown Iowa City and the University of Iowa campus. The Riverfront Crossings area is anchored by a 76.8 acre area that was formerly comprised of public facilities including the City's north wastewater treatment plant. An $8.5 million hazard mitigation grant from the State of Iowa assisted the City in removing the public facilities in this area and then converting the area into a riverfront park and wetland. Construction of phases 1 and 2 of the park began in 2017 and are expected to be completed in 2018. On the north side of the Riverfront Crossing area, the University of Iowa recently constructed the Voxman School of Music, and there are also several public and private developments under various stages of construction in this area including a 12 -story, $33 million Hilton Garden Inn, a $102.5 million mixed-use development with a 14 -story tower and a 15 -story tower that will include a hotel, apartments, retail space, and office space. The City also completed construction of a $15.3 million, 600 space parking garage to service the growth in this area in 2017. In the Downtown District, the City completed a streetscape plan for the Central Business District which included lighting, landscaping, parking, utility improvements, art work, and pedestrian amenities. Reconstruction and enhancements for the Washington Street corridor were completed in 2017 and reconstruction of Black Hawk mini -park and the downtown pedestrian mall are currently under design and are planned for 2018 and 2019. Other buildings in the downtown that are undergoing or have recently completed major re- development include the Wilson Building and public space is being developed into a 15 -story mixed-use development to be known as the Chauncey; this building will have 8 floors of residential units, a 35 unit hotel, two floors of commercial space, a movie theatre and a bowling alley. The project is estimated to be $49 million and will be assisted with tax increment financing. This project is currently under construction. In the Towncrest commercial area, City staff is working to facilitate redevelopment of key properties that will improve the function and aesthetic appeal of the area. The Towncrest Urban Renewal Area was developed to revitalize the Towncrest commercial district in ways that would serve existing businesses while also drawing new retailers, service providers, and consumers to the area. A major project underway is a Low Income Housing Tax Credit project to construct a $7.4 million, 40 unit senior housing complex on the current site of a dilapidated commercial structure. This project is under construction as of June 2017. The Riverside Drive commercial area is an area that stretches from the University of Iowa campus to the intersection of Highways 1 and 6 and is across the river from the Riverfront Crossings development area. The development of a 4 -story, $16.1 million multi-family/student housing development in the Riverside Drive area was completed in late 2016, and adjacent to this development several new retail spaces including a gas station/marketplace were also constructed. The City is developing a streetscape plan for this area which will include lighting, trails, landscaping, and other amenities and improvements. Construction of the streetscape improvements are expected to begin in 2017. Adjacent to this area is the City's aging public works complex, which is being targeted for replacement and redevelopment. A plan for replacement is underway with construction of a new Public Works Facility being designed during 2017 and construction to begin in 2018. Long-term Financial Planning It is our intent to support the major initiatives through budget appropriations, departmental operations, and employee management so that the organization as a whole is moving in the same direction. 0 A significant influence in the preparation of the three-year financial plan (FY2017 — FY2019) was the passage of property tax reform (SF295) by the state legislature in 2013. The property tax reform bill had multiple components including a property tax rollback for commercial and industrial property, which reduced the taxable value of these property types. The bill established a State funded "backfill" to reimburse the City for lost property tax revenues due to the commercial and industrial rollback. The State "backfill" payments began in fiscal year 2015 but will be capped at the fiscal year 2017 levels for years thereafter. The cumulative reduction in commercial and industrial property tax revenues due to this rollback are estimated to be $16,484,000 between fiscal year 2015 to fiscal year 2024, and the maximum reimbursement from the State during that time period would be $15,789,000 for a net loss in revenues of $695,000. For fiscal years 2015 through 2017, the City received actual State "backfill" payments for the commercial and industrial rollback totaling $1,048,359, $2,080,228, and $1,582,567 in fiscal years 2015, 2016, and 2017, respectively. This bill also limited the annual taxable valuation growth of residential and agricultural property to 3 percent, instead of the previous limit of 4 percent. The impact of this provision is that the taxable percentage of residential property is expected grow at a slower pace. Without this change, the estimated taxable percentage of residential property was estimated to be 60.85% in fiscal year 2024. With this provision in place, the estimated taxable percentage in fiscal year 2024 is estimated to be 55.11 %, a reduction of 5.74%. Based on the assessed value of residential property in Iowa City, the cumulative loss is estimated to be $21,078,000 from fiscal year 2015 to fiscal year 2024. The City will not receive any money from the State due to lost revenue from this provision. SF295 also established a multi -residential property classification that includes mobile home parks, assisted living facilities, and property primarily intended for human habitation. A gradual rollback will be applied to these properties to eventually tax them similarly to residential property, rather than commercial, by fiscal year 2024. The estimated cumulative loss from fiscal year 2015 to fiscal year 2024 is $15,684,000, which will not be reimbursed by the State of Iowa. Fiscal year 2017 was the first year for this new class of property, and the estimated lost revenue in fiscal year 2017 from this provision is $1,200,000. Due to the passage of SF295, the City estimates its net revenue losses to be $3,033,000 from fiscal year 2015 through fiscal year 2017. The cumulative net revenue loss from fiscal year 2015 through fiscal year 2024 is estimated to be $37,457,000. It is possible that this could affect the City's ability to finance services at current levels without finding other revenue sources or more efficient ways to deliver services. The City's long-term financial planning strategy is to promote targeted economic development, diversify its revenue structure, control spending and create efficiencies and to build adequate reserves and contingencies into its financial structure. In addition, the City is annually reviewing and adjusting its user fees, service charges, and fine structures to try to maintain all of its major enterprise funds with a positive net income after depreciation but before capital contributions, transfers, and extraordinary items. The City also continues to strive to reduce the City's property tax levy rate to be competitive for economic development purposes. For fiscal year 2013, the levy rate was $17.269 per $1,000 of assessed value. The property tax levy rate has been reduced for four consecutive years to $16.533 in fiscal year 2018. This has been a reduction of $.736 per $1,000 of assessed value or 4.26% over that time period. 0 In looking at expenses for the FY17 — FY19 financial plan, the City will generally experience increased expenditures; however at a modest pace. Bargaining unit wage increases are approximately 2.40% to 2.60% each year; however, the budgeted full time equivalents (FTE) has decreased from 607.66 in FY15 to 601.89 in FY18. In addition, public safety pension contribution rates have decreased slightly in FYI but are projected to increase slightly in FY19. The City has averaged an increase in its health insurance premium rates of approximately 2.5% over the previous five years, and is not projecting any dramatic changes to this trend in FY19. Employee contributions, deductibles, and out-of-pocket maximums are expected to increase in FYI and FY19. In balancing the budget for the three-year period, the City attempted to reduce costs where possible while continuing to provide high quality services, identify and eliminate redundancies that may exist within the organization, examine existing and potential new revenue sources, promote and plan for economic development and redevelopment throughout the City to ensure strong property values, provide for necessary improvements to existing infrastructure, and uphold fiscal integrity and maintain adequate cash reserves. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting (the Certificate) to the City of Iowa City, Iowa for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2016. The Certificate is the highest form of recognition for excellence in state and local financial reporting. In order to be awarded the Certificate, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. The Comprehensive Annual Financial Report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. The Certificate is valid for a period of one year only. The City has received the Certificate for the last thirty-two consecutive years. I believe our current report continues to conform to the Certificate requirements and I will submit it to GFOA to determine its eligibility for another certificate. In addition, the City received the GFOA's Award for Distinguished Budget Presentation for its annual appropriated budget beginning July 1, 2017. In order to qualify for the Distinguished Budget Presentation Award, the City's budget document was judged to be proficient or outstanding in several categories including policy documentation, financial planning, and organization. This is the sixth consecutive year the City has received this award. 10 Responsibility and Acknowledgments The Department of Finance prepared the Comprehensive Annual Financial Report of the City of Iowa City, Iowa for the fiscal year ended June 30, 2017. The City Council, as required by law, is responsible for the complete and accurate preparation of the City's Comprehensive Annual Financial Report. I believe that the information presented is accurate in all material respects and that this report fairly presents the financial position and results of operations of the various funds of the City. The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated services of the entire staff of the City's Finance Department. I would like to express my appreciation to all members of the department who assisted and contributed to its preparation. I want to especially recognize the contributions of the City's Controller, Nicole Knudtson-Davies, Assistant Controller, Sara Sproule, Senior Accountants, TaraLynne Atkins and Angie Ogden and Senior Payroll Accountant, Chris Hurlbert. Also, I thank the Mayor, members of the City Council and the City Manager for their interest and support in planning and conducting the financial operations of the City in a dedicated, responsible, and progressive manner. Respectfully submitted, Dennis Bockenstedt Director of Finance 11 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Iowa City Iowa For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2016 ..W��' Executive DirectodCEO 12 City of Iowa City Organization Chart Community City Council Airport City Attorney City Manager City Clerk Library Commission Board Airport City Attorney City Manager City Clerk Library Airport Operations CityAttomey City Manager City Clerk Library Operations Communications Office Library Foundation Human Resources Human Rights Economic Development Fire Administration Emergency Operations Fire Prevention Training Finance Administration Accounting Purchasing Revenue Risk Management Information Technology Services Police Administration Support Services Field Operations Parks & Recreation Administration Recreation Park Maintenance Cemetery 13 Senior Center Senior Center Operations Transportation & Resource Management Administration Parking Public Transportation Public Works Neighborhood & Development Services Administration Engineering Streets Administration Wastewater Development Services Water Neighborhood Services Refuse Collection Metropolitan Planning Landfill Organization of Johnson County Storm Water Equipment 13 Senior Center Senior Center Operations Transportation & Resource Management Administration Parking Public Transportation Mayor Council Member and Mayor Pro Tem Council Member Council Member Council Member Council Member Council Member City Manager City Clerk City Attorney CITY OF IOWA CITY, IOWA LISTING OF CITY OFFICIALS June 30, 2017 ELECTED OFFICIALS Jim Throgmorton Kingsley Botchway 11 Susan Mims Terry Dickens Rockne Cole Pauline Taylor John Thomas APPOINTED OFFICIALS Geoff Fruin Kellie Fruehling Eleanor Dilkes DEPARTMENT DIRECTORS Assistant City Manager Director of Neighborhood Development Services Library Director Director of Public Works Director of Transportation Services Senior Center Coordinator Fire Chief Parks and Recreation Director Director of Finance Chief of Police Ashley Monroe Douglas W. Boothroy Susan Craig Ron Knoche Chris O'Brien Linda Koppmg John Grier Juli Seydell Johnson Dennis Bockenstedt Jody Matherly 14 Term Expires January 2, 2020 January 2, 2018 January 2, 2018 January 2, 2018 January 2, 2020 January 2, 2020 January 2, 2020 Date of Hire November 28, 2011 July 10, 2000 March 18, 1996 December 1, 2016 September 22, 1975 July 28, 1975 April 28, 1999 December, 29, 1997 March 20, 1995 August 10, 1992 January 4, 2016 February 15, 2013 January 23, 2017 Financial Section Tabs EideBailly CPAs t BUSINESS ADVISORS Independent Auditor's Report To the Honorable Mayor and Members of the City Council City of Iowa City, Iowa Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Iowa City, Iowa, (City) as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the fmancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 15 What inspires you, inspires us. Let's talk. 1 eideboilly.tom 1545 Associates Dr., Ste, 101 Dubuque, IA 520022299 T 563.556.1790 1 F 563.557.7842 I EOE Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Iowa City, Iowa, as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter Fund Balance Restatement As discussed in Note 14 to the financial statements, the City has elected to change its accounting method for Notes Receivable. Accordingly, adjustments were made to restate beginning fund balances. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and the other required supplementary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquires of management about the methods or preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Iowa City, Iowa's financial statements. The introductory section, combining nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and is not a required part of the financial statements. The combining nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajor fund financial statements and the Schedule of Expenditures of Federal Awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 16 The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 11, 2017, on our consideration of the City of Iowa City, Iowa's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Iowa City, Iowa's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Dubuque, Iowa December 11, 2017 17 (This page left blank intentionally.) 18 Management's Discussion and Analysis As management of the City of Iowa City, we present this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2017. This narrative is intended to be used in conjunction with additional information that is included in the letter of transmittal, which can be found on pages 3 — 11 of this report. Financial Highlights • The assets and deferred outflows of resources of the City of Iowa City exceeded its liabilities and deferred inflows of resources at the close of the fiscal year ending June 30, 2017 by $631,405,000 (net position). Of this amount, $92,928,000 (unrestricted net position) may be used to meet the government's ongoing obligations to its citizens and creditors. • The City's total net position increased by $36,067,000 during the fiscal year. Governmental activities increased by $23,673,000 and business -type activities increased by $12,394,000. • At the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $106,381,000, an increase of $15,254,000 in comparison with the prior year. Of this total amount, approximately $24,793,000 or 23.3% is unassigned and available for spending at the City's discretion. • At the end of the current fiscal year, the City's unassigned fund balance for the General Fund was $24,793,000 or 53.1% of total General Fund expenditures. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide Financial Statements: The government -wide financial statements are designed to provide readers with a broad overview of the City's finances in a manner similar to a private -sector business. The statement of net position presents information on all of the City's assets and deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include Public Safety, Public Works (roads and traffic controls), Culture and Recreation, Community and Economic Development, General Government, and Interest on long-term debt. The business -type activities of the City include Airport, Housing Authority, Parking, Sanitation, Stormwater Collection, Transit, Wastewater Treatment, and Water. The government -wide financial statements may be found on pages 30 — 33 of this report W11 Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds: Governmental funds are used to account for essentially the same function reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and ou0ows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements and is typically the basis that is used in developing the next annual budget. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison. The City has four major governmental funds: General Fund, Employee Benefits Fund, Bridge, Street and Traffic Control Construction Fund, and Debt Service Fund. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for these major funds. Data from all other non -major governmental funds is combined into a single aggregated presentation and are referenced under a single column as "Other Governmental Funds". Individual fund data on each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for all governmental funds as required by state statute. Budget comparisons have been provided for the Governmental funds and the Enterprise funds, to demonstrate compliance with the adopted budget. The basic governmental funds financial statements can be found on pages 34 — 37 of this report. Proprietary Funds: The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the govemment-wide financial statements. The City uses enterprise funds to account for its Airport, Housing Authority, Parking, Sanitation, Stormwater Collection, Transit, Wastewater Treatment, and Water activities. Internal Service funds are an accounting device used to accumulate and allocate costs intemally among the City's various functions. The City has four Internal Service Funds: Equipment Maintenance, Central Services, Loss Reserve, and Information Technology. Because these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the government -wide financial statements. Proprietary funds financial statements provide the same type of information as the government -wide financial statements, only in more detail. Parking, Wastewater Treatment, Water, Sanitation, Stormwater and Housing Authority are considered to be major funds and are reported individually throughout the report. The other two non -major enterprise funds are grouped together for reporting purposes and listed under a single heading "Other Enterprise Funds". Detailed information for each of the non -major funds is provided in the combining statements on pages 108 — 110. Individual fund data for the Internal Service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 38 — 43 of this report 20 Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not available to support the City's own programs and therefore are not reflected in the government -wide financial statements. The City has one fiduciary fund: Project Green, which is maintained as an agency fund. The basic fiduciary funds financial statements can be found on page 44. Notes to Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 46 - 86 of this report. Other Information: The combining statements referred to in the above paragraphs in connection with non - major governmental funds, non -major enterprise funds, and internal service funds are presented immediately following the notes. Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $631,405,000 at the close of the fiscal year ended June 30, 2017. By far, the largest portion of the City's net position reflect its investment in capital assets (e.g., land, building, machinery and equipment, improvements other than buildings, and infrastructure), net any related debt to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Iowa City's Net Position June 30, 2017 (amounts expressed in thousands) 21 Gowmmental Business -type activities activities Total 2017 2016 2017 2016 2017 2016 Current and other assets, as restated $ 190,352 S 176,348 $ 119,968 $ 116,163 $ 310,320 $ 292,511 Cap it al assets 226,143 207,222 335,064 319,926 561207 527,148 Total assets, as restated 416,495 383,570 455,032 436,089 871,527 819,659 Deferred outflows of resources 13,131 7,192 2.345 1,217 15,476 8,409 Longterm liabilities outstanding 112,931 94,598 68,385 57,712 181,316 152,310 Current and other liabilities 11,042 13,146 4,379 7,217 15,421 20,363 Total liabilities 123,973 107,744 72,764 64,929 196,737 172,673 Deferred inflows of resources, as restated 58,062 59,100 799 957 58,861 60,057 Net position: Net investment in capital assets 183,651 163.362 285,912 279,679 469,563 443,041 Restricted 47,676 42,154 21,238 22,269 68,914 64,423 Unrestricted 16,264 18,402 76,664 69,472 92,928 87,874 Total net position S 247,591 S 223,918 S 383,814 S 371,420 S 631,405 $ 595,338 21 A portion of the City's net position, $68,914,000 or 10.9%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of the unrestricted net position, $92,928,000 or 14.7%, may be used to meet the government's ongoing obligations to its citizens and creditors. At the end of the fiscal year ended June 30, 2017, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities. The following is a more detailed review of FY17's operation. Governmental Activities: Governmental activities increased the City's net position by $23,673,000. The increase in net position of governmental activities is primarily due to receiving grants to fund expenses for operations and capital assets. The total revenues for governmental activities for FY17 were $98,143,000. Governmental activities are primarily funded through taxes, $60,451,000 or 61.6%, and grants and contributions, $20,780,000 or 21.2%. Taxes increased from the prior year by $4,620,000, mostly due to increased property taxes which was due to an increase in the taxable value of all property. Grants and contributions increased from prior year by $6,840,000 which is due to City's expenses for a large flood mitigation project. Expenses for governmental activities totaled $67,417,000. Governmental activities are tracked by function including Public Safety, Public Works, Community and Economic Development, Culture and Recreation, and General Government. In FY17, Public Safety accounted for the highest portion of governmental expenses, $24,002,000 or 35.6%, and increased over the prior year due to an increase in pension expense. Culture and Recreation expenses of $15,525,000 or 23.0% made up another large portion of the governmental expenses and increased over the prior year due mainly to increases in parks and recreation operating costs. Public Works expenses of $12,032,000 or 17.8% made up the third highest portion of governmental expenses and increased due to an increase in depreciation and operating expenses. Business -type Activities: Business -type activities increased the City's total net position by $12,394,000. The increase in net position was primarily from the Water and Wastewater Treatment funds. The increases in both Water and Wastewater Treatment funds are due to transfers of capital assets from governmental capital project funds. For all business -type activities, revenues exceeded expenses by $5,341,000. Revenues for business -type activities totaled $59,133,000. The primary revenue source for business -type activities is charges for services, $41,231,000 or 69.7%. In addition for FY17, the City's business type - activities had a significant portion, $15,635,000 or 26.4%, of their revenues from grants and contributions used to help fund operation and capital projects for business -type activities. The total expenses for business -type activities in FY17 were $53,792,000. Wastewater Treatment represented the highest portion of business -type activities, $11,233,000 or 20.9%, with Sanitation, $9,123,000 or 17.0%, Water, $8,921,000 or 16.6%, Housing Authority, $8,798,000 or 16.4%, and Transit, $7,263,000 or 13.5%, making up the remainder of the majority of business -type activities expenses. `A City of Iowa City's Changes in Net Position (amounts expressed in thousands) The graphs on the following pages represent a breakdown of revenue by source and expenses by program area for governmental and business -type activities. 23 Governmental Business -type activities activities Total 2017 2016 2017 2016 2017 2016 Revenues: Program Revenues: Charges for services $ 8,412 $ 8,560 $ 41,231 $ 39,953 $ 49,643 $ 48,513 Operating grants and contributions; 10,828 9,941 10,836 10,639 21,664 20,580 Capital guts and contributions 9,952 3,999 4,799 4,607 14,751 8,606 General Revenues: Property taus 57,649 53,114 - - 57,649 53,114 Other taus 2,802 2,717 - - 2,802 2,717 Grants and contributions not restricted to specific purposes 1,583 2,080 - - 1,583 2,080 Earnings on investments 1,397 1,045 938 715 2,335 1,760 Gain on disposal of capital assets 2,151 218 69 2,463 2,220 2,681 Other 3,369 4,464 1,260 362 4,629 4,826 Total revenues 98,143 86,138 59,133 58,739 157,276 144,877 Expenses: Public safety 24,002 22,029 - - 24,002 22,029 Public works 12,032 10,839 - - 12,032 10,839 Culture and recreation 15,525 14,422 - - 15,525 14,422 Community and economic development 8,253 6,786 - - 8,253 6,786 General government 6,124 6,240 - - 6,124 6,240 Interest on long -temp debt 1,481 1,287 - - 1,481 1,287 Wastewater treatment - - 11,233 11,866 11,233 11,866 Water - - 8,921 8,149 8,921 8,149 Sanitation - - 9,123 8,735 9,123 8,735 Housingauthority, - - 8,798 8,378 8,798 8,378 Puking - - 4,620 4,460 4,620 4,460 Airport - - 1,402 1,597 1,402 1,597 Stormwater - - 2,432 1,989 2,432 1,989 Transit - - 7,263 7,486 7,263 7,486 Total expenses 67,417 61,603 53,792 52,660 121,209 114,263 Change in net position before transfers and special item 30,726 24,535 5,341 6,079 36,067 30,614 Transfers (7,053) (6,395) 7,053 6,395 - - Reassignment of Cable Television to governmental activities - 82 - (82) - - Chang in net position 23,673 18,222 12,394 12,392 36,067 30,614 Net position beginning of year 223,918 205,696 371,420 359,028 595,338 564,724 Net position end of year $ 247,591 $ 223,918 $ 383,814 $ 371,420 $ 631,405 $ 595,338 The graphs on the following pages represent a breakdown of revenue by source and expenses by program area for governmental and business -type activities. 23 Governmental Activities FY2017 Revenue by Source Misc. Charges for Other Taxes Other 3% 7% services 8% Property taxes 59% Grants and Contributions 23% Business -Type Activities FY2017 Revenue by Source Grants and Misc. Other Contributions 4% 26% Charges for services 70% 24 25 Governmental Activities Wastewater FY2017 Expenses Water anitationl3ousing by Program Area Transit Public tormwater Airport (amounts expressed in thousands) orks 26,000 Public Safety 24,000 General 22,000 Govt 20,000 Interest Culture and xpense 18,000 Recreation 16,000 y 14,000 0 12,000 A 10,000 8,000 6,000 4,000 2,000 0 Program Area Business-Type Activities FY2017 Expenses by Program Area (amounts expressed in thousands) 22,000 20,000 18,000 16,000 14,000 us y 12,000 c A 10,000 8,000 6,000 4,000 2,000 0 Program Area 25 Wastewater Treatment Water anitationl3ousing u n Transit Public tormwater Airport orks and Econ Dev General Govt Interest xpense 25 Wastewater Treatment Water anitationl3ousing u n Transit Parking tormwater Airport 25 Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental Funds: The financial reporting focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information may be/is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. The City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions effective with the June 30, 2011 financial statements. Fund balances for the governmental funds are reported in classifications that comprise a hierarchy based on the extent to which the government honors constraints on the specific purposes for which amounts in those funds can be spent. As of the fiscal year ended June 30, 2017, the City's governmental funds reported combined ending fund balances of $106,381,000, an increase of $15,254,000 in comparison with the prior year. Of this total amount, $24,793,000 constitutes unassigned fund balance, which is available to use as working capital for the General Fund since property tax revenues are received only twice a year and the remainder is available to meet the future needs of the City. The remainder of the fund balance is not available for new spending because of constraints imposed externally by creditors, grantors, contributors, or laws or regulations of other governments or constraints imposed internally on the specific purposes for which these amounts can be spent. The restricted fund balance of $73,915,000 or 69.5% contains external restraints on its use. The committed and assigned fund balances of $5,199,000 or 4.9% and $1,342,000 or 1.3%, respectively, have been identified by the City to be used for specific purposes. The nonspendable fund balance is $1,132,000 or 1.1%, which the City is contractually required to maintain intact or cannot be spent because it is in a nonspendable format, such as inventories. The General Fund is the chief operating fund of the City. As of the fiscal year ended June 30, 2017, the unassigned fund balance of the General Fund was $24,793,000 while General Fund's total fund balance was $42,096,000. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 53.1% of total General Fund expenditures of $46,706,000, while total fund balance represents 90.1% of that same amount. During the current fiscal year, the fund balance of the City's General Fund decreased by $7,405,000. This is due to transfers out to other funds. The fund balance in the Bridge, Street, and Traffic Control Construction Fund was $15,537,000, an increase of $2,366,000. This fund accounts for transactions relating to the acquisition or construction of major streets, bridges, and traffic control facilities. The fund balance in the Other Construction Fund was $27,356,000, an increase of $18,607,000. This fund accounts for the construction or replacement of other governmental general capital assets, such as administrative buildings, with various funding sources, including general obligation bonds, intergovernmental revenues, and contributions. The change in these fund balances is due to timing of the sale of GO bonds. The ending fund balance of the Debt Service Fund was $7,756,000, an increase of $1,183,000, all of which is reserved for the payment of debt service (i.e. payment of general obligation principal and interest). The ending fund balance of the Employee Benefits Fund was $2,521,000, an increase of $850,000 due to an increase in property tax revenues. 26 Proprietary Funds: The City's proprietary funds provide the same type of „information found in the government -wide financial statements, but in more detail. The ending net position of the enterprise funds was $368,320,000, an increase in net position of $10,606,000. This was primarily due to capital contributions of federal and state grants to fund capital improvement projects and transfers of business -type capital assets from governmental capital project funds. Of the enterprise funds' net position, $285,912,000 is net investment in capital assets. Unrestricted net position totaled $61,170,000, an increase of $5,404,000 compared to the previous year. The Internal Service funds showed net position totaling $39,652,000 as of June 30, 2017, an increase of $4,188,000 primarily due to operating income in the Equipment Reserve Fund to build up reserves for future capital outlay. Budgetary Highlights The City presents budgetary information as allowed by GASB Statement No. 41. Budgets are based on nine functional areas as required by state statute, not by fund or fund type. The City had two budget amendments during the fiscal year. These amendments increased budgeted revenues by $9,148,000 or 6.2% to a total of $155,743,000 and the expenditure budget by $74,037,000 or 44.0% to a total of $242,301,000. These increases were due primarily to capital projects in governmental and business - type funds because of timing of completion of projects. Capital Assets and Debt Administration Capital Assets: The City's investment in capital assets for its governmental and business -type activities as of June 30, 2017 amounts to $561,207,000, net of accumulated depreciation. This investment in capital assets, including land, buildings, improvements other than buildings, equipment, streets, bridges, trails, wastewater and water systems, and other infrastructure represents the value of resources utilized to provide services to its citizens. The City's investment in capital assets for the fiscal year ended June 30, 2017 increased by $18,921,000 for governmental activities compared to the prior year and increased by $15,138,000 for business -type activities from the prior year. The following table reflects the $561,207,000 investment in capital assets, net of accumulated depreciation. City of Iowa City's Capital Assets (net of depreciation) (amounts expressed in thousands) Governmental Business -type Activities Activities Total 27 2017 2016 2017 2016 2017 2016 Land $ 29,778 $ 24,081 $ 30,737 $ 35,590 $ 60,515 $ 59,671 Buildings 39,464 41,126 73,297 60,636 112,761 101,762 Improvements other than buildings 3,954 4,092 441 4,703 8,295 8,795 Machinery and equipment 16,686 15,825 7,470 8,596 24,156 24,421 InfrasWcture 113,494 97,904 209,505 207,756 322,999 305,660 Construction in progress 22,767 24,194 9,714 2,645 32,481 26,839 Total $ 226,143 $ 207,222 $ 335,064 $ 319,926 $ 561,207 $ 527,148 27 Major capital asset events during the current fiscal year included the following: Work was completed for the I" Avenue/IAIS Railroad Crossing Improvement which lowered I" Avenue under the IAIS Railroad and included a railroad bridge, retaining wall and utilities. The construction in progress balance at the beginning of the year was $9,187,000. Additional expenses of $3,111,000 were added in FY 17. The total cost of the project that was capitalized was $12,298,000 and is funded primarily by GO bonds with the remainder of the funding by federal or state grants. Work was completed for the Washington Street Construction Project, which includes in addition to reconstruct Washington Street, improvements to the sidewalk pavement and water main and stormwater enhancement. The construction in progress balance at the beginning of the year was $1,350,000. Additional expenses of $3,085,000 were added in FY 17. The total cost of the project that was capitalized was $4,435,000 and is funded primarily from GO bonds. Expenses for a variety of street and bridge construction were moved into construction in progress at the end of FY17 for a total balance of $28,791,000. This construction in progress includes $27,874,000 for the Iowa City Gateway Project, which will reconstruct and elevate Dubuque Street and Park Road Bridge to provide flood protection. Additional information on the City's capital assets can be found in Note 4 to the financial statements. Debt Administration: At the end of the fiscal year, the City had total bonded debt outstanding of $99,665,000. Of this amount, $51,645,000 comprises debt backed by the full faith and credit of the City. $5,084,000 or 9.8% of these bonds is debt that will be paid with Tax Increment Financing revenues. $48,020,000 represents revenue bonds secured solely by specific revenue sources. General obligation bonds Revenue bonds Total City of Iowa City's Outstanding Debt General Obligation and Revenue Bonds (amounts expressed in thousands) Governmental Business -type Activities Activities 2017 2016 $ 51,645 $ 55,055 15200 2,525 $ 66,845 $ 57,580 2017 2016 $ - $ 295 32,820 38,420 $ 32,820 $ 38,715 Total 2017 2016 $ 51,645 $ 55,350 48,020 40,945 $ 99,665 $ 96,295 The City issued $9,765,000 of General Obligation bonds and $23,265,000 of Revenue bonds during FY17. This increase in debt was mostly offset by the retirement of debt for a net increase of City's total bonded debt by $3,370,000. The City continues to have the same excellent bond rating on its General Obligation bonds that it has had for the past several years. This rating is given to those bonds judged to be of the best quality and carrying the smallest degree of investment risks. The City's bond ratings by Moody's Investors Services, Inc. as of June 30, 2017 were as follows: General obligation bonds Aria Wastewater treatment revenue bonds Aa2 Water revenue bonds Aa2 28 The City continues to operate well under the State debt capacity debt limitations. State statute limits the amount of debt outstanding to 5% of the assessed value of all taxable property in Iowa City. Debt subject to the debt limit includes general obligation debt and revenue bonds issued pursuant to Iowa Code Chapter 403 (tax increment). The current debt limitation for the City is $267,511,000. With outstanding debt applicable to this limit of $84,864,000 we are utilizing 31.7% of this limit. More detailed information on debt administration is provided in Note 6 of the financial statements. Economic Factors and Next Year's Budget and Rates During the 2009 session, the Iowa State Legislature passed a law allowing cities to utilize franchise fee tax as a revenue alternative to property tax. The Iowa City Council passed a local franchise fee tax of 1% on natural gas and electricity that became effective April 1, 2010. This revenue is being utilized to support additional public safety initiatives, including operating a fourth fire station. In FY17, the City collected $939,000 in local franchise fee. The City expects continued constraints by the State's property tax formula. The State passed property tax reform, which will negatively affect the City's general operating funds. Without the potential for new revenue sources, like those mentioned above, the City's opportunities for new initiatives are limited. The Council has established a balanced budget in the General Fund for FY18 that strives to maintain current service delivery levels. The tax levy rate per $1,000 of assessed valuation for FYI is provided below: General Levy $ 8.100 Debt Service Levy 3.579 Employee Benefits Levy 3.144 Transit Levy 0.950 Liability Insurance Levy 0.290 Library Levy 0.270 Total City Levy $ 16.333 Requests for Information This report is designed to provide a general overview of the City of Iowa City's finances for all of those with an interest in the government's finances. Questions concerning any of the information provided in this report, or requests for additional financial information should be addressed to City of Iowa City, Finance Department, 410 East Washington Street, Iowa City, IA, 52240. 29 CITY OF IOWA CITY, IOWA STATEMENT OF NET POSITION June 30, 2017 (amounts expressed in thousands) Assets Equity in pooled cash and imestments Receivables: Property tax Accounts and unbilled usage Interest Notes Internal balances Due from other governments Prepaid item Inventories Assets held for resale Restricted assets: Equity in pooled cash and investments Other post employment benefits asset Capital assets: Land and construction in progress Other capital assets (net of accumulated depreciation) Total assets Deferred Outflows of Resources Pension related deferred outflows Liabilities Accounts payable Contracts payable Accrued liabilities Interest payable Deposits Advances from grantors Due to other governments Notes payable Noncurrent liabilities: Due within one year. Employee vested benefits Capitol lease obligation Bonds payable Due in more than one year: Employee vested benefits Net pension liability Other post employment benefts obligation Notes payable Capital lease obligation Bonds payable Landfill closure/post-closure liability Total liabilities Govemm"tal Business -type Activities Activities Tend $ 111,030 $ 64,719 $ 175,749 56,639 - 56,639 820 3,469 4,289 428 351 779 5,524 540 6,064 (15,494) 15,494 - 4,519 2,435 6,954 811 3 814 730 763 1,493 750 - 750 24,560 32,191 56,751 35 3 38 52,545 40,451 92,996 173,598 294,613 468,211 416,495 455,032 871,527 13,131 2,345 15,476 2,127 997 3,124 2,521 539 3,060 4,182 440 4,622 133 718 851 1,230 1,606 2,836 144 - 144 42 79 121 663 - 663 1,252 403 1,655 - 524 524 8,230 5,326 13,556 989 291 1,280 39,080 8,975 48,055 3,660 1,222 4,882 211 - 211 - 13,958 13,958 59,509 29,095 88,604 8,591 8,591 $ 123,973 $ 72,764 $ 196,737 U11 (continued) The notes to the financial statements are an integral part of this statement. 31 CITY OF IOWA CITY, IOWA STATEMENT OF NET POSITION (continued) June 30, 2017 (amounts expressed in thousands) Governmental Business -type Activities Activities Total Deferred inflows of resources Unavailable revenues: Pension related deferred inflows $ 1,603 $ 550 $ 2,153 Deferred amount on refunding - 249 249 Succeeding year property taxes 56,459 56,459 Total deferred inflows of resources 58,062 799 58,861 Net position Net investment in capital assets 183,651 285,912 469,563 Restricted for or by. Employee benefits 2,810 - 2,810 Capital projects 30,856 - 30,856 Debt service 7,221 - 7,221 Police 349 - 349 Other purposes 2,590 - 2,590 Bond ordinance - 12,112 12,112 State statute - 5,939 5,939 Future improvements - 100 100 Grant agreement 3,850 3,087 6,937 Unrestricted 16,264 76,664 92,928 Total net position S 247,591 S 383,814 S 631,405 The notes to the financial statements are an integral part of this statement. 31 Functions/Programs: Expenses Governmental activities: Capital Public safety $ 24,002 Public works 12,032 Culture and recreation 15,525 Community and economic development 8,253 General government Interest on long-term debt Total governmental activities Business -type activities: Wastewater treatment Water Sanitation Housing authority Parking Airport Stornwater Transit Total business -type activities Total 6,124 1,481 67,417 CITY OF IOWA CITY, IOWA STATEMENT OF ACTIVITIES For the Year Ended June 30, 2017 (amounts expressed in thousands) Program Revenues 12,277 Operating Capital Charges Grants and Grants and for Services Contributions Contributions 5,286 $ 196 S 467 724 8,711 9,343 842 74 36 36 1,847 106 1,524 - - 8,412 10,828 9,952 11,233 12,277 - 2,226 8,921 9,275 - 869 9,123 9,927 - - 8,798 321 8,532 - 4,620 5,453 - - 1,402 345 69 58 2,432 1,544 - 1,251 7,263 2,089 2,235 395 53,792 41,231 10,836 4,799 $ 121,209 $ 49,643 S 21,664 S 14,751 General revenues: Property taxes, levied for general purposes Hotel/motel tax Gas and electric tax Utility franchise tax Grants and contributions not restricted to specific purposes Earnings on investments Gain on disposal of capital assets Miscellaneous Transfers Total general revenues and tmnsfers Changes in net position Net position beginning of year Net position end of year The notes to theftnancial statements are an integral part of this statement. 32 Net (Expense) Revenue and Changes in Net Position Governmental Business -type Activities Activities Total $ (18,053) $ - $ (18,053) 6,746 - 6,746 (14,573) - (14,573) (6,264) - (6,264) (4,600) - (4,600) (1,481) - (1,481) (38,225) - (38,225) 3,270 3,270 1,223 1,223 804 804 55 55 833 833 - (930) (930) - 363 363 - (2,544) (2,544) - 3,074 3,074 (38,225) 3,074 (35,151) 57,649 - 57,649 1,137 - 1,137 726 - 726 939 - 939 1,583 - 1,583 1,397 938 2,335 2,151 69 2,220 3,369 1,260 4,629 (7,053) 7,053 61,898 9,320 71,218 23,673 12,394 36,067 223,918 371,420 595,338 $ 247,591 $ 383,814 $ 631,405 33 My aywrClAY�,1[a a CA [411.1113 BALANCESHEET GOVERNMENTAL FUNDS Jane 30, 2017 (amounts expressed in thousands) Capital Special Revenue Projects Bridge, Street, and Traffic Other Employee Control Debt Governmental General Benefits Construction Service Funds Total Assets Equity in pooled casb and investments S 32,500 $ 2,413 $ 12,151 $ 7,090 $ 25,459 $ 79,613 Receivables: 1,191 S 4 $ 11 S 5 S 430 S 1,641 Property tax 32,965 10,783 - 12,564 327 56,639 Accounts and unbilled usage 410 - 252 - 1 663 Interest 161 - 43 106 29 339 Notes 1,292 - - 399 3,833 5,524 Advances to other funds - - - 125 - 125 Due from other governments 1,887 316 931 - 1,318 4,452 Inventories - - - - 264 264 Prepaid item 719 80 - - - 799 Assets held for resale 750 - - - - 750 Restricted assets: 4,448 6 2,100 5 1,247 7,806 Equity in pooled cash and investments 10,268 5,272 - 9,020 24,560 Total assets S 80,952 S 13,592 S 18,649 5 20,284 $ 40,251 S 173,728 Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable S 1,191 S 4 $ 11 S 5 S 430 S 1,641 Contracts payable - - 2,077 - 444 2,521 Accrued liabilities 1,321 2 12 - 101 1,436 Advances from other funds - - - - 125 125 Due to other governments 38 - - - 4 42 Interest payable 4 - - - - 4 Notes payable 663 - - - - 663 Liabilities payable from restricted assets: Deposits 1,224 - - - 6 1,230 Advances from grantors 7 - 137 144 Total liabilities 4,448 6 2,100 5 1,247 7,806 Deferred inflows of resources Unavailable revenues: Succeeding year property taxes 32,863 10,750 - 12,523 323 56,459 Grants 6 - 581 - 117 704 Other 1,539 315 431 93 2,378 Total deferred inflows of resources 34,408 11,065 1,012 12,523 533 59,541 Fund balances: Nonspendable 788 80 - - 264 1,132 Restricted 9,974 2,441 15,537 7,756 38,207 73,915 Committed 5,199 - - - - 5,199 Assigned 1,342 - - - - 1,342 Unassigned 24,793 - - 24,793 Total fund balances 42,096 2,521 15,537 7,756 38,471 106,381 Total liabilities, deferred inflows of resources and fund balances $ 80,952 $ 13,592 $ 18,649 $ 20,284 $ 40,251 $ 173,728 The notes to thefenanciai statements are an integral part ofthis statement 34 CITY OF IOWA CITY RECONCILIATION OF THE BALANCE SHEET OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2017 (amounts expressed in thousands) Total governmental fund balances $ 106,381 Amounts reported for governmental activities in the statement of net position are different because: Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. Other long-term assets are not available to pay for current period expenditures and therefore are unavailable in the funds: Grants and other receivables - Earned but unavailable. Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds. Pension related deferred outflows of resources and deferred inflows of resources me not due and payable in the current period and therefore are not reported in the funds. Deferred outflows of resources Deferred inflows of resources Net pension liabilities are not due and payable in the current period and therefore are not reported in the funds. Accrued compensated absences are not due and payable in the current period and therefore are not reported in the funds. Accrued post employment benefit obligations are not due and payable in the current period and therefore are not reported in the funds. Bonds payable are not due and payable in the current period and therefore we not reported in the funds. Notes payable are not due and payable in the current period and therefore are not reported in the funds. Accrued interest on bonds Internal balance due to integration of internal service funds Total net position of governmental activities The notes to the f nancial statements are an integral part of this statement. 35 39,652 3,082 214,188 $ 12,750 (1,515) 11,235 (37,683) (2,128) (3,563) (67,739) (211) (129) (15,494) $ 247,591 CITY OF IOWA CITY, IOWA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Revenues Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Use of money and property Miscellaneous Total revenues Expenditures Current: Public safety Public works Culture and recreation Community and economic development General government Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures Other Financing Sources (Uses) Issuance of debt Sale of capital assets Premiums on issuance of bonds Transfers in Transfers out Total other financing sources and (uses) Net change in fund balances Fund Balances, Beginning, as restated Fund Balances, Ending For the Year Ended June 30, 2017 (amounts expressed in thousands) Capital Special Revenue Projects Bridge, Street, and Traffic Other Employee Control Debt Governmental General Benefits Construction Service Funds Total $ 34,290 $ 10,537 $ - $ 13,109 $ 2,516 $ 60,452 3,521 - - - - 3,521 3,574 295 8,663 359 11,249 24,140 1,665 302 22 - 366 2,355 750 - - - - 750 839 - 69 181 146 1,235 1,692 12 1 396 2,101 46,331 11,146 8,755 13,649 14,673 94,554 22,005 484 - - 24 22,513 1,803 - 2,290 - 5,093 9,186 12,890 - - - 451 13,341 3,074 - - - 4,621 7,695 5,471 384 - 16 11 5,882 - - - 13,305 - 13,305 - - - 1,597 - 1,597 1,463 14,704 2,238 18,405 46,706 868 16,994 14,918 12,438 91,924 (375) 10,278 (8,239) (1,269) 2,235 2,630 - - 6,023 654 15,893 22,570 268 - - - 2,024 2,292 - - 32 3 85 120 10,725 - 16,343 1,795 5,812 34,675 (18,023) (9,428) (11,793) (7,789) (47,033) (7,030) (9,428) 10,605 2,452 16,025 12,624 (7,405) 850 2,366 1,183 18,260 15,254 49,501 1,671 13,171 6,573 20,211 91,127 $ 42,096 $ 2,521 $ 15,537 $ 7,756 $ 38,471 $ 106,381 The. notes to the financial statements are an integral part of this statement. K. CITY OF IOWA CITY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2017 (amounts expressed in thousands) Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the asset. Capital outlays and contributed capital assets exceeded depreciation expense in the current year as follows: Expenditures for capital assets Transfers of capital assets (to)\from enterprise funds - net Capital assets contributed Depreciation expense Bond proceeds are reported as other financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net position. Debt issued Premium on bonds issued Repayments of debt Amortization of premium Because some revenues will not be collected for several months after the City's year end, they are not considered available revenues in the governmental funds. Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Change in accrued compensated absences Pension expense Change in accrued post employment benefit obligations Change in accrued interest on debt In the statement of activities, only the gain on the sale of the capital assets is recognized, whereas in the governmental funds, the proceeds from the sale increased financial resources. Thus, the change in net position differs from the change in fund balance by the cost of the capital asset sold. Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. Change in net position of governmental activities The notes to the financial statements are an integral part of this statement. 37 $ 17,060 4,863 2,574 (6,749) (22,570) (120) 13,305 135 15,254 17,748 (9,250) (1,323) (99) (458) (424) (19) (156) 2,400 $ 23,673 CITY OF IOWA CITY, IOWA S 11,896 S 18,830 S 9,566 STATMENT OF NET POSITION S 1,547 $3,685 55230 PROPRIETARYFUNDS $ 31,417 Receivables: Junc 30, 2017 (amovau ecpmssd in thousands) Accounts and unbilled mage 10 1,525 Govanrnmw Business -type Aetivitia- Eot,.ise Funds 154 Acrivities- 39 3.469 Olha Intenol wastewater Housing Enterprise Service Parking Treatment wwor Sanitation Sturmwater AuNority Fends Total Funds Equity in pooled crosh and invatmmm S 11,896 S 18,830 S 9,566 S 13.965 S 1,547 $3,685 55230 $ 64,719 $ 31,417 Receivables: Accounts and unbilled mage 10 1,525 1,043 690 154 - 39 3.469 157 Iotermt 31 100 42 92 5 65 16 351 89 Nota - - - - - 540 - 540 - AdvancmtooWerfaa& - - - 1,901 - - - 1,901 - Due fmmothergoveroromts - 1 1 63 82 106 2,182 2,435 67 Invoutonm - - 469 - - - 294 763 466 Propaid item - - - - - - 3 3 12 Asst held for rmale Total curtmt assay 11.937 20,456 11,121 16.719 1,788 4396 7,764 74,181 32,208 Noneurtmt insets: Restricted assets: Equity m pooled cash and investmmu 1 9.136 4,640 14,547 - 3,706 161 32,191 - Othapostanploymmtbmcfittme - - - - - - 3 3 35 Capital oust: Land 3,746 759 6,296 2,264 2264 620 14,780 30,737 45 Buildings 41,647 36,858 24,019 5,467 - 5,350 20,776 134,117 1,531 Impmv®outs other 0mn buildings 328 7,119 2,616 421 - 9 396 10389 50 Machine, and equipment 1,504 7,612 10,801 147 27 106 10,613 30,810 22,333 Infmswaure - 149,533 63,017 17,366 58,796 - 18,713 307,425 2,849 Accumulated depreciation (19,364) (76,030) (36,740) (14,845) (13,693) (4,468) (23,488) (188,628) (15,346) Comtsuction m progress 5,940 1.566 129 1,$37 542 9.714 493 Total .ower Iassns 27,862 140.927 76,215 25,496 48,931 5,323 42,$04 367,258 11,990 Tom] assns 39,799 161,383 87,336 42,215 50,719 9.719 50,268 441.439 44,198 Deferred Outflows of Resources Pauionrclatd defend oulfl. S 251 $ 355 $ 430 $ 422 S 41 S 146 $ 700 S 2,345 $ 381 (coatinud) 38 CITY OF IOWA CITY, IOWA STATEMENT OF NET POSITION (continued) PROPRIETARY FUNDS June 30, 2017 (amounts expressed in thousands) Governmental Business -type Activities- Enterprise Funds Activities - Um. Internal Wast.mR Housing Enterprise Service Paridng Treatment Water Sanitation Stc.ater Authority Funds Total Funds Liabilities NrtentliabMass Accmmts payable It 82 $ 225 S 237 S 211 $ 41 S 34 $ 167 S 997 S 486 Coatraw payable 144 210 34 55 45 - 51 539 - AcaoedliebOlties 43 69 81 72 9 28 138 440 2,746 Employee vested benefits 39 62 69 83 1 32 117 403 63 Due to other governments - 2 25 2 - 34 16 79 - Interest payable 48 426 244 - - - - 718 - Capital lexseabligation 524 - - - - - - 524 - Bondeddebtpayable(netofunamoeti d premium and discounts) 3,841 1485 - - - 5,326 Total eurent liabtites 880 4,835 2,175 423 96 128 489 9,026 3,295 Noncmrentliabtifies: Liabilities payable from testicted assets: Deposits I - 965 5 - 619 16 1,606 - Advancesfrom other funds 1,901 - - - - - - 1,901 - en Employeevestedbefits 27 44 52 61 1 23 8 3 291 50 Capital lease obligation 13,958 - - - - - - 13,958 founded debt payable (net ofummmdrM premium and disco mea) - 17,087 12,008 - - - - 29,095 - Net pension liability 995 1,469 1,668 1,648 110 608 2,4r 8,975 1,397 Other port employment benefits obligatioa 162 187 201 259 1 75 337 1,222 97 Landfill closmdpoetmosore liability - 8,591 8,591 Total mauumat liabilitiR 17,044 18,787 14.894 10,564 112 1,325 2,913 65,639 1,544 Total liabilities 17,924 23,622 17,069 10,987 208 1,453 3,402 74,665 4,839 Defermd Inflom of Resources Persian related deferred m0e s 61 88 102 100 7 36 156 550 88 Deferred amomt on refunding 148 101 - 249 Total defened m0ov, ofresoomes 61 236 203 100 7 36 156 799 88 Net Position Net investment in capital We 13,379 110,715 57,981 10,949 48,931 1,617 42,340 285,912 11,955 Restrictedbylonlcolmance - 8,707 3,405 - - - - 12,112 - Restrictedbymat.abusee - - - 5,939 - - - 5,939 - RestriaWfeefmweimpmvemenls - - - - - - 100 100 - Restrieledbygmmagreement - - - - - 3,087 - 3,087 - Unrestrimed 8,686 18,458 9,108 14,662 1,614 3,672 4,970 61,170 27,697 Tocol net position $ 22,065 It 137,880 $ 70,494 S 71.550 $ 50.545 _L.W767410 $ 368,320 $ 39,652 Adjustment to re0ect the consolidation ofintemal service fiord amivides related to enterprise 6mds- 15 ,494 Net position ofbusiness-type activities $ 383,814 The not. to rhe frmneial smrementr are an imegvfpart ofthls sfinemenn 39 CITY OF IOWA CITY, IOWA STATEhD:Nf OF REVENUES, EXPENSES AND CFL NGES IN FUND NET POSITION PROPRIETARY FUNDS the notatothefinancialsovemeau ole an imegrvlpwrroflhU raunnenr. 40 For the Yea Ended June 3D, 2017 (®nwD ca'reavd in 0sousaods) Gova®wtal Bminstvpe Activities- Enterprise Funds ActivVies- Other IWemal Wastewater Howing Enterprise Service Trratm®t Water Sanitation Stmmwater Aut3ority Funds, Total Funds Operating Ransom Charges for services S 5,453 E 12377 S 9,275 S 9,927 E 1,544 S 321 S 2,434 $41,231 S 18.355 Mucclimmw 41 754 41 77 136 147 64 1,260 Total operating menues 5,494 13,031 9,316 10_A04 1,680 468 2_498 42,491 18.355 Operating Expewes: Personal services 1,767 2,899 3,288 3,165 310 913 4,042 16,384 2,175 Commodities 621 1,094 1,031 220 583 20 751 4,320 1,838 Services and ehmges ,_295 2,364 2.013 4.880 358,765,122 20,797 9,455 3,683 6,357 6,332 8,265 1,251 8.699 6,915 41,501 13.468 Dgnedatioa 880 4506 ,344 1,560 1.192 121 1.894 12,487 1,798 Total operating expenses ,563 10,863 8_676,825 2,443 8,819 8.799 53.988 15,266 OperWing income go.) 931 2,168 640 179 (763) (8,351) (6,301)I( 1,497) 3,089 Nonopwting Revenues (Expenses): Gain (100) on disposal ofcepital aaels - (4,835) 1 (88) 47 3 (4,872) 84 Operating gr®ts - - - - - 8,532 2.304 10,836 - Werestmm coe 37 352 213 253 8 45 30 938 163 Interest cxperse (134) (558) (447) (1_139) Total ocnopcmtivg revenues(expeoso) (97) (5,041) (233) 165 8,624 y 5,763 247 Income (low) before capital contributions and trmmsfee, 834 (2,873) 407 344 (755) 273 (3,964) (5,734) 3.336 Capital cnnuib d.. - 2,226 869 - 1,251 - 453 4,799 35 Transfema - 5911 2,303 - 2,978 - 3,385 14,579 1,322 Tmwfers out (2.436) (250) (191) (115) (0) (3.038) (505) Change in net position 834 2,828 3,331 153 3,359 227 (126) 10,606 4,188 Net Position, Beginning 21,231 135,052 67,163 31.397 47,186 8,149 47,536 35,464 Net Position, Ending 522065 5137,880 $70,49531®550 550545 E 8}76 54410 S 39.652 Adjustment to reflect the consolidation ofinterml service fund activities related to enterprise funds 1y_788 Change m act position ofbusmess-type activities S12.394 the notatothefinancialsovemeau ole an imegrvlpwrroflhU raunnenr. 40 41 Cash Flaws From Operating Activities Receipts from customers and uses Payments to suppliers Payments to employes Net cash Rows from (used for) operating o nivids Cash Flows From Noncspital Financing Activities Grants received Transfem from other feeds Transfers to other funds Repaym®U(payment) ofnotm receivable Repayment of advaecs from other hands Repayment ofadvancs to other hands Nat cash Flours from (used for) noncapita fmancivg activities Cash Flows From Capitol aad Reloted Flnaneing Activities Capital rants received Acquisition and conswcuon ofpmptaly and equipment Proceeds from sale ofpropwy Proceeds from issuance ofdd t Principal paid on capital lease obligation Interest paid on spiral 1. obligation Principal paid on bonded debt Interest paid on headed debt Net cash Rows from (used for) capita and related financingactivities CITY OF IOWA CITY, IOWA STATEMENT OF CASH FLOWS PROPRIETARYFUNDS Fm the Yem Ended lune 30, 2017 (amounts expressed in thousands) Govemmenta Busineca-type Activities -Enterprise Fonds Activities - Oder Internal Wazt.ater Housing Enterprise Service Parking Treaaneot Water Saturation Stonnwmer Authority Funds Total Foods S 5,493 $ 12,961 $ 9,277 S 9,863 $ 1,641 $ 615 $ 2,497 $ 42,347 $ 18,318 (1,802) (3,397) (2,834) (4,852) (1,069) (7,695) (3,216) (24,865) (11,845) (1,732) (2,862) (3_269) (3,140) (309) (903) (3,975) (16,190) (2295) 1,959 6,7023174 - 1,871 263 (7,983) (4,694) 1,292 4,178 - - - 6 85 8,437 641 9,169 - - 5,911 2,305 - 2,978 - 3,385 14,579 1,332 - (2,436) (250) (191) (115) (46) - (3,038) (505) - - - - - 48 - 48 - (229) - - - - (18) - (247) - (1,196) (10,214) 229 46 (793) (21,176) (3,018) $ 1,547 229 S 5,391 (229) 3,475 2,055 44 2,948 8,421 4,026 20,740 827 3,108 151 3,259 (95) (8,616) (2,701) (1,327) (2,958) (1) (947) (16,645) (3,136) - 18 1 - - 47 3 69 118 - 10,123 4,032 - - - - 14,155 - (1,015) - - - - - - (1,015) - (86) - - - - - - (86) - - (13,863) (5,542) - - - - (19,405) - Cash and Cash Equivalents,Beginning (984) (524) (1,508) 27,727 1287 6,873 6,826 95,221 29,283 (1,196) (10,214) (4,734) (1,327) (2,958) 46 (793) (21,176) (3,018) Cash Flows From Investing Activities Interest on invsmrena 32 333 204 197 7 34 26 833 147 Not inc¢am(dcerease) in rmh and rash equivalents 566 296 699 785 260 518 (1,435) 1,689 2,134 Cash and Cash Equivalents,Beginning 11,331 27.67013507 27,727 1287 6,873 6,826 95,221 29,283 Cnshaad Cash Equivalents, Ending 511,897 $ 27,966 $14,206 S 28,512 $ 1,547 $ 7,391 S 5,391 $96,910 $31,417 (continued) Cyd 43 CITU OF IOWA CITY, IOWA STAT 113 FOF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30,2017 (amo cors, expressed in thousands) Go, crnmatel Business-Rpe Activities - Emetwise Funds Activhia- other lot e..I Wastewater Housing Enterprise service Parking Treatment Water Sanitation Starmwater Authority Funds Total I.& Reconciliation of operating Income (low) to net cash Rana from Hand for) operating adfvilies: Operating mcomc(I..) S 931 S 2,168 $ 640 S 179 $ (763) $ (8,351) S (6,301) S(11,497) $ 3,089 Adjuswew to monde operating income (loss) to on cash flows fiam (teed for) operating mivitis: Depreciation apense 880 4,506 2,344 1560 1,192 121 1,884 12,487 1,798 Changes.: Receivable: Account. and mbIDd usage - (71) (124) (85) (25) 2 (2) (305) (13) Due from other govemments - 1 - (53) - (1) 1 (52) (24) Invatories - - (18) - - - (14) (32) 5 Prepaid it® - - - - - - (3) (3) (12) Assets held for reale - - - - - 73 - 73 - Accounts payable 114 59 221 (74) (128) 13 (298) (93) (545) Accrued liabilities 1 7 11 2 1 3 9 34 (151) Employee voted benefits 6 7 (6) 8 (1) 1 (1) 14 10 Due to other govemmets - 2 7 (1) - 4 (28) (16) - Uncoated ..e - - - - (14) - - (14) - Deposits (1) - 85 (3) - 146 - 227 - Netpeon..liablity 175 246 283 276 25 101 451 1,557 249 Defmred.tafl. sofresource, (114) (160) (207) (264) (23) (66) (354) (1,128) (186) Defordin0owsofraources (47) (81) (76) (77) (2) (36) (88) (407) (56) Other post croployment benefits aseVobligation 14 18 14 20 1 7 50 124 14 f dfll elosurelpostelmum liability 323 323 - Total adjuvmats 1,028 4,534 2.534 1.692 1.026 368 1.607 12.789 1,089 Ne, esb Mwa from (used far) operating eniJvis $ 1,959 _L.=6 .70253174 S 1.871 S 263 ! 694 292 4178 Noneash Investing, Capital, and Financing Ac(ivipe: Contributions ofeaphal awecs form govcrvmevt and others S - S 1,151 $ 869 S - $ 1,251 S - $ - S 3,271 S 35 Cootnbutiote of.piw averts to government and others S - S 4,853 S - S - $ - S - $ - S 4,853 S - Purchase oftsild'wg with capital lease $ 15,497 S - $ - S - S - $ - $ - S 15,497 S - The rotes to rhe fOmroral smeemenn are on integmJpars cfrhis smtemenr. 43 CITY OF IOWA CITY STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES June 30, 2017 (amounts expressed in thousands) Agency Funds Assets Equity in pooled cash and investments $ 163 Interest receivable 1 Total assets $ 164 Liabilities Accounts payable $ 4 Due to agency 160 Total liabilities $ 164 The notes to the financial statements are an integral part of this statement. 44 45 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS June 30, 2017 1. Accounting Policies The City of Iowa City, Iowa, (the City) was incorporated April 6, 1853, and operates under the Council/Manager form of government. The City provides a broad range of services to its citizens including general government, public safety, streets, parks, and cultural facilities. It also operates an airport, a mass transportation system, parking facilities, water treatment, wastewater treatment, storm water collection, sanitation collection and disposal (including landfill operations), cable television, and a housing authority. The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the City are described below. The Reporting Entity For financial reporting purposes, the City includes all of its funds, organizations, agencies, boards, commissions, and authorities. The City has also considered all potential component units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization's governing body, and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the City. There were no component units required to be included. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non -fiduciary activities of the primary government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. As a general rule, the effect of inter -fund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are charges between the City's water and sewer function and various other functions of the government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. IN CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Description of Funds These financial statements include all funds owned or administered by the City or for which the City acts as custodian. The accounts of the City are organized on the basis of funds, each of which is considered to be a separate accounting entity. The fund categories are governmental, proprietary, and fiduciary. Each fund is accounted for by providing a separate set of self -balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues, and expenditures or expenses, as appropriate. The individual funds account for the governmental resources allocated to them for the purpose of carrying on specific activities in accordance with laws, regulations, or other restrictions. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its "measurement focus." The government -wide financial statements and proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Agency funds do not have a measurement focus and use the accrual basis of accounting. Under the accrual method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. All governmental funds are accounted for using a current financial resources measurement focus, which generally includes only current assets and current liabilities on the balance sheet. The modified accrual basis of accounting is used for these funds. Under the modified accrual basis, revenue is recognized when susceptible to accrual, which is in the period in which it becomes both available (collectible within the current period or soon thereafter to be used to pay liabilities of the current period) and measurable (the amount of the transaction can be determined). Revenue accrued includes property taxes, intergovernmental revenue, and interest earned on investments (if they are collected within 60 days after the year-end). Expenditures are recorded when the related fund liability is incurred. Principal and interest on long-term debt, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. The City reports the following major governmental funds: The General Fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Employee Benefits Fund is used to account for the employee benefits related to those employees who are paid through governmental fund types, which are funded by a separate property tax levy. The Bridge, Street, and Traffic Control Construction Fund accounts for the construction or replacement of infrastructure fixed assets, such as streets, bridges, dams, sidewalks, and lighting systems. The Debt Service Fund accounts for the accumulation of resources for the payment of general long- term debt principal, interest, and related costs. 47 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 The City reports the following major proprietary funds: The Parking Fund is used to account for the operation and maintenance of the "on" and `off' street public parking facilities. The Wastewater Treatment Fund is used to account for the operation and maintenance of the wastewater treatment facility and sanitary sewer system. The Water Fund is used to account for the operation and maintenance of the water system. The Sanitation Fund is used to account for the operation and maintenance of the solid waste collection system and landfill. The Stormwater Fund is used to account for the operation and maintenance of the stormwater utility system. The Housing Authority Fund is used to account for the operations and activities of the City's low and moderate income housing assistance and public housing programs. Additionally, the City reports internal service funds to account for goods and services provided by one department to other City departments on a cost reimbursement basis. The funds in this category are the Equipment Maintenance Fund, Central Services Fund, Loss Reserve Fund, and the Information Technology Fund. The City also reports fiduciary funds which are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City has one fiduciary fund which is maintained as an agency fund, with no attempt to create an ongoing fund balance. The fund in this category is Project Green, which accounts for donations that are received to plant and develop yards and lawns, both public and private, within Iowa City. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds and of the City's internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. 48 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Uses of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue, expenditures and expenses, as appropriate, during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of other post employment benefit obligation, net pension liability, landfill closure and post -closure care costs, total capacity of the landfill at closure, and calculation of the costs of claims incurred, but not reported. Cash and Investments The City maintains one primary demand deposit account through which the majority of its cash resources are processed. Substantially all investment activity is carried on by the City in an investment pool, except for those funds required to maintain their investments separately. The earnings on the pooled investments are allocated to the funds on a systematic basis. All investments are stated at fair value except for the Iowa Public Agency Investment Trust (IPAIT) which is valued at amortized cost pursuant to Rule 2a-7 under the Investment Company Act of 1940. For the purpose of the Statement of Cash Flows, restricted and non -restricted investments with a maturity of three months or less when purchased are considered cash equivalents. Receivables and Revenue Recognition Property tax receivable is recognized in governmental funds on the levy or lien date, which is the date that the tax asking is certified by the City to the County Board of Supervisors. Current year delinquent property tax receivable represents unpaid taxes from the current year. The succeeding year property tax receivable represents taxes certified by the City to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the City is required to certify its budget to the County Auditor by March 15 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, it will not be recognized as revenue until the year for which it is levied. Federal and state grants are recorded as receivables and the revenue is recognized during the period in which the City fulfills the requirements for receiving the grant awards, as long as the susceptible to accrual criteria are met. Income from investments in all fund types and from charges for services in proprietary fund types is recognized when earned. Licenses and permits, fines and forfeitures, fees and refunds, charges for services (in governmental fund types), miscellaneous, and other revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. 49 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Inventories Inventories are recognized only in those funds in which they are material to the extent of affecting operations. For the City, these are the Other Shared Revenue and Grants Fund, Transit Fund, Water Fund, and the Equipment Maintenance Fund. Inventories of materials and supplies are determined by actual count and priced on the FIFO method. Capital Assets Capital assets, which include property, buildings, equipment, and infrastructure assets (e.g., roads, bridges, water mains, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. The City follows the policy of not requiring capitalization of an asset with an initial, individual cost of less than $50,000 for infrastructure, $25,000 for buildings and improvements, and $5,000 for equipment assets. Such assets are recorded at original purchase cost or at acquisition value at the date of donation when received as donated properties. Depreciation is computed using the straight-line method over the following estimated useful lives: Infrastructure 3 — 100 years Buildings and structures 20 — 50 years Improvements other than buildings 10 — 50 years Vehicles 2 — 20 years Other equipment 3 — 30 years Deferred Outflows of Resources Deferred outflows of resources represent a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. Deferred outflows of resources consist of unrecognized items not yet charged to pension expense and contributions from the employer after the measurement date but before the end of the employer's reporting period. Bond Premiums and Discounts Debt issued at a premium or discount is recorded net of the unamortized premium or discount. In the governmental funds, premiums and discounts are recorded entirely as other financing sources or uses in the year of issuance. In the proprietary funds and the government -wide statements, they are amortized over the life of the bonds. 50 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Compensated Absences Permanent City employees accumulate vacation and sick leave hours for subsequent use or for payment upon death, resignation, or retirement. The City pays its employees (except firefighters) one-half of the accumulated sick leave at the time of termination on the basis of the employee's then effective hourly base salary, provided that the dollar amount of the payment may be up to, but not exceed, the amount that an employee would be paid if the employee had terminated on June 28, 1985. Employees hired on or after June 29, 1985, are not eligible for payment of accumulated sick leave upon termination, death, or retirement. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Iowa Public Employees' Retirement System and the Municipal Fire and Police Retirement System (Systems') and additions to/deductions from the Systems' fiduciary net position have been determined on the same basis as they are reported by the Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Landfill Closing Costs Costs expected to be incurred in ultimately closing the present landfill site are being systematically provided for through charges to expense over the estimated useful life of the landfill on the basis of capacity used (see Note 8). Deferred Inflows of Resources Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. Although certain revenues are measureable, they are not available. Available means collected within the current year or expected to be collected soon enough thereafter to be used to pay liabilities of the current year. Deferred inflows of resources in the governmental fund financial statements represent the amount of assets that have been recognized, but the related revenue has not been recognized since the assets are not collected within the current year or expected to be collected soon enough thereafter to be used to pay liabilities of the current year. Deferred inflows of resources consist of property tax receivable, grants receivable and other receivables. Deferred inflows of resources in the Statement of Net Position consist of succeeding year property tax receivable that will not be recognized as revenue until the year for which they are levied, the difference in the carrying value of refunded debt and it's acquisition price and the unamortized portion of pension related items. 51 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Budgetary and Legal Appropriation and Amendment Policies The City prepares and adopts an annual function budget, as prescribed by Iowa statutes, for all funds except internal service and agency funds. This is formalized in a separate budgetary report, the Financial Plan. This budget is adopted on or before March 15 of each year to become effective July 1, and constitutes the City's appropriation for each program and purpose specified therein until amended. The adopted budget must include the following: a. Expenditures for each function: Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Business-type/enterprise b. The amount to be raised by property taxation c. Income from sources other than property taxation d. Transfers in and transfers out The legal level of control (the level at which expenditures may not legally exceed appropriations) is the function level for all funds combined, rather than at the individual fund level. Management can transfer appropriations within a function, within a fund type, and between fund types, without the approval of the governing body so long as the total budget by function area will not be exceeded. It is necessary, therefore, to aggregate the expenditures of the budgeted activities within the governmental fund types with the expenditures of the budgeted activities within the enterprise funds on a function basis, and to compare such function totals to function budgeted totals in order to demonstrate legal compliance with the budget. The City's budget for revenue focuses on aggregated totals by revenue source. The City formally adopts budgets for several funds that are not required by state law to be included in the annual function budget. Annual operating budgets are adopted for the internal service funds for management control purposes. Such budgets, however, are not legally required to be adopted under state statutes. A City budget for the current fiscal year may be amended for any of the following purposes as prescribed by Iowa statute: a. To permit the appropriation and expenditure of unexpended, unencumbered cash balances on hand at the end of the preceding fiscal year. b. To permit the appropriation and expenditure of amounts anticipated being available from sources other than property taxation. c. To permit transfers between funds. d. To permit transfers between functions. A budget amendment must be prepared and adopted in the same manner as the original budget. The City's budget was amended as prescribed, and the effects of those amendments are shown in the accompanying budgetary comparison schedule. The original budget was increased by $30,470,230 in revenues and other financing sources and by $86,120,048 in expenditures and other financing uses. Appropriations, as adopted or amended, lapse at the end of the fiscal year. 52 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 As allowed by GASB Statement No. 41, Budgetary Comparison Schedules — Perspective Differences, the City presents budgetary comparison schedules as required supplementary information based on the program structure of nine functional areas as required by state statute for its legally adopted budget. Restricted Assets Assets within the individual funds, which can be designated by the City Council for any use within the fund's purpose, are considered to be unrestricted assets. Assets, which are restricted for specific uses by bonded debt requirements, grant provisions, or other requirements, are classified as restricted assets. Liabilities, which are payable from restricted assets, are classified as such. Classification of Fund Balances Fund balances for the governmental funds are reported in classifications based on the nature of any limitations requiring the use of resources for specific purposes (see Note 10). 2. Cash and Pooled Investments The City's deposits in banks at June 30, 2017 were entirely covered by federal depository insurance, national credit union administration, or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. The City is authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured Iowa depository institutions approved by City Council and secured pursuant to the limitations set forth in Chapter 12C of the Code of Iowa; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; Iowa Public Agency Investment Trust (IPAIT); certain registered open— end management investment companies registered with the Securities & Exchange Commission under the federal Investment Company Act of 1940; certain joint investment trusts; and warrants or improvement certificates of a drainage district. At June 30, 2017 the City had the following investments The City uses the fair value hierarchy established by generally accepted accounting principles based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are significant other observable inputs. Level 3 inputs are significant unobservable inputs. 53 Fair Investment Value Maturities Federal Home Loan Bank Notes $ 7,989,640 July 2017 to June 2019 Federal Home Loan Mortgage Corporation Notes 3,990,660 June 2018 to May 2019 United States Treasury Note 498,789 May 2018 Credit Agricole Corporate and Investment Bank NY Commercial Paper 495,237 March 2018 $ 12,974,326 The City uses the fair value hierarchy established by generally accepted accounting principles based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are significant other observable inputs. Level 3 inputs are significant unobservable inputs. 53 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 The recurring fair value measurement for the Federal Home Loan Bank securities of $7,989,640, the Federal Home Loan Mortgage Corporation securities of $3,990,660 and the United States Treasury securities of $498,789 were determined using the last reported sales price at current exchange rates (Level 1 inputs). The fair value measurement for the Credit Agricole Corporate and Investment Bank NY commercial paper of $495,237 was determined using the last reported sales price at current exchange rates (Level I inputs). The City had no other investments meeting the disclosure requirements of Governmental Accounting Standards Board Statement No. 72. In addition, the City had investments in the Iowa Public Agency Investment Trust (IPAIT), which are valued at an amortized cost of $40,361,714, which approximates fair value. The Diversified Portfolio consists of cash and short-term investments valued at amortized cost, which approximates fair value, pursuant to Governmental Accounting Standards Board Statement No. 79. The Iowa Public Agency Investment Trust (IPAIT) represents an investment in a pool managed by others. IPAIT is a common trust established under Iowa law pursuant to Iowa Code Chapter 28E in 1987 to enable eligible Iowa public agencies to safely and effectively invest their available operating and reserve funds. IPAIT is registered under the Investment Company Act of 1940. The IPAIT portfolios have followed established money market mutual fund investment parameters designed to maintain a $1 per unit net asset value since inception and were registered with the Securities and Exchange Commission (SEC). Interest rate risk - The City's investment policy limits the investment of general and operating funds to one year, unless a temporary extension of maturities is approved by the City Council. In such cases, the average maturity of each fund's portfolio shall not exceed 397 days. Funds not identified as operating funds may be invested in instruments whose maturities do not exceed five years at the time of purchase. Credit risk. State law limits investments to commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. It is the City's policy to comply with rating restrictions. The investment in Iowa Public Agency Investment Trust is not rated by Moody's Investors service as it is a state security that is backed by the full faith and credit of the issuing government and is not subject to credit risk. Concentration of credit risk. The City investment policy limits the amount that may be invested in any one issuer to a maximum amount approved by the City Council. Due to legal and budgetary reasons, the General Fund is assigned a portion of the investment earnings associated with other funds. These funds are the employee benefits, other shared revenue, and sanitation funds. 54 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 3. Interfund Balances and Transfers Interfund balances for the year ended June 30, 2017, consisted of the following: Advances from Debt Service Sanitation Total Advances to: Parking $ - $ 1,901,161 $ 1,901,161 Nonmajor governmental 124,595 - 124,595 Total $ 124,595 $ 1,901,161 $ 2,025,756 Interfund balances at June 30, 2017, include advances due to/from other funds, which represent amounts for construction loans and a revenue bond redemption loan. $1,665,852 of the $1,901,161 advance to the Parking Fund is not expected to be repaid within the next year. $110,893 of the $124,595 advance is not expected to be repaid within the next year. 55 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Interfund transfers for the year ended June 30, 2017, consisted of the following: Transfer from Capital Projects Bridge, Street and Traffic Employee Control Nonmajor Wastewater General Benefits Construction Governmental Treatment Transfer to: General $ - $ 9,096,921 $ - $ 823,503 $ 758,987 Debt Service 60,052 - - 1,735,400 - Capital Projects Bridge, Street and Traffic Control Construction 11,305,966 - - 3,505,674 1,241,013 Nonmajor Governmental 3,239,963 330,662 - 1,359,918 381,901 Wastewater Treatment - - 5,829,861 - - Water - 2,304,989 Stormwater - - 2,977,881 Nonmajor Enterprise 3,384,842 - - - - Internal Service 31,738 680,396 364,470 54,352 Total Transfer to $ 18,022,561 $ 9,427,583 $ 11,793,127 $ 7,788,965 $ 2,436,253 Transfers are used to move revenues and bond proceeds from the fund that State statutes or the budget requires to collect them to the fund that the State statutes or the budget requires to expend them. In the fund financial statements, total transfers in and transfers out of $50,576,822 are less than total transfers of $55,439,701 because of the treatment of transfers of capital assets to the governmental activities capital assets. 0.1 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Transfer from Housing Internal Total Water Sanitation Stormwater Authority Service Transfer from $ $ $ $ 46,087 $ $ 10,725,498 - 1,795,452 174,975 115,260 - 16,342,888 - 5 500,000 5,812,449 75,457 - 5,318 5,910,636 - - 2,304,989 2,977,881 - 3,384,842 191,231 1,322,187 $ 250,432 $ 191,231 $ 115,265 $ 46,087 $ 505,318 50,576,822 Transfers to governmental activities capital assets from an enterprise fund 4,852,938 Transfers to governmental activities capital assets f -om an internal service fund 9,941 $ 55,439,701 During the year, land for the construction of the Riverfront Crossing Park with a value of $4,852,938 was transferred to governmental activities capital assets from Wastewater Treatment. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of fmancial resources. However, Wastewater Treatment did report a disposal for the capital resources given. During the year, a capital asset related to public safety with a value of $9,941 was transferred from Equipment to governmental activities capital assets. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of financial resources. However, Equipment did report a disposal for the capital resources given. 57 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 4. Capital Assets Capital asset activity for the year ended June 30, 2017, was as follows: Less accumulated depreciation for Buildings 23,185,807 Acquisitions Disposals 24,719,781 Improvements other than buildings Beginning and and Balance Machinery and equipment July 1, 2016 Transfers Transfers Jane 30, 2017 Governmental activities: 40,075,777 3,356,791 5,305 43,427,263 Capital assets, not being depreciated: 92,444,052 8,547,497 1,526,691 99,464,858 Land $ 24,081,394 $ 5,697,487 $ - $ 29,778,881 Construction in progress 24,193,739 23,219,327 24,646,084 22,766,982 Total capital assets, not being depreciated 48,275,133 28,916,814 24,646,084 52,545,863 Capital assets, being depreciated: $ 24,879,228 $ 226,144,737 Buildings 64,312,273 126,520 254,932 64,183,861 Improvements other than buildings 7,358,005 148,833 5,320 7,501,518 Machinery and equipment 41,741,748 4,208,769 1,494,278 44,456,239 Infrastructure 137,980,063 18,947,356 5305 156,922,114 Total capital assets being depreciated 251,392,089 23,431,478 1,759,835 273,063,732 Less accumulated depreciation for Buildings 23,185,807 1,632,505 98,531 24,719,781 Improvements other than buildings 3,266,179 286,631 5,320 3,547,490 Machinery and equipment 25,916,289 3,271,570 1,417,535 27,770,324 Infrastructure 40,075,777 3,356,791 5,305 43,427,263 Total accumulated depreciation 92,444,052 8,547,497 1,526,691 99,464,858 Total capital assets, being depreciated, net 158948,037 14,883,981 233,144 173,598,874 Governmental activities capital assets, net $ 207,223,170 $ 43,800,795 $ 24,879,228 $ 226,144,737 58 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Less accumulated depreciation for Buildings 57,850,943 Acquisitions Disposals 60,819,791 Beginning and and Balance July 1, 2016 Transfers Transfers June 30, 2017 Business -type activities: 23,340,652 Infrastructure 90,363,007 Capital assets, not being depreciated: 97920,877 Total accumulated depreciation Land $ 35,590,298 $ - $ 4,852,938 $ 30,737,360 Construction in progress 2,647,044 9,381,759 2,313,910 9,714,893 Total capital assets, not. being depreciated 38,237,342 9,381,759 7,166,848 40,452,253 Capital assets, being depreciated: $ 319,926,261 $ 22,393,664 $ 7,254504 $ Buildings 118,486,975 15,747,867 118,000 134,116,842 Improvements other than buildings 10,783,445 105,329 - 10,888,774 Machinery and equipment 31,095,957 338,098 622,986 30,811,069 Infrastructure 298,117,591 9,308,433 - 307,426,024 Total capital assets being depreciated 458,483,968 25,499,727 740,986 483,242,709 Less accumulated depreciation for Buildings 57,850,943 3,086,848 118,000 60,819,791 Improvements other than buildings 6,081,033 467,188 - 6,548;221 Machinery and equipment 22,500,066 1,375,916 535,330 23,340,652 Infrastructure 90,363,007 7,557,870 97920,877 Total accumulated depreciation 176,795,049 12,487,822 653,330 188,629,541 Total capital assets, being depreciated, net 281,688,919 13,011,905 87,656 294,613,168 Business -type activities capital assets, net $ 319,926,261 $ 22,393,664 $ 7,254504 $ 335,065,421 Depreciation expense was charged to functions as follows: Governmental activities: Public safety $ 1,413,945 Public works 3,814,919 Culture and recreation 2,839,333 Community and economic development 61,853 General government 417,447 Total depreciation expense - governmental activities $ 8,547,497 Business -type activities: Parking $ 879,706 Transit 887,095 Wastewater treatment 4,506,493 Water 2,343,883 Sanitation 1,560,499 Stormwater 1,192,434 Housing authority 120,681 Nonmajor enterprise 997,031 Total depreciation expense - business -type activities $ 12,487,822 59 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 5. Capital Lease Obligation This year, the government entered into a lease agreement as lessee for financing the acquisition of a parking ramp valued at $15,497,867. The parking ramp has a 30 -year estimated useful life. This year, $129,149 was included in depreciation expense. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of future minimum lease payments as of the inception date. The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2017, were as follows: Fiscal Year Ending Business -type June 30 Activities 2018 $ 1,100,821 2019 1,100,821 2020 1,100,821 2021 1,100,821 2022 1,100,821 2023-2036 15,411,500 Total minimum lease payments 20,915,605 Less: amount representing interest (6,432,891) Present value of minimum lease payments $ 14,482,714 Changes in Capital Lease Obligation Changes in the capital lease obligation for the year ended June 30, 2017, was as follows: July 1, 2016 Issues Retirements Business -type activities: $ $ 15,497,867 $ 1,015,153 60 Due Within June 30, 2017 One Year $ 14,482,714 $ 524,409 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 6. Long Term Debt Changes in Debt for Bonds Bond debt activity for the year ended June 30, 2017, was as follows: Governmental activities: General obligation bonds Plus: Unamortized Premium Total general obligation bonds Revenue bonds Less: Unamortized Discounts Total revenue bonds Business -type activities: General obligation bonds Revenue bonds Plus: Unamortized Premium Total revenue bonds General Obligation Bonds Due Within July 1, 2016 Issues Retirements June 30, 2017 One Year $ 55,055,000 $ 9,765,000 $ 13,175,000 $ 51,645,000 $ 7,960,000 943,392 120,083 137,221 926,254 137,221 55,998,392 9,885,083 13,312,221 52,571,254 8,097,221 2,525,000 12,805,000 130,000 15,200,000 135,000 33,984 2,124 31,860 2,124 2,491,016 12,805,000 127,876 15,168,140 132,876 $ 58,489,408 $ 22,690,083 $ 13,440,097 $ 67,739,394 $ 8,230,097 $ 295,000 $ - $ 295,000 $ $ - 38,420,000 10,460,000 16,060,000 32,820,000 5,035,000 1,531,661 645,415 576,162 1,600,914 290,852 39,951,661 11,105,415 16,636,162 34,420,914 5325,852 $ 40,246,661 $ 11,105,415 $ 16,931,162 $ 34,420,914 $ 5,525,852 Various issues of general obligation bonds totaling $51,645,000 are outstanding as of June 30, 2017. The bonds have interest rates ranging from 1.0% to 4.0% and mature in varying annual amounts ranging from $345,000 to $1,330,000 per issue, with the final maturities due in the year ending June 30, 2027. Interest and principal payments on all general obligation bonds, except tax abated portions recorded in the enterprise funds, are accounted for through the Debt Service Fund. 61 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Ending June 30 Total Revenue Bonds 2018 2019 2020 2021 2022 2023-2027 Governmental Activities Principal Interest 7,960,000 $ 1,197,996 8,125,000 1,031,994 8,330,000 835,606 7,090,000 613,841 5,540,000 438,663 14,600,000 778,963 $ 51,645,000 $ 4,897,063 As of June 30, 2017, the following unmatured revenue bond issues are outstanding: Wastewater Taxable Urban The City of Iowa City defeased the remaining $6,605,000 of its 2009 parking revenue bonds on November 12, 2014 by prepaying all remaining outstanding bonds and interest from cash on hand. The total defeased outstanding as of June 30, 2017 is $5,465,000. The total amount of interest that was paid was $574,186. Liabilities for the defeased bonds are not included in the City's financial statements. On June 15, 2017, the City issued $4,550,000 of sewer revenue bonds for a current refunding of $5,245,000 of sewer revenue bonds on July 1, 2017. As a result, the sewer revenue bonds from that issue are considered to be defeased and the liability has been removed from the financial statements. The refunding was undertaken to reduce total future debt service payments. The result of the transaction is a reduction of $1,030,981 in future debt service payments and an economic gain of $723,184. On June 15, 2017, the City issued $5,910,000 of water revenue bonds for a current refunding of $5,725,000 of water revenue bonds on July 1, 2017. As a result, the water revenue bonds from that issue are considered to be defeased and the liability has been removed from the financial statements. The refunding was undertaken to reduce total future debt service payments. The result of the transaction is a reduction of $1,137,664 in future debt service payments and an economic gain of $1,033,306. 62 Treatment Water Renewal Original issue amount $ 37,650,000 $ 24,260,000 $ 15,200,000 Interest rates 2.0% to 5.0% 1.5% to 5.0% 1.0% to 3.9% Annual maturities $ 275,000 to $ 380,000 to $ 135,000 to $ 2,085,000 $ 1,225,000 $ 965,000 Amount outstanding $ 19,590,000 $ 13,230,000 $ 15,200,000 The City of Iowa City defeased the remaining $6,605,000 of its 2009 parking revenue bonds on November 12, 2014 by prepaying all remaining outstanding bonds and interest from cash on hand. The total defeased outstanding as of June 30, 2017 is $5,465,000. The total amount of interest that was paid was $574,186. Liabilities for the defeased bonds are not included in the City's financial statements. On June 15, 2017, the City issued $4,550,000 of sewer revenue bonds for a current refunding of $5,245,000 of sewer revenue bonds on July 1, 2017. As a result, the sewer revenue bonds from that issue are considered to be defeased and the liability has been removed from the financial statements. The refunding was undertaken to reduce total future debt service payments. The result of the transaction is a reduction of $1,030,981 in future debt service payments and an economic gain of $723,184. On June 15, 2017, the City issued $5,910,000 of water revenue bonds for a current refunding of $5,725,000 of water revenue bonds on July 1, 2017. As a result, the water revenue bonds from that issue are considered to be defeased and the liability has been removed from the financial statements. The refunding was undertaken to reduce total future debt service payments. The result of the transaction is a reduction of $1,137,664 in future debt service payments and an economic gain of $1,033,306. 62 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ending June 30 Governmental Activities Principal Interest Business -type Activities Principal Interest 2018 $ 135,000 $ 456,495 $ 5,035,000 $ 1,150,476 2019 135,000 454,335 4,975,000 872,703 2020 140,000 451,635 5,385,000 685,365 2021 140,000 448,695 5,610,000 477,665 2022 1,110,000 445,475 4,350,000 298,690 2023-2027 5,420,000 1,735,955 7,465,000 237,420 2028-2032 4,710,000 964,955 - - 2033-2037 3,410,000 259,500 Total $ 15,200,000 $ 5,217,045 $ 32,820,000 $ 3,722,319 The revenue bond ordinances required that wastewater treatment, water revenues, and urban renewal tax revenues be set aside into separate and special accounts as they are received. The use and the amounts to be included in the accounts are as follows: (a) Revenue Bond and Interest Amount sufficient to pay current bond and interest maturities. Sinking Reserve (b) Revenue Debt Service Reserve Amount required to be deposited in the Revenue Bond and Interest Reserve until the reserve fund equals: Water Revenue and Taxable Urban Renewal Revenue bonds — maximum debt service due on the bonds in any succeeding fiscal year. Wastewater Revenue bonds —125% of the average principal and interest payments over the life of all the Wastewater Revenue bonds. (c) Improvement Reserve $20,000 per month until the reserve balance equals or exceeds $2,000,000 for Wastewater Revenue bonds and $5,000 per month until the reserve balance equals or exceeds $450,000 for Water Revenue bonds, with no further deposits once the minimum balance is reached. If the reserve falls below the required minimum, monthly transfers in the aforementioned amounts will resume. In fiscal year ended June 30, 2017, the Wastewater Treatment Fund had net revenue of $7,026,000 and the amount of principal and interest due was $4,610,000. In fiscal year ended June 30, 2017, the Water Fund had net revenues of $3,197,000 and the amount of principal and interest due was $2,284,000. [x? CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Summary of Bond Issues General obligation and revenue bonds payable at June 30, 2017, are comprised of the following issues: $ 99,665,000 64 Date of Amount Interest Final Outstanding Issue Issued Rates Maturity June 30, 2017 General Obligation Bonds: Multi-purpose Aug. 2010 7,420,000 2.0-2.75 6/20 2,370,000 Multi -Purpose June 2011 7,925,000 2.0-3.625 6/21 3,080,000 Refunded Multi -Purpose and Library Construction (1) June 2011 10,930,000 2.0-3.625 6/21 5,055,000 Multi -Purpose June 2012 9,070,000 2.0-2.25 6/22 4,780,000 Multi -Purpose July 2013 7,230,000 1.0-2.0 6/23 4,975,000 Refunded Multi -Purpose (2) June 2014 11,980,000 2.0-3.0 6/24 6,685,000 Multi -Purpose June 2015 7,785,000 2.0-2.25 6/25 6,380,000 Multi-purpose June 2016 8,795,000 2.0-3.0 6/26 8,555,000 Multi -Purpose June 2017 9,765,000 2.0-2.5 6/27 9,765,000 Total General Obligation Bonds $ 51,645,000 Date of Amount Interest Final Outstanding Issue Issued Rates Maturity June 30, 2017 Revenue Bonds: Refunded Wastewater TreatmentBords (3) May2009 8,660,000 3.5-5.0 7/25 525,000 Refunded Wastewater Treatment Bonds (4) Apr. 2010 15,080,000 3.0-4.0 7/20 5,155,000 Refunded Wastewater Treatment Bonds (5) June 2016 9,360,000 3.0-4.0 7/21 9,360,000 Refiauded Wastewater Treatment Bonds (6) June 2017 4,550,000 2.0-5.0 7/22 4,550,000 Refunded Water Bonds (7) May 2009 9,750,000 4.0-4.5 7/25 585,000 Refunded Water Bonds (8) June 2012 4,950,000 1.5-2.1 7/22 3,085,000 Refunded Water Bonds (9) June 2016 3,650,000 1.5-5.0 7/24 3,650,000 Refiruded Water Bonds (10) June 2017 5,910,000 2.0-2.25 7/25 5,910,000 Taxable Urban Renewal Nov. 2012 2,655,000 1.0 - 3.9 6/32 2,395,000 Taxable Urban Renewal Sept. 2016 12,805,000 3.0 6/36 12,805,000 Total Revenue Bonds 48,020,000 $ 99,665,000 64 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 (1) This bond issue refunded the May 2002 General Obligation Bonds. (2) This bond issue is an advance refunding of portions of the September 2006 and May 2007 General Obligation Bonds. (3) This bond issue refunded the October 2000 Wastewater Revenue Bonds. (4) This bond issue refunded the December 2001 and April 2002 Wastewater Revenue Bonds. (5) This bond issue refunded the October 2008 Wastewater Revenue Bond. (6) This bond issue refunded the May 2009 Wastewater Revenue Bonds. (7) This bond issue refunded the December 2000 Water Revenue Bonds. (8) This bond issue refunded the October 2002 Water Revenue Bonds. (9) This bond issue refunded the October 2008 Water Revenue Bonds. (10) This bond issued refunded the May 2009 Water Revenue Bonds. Conduit Debt Obligations From time to time, the City has issued Industrial Development Revenue Bonds and Midwestern Disaster Area Revenue Bonds to provide financial assistance to private sector entities for the acquisition, construction, and renovation of industrial and commercial facilities deemed to be in the public interest. The bonds are collateralized by the property financed and are payable solely from payments received on the underlying mortgage loans. All payments on the bonds are made by the private sector entities directly to a bond trustee, who is a third party financial institution, and in tum, disburses the payment to the respective bond holders. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2017, there were three series of Industrial Development Revenue Bonds and Midwest Disaster Area Revenue Bonds outstanding, with an aggregate principal amount payable of $33,867,375. Debt Legal Compliance Legal Debt Margin: As of June 30, 2017, the general obligation debt issued by the City did not exceed its legal debt limit computed as follows (amounts expressed in thousands): Assessed valuation: Real property $ 5,257,241 Utilities 92.987 Total valuation 5.350.228 Debt limit, 5% of total assessed valuation $ 267,511 Debt applicable to debt limit: General obligation bonds 51,645 Urban renewal revenue bonds 15,200 Letters of credit 663 Other legal indebtedness (TIF rebates) 17,356 Total net debt applicable to limit 84,864 Legal debt margin 9. CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 7. Pension and Retirement Systems Municipal Fire and Police Retirement System of Iowa (MFPRSI) Plan Description MFPRSI membership is mandatory for fire fighters and police officers covered by the provisions of Chapter 411 of the Code of Iowa. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by MFPRSI. MFPRSI issues a stand-alone financial report which is available to the public by mail at 7155 Lake Drive, Suite #201, West Des Moines, Iowa 50266 or at www.mfi)rsi.org. MFPRSI benefits are established under Chapter 411 of the Code of Iowa and the administrative rules thereunder. Chapter 411 of the Code of Iowa and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information. Pension Benefits Members with 4 or more years of service are entitled to pension benefits beginning at age 55. Full service retirement benefits are granted to members with 22 years of service, while partial benefits are available to those members with 4 to 22 years of service based on the ratio of years completed to years required (i.e., 22 years). Members with less than 4 years of service are entitled to a refund of their contribution only, with interest, for the period of employment. Benefits are calculated based upon the member's highest 3 years of compensation. The average of these 3 years becomes the member's average final compensation. The base benefit is 66 percent of the member's average final compensation. Additional benefits are available to members who perform more than 22 years of service (2 percent for each additional year of service, up to a maximum of 8 years). Survivor benefits are available to the beneficiary of a retired member according to the provisions of the benefit option chosen plus an additional benefit for each child. Survivor benefits are subject to a minimum benefit for those members who chose the basic benefit with a 50 percent surviving spouse benefit. Active members, at least 55 years of age, with 22 or more years of service have the option to participate in the Deferred Retirement Option Program (DROP). The DROP is an arrangement whereby a member who is otherwise eligible to retire and commence benefits opts to continue to work. A member can elect a 3, 4, or 5 year DROP period. By electing to participate in DROP the member is signing a contract indicating the member will retire at the end of the selected DROP period. During the DROP period the member's retirement benefit is frozen and a DROP benefit is credited to a DROP account established for the member. Assuming the member completes the DROP period, the DROP benefit is equal to 52% of the member's retirement benefit at the member's earliest date eligible and 100% if the member delays enrollment for 24 months. At the member's actual date of retirement, the member's DROP account will be distributed to the member in the form of a lump sum or rollover to an eligible plan. Disability and Death Benefits Disability coverage is broken down into two types, accidental and ordinary. Accidental disability is defined as permanent disability incurred in the line of duty, with benefits equivalent to the greater of 60 percent of the member's average final compensation or the member's service retirement benefit calculation amount. Ordinary disability occurs outside the call of duty and pays benefits equivalent to the greater of 50 percent of the member's average final compensation, for those with 5 or more years of service, or the member's service retirement benefit calculation amount, and 25 percent of average final compensation for those with less than 5 years of service. 66 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Death benefits are similar to disability benefits. Benefits for accidental death are 50 percent of the average final compensation of the member plus an additional amount for each child, or the provisions for ordinary death. Ordinary death benefits consist of a pension equal to 40 percent of the average final compensation of the member plus an additional amount for each child, or a lump -sum distribution to the designated beneficiary equal to 50 percent of the previous year's earnable compensation of the member or equal to the amount of the member's total contributions plus interest. Benefits are increased annually in accordance with Chapter 411.6 of the Code of Iowa which states a standard formula for the increases. The surviving spouse or dependents of an active member who dies due to a traumatic personal injury incurred in the line of duty receives a $100,000 lump -sum payment. Contributions Member contribution rates are set by state statute. In accordance with Chapter 411 of the Code of Iowa, the contribution rate was 9.40% of eamable compensation for the year ended June 30, 2017. Employer contribution rates are based upon an actuarially determined normal contribution rate and set by state statute. The required actuarially determined contributions are calculated on the basis of the entry age normal method as adopted by the Board of Trustees as permitted under Chapter 411 of the Code of Iowa. The normal contribution rate is provided by state statute to be the actuarial liabilities of the plan less current plan assets, with such total divided by 1 percent of the actuarially determined present value of prospective future compensation of all members, further reduced by member contributions and state appropriations. Under the Code of Iowa the employer's contribution rate cannot be less than 17.00% of eamable compensation. The contribution rate was 25.92% for the year ended June 30, 2017. The City's contributions to MFPRSI for the year ended June 30, 2017 was $2,681,511. If approved by the state legislature, state appropriation may further reduce the employer's contribution rate, but not below the minimum statutory contribution rate of 17.00% of eamable compensation. The State of Iowa therefore is considered to be a nonemployer contributing entity in accordance with the provisions of the Governmental Accounting Standards Board Statement No. 67 — Financial Reporting for Pension Plans, (GASB 67). There were no state appropriations to MFPRSI during the fiscal year ended June 30, 2017. Net Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2017, the City reported a liability of $23,116,697 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's share of contributions to the pension plan relative to the contributions of all MFPRSI participating employers. At June 30, 2016, the City's proportion was 3.697128% which was a decrease of .007844% from its proportions measured as of June 30, 2015. 67 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 For the year ended June 30, 2017, the City recognized pension expense of $3,216,923. At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Change of assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between City contributions and proportionate share of contributions City contributions subsequent to the measurement date Total Deferred Outflows of Deferred Inflows of Resources Resources $ 596,612 $ 21,438 976,000 316,636 4,087,567 - 336,511 268,755 2,681,511 $ 8,678,201 $ 606,829 $2,681,511 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended Total June 30, 2018 $ 879,619 June 30, 2019 879,619 June 30, 2020 2,319,990 June 30, 2021 1,323,484 June 30, 2022 (12,851) $ 5,389,861 68 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Actuarial Assumptions The total pension liability in the June 30, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Rate of inflation 3.00 percent per annum Salary increases 4.50 to 15.11 percent, including inflation Investment rate of return 7.50 percent, net of pension plan investment expense, including inflation The actuarial assumptions used in the June 30, 2016 valuation were based on the results of an actuarial experience study for the period from July 1, 2002 to June 30, 2012. Postretirement mortality rates were based on the RP -2000 Blue Collar Combined Healthy Mortality Table with males set -back two year, females set -forward one year and disabled individuals set -forward one year (male only rates), with no projection of future mortality improvement. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates (i.e., expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Core Plus Fixed Income Emerging Markets Emerging Markets Debt Large Cap Small Cap Master Limited Partnerships (MLP) International Large Cap Treasury Inflation Protected Securities Tactical Asset Allocation Private Equity Private Non -Core Real Estate Private Core Real Estate Long -Term Expected Real Rate of Return 3.8% 8.8 6.5 6.0 5.8 8.5 7.0 2.8 6.0 9.8 9.3 6.8 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Discount Rate The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumed that contributions will be made at 9.40 percent of covered payroll and the City contributions will be made at rates equal to the difference between actuarially determined rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of City's Proportionate Share of the Net Pension Liability to Chanties in the Discount Rate The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the city's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 -percent lower (6.5 percent) or 1 -percent higher (8.5 percent) than the current rate. 1% Decrease Discount Rate 1% Increase (6.5%) (7.5%) (8.5%) City's proportionate share of the net pension liability: $ 36,280,488 $ 23,116,701 $ 12,154,074 Pension Plan Fiduciary Net Position Detailed information about the pension plan's fiduciary net position is available in the separately issued MFPRSI financial report which is available on MFPRSI's website at www.mfi)rsi.org. Pavables to the Pension Plan At June 30, 2017, there were no amounts due to MFPRSI. Iowa Public Employees Retirement System (IPERS) Plan Description IPERS membership is mandatory for employees of the City, except for those covered by another retirement system. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by IPERS. B'ERS issues a stand-alone financial report which is available to the public by mail at 7401 Register Drive P.O. Box 9117, Des Moines, Iowa 50306-9117 or at www.iyers.orti. IPERS benefits are established under Iowa Code chapter 97B and the administrative rules thereunder. Chapter 97B and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information. 70 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Pension Benefits A regular member may retire at normal retirement age and receive monthly benefits without an early- retirement reduction. Normal retirement age is age 65, any time after reaching age 62 with 20 or more years of covered employment, or when the member's years of service plus the member's age at the last birthday equals or exceeds 88, whichever comes first. (These qualifications must be met on the member's first month of entitlement to benefits.) Members cannot begin receiving retirement benefits before age 55. The formula used to calculate a Regular member's monthly IPERS benefit includes: A multiplier (based on years of service). The member's highest five-year average salary. (For members with service before June 30, 2012, the highest three-year average salary as of that date will be used if it is greater than the highest five- year average salary.) If a member retires before normal retirement age, the member's monthly retirement benefit will be permanently reduced by an early-retirement reduction. The early-retirement reduction is calculated differently for service earned before and after July 1, 2012. For service earned before July 1, 2012, the reduction is 0.25 percent for each month that the member receives benefits before the member's earliest normal retirement age. For service earned starting July 1, 2012, the reduction is 0.50 percent for each month that the member receives benefits before age 65. Generally, once a member selects a benefit option, a monthly benefit is calculated and remains the same for the rest of the member's lifetime. However, to combat the effects of inflation, retirees who began receiving benefits prior to July 1990 receive a guaranteed dividend with their regular November benefit payments. Disability and Death Benefits A vested member who is awarded federal Social Security disability or Railroad Retirement disability benefits is eligible to claim IPERS benefits regardless of age. Disability benefits are not reduced for early retirement. If a member dies before retirement, the member's beneficiary will receive a lifetime annuity or a lump -sum payment equal to the present actuarial value of the member's accrued benefit or calculated with a set formula, whichever is greater. When a member dies after retirement, death benefits depend on the benefit option the member selected at retirement. Contributions Effective July 1, 2012, as a result of a 2010 law change, the contribution rates are established by IPERS following the annual actuarial valuation, which applies IPERS' Contribution Rate Funding Policy and Actuarial Amortization Method. Statute limits the amount rates can increase or decrease each year to 1 percentage point. IPERS Contribution Rate Funding Policy requires that the actuarial contribution rate be determined using the "entry age normal" actuarial cost method and the actuarial assumptions and methods approved by the IPERS Investment Board. The actuarial contribution rate covers normal cost plus the unfunded actuarial liability payment based on a 30 -year amortization period. The payment to amortize the unfunded actuarial liability is determined as a level percentage of payroll, based on the Actuarial Amortization Method adopted by the Investment Board. 71 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 In fiscal year 2017, pursuant to the required rate, Regular members contributed 5.95 percent of pay and the City contributed 8.93 percent for a total rate of 14.88 percent. The City's total contributions to IPERS for the year ended June 30, 2017 were $2,645,105. At June 30, 2017, the City reported a liability of $24,938,496 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City's proportion of the net pension liability was based on the City's share of contributions to the pension plan relative to the contributions of all IPERS participating employers. At June 30, 2016, the City's proportion was .3962696% which was a decrease of .019656% from its proportions measured as of June 30, 2015. For the year ended June 30, 2017, the City recognized pension expense of $2,599,601. At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Change of assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between City contributions and proportionate share of contributions City contributions subsequent to the measurement date Total 72 Deferred Outflows of Deferred Inflows of Resources Resources 220,407 $ 297,631 380,484 3,552,947 1,250,940 2,645,105 $ 6,798,943 $ 1,548,571 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 $2,645,105 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended Total June 30, 2018 $ 121,419 June 30, 2019 121,419 June 30, 2020 1,561,079 June 30, 2021 866,632 June 30, 2022 (65,282) $ 2,605,267 Actuarial Assumptions The total pension liability in the June 30, 2016, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Rate of inflation 3.00 percent per annum (effective June 30, 2014) Salary increases 4.00 to 17.00 percent, average, including inflation. Rates vary by (effective June 30, 2010) membership group. Investment rate of return 7.50 percent, net of pension plan investment (effective June 30, 1996) expense, including inflation Wage growth 4.00 percent per annum based on 3.00 inflation and I.00 (effective June 30, 1990) real wage inflation The actuarial assumptions used in the June 30, 2016 valuation were based on the results of actuarial experience studies with dates corresponding to those listed above. Mortality rates were based on the RP -2000 Mortality Table for Males or Females, as approprlhte, with adjustments for mortality improvements based on Scale AA. 73 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 The long-term expected rate of return on pension plan investments was determined using a building-block method in which best -estimate ranges of expected future real rates (i.e., expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Core Plus Fixed Income Domestic Equity International Equity Private Equity/Debt Real Estate Credit Opportunities U.S. TIPS Other Real Assets Cash Target Allocation 28% 24 16 Long -Tenn Expected Real Rate of Return 1.9% 5.85 6.32 11 10.31 8 3.87 5 4.48 5 1.36 2 6.42 1 (0.26) Total 100% Discount Rate The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumed that contributions will be made at the contractually required rate and that the contributions from the City will be made at contractually required rates, actuarially determined. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivitv of Citv's Proportionate Share of the Net Pension Liabilitv to Changes in the Discount Rate The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the city's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 -percent lower (6.5 percent) or 1 -percent higher (8.5 percent) than the current rate. 1% Decrease Discount Rate 1% Increase (6.5%) (7.5%) (8.5%) City's proportionate share of the net pension liability: $ 40347,112 $ 24,938,496 $ 11,933,423 74 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Pension Plan Fiduciary Net Position Detailed information about the pension plan's fiduciary net position is available in the separately issued IPERS financial report which is available on IPERS' website at www.iners.org. Pavables to the Pension Plan At June 30, 2017, there were no amounts due to IPERS. 8. Other Long-term Liabilities Changes in Long -Term Liabilities - Notes Payable Note Payable activity for the year ended June 30, 2017, was as follows: Due Within July 1, 2016 Issues Retirements June 30, 2017 One Year Governmental activities: $ 211,000 $ $ - ti 211,000 $ A note payable was issued to Greater Iowa City Housing Fellowship for the purchase of an 11 unit apartment building for low income and disabled housing in the Peninsula Neighborhood. The terms of the loan are 1%, interest only payments for twenty years with a final balloon payment of $211,000 due on August 1, 2025. Changes in Long -Term Liabilities - Employee Vested Benefits Employee Vested Benefits activity for the year ended June 30, 2017, was as follows: For the governmental activities, employee vested benefits are generally liquidated by the General Fund, Community Development Block Grant Fund and Other Shared Revenue and Grants Fund. 75 Due Within July 1, 2016 Issues Retirements June 30, 2017 One Year Governmental activities: $ 2,133,179 $ 1,292,682 $ 1,185,014 $ 2,240,847 $ 1,251,482 Business -type activities: $ 678,973 $ 405,439 $ 392,471 $ 691,941 $ 401,049 For the governmental activities, employee vested benefits are generally liquidated by the General Fund, Community Development Block Grant Fund and Other Shared Revenue and Grants Fund. 75 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Changes in Long -Term Liabilities - Landfill Closure Post -closure Care Costs Landfill Closure Post -closure care activity for the year ended June 30, 2017, was as follows: Due Within July 1, 2016 Issues Retirements June 30, 2017 One Year Business -type activities: $ 8,268,394 $ 322,795 $ - $ 8,591,189 $ - In August 1993, the GASB issued Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Post -closure Care Costs (the Statement). Under these rules, in addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and post -closure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and post -closure care costs is based on the amount of the landfill used during the year. The estimated liability for landfill closure and post -closure care costs as of June 30, 2017, is $8,591,189, which is based on 52.16% usage (filled) of the landfill and is included in accrued liabilities within the Sanitation Fund. It is estimated that an additional amount of approximately $7,879,648 will be recognized as closure and post -closure care expenses between the date of the balance sheet and the date the landfill is expected to be filled to capacity by the year ended June 30, 2039. The estimated total current cost of the landfill closure and post -closure care costs at June 30, 2017, was determined by a licensed professional engineer and approximated at $16,470,837. It is based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of June 30, 2017. These amounts are based on an estimated post -closure care and monitoring period of 30 years, consistent with current State Department of Natural Resources regulations. However, the actual cost of closure and post -closure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City is required by federal and state laws and regulations to provide some form of financial assurance to finance closure and post -closure care. The City will meet its financial assurance obligations through the issuance of general obligation bonds. As of June 30, 2017, the Sanitation Fund had $13,227,106 in related equity in pooled cash and investments, at fair value designated for satisfaction of closure and post -closure costs. The City estimates that these cash reserves will only provide a fraction of the dollars needed to close and monitor the landfill. The remaining portion of post -closure care costs, anticipated future inflation costs and additional costs that might arise from changes in post -closure requirements (due to changes in technology or more rigorous environmental regulations, for example) may need to be covered by charges to future landfill users as well as City taxpayers. 76 CITY OF IOWA CITY, IOWA NOTES TO FINANCUL STATEMENTS (continued) June 30, 2017 Changes in Long -Term Liabilities - Other Postemployment Benefits Governmental activities: Business -type activities: July 1, 2016 $ 3,187,337 $ 1,095,202 Net OPEB Obligation Current Year $ 438,375 $ 123,398 June 30,2017 $ 3,625,712 $ 1,218,600 Plan Description: The City operates one self-funded medical and dental plan for all employees, which is offered to current and retired employees and their dependents. All full-time employees who retire or terminate/resign and their eligible dependents are offered the following post -employment benefit options: Health insurance and dental insurance — The option of continuing with the City's health insurance plan at the individual's expense. These benefits cease upon Medicare eligibility. Life insurance — The option of converting the employee's City -paid policy to an individual policy at the individual's expense with the City's life insurance carrier. Long-term disability — For employees who terminate/resign and have been on the plan for a minimum of one year, the option of converting the employee's City -paid group policy to a personal policy at the individual's expense with the City's long-term disability insurance carrier. The above options, while at the individual's own expense, are included within the City's overall insurance package, which results in an implicit rate subsidy and an OPEB liability. Funding Policy: The plan member's contribution requirements are established and may be amended by the City. The City currently finances the benefit plans on a pay-as-you-go basis. For governmental activities, this liability is expected to be liquidated by the General Fund. Annual OPEB Cost and Net OPEB Obligation: The City's annual OPEB cost is calculated based on the annual required contribution (ARC) of the City, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. 77 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 The following table shows the components of the City's annual OPEB cost for the year ended June 30, 2017, the amount actually contributed to the plans, and changes in the City's net OPEB obligation: Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB costs Contributions made Increase in net OPEB obligation Net OPEB obligation beginning of year Net OPEB obligation end of year $ 735,979 149,889 (147,747) 738,121 (176,348) 561,773 4,282,539 $ 4,844,312 For calculation of the net OPEB obligation, the actuary has set the transition day as July 1, 2008. The end of year net OPEB obligation was calculated by the actuary as the cumulative difference between the actuarially determined funding requirements and the actual contributions for the year ended June 30, 2017. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plans and the net OPEB obligation are summarized as follows: Percentage of Annual OPEB Cost Annual Year Ended OPEB Cost June 30, 2015 $ 573,338 June 30, 2016 $ 672,867 June 30, 2017 $ 738,121 Percentage of Annual OPEB Cost Net OPEB Contributed from City Obli ag tion 38.0% $3,969,641 53.5% $4,282,539 23.9% $4,844,312 Funded Status and Funding Progress: As of July 1, 2016, the most recent actuarial valuation date for the period July 1, 2016 through June 30, 2017, the actuarial accrued liability was $6,560,682, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of $6,560,682. The covered payroll (annual payroll of active employees covered by the plans) was $37,814,968 and the ratio of the UAAL to covered payroll was 17.3%. As of June 30, 2016, there were no trust fund assets. Actuarial Methods and Assumptions: Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Examples include assumption about future employments, mortality, and the health care cost trend. Actuarially determined amounts are subject to continual review as actual results are compared with past expectations and new estimates are made about the future. Actuarial calculations of the OPEB plan reflect a long-term perspective. The required schedule of funding progress, presented as required supplementary information in the section following the Notes to Financial Statements, will present multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 78 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. As of the July 1, 2016 actuarial valuation date, the actuarial cost method used is the entry -age normal method. The actuarial assumption includes a 3.5% discount rate and an inflation rate of 3% per annum. The projected annual medical trend rate is 9.0%. The ultimate medical trend rate is 5.0%. The medical trend rate is decreased to 8.5% for year two and then reduced by 0.5% each year until reaching the 5.0% ultimate trend rate. Mortality rates for active employees and retirees are from the SOA RPH-2014 Total Dataset Mortality table fully generational using Scale MP -2015. Annual retirement and termination probabilities were developed from the retirement probabilities from the MFPRSI and IPERS pension plan turnover tables, adjusted to be consistent with expected first fiscal year retirements. Projected claim costs of the health plan is $933.33 per month for retirees and $816.67 for their spouses. The salary increase rate was assumed to be 3.5% per year. The UAAL is being amortized as a level percentage of projected payroll expenses over 30 years on an open basis. 9. Short Term Debt Changes in Short -Term Liabilities - Notes Payable Notes Payable activity for the year ended June 30, 2017, was as follows: July 1, 2016 Issues Retirements Due Within June 30, 2017 One Year Governmental activities: $ 582,000 $ 669,000 $ 588,000 $ 663,000 $ 663,000 During FY17, the City entered into additional multiple short term loans totaling $669,000 and repaid multiple short term loans totaling $588,000. The outstanding loans mature one year from the date of the loan and bear interest rates ranging from 2% to 4.25%. The loans were used to fund the acquisition and rehabilitation of single family homes as part of the UniverCity Neighborhood Partnership Program (UniverCity). UniverCity is a cooperative effort of the City of Iowa City and the University of Iowa dedicated to ensuring that the University of Iowa Campus and surrounding neighborhoods remain vital, safe, affordable, and attractive places to live and work for both renters and homeowners. The short term loans have been repaid and will be repaid with the proceeds from the sale of the rehabilitated homes. 79 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 10. Fund Equity Fund balances for the governmental funds are reported in classifications that comprise a hierarchy based on the extent to which the government honors constraints on the specific purposes for which amounts in those funds can be spent. • The Nonspendable classification contains amounts not in spendable form or legally or contractually required to be maintained intact. • Restricted amounts contain restraint on their use externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. • Committed amounts can only be used for specific purposes imposed by formal action of the government's highest level of decision-making authority. The highest level of decision-making authority is the City Council and it takes a resolution to establish, modify or rescind a fund balance commitment. • Amounts intended to be used for specific purposes are Assigned. Assignments should not cause deficits in the Unassigned fund balance. The Finance Director has been delegated authority by the City Council through a resolution to assign amounts to be used for specific purposes. • Unassigned fund balance is the residual classification for the General Fund. The General Fund is the only fund that would report a positive amount in unassigned fund balance. Residual deficit amounts of other governmental funds would also be reported as unassigned. The City would use Restricted fund balances first, followed by Committed resources, and then Assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend Unassigned resources first to defer the use of these other classified funds. 80 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Components of Fund Balance Public Safety 348,934 - - - - 348,934 Local Option Sales Tax Bridge, - - - - 8,021,582 Debt Service - - - 7,756,146 - Street and GO Bond Projects - - 15,537,011 - 27,356,404 42,893,415 State Funding Tmfic Other 5,714,241 Grant Agreement - Employee Control Debt Govemmenlal - - - - 468,102 General Benefits Construction Service Funds Total Nonspendable: 86,800 - - - - 86,800 Public Safety Employee Perpetual Cam Principal $ 69,000 $ - $ - $ - $ - $ 69,000 Inventory - - - - 263,610 263,610 Prepaid Items 718,919 79,591 - - - 798,510 Total Nonspendable 787,919 79,591 - 263,610 1,131,120 Restricted for. Public Safety 348,934 - - - - 348,934 Local Option Sales Tax 8,021,582 - - - - 8,021,582 Debt Service - - - 7,756,146 - 7,756,146 GO Bond Projects - - 15,537,011 - 27,356,404 42,893,415 State Funding - - - - 5,714,241 5,714,241 Grant Agreement - - - - 3,911,201 3,911,201 Affordable Housing - - - - 468,102 468,102 Notes Receivable 1,291,801 - - - - 1,291,801 Property Held for Resale 86,800 - - - - 86,800 Public Safety Employee Benefits - 2,441,357 - - - 2,441,357 Other Restricted 224,712 - - 757,771 982,483 Total Restricted 9,973,829 2,441,357 15,537,011 7,756,146 38,207,719 73,916,062 Committed to: Emergency Fund 5,198,779 - - - 5,198,779 Total Committed 5,198,779 - - 5,198,779 Assigned to: Library Programs 814,236 - - - - 814,236 Senior Center Programs 13,882 - - - - 13,882 Replacement and Acquisition Reserves 378,811 - - - - 378,811 Other Assigned 135,390 - 135,390 Total Assigned 1.342,319 - - - 1,342,319 Unassigned: 24,793,417 - 24,793,417 Total Fund Balances $ 42,096,263 $ 2,520,948 $ 15.537,011 $ 7,756,146 $ 38,471,329 $106,381,697 11. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; workplace accidents, errors and omissions; and natural disasters. During fiscal year 1988 the City established the Loss Reserve Fund, an internal service fund, to account for and finance its uninsured risks of loss. During the year ended June 30, 2017 the City purchased property, liability, and workers' compensation insurance under the program that provides for a $100,000 self-insured retention per occurrence on property losses, a $500,000 self-insured retention per occurrence on liability, and a $500,000 self-insured retention on workers' compensation losses. The liability insurance provides coverage for claims in excess of the aforementioned self-insured retention up to a maximum of $21,000,000 annual aggregate of losses paid. Settled claims have not exceeded this commercial coverage in any of the past twenty nine fiscal years. The operating funds pay annual premiums to the Loss Reserve Fund. Accumulated monies in the Loss Reserve Fund are available to cover the self-insured retention amounts and any uninsured losses. 81 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 The Housing Authority Fund is insured under a separate policy with the Assisted Housing Risk Management Association. The remaining funds participate in the Loss Reserve Fund. The funds make payments to the Loss Reserve Fund based on actuarial estimates of the amounts needed to pay prior- and current -year claims and to establish a reserve for catastrophic losses. The Fund's accrued liabilities balance includes a claims liability at June 30, 2017 based on the requirements of GASB Statement No. 10, as amended, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in the Loss Reserve Fund's claims liability amount for property, liability, and workers' compensation for the years ended June 30, 2017 and 2016 are as follows: Also, the City is partially self-insured, through stop -loss insurance, for employee health care coverage, which is available to all of its permanent employees. This insurance provides stop -loss coverage for claims in excess of $125,000 per employee with an aggregate stop -loss of $9,716,893. The operating funds are charged premiums by the Loss Reserve Fund. The City reimburses a health insurance provider for actual medical costs incurred, plus a claims processing\administrative fee. Changes in the Loss Reserve Fund's claims liability amount for health care coverage for the years ended June 30, 2017 and 2016 are as follows: Current -Year Beginning -of- Claims and Fiscal -Year Changes in Claim Liability Estimates Payments 2015-2016 $ 568,000 $ 7,035,000 $ 7,253,000 2016— 2017 350,000 7,356,000 7,321,000 82 Balance at Fiscal Year -End 350,000 385,000 Current -Year Beginning -of- Claims and Balance at Fiscal -Year Changes in Claim Fiscal Liability Estimates Payments Year -End 2015 —2016 $ 2,536,000 $ 827,000 $ 874,000 $ 2,489,000 2016-2017 2,489,000 706,000 906,000 2,289,000 Also, the City is partially self-insured, through stop -loss insurance, for employee health care coverage, which is available to all of its permanent employees. This insurance provides stop -loss coverage for claims in excess of $125,000 per employee with an aggregate stop -loss of $9,716,893. The operating funds are charged premiums by the Loss Reserve Fund. The City reimburses a health insurance provider for actual medical costs incurred, plus a claims processing\administrative fee. Changes in the Loss Reserve Fund's claims liability amount for health care coverage for the years ended June 30, 2017 and 2016 are as follows: Current -Year Beginning -of- Claims and Fiscal -Year Changes in Claim Liability Estimates Payments 2015-2016 $ 568,000 $ 7,035,000 $ 7,253,000 2016— 2017 350,000 7,356,000 7,321,000 82 Balance at Fiscal Year -End 350,000 385,000 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 12. Commitments and Contingencies Contractual Commitments The total outstanding contractual commitments as of June 30, 2017 are as follows: Fund Project Amount Bridge, street and traffic Paving and Bridge Construction, control construction Engineering Design and Consulting $ 22,051,540 Parking Parking Facility Restoration Repair 529,689 Wastewater Sewer Construction & Riverfront Crossings Park 3,563,486 Water Ground Storage Resevoir & Water Plant Computer 45,341 Sanitation Landfill Cell Reconstruction & Road Improvements 552,749 Airport Runway, S. Taxiway Extension, N T -Hangar Restroom 71,888 Stormwater Stormwater system improvements & Storm Sewer 26,317 Replacements $ 26,841,010 Developer Commitments In order to encourage development within designated TIF districts, the City Council has approved developer grants to 7 different projects. The grants are to be paid only after certain conditions have been met by each project developer, and are to be paid over many years in the form of a rebate of a predetermined percentage of future property taxes generated by the property. Currently, it is estimated that outstanding commitments totaling $25,526,444 exist, of which $330,157 is expected to be paid in the next fiscal year. These items are expensed in the period in which they are paid. There were no payments made in the current fiscal year. No liability is recognized due to the fact that the agreements are conditional and the payments are to be funded by future property taxes receivable on the project. 83 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 13. Contingent Liabilities Litigation The City is a defendant in a number of lawsuits arising principally from claims against the City for alleged improper actions by City employees, with such lawsuits typically involving claims of improper police action, unlawful taking of property by zoning, negligence, appeals of condemnations, and discrimination. Total damages claimed are substantial; however, it has been the City's experience that such actions are settled for amounts substantially less than claimed amounts. The City's management estimates that the potential claims against the City, not covered by various insurance policies, would not materially affect the financial condition of the City. The City has the authority to levy additional taxes (outside the regular limit) to cover uninsured judgments against the City. 14. Accounting Change/Restatement Beginning fund balances for the General Fund and the Community Development Block Grant Fund (a nonmajor governmental fund) were restated to reflect the reclassification of deferred inflow of resources to restricted fund balance for notes receivable. Long-term notes receivable were previously recorded as a deferred inflow of resources, as their revenue was not considered available. However, in evaluating the balances during the current year, it was determined that the presentation would be more representative to reflect the long-term note receivable balances as part of restricted fund balance. Restatements of fund balances previously reported are as follows: (Amounts in thousands) Effect of Reclassification of Fund Balances Deferred Inflow of Ending June 30, 2016 Resources to Fund Balances as Previously Restricted Fund Ending June 30, 2016 Fund Reported Balance as Restated General $ 48,252 $ 1249 $ 49,501 Other Governmental Funds $ 16,851 $ 3,360 $ 20,211 15. Tax Abatements Governmental Accounting Standards Board Statement No. 77 defines tax abatements as a reduction in tax revenues that results from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax revenues to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments. 84 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 City Tax Abatements The City provides tax abatements for urban renewal and economic development projects with tax increment financing as provided for in Chapters 15A and 403 of the Code of Iowa. For these types of projects, the City enters into agreements with developers which require the City, after developers meet the terms of the agreements, to rebate a portion of the property tax paid by the developers, to pay the developers an economic development grant or to pay the developers a predetermined dollar amount. No other commitments were made by the City as part of these agreements. For the year ended June 30, 2017, the City did not abate any property tax under the urban renewal and economic development projects. Tax Abatements of Other Entities Property tax revenues of the City were not reduced by any amount for the year ended June 30, 2017 under agreements entered into by any entities. 16. New Governmental Accounting Standards Board (GASB) Standards The Governmental Accounting Standards Board (GASB) has issued seven statements not yet implemented by the City. The statements, which might impact the City's financial statements, are as follows: Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, will be effective for fiscal year ending June 30, 2018. The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. Statement No. 81, Irrevocable Split -Interest Agreements, will be effective for fiscal year ending June 30, 2018. The objective of this Statement is to improve accounting and financial reporting for irrevocable split interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. Statement No. 83, Certain Asset Retirement Obligations, will be effective for fiscal year ending June 30, 2019. The objective of this Statement is to address legally enforceable liabilities associated with tangible capital assets. Statement No. 84, Fiduciary Activities, will be effective for fiscal year ending June 30, 2020. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. Statement No. 85, Omnibus 2017, will be effective for fiscal year ending June 30, 2018. The objective of this Statement is to address practice issues that have been identified during implementation and application of certain GASB Statements. 11 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2017 Statement No. 86, Certain Debt Extinguishment Issues, will be effective for fiscal year ending June 30, 2018. The primary objective of this Statement is to improve consistency in accounting and financial reporting for in -substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources—resources other than the proceeds of refunding debt—are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. Statement No. 87, Leases, will be effective for fiscal year ending June 30, 2021. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. The City's management has not yet determined the effect these statements will have on the City's financial statements. M. 87 CITY OF IOWA CITY BUDGETARY COMPARISON SCHEDULE BUDGET AND ACTUAL - ALL GOVERNMENTAL FUNDS AND ENTERPRISE FUNDS BUDGETARY BASIS REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2017 (dollar amounts expressed in thousands) Governmental Fund Types Enterprise Fund Actual Budgetary Types Actual Total Actual Basis Budgetary Basis Budgetary Basis Revenues: Public safety Property taxes $ 55,357 $ - $ 55,357 Delinquent property taxes I - 1 Tax increment financing taxes 2,226 - 2,226 Other city taxes 2,868 - 2,868 Special assessments - - - Licenses and permits 3,521 10 3,531 Intergovernmental 24,573 14,592 39,165 Charges for services 5,718 39,954 45,672 Use of money and property 1,168 1,754 2,922 Miscellaneous 3,560 1,488 5,048 Total revenues 98,992 57,798 156,790 Expenditures/Expenses: Public safety 22,963 - 22,963 Public works 7,948 - 7,948 Health and social services 301 - 301 Culture and recreation 13,782 - 13,782 Community and economic development 8,105 - 8,105 General government 8,166 - 8,166 Debt service 15,218 - 15,218 Capital outlay 32,903 - 32,903 Business -type - 66,545 66,545 Total expenditures/expenses 109,386 66,545 175,931 Excess (deficiency) of revenues over (under) expenditures/expenses (10,394) (8,747) (19,141) Other financing sources and uses, net 25,551 11,995 37,546 Net change in fund balances 15,157 3,248 18,405 Balances, beginning of year 85,925 107,044 192 Balances, end of year $ 101,082 $ 110,292 $ 211 See Note to Required Supplementary Information. 88 Amounts Final to Actual Variance - Positive Original Final (Negative) $ 55,330 $ 55,330 $ 27 1 2,277 2,277 (51) 2,773 2,773 95 1 1 (1) 1,739 1,739 1,792 32,760 41,140 (1,975) 44,894 45,045 627 2,184 2,285 637 4,637 5,153 (105) 146,595 155,743 1,047 23,533 23,995 1,032 9,309 9,328 1,380 350 350 49 14,042 14,141 359 7,510 11,170 3,065 9,209 9,085 919 15,146 15,390 172 35,452 79,145 46,242 53,713 79,697 13,152 168,264 242,301 66,370 (21,669) (86,558) 67,417 18,080 27,319 10,227 (3,589) (59,239) $ 77,644 128,702 192,969 $ 125,113 $ 133,730 89 CITY OF IOWA CITY BUDGETARY COMPARISON SCHEDULE BUDGET TO GAAP RECONCILIATION REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2017 (dollar amounts expressed in thousands) Revenues Expenditures Net Other financing sources and uses, net Beginning Fund Balances Ending Fund Balances Revenues Expenditures Net Other financing sources and uses, net Beginning Fund Balances Ending Fund Balances Governmental Fund Types Accrual Modified Accrual Budget Basis Adjustments Basis $ 98,992 $ (4,438) $ 94,554 109,386 (17,462) 91,924 (10,394) 13,024 2,630 25,551 (12,927) 12,624 85,925 5,202 91,127 $ 101,082 $ 5,299 $ 106,381 Enterprise Fund Types Accrual Accrual Budget Basis Adjustments Basis $ 57,798 $ 1,266 $ 59,064 66,545 (11,418) 55,127 (8,747) 12,684 3,937 11,995 (5,326) 6,669 107,044 250,670 357,714 $ 110,292 $ 258,028 $ 368,320 See Note to Required Supplementary Information. .E City of Iowa City, Iowa Note to Required Supplementary Information - Budgetary Reporting For the Year Ended June 30, 2017 In accordance with the Code of Iowa, the City Council annually adopts a budget following required public notice and hearing which includes all funds, except internal service funds and agency funds. The budget basis of accounting is a modified accrual basis. The annual budget may be amended during the year utilizing similar statutorily prescribed procedures. Formal and legal budgetary control is based upon nine major classes of expenditures known as functions, not by fund or fund type. These nine functions are: public safety, public works, health and social services, culture and recreation, community and economic development, general government, debt service, capital outlay and business -type. The legal level control is at the aggregated function level, not at the fund or fund type level. During the year, budget amendments increased budgeted revenues by $9,148,000 and expenditures by $74,037,000. The budget amendments were primarily due to changes in the breadth and timing of capital improvement projects, which the City budgets in full during the initial year of the projects and amends future year budgets for carryover. 92 City of Iowa City, Iowa Required Supplementary Information -Schedule of the City's Proportionate Share of the Net Pension Liability Municipal Fire and Police Retirement System of Iowa For the Last Three Years - (amounts expressed in thousands) • In accordance with GASB Statement No. 68, the amounts presented for each fiscal year were determined as of June 30 of the preceding fiscal year. Note: GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10 -year trend is compiled, the City will present information for those years for which information is available. M 2017 2016 2015 City's proportion of the net pension liability 3.697128% 3.704972% 3.778137% City's proportionate share of the net pension liability S 23,117 S 17,406 S 13,696 City's covered payroll 10,019 9,716 9,648 City's proportionate share of the net pension liability as a percentage of its covered payroll 230.73% 179.15% 141.96% Plan fiduciary net position as a percentage of the total pension liability 78.20% 83.04% 86.27% • In accordance with GASB Statement No. 68, the amounts presented for each fiscal year were determined as of June 30 of the preceding fiscal year. Note: GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10 -year trend is compiled, the City will present information for those years for which information is available. M City of Iowa City, Iowa Required Supplementary Information - Schedule of the City's Contributions Municipal Fire and Police Retirement System of Iowa For the Last Ten Years (amounts expressed in thousands) 94 2017 2016 2015 2014 Statutorily required contributions $ 2,682 $ 2,782 $ 2,955 $ 2,906 Contributions in relation to the statutorily required contribution (2,682) (2,782) (2,955) (2,906) Contribution deficiency (excess) $ $ $ $ - City's covered payroll $ 10,347 $ 10,019 $ 9,716 $ 9,648 Contributions as a percentage of covered payroll 25.92% 27.77% 30.41% 30.12% 94 2013 2012 2011 2010 2009 2008 $ 2,383 $ 2,277 $ 1,654 $ 1,336 $ 1,425 $ 1,893 (2,383) (2,277) (1,654) (1,336) (1,425) (1,893) $ $ $ $ $ $ $ 9,122 $ 9,197 $ 8,310 $ 7,860 $ 7,601 $ 7,430 26.12% 24.76% 19.90% 17.00% 18.75% 25.48% 95 City of Iowa City, Iowa Notes to Required Supplementary Information - Pension Liability Municipal Fire and Police Retirement System of Iowa Year ended June 30, 2017 Chan_ees of benefit tenns: There were no significant changes of benefit terms. Chances of assumptions: Postretirement mortality changed to the RP -2000 Blue Collar Combined Healthy Mortality Table with males set -back two years, females set -forward one year and disableds set -forward one year (male only rates), with no projection of future mortality improvement. M City of Iowa City, Iowa Required Supplementary Information -Schedule of the City's Proportionate Share of the Net Pension Linbility Iowa Public Employees' Retirement System For the Last Three Years - (amounts expressed in thousands) • In accordance with GASB Statement No. 68, the amounts presented for each fiscal year were determined as of June 30 of the preceding fiscal year. Note: GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10 -year trend is compiled, the City will present information for those years for which information is available. M 2017 2016 2015 City's proportion of the net pensionliability 0.3962696% 0.4159256% 0.4378904% City's proportionate share of the net pension liability $ 24,938 $ 20,549 S 17,366 Citys covered payroll 28,448 28,495 28,654 City's proportionate share of the net pension liability as a percentage of its covered payroll 87.66% 72.11% 60.61% Plan fiduciary net position as a percentage of the total pension liability 81.82% 85.19% 87.61% • In accordance with GASB Statement No. 68, the amounts presented for each fiscal year were determined as of June 30 of the preceding fiscal year. Note: GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10 -year trend is compiled, the City will present information for those years for which information is available. M City of Iowa City, Iowa Required Supplementary Information - Schedule of the City's Contributions Iowa Public Employees' Retirement System For the Last Ten Years (amounts expressed in thousands) 98 2017 2016 2015 2014 Statutorily required contributions $ 2,645 $ 2,540 $ 2,545 $ 2,559 Contributions in relation to the statutorily required contribution (2,645) (2,540) (2,545) (2,559) Contribution deficiency (excess) $ - $ $ $ - City's covered payroll $ 29,619 $ 28,448 $ 28,495 $ 28,654 Contributions as a percentage of covered payroll 8.93% 8.93% 8.93% 8.93% 98 2013 2012 2011 2010 2009 2008 $ 2,442 $ 2,327 $ 1,877 $ 1,780 $ 1,659 $ 1,522 (2,442) (2,327) (1,877) (1,780) (1,659) (1,522) $ 28,170 $ 28,833 $ 27,013 $ 26,764 $ 26,133 $ 25,151 8.67% 8.07% 6.95% 6.65% 6.35% 6.05% 061 City of Iowa City, Iowa Notes to Required Supplementary Information - Pension Liability Iowa Public Employees' Retirement System Year ended June 30, 2017 Chances of benefit teens: Legislation passed in 2010 modified benefit terms for current Regular members. The definition of final average salary changed from the highest three to the highest five years of covered wages. The vesting requirement changed from four years of service to seven years. The early retirement reduction increased from 3 percent per year measured from the member's fust unreduced retirement age to a 6 percent reduction for each year of retirement before age 65. Changes of assumptions: The 2014 valuation implemented the following refinements as a result of a quadrennial experience study: • Decreased the inflation assumption from 3.25 percent to 3.00 percent • Decreased the assumed rate of interest on member accounts from 4.00 percent to 3.75 percent per year. • Adjusted male mortality rates for retirees in the Regular membership group. • Moved from an open 30 year amortization period to a closed 30 year amortization period for the UAL beginning June 30, 2014. Each year thereafter, changes in the UAL from plan experience will be amortized on a separate closed 20 year period. The 2010 valuation implemented the following refinements as a result of a quadrennial experience study: • Adjusted retiree mortality assumptions. • Modified retirement rates to reflect fewer retirements. • Lowered disability rates at most ages. • Lowered employment termination rates • Generally increased the probability of terminating members receiving a deferred retirement benefit. • Modified salary increase assumptions based on various service duration. 100 City of Iowa City, Iowa Required Supplementary Information — Schedule of Funding Progress for Health and Dental Plans For the Year Ended June 30, 2017 101 UAAL As a Actuarial Actuarial Actuarial Percentage of Valuation Fiscal Value of Accrued Unfunded AAL Funded Covered Date Year Assets Liability (AAL) (UAAL) Ratio Covered Payroll Payroll July 1, 2012 June 30, 2013 $ $ 7,163,715 $ 7,163,715 0.00% $ 34,992,423 20.5% July 1, 2014 June 30, 2015 $ $ 5,150,697 $ 5,150,697 0.00% $ 35,972,242 14.3% July 1, 2016 June 30, 2017 $ $ 6,560,682 $ 6,560,682 0.00% $ 37,814,968 17.3% 101 11M NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special Revenue Funds account for revenues derived from specific sources that are required to be accounted for as separate funds. The funds in this category and their purpose are as follows: Economic Development Fund — accounts for revenue and expenditures of economic development activities. Community Development Block Grant Fund — accounts for revenue from the U.S. Department of Housing and Urban Development's Community Development Block Grant programs. Other Shared Revenue and Grants Fund — accounts for revenue from various sources, primarily road use tax monies from the State of Iowa and reimbursable programs funded by federal and state grants. Metropolitan Planning Organization of Johnson County Fund — accounts for the financial activities of the metropolitan/rural cooperative planning organization. CAPITAL PROJECT FUND Capital Projects Funds are utilized to account for all resources used in the acquisition and construction of capital facilities and other major fixed assets, with the exception of those that are financed by proprietary fund monies. The fund in this category is as follows: Other Construction Fund - accounts for the construction or replacement of other City general fixed assets, such as administrative buildings with various funding sources, including general obligation bonds, intergovernmental revenues, and contributions. WIN L.I�rcayn�v�ktiu COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2017 (amounts expressed in thousands) Assets Equity in pooled cash and investments S 476 $ 24 $ Capital Spacial Revenue Receivables: Projects 444 444 Metropolitan 85 Community Other Planning - Development Shared Organization - Economic Block Revenue and of Johnson Other Development Grant Grants County Construction Total Assets Equity in pooled cash and investments S 476 $ 24 $ 5,029 S 227 $ 19,703 $ 25,459 Receivables: 117 444 444 1 85 Property tax 327 - - - - 327 Accounts and unbilled usage - - 1 - - I Interest 2 - 2 1 24 29 Notes - 3,833 - - - 3,833 Due from other governments - 113 1,039 49 117 1,318 Inventories - - 264 - - 264 Restricted assets: Equity in pooled cash and investments - 476 - 8.544 9,020 Total assets $ 805 $ 3,970 $ 6,811 $ 277 S 28.388 S 40251 Ltabilifies, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable $ - Contracts payable - Accrued liabilities - Advances from other funds - Due to other governments - Liabilities payable from restricted assets: Deposits Advances from grantors Total liabilities Deferred inflows of resources: Unavailable revenues: Succeeding year pmperty Lues (hands Other Total deferred inflows of sources Fund balances: Nonspendable Restricted Total fwd balances Total liabilifies, deferred inflows of resources end fwd bah.ces $ 23 $ 42 $ 5 $ 360 $ 430 - - 117 444 444 1 85 15 - 101 - 125 6,521 257 27,356 125 4 4 6 6 27 110 137 24 289 20 914 1,247 323 - - - - 323 - 91 1 - 25 117 257 27.356 38,207 93 93 323 91 1 118 533 - - 264 - - 264 482 3,855 6,257 257 27.356 38,207 482 3,855 6,521 257 27,356 38,471 S 805 S 3,970 $ 6,811 S 277 S 28388 $ 40.251 104 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2017 (amounts expressed in thousands) Revenues Capital Special Revenue Projects $ 2,516 S - $ Metropolitan - $ - Community Other Planning 1,110 Development Shared Organization Charges for services Economic Block Revenue and of Johnson Other Development Grant Grants County Construction Total Revenues Current: Property taxes $ 2,516 S - $ - $ - $ - $ 2,516 Intergovernmental 29 1,110 9,205 291 614 11,249 Charges for services - - 67 - 299 366 Use of money and property 4 20 81 1 40 146 Miscellaneous I1 50 94 4 248 396 Total revenues 2,549 1,180 9,447 296 1,201 14,673 Expenditures Current: (under) expenditures Public safety - - - - 24 24 Public works - - 5,052 - 41 5,093 Culture and recreation - - - - 451 451 Community and economic Issuance of debt - - development 318 963 711 609 2,020 4,621 General government - - - - 11 I1 Capital outlay 597 - 1,641 2,238 Total expenditures 318 963 6,360 609 4,188 12,438 Excess (deficiency) of revenues over (under) expenditures 2,231 217 3,087 (313) (2,987) 2,235 Other Financing Sources (Uses) Issuance of debt - - - - 15,893 15,893 Sale of capital assets - - - - 2,024 2,024 Premium on issuance of bonds - - - - 85 85 Transfers in - 4 336 268 5,204 5,812 Transfers out (1,988) (175) (4,014) (1,612) (7,789) Total other financing sources and (uses) (1,988) (171) (3,678) 268 21,594 16,025 Net change in fund balances 243 46 (591) (45) 18,607 18,260 Fund Balances, Beginning, as restated 239 3,809 7,112 302 8,749 20,211 Fund Balances, Ending $ 482 $ 3,855 S 6,521 S 257 $ 27,356 $ 38,471 105 106 NONMAJOR ENTERPRISE FUNDS Enterprise Funds account for operations and activities of the City that are financed and operated in a manner similar to a private business enterprise, and where the costs of providing services to the general public on a continuing basis are expected to be financed or recovered primarily through user charges, or where the City has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The funds in this category are as follows: Airport Fund — accounts for the operation and maintenance of the airport facility. Transit Fund — accounts for the operation and maintenance of the public transportation system. 107 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS June 30, 2017 (amounts expressed in thousands) 108 Airport Transit Total Assets Current assets: Equity in pooled cash and investments $ 238 $ 4,992 $ 5,230 Receivables: Accounts and unbilled usage 24 15 39 Interest 1 15 16 Due from other governments 114 2,068 2,182 Inventories - 294 294 Prepaid item 3 3 Total current assets 380 7,384 7,764 Noncurrent assets: Restricted assets: Equity in pooled cash and investments 111 50 161 Other post employment benefits asset 3 - 3 Capital assets: Land 12,158 2,630 14,788 Buildings 5,377 15,399 20,776 Improvements other than buildings 396 - 396 Machinery and equipment 281 10,332 10,613 Infrastructure 17,758 955 18,713 Accumulated depreciation (8,704) (14,784) (23,488) Construction in progress 66 476 542 Total noncurrent assets 27,446 15,058 42,504 Total assets 27,826 22,442 50,268 Deferred Outflows of Resources Pension related deferred outflows 14 686 700 Liabilities Current liabilities: Accounts payable 8 159 167 Contracts payable 51 - 51 Accrued liabilities 2 136 138 Employee vested benefits 2 115 117 Due to other governments - 16 16 Total current liabilities 63 426 489 Noncurrent liabilities: Liabilities payable from restricted assets: Deposits 10 6 16 Employee vested benefits 1 82 83 Net pension liability 49 2,428 2,477 Other post employment benefits obligation 337 337 Total noncurrent liabilities 60 2,853 2,913 Total liabilities 123 3,279 3,402 Deferred Inflows of Resources Pension related deferred inflows 3 153 156 Net Position Net investment in capital assets 27,332 15,008 42,340 Restricted for future improvements 100 - 100 Unrestricted 282 4,688 4,970 Total net position $ 27,714 $ 19,696 $ 47,410 108 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION NONMAJOR ENTERPRISE FUNDS For the Year Ended June 30, 2017 (amounts expressed in thousands) IDYL Airport Transit Total Operating Revenues: Charges for services $ 345 $ 2,089 $ 2,434 Miscellaneous 2 62 64 Total operating revenues 347 2,151 2,498 Operating Expenses: Personal services 76 3,966 4,042 Commodities 105 646 751 Services and charges 239 1,883 2,122 420 6,495 6,915 Depreciation 997 887 1,884 Total operating expenses 1,417 7,382 8,799 Operating loss (1,070) (5,231) (6,301) Nonoperating Revenues: Gain on disposal of capital assets - 3 3 Operating grants 69 2,235 2,304 Interest income 1 29 30 Total nonoperating revenues 70 2,267 2,337 Loss before capital contributions and transfers (1,000) (2,964) (3,964) Capital contributions 58 395 453 Transfers in 113 3,272 3,385 Change in net position (829) 703 (126) Net Position, Beginning 28,543 18,993 47,536 Net Position, Ending $ 27,714 $ 19,696 $ 47,410 IDYL CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS For the Year Ended June 30, 2017 (amounts expressed in thousands) Cash Flows From Operating Activities Receipts from customers and users Payments to suppliers Payments to employees Net cash flows used for operating activities Cash Flows From Noncapital Financing Activities Operating grants received Transfers from other funds Net cash flows from noncapital financing activities Cash Flows From Capital and Related Financing Activities Capital grants received Acquisition and construction of property and equipment Proceeds from sale of property Net cash flows used for capital and related financing activities Cash Flows From Investing Activities Interest on investments Net decrease in cash and cash equivalents Cash and Cash Equivalents, Beginning Cash and Cash Equivalents, Ending Reconciliation of operating loss to net cash flows used for operating activities: Operating loss Adjustments to reconcile operating loss to net cash flows used for operating activities: Depreciation expense Changes in: Receivables: Accounts and unbilled usage Due from other governments Inventories Prepaid item Accounts payable Accrued liabilities Employee vested benefits Due to other governments Net pension liability Deferred outflows of resources Deferred inflows of resources Other post employment benefits assetlobligation Total adjustments Net cash flows used for operating activities Airport Transit Total $ 350 $ 2,147 $ 2,497 (344) (2,872) (3,216) (75) (3,900) (3,975) (69) (4,625) (4,694) 29 612 641 113 3,272 3,385 142 3,884 4,026 151 - 151 (472) (475) (947) 3 3 (321) (472) (793) 26 26 (248) (1,187) (1,435) 597 6,229 6,826 $ 349 $ 5,042 $ 5,391 $ (1,070) $ (5,231) $ (6,301) 997 887 1,884 3 (5) (2) 1 - 1 (14) (14) (3) (3) 3 (301) (298) 9 9 (1) (1) - (28) (28) 9 442 451 (7) (347) (354) (2) (86) (88) 1 49 50 1,001 606 1,607 $ (69) _L_L4,6251 $ (4,694) 110 INTERNAL SERVICE FUNDS Internal Service Funds account for goods and services provided by one department to other City departments on a cost -reimbursement basis. The funds in this category are: Equipment Maintenance Fund — accounts for the provision of maintenance for City vehicles and equipment and vehicle rental to other City departments from a central vehicle pool. Central Services Fund — accounts for the support services of photocopying, mail, overnight shipping, and two-way radios provided to other City departments. Loss Reserve Fund — accounts for the property, liability, Workers' Compensation and health insurance premiums and claims activity for City departments, including the self-insured retention portion. Information Technology Fund — accounts for the accumulation and allocation of costs associated with telecommunications and data processing, including the operation and replacement of equipment. 111 CITY OF IOWA CITY COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS Assets Current assets: Equity in pooled cash and investments Receivables: Accounts and unbilled usage Interest Due from other governments Inventories Prepaid item Total current assets Noncurrent assets: Restricted assets: Other post employment benefits asset Capital assets: Land Buildings Improvements other than buildings Machinery and equipment Infrastructure Accumulated depreciation Construction in progress Total noncurrent assets Total assets Deferred Outflows of Resources Pension related deferred outflows Liabilities Current liabilities: Accounts payable Accrued liabilities Employee vested benefits Total current liabilities Noncurrent liabilities: Employee vested benefits Net pension liability Other post employment benefits obligation Total noncurrent liabilities Total liabilities Deferred Inflows of Resources Pension related deferred inflows Net Position Net investment in capital assets Unrestricted Total net position June 30, 2017 (amounts expressed in thousands) Equipment Central Maintenance Services $ 13,209 $ 715 $ Loss Information Reserve Technology Total 14,842 $ 2,651 $ 31,417 - - 157 - 157 42 2 37 8 89 67 - - - 67 466 - 466 - - 12 12 13,784 717 15,036 2,671 32,208 15 - 20 35 45 8 258 98 - 45 1,298 - - 233 1,531 50 - - - 50 19,271 804 24 2,234 22,333 - 31 - 2,818 2,849 (12,228) (307) (24) (2,787) (15,346) - - - 493 493 8,451 528 20 2,991 11,990 22,235 1,245 15,056 5,662 44,198 167 6 38 170 381 122 8 258 98 486 31 1 2,681 33 2,746 38 1 2 22 63 191 10 2,941 153 3,295 30 1 1 18 50 600 20 118 659 1,397 - 7 - 90 97 630 28 119 767 1,544 821 38 3,060 920 4,839 38 8 8,436 528 - 13,107 684 12,026 41 88 2,991 11,955 1,880 27,697 $ 21,543 $ 1,212 $ 12,026 $ 4,871 $ 39,652 112 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS Operating Revenues: Charges for services Total operating revenues Operating Expenses: Personal services Commodities Services and charges Depreciation Total operating expenses Operating income (loss) Nonoperating Revenues: Gain on disposal of capital assets Interest income Total nonopemting revenues Income (loss) before transfers Capital contributions Transfers in Transfers out Change in net position Net Position, Beginning Net Position, Ending For the Year Ended June 30, 2017 (amounts expressed in thousands) Equipment Central Loss Information Maintenance Services Reserve Technology Total $ 5,913 $ 238 $ 10,072 $ 2,132 $ 18,355 5,913 238 10,072 2,132 18,355 978 36 205 956 2,175 1,474 10 12 342 1,838 545 150 8,446 314 9,455 2,997 196 8,663 1,612 13,468 1,494 60 1 243 1,798 4,491 256 8,664 1,855 15,266 1,422 (18) 1,408 277 3,089 84 - - - 84 69 4 74 16 163 153 4 74 16 247 1,575 (14) 1,482 293 3,336 - 35 35 559 - - 763 1,322 (505) (505) 2,134 (14) 1,482 586 4,188 19,409 1,226 10,544 4,285 35,464 $ 21,543 $ 1,212 $ 12,026 $ 4,871 $ 39,652 113 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended lune 30, 2017 (amounts expressed in thousands) Noncash Investing, Capital, and Financing Activities: Contributions of capital assets from government and others $ - $ - $ - $ 35 $ 35 114 Equipment Central Loss Information Maintenance Services Reserve Technology Total Cash Flows From Operating Activities Receipts from customers and users $ 5,889 $ 238 S 10,059 $ 2,132 $ 18,318 Payments to suppliers (2,702) (159) (8,365) (619) (11,845) Payments to employees (965) (36) (370) (924) (2,295) Net cash flows from operating activities 2,222 43 1,324 589 4,178 Cash Flows From Noncaphal Financing Activities Transfers from other funds 559 - - 763 1,322 Transfers to other funds (505) (505) Net cash flows from noncapiml financing activities 559 258 817 Cash Flows From Capital and Related Financing Activities Acquisition and construction of properly and equipment (2,270) (5) - (861) (3,136) Proceeds from sale of property 128 128 Net cash flows used for capital and related financing activities (2,142) (5) (861) (3,008) Cash Flows From investing Activities Interest on investments 57 4 71 15 147 Net increase in cash and cash equivalents 696 42 1,395 1 2,134 Cash and Cash Equivalents, Beginning 12,513 673 13,447 2,650 29,283 Cash and Cash Equivalents, Ending $ 13,209 $ 715 $ 14,842 $ 2,651 $ 31,417 Reconciliation of operating income (loss) to net cash flows from operating activities: Operating income (loss) $ 1,422 $ (18) $ 1,408 $ 277 $ 3,089 Adjustments to reconcile operating income (lass) to net cash flows from operating activities: Depreciation expense 1,494 60 1 243 1,798 Changes in: Receivables: Accounts and unbilled usage - - (13) - (13) Due from other governments (24) - - - (24) Inventories 5 - - - 5 Prepaid item - - - (12) (12) Accounts payable (688) 1 93 49 (545) Accrued liabilities 4 - (164) 9 (151) Employee vested benefits 6 - (3) 7 10 Net pension liability 106 3 23 117 249 Deferred outflows of resources (84) (3) (20) (79) (186) Deferred inflows of resources (23) (1) (2) (30) (56) Other post employment benefits asset/obligation 4 1 1 8 14 Total adjustments 800 61 (84) 312 1,089 Net cash flows from operating activities $ 2,222 $ 43 $ 1,324 $ 589 $ 4,178 Noncash Investing, Capital, and Financing Activities: Contributions of capital assets from government and others $ - $ - $ - $ 35 $ 35 114 AGENCY FUND The Agency Fund accounts for assets held by the City in a trustee or custodial capacity for other entities, such as individuals, private organizations, or other governmental units. The fund in this category is: Project Green Fund — accounts for donations that are received to plant and develop yards and lawns, both public and private, within Iowa City. 115 CITY OF IOWA CITY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS Project Green Assets Equity in pooled cash and investments Interest receivable Total assets Liabilities Accounts payable Due to agency Total liabilities For the Year Ended June 30, 2017 (amounts expressed in thousands) Balance Balance July 1, 2016 Increases Decreases June 30, 2017 $ 175 $ 72 $ 84 $ 163 $ 175 $ 73 $ 84 $ 164 $ 10 $ 4 $ 10 $ 4 165 69 74 160 $ 175 $ 73 $ 84 $ 164 116 Statistical Section Tabs Statistical Section This part of the City of Iowa City's comprehensive annual financial report represents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents Page Financial Trends 119 These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity 124 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 134 These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information 144 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information 146 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial report for the relevant year. 117 118 CITY OF IOWA CITY, IOWA NET POSITION BY COMPONENT Last Ten Fiscal Years (Accrual basis of accounting) (amounts expressed in thousands) ' The City of Iowa Gty reclassified the Mass Transportation Fund from the General fund io an Enterprise Fund effective the fiscal year ending June 30, 2013. 'The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. 119 2008 2009 2010 2011 2012 2013' 2014 2015 2016' 2017 Governmental activities Net investment in capital assets $ 104,833 S 100,741 $ 111,703 S 123,935 S 135,998 S 133,989 S 138,482 S 153,729 S 163,362 S 183,651 Restricted 23,741 26,586 25,588 31,179 35,021 22,867 39,958 36,447 42,154 47,676 Unrestricted 1,119 17,938 32,478 36,862 38,906 50,744 39,758 15,520 18,402 16,264 Total governmental activities net position S 129.693 TI S 169,769 $ 191.976 $ 209,925 S 207,600 S 218.198 -T-205 $ 223.918 S 247.591 Business -type activities Net investment in capital assets S 156,075 S 162,211 $ 172,601 S 186,177 S 195,073 S 253,617 S 264,727 S 279,272 S 279,679 S 285,912 Restricted 21,320 19,159 17,588 20,658 20,176 19,033 19,438 22,389 22,269 21,238 Unrestricted 60,225 63,842 65,725 61,032 58,850 74,370 71,542 57,367 69,472 76,664 Total business -type activities net position T237 S 245,212 $ 255.914 -T2-6-7-867 _T2_74 -§-3-4-7-020 S 355,707 -T3-5-9-08 $ 371,420 $ 383.814 Primary government Net investment in capital assets S 260,908 S 262,952 S 284,304 S 310,112 S 331,071 S 387,606 S 403,209 S 433,001 S 443,041 S 469,563 Restricted 45,061 45,025 43,176 51,837 55,197 41,900 59,396 58,836 64,423 68,914 Unrestricted 61,344 82,500 98,203 97,894 97,756 125,114 111,300 72,887 87,874 92,928 Total primary government net position $ 367 313 S 390,477 S 425,683 $ 459,843 S 484,024 $ 554,620 S 573,905 S 564,724 $ 595,338 S 631,405 ' The City of Iowa Gty reclassified the Mass Transportation Fund from the General fund io an Enterprise Fund effective the fiscal year ending June 30, 2013. 'The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. 119 Expenses Gmemmrntal activities: Public safety Public works Culture and recreation Community and economic development General government Debt service Total governmental activities expenses Business-typc activities: Wastewater Water Sanitation Housingauthority Parking Airport St.nowstcr Cable television Transit Total business -type activities expenses Total primary government expenses Program Revenues Govemmental activities: Charges for services Public safety Public works Culture and recreation Community and economic development General government Operating grants and contributions Capital grants and contributions Total govemmenul activities program revenues Business -type activities: Charges for services: Wastewater Water Sanitation Housing authority Parking Airport Stormwater Cable Television Transit' CITY OF IOWA CITY, IOWA CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual basis ofacwunting) (amounts expressed in thousands) 2008 2009 2010 2011 2012 2013r 2014 201ST 11,866 2M 8,8114 9,185 8,309 8,523 8,781 9,074 8,723 8,403 8,149 S 20,504 S 20,730 S 19,955 S 18,867 S 21,186 S 20,989 S 22,721 S 21,193 S 22,029 S 24,002 13,727 15,177 16,806 19,145 17,556 10,240 8,258 11,037 10,839 12,032 13,460 9,574 12,238 10,811 13,107 14,481 16,586 14,049 14,422 15,525 1,850 8,726 16,913 16,501 16,305 10,596 10,059 7,093 6,786 8,253 7,433 7,600 7,549 7,356 7,591 7,513 7,687 7,752 6,240 6,124 3,517 3,264 2.970 2,841 2.400 2.237 1,797 1,517 1,287 1.481 6,491 65,071 76.431 75,521 78.145 66,056 67,108 62,641 61,603 67,417 11,757 11,925 11,274 10,971 11,069 10,464 21,139 12,131 11,866 11,233 8,8114 9,185 8,309 8,523 8,781 9,074 8,723 8,403 8,149 8,921 6,868 7,296 7,705 7,461 8,315 7,279 8,402 9,114 8,735 9,123 7,374 7,238 7,838 7,448 7,911 7,658 7,703 7,873 8,378 8,798 3,913 4,489 4,536 4,135 4,167 4,579 4,093 4,678 4,460 4,620 560 693 724 1,049 1,127 1,086 1,209 1,612 1,597 1,402 1,072 1,223 1,187 1,418 1,304 1,318 1,314 2,091 1,989 2,432 598 633 645 638 689 692 781 704 22,500 29.192 6.998 7,795 7.379 7,496 7,263 40,946 42,682 42.218 41643 43,363 49.148 61.159 52,985 52.660 53.792 S 101,437 S 107,753 S 118,649 S 117,164 S 121,508 S 115,204 S 128.267 S 115.626 S 114,263 S 121,209 5 3,019 S 2,968 S 2,980 S 3,279 S 3,401 S 4,098 S 3,626 S 3,926 S 4,813 S 5,286 1,047 1,392 1,061 1,117 1,112 52 61 398 628 724 680 715 773 872 825 775 808 801 823 842 45 50 1,044 36 1,633 1,626 2,574 2,931 2,817 2,763 3,030 2,975 1,252 1,524 3,611 8,185 15,554 13,517 8,682 4,731 3,231 8,701 9,941 10,828 1,747 3,773 8.291 6,04S 6,078 6.876 5,580 11,556 3,999 9,952 11,]37 18.659 31.233 27,764 22,915 19.295 16.381 28,397 22,500 29.192 12,318 12,557 12,637 12,836 12,670 12,832 12,559 12,189 12,266 12,277 8,195 8,107 7,957 8,054 8,419 8,583 8,443 8,527 9,134 9,275 7,853 8,286 8,096 8,259 8,115 8,181 8,467 9,015 9,215 9,927 149 181 180 208 207 205 213 237 300 321 4,673 5,438 5,3T7 5,234 4,743 5,043 5,294 5,502 5,438 5,453 258 248 289 293 306 314 328 349 333 345 616 622 617 641 811 974 1,093 1,147 1,168 1,544 814 788 790 809 824 816 773 750 - - - - - - - 2,117 2,185 2,289 2,099 209 120 (continued) Capital grants and contributions: Wastewater Capital giants and contributions: Water Capital grants and contributions: Simulation Capital grants and contributions: Airport Capital grants and contributions: Starnv atcr Capital grants and contributions. Housingauthority Capital giants and contributions: Parking Capital grants and contributions: Transit Operating giants and contributions: Housing authority Operating grants and contributions: Water Operating grants and contributions: Airport Operating goods and contributions: Sanitation Operating giants and contributions: Wastewater Operating Amts and contributions: Sto envater Operating grants and contributions: Transit Total business -type activities program revenues Total primary government revenues CITY OF IOWA CITY, IOWA CHANGES IN NET POSITION (continued) Last Ten Fiscal Years (Accrual basis of accounting) (amounts expressed in thousands) 2008 2009 2010 2011 2012 2 3 2014 2015 2T 201] 577 266 2,115 2,394 3,223 30,181 7,105 1,370 3,415 2,226 314 132 572 973 977 494 539 581 254 869 1,435 1,489 6 2,464 2 2,609 2,778 2,810 2,717 2,802 1,580 3,239 3,311 358 1,576 4452 5,214 137 260 58 302 68 541 140 436 226 711 792 370 1,251 ❑ - 25 11 4,228 - - - - - 8 - - 269 4 - - - 218 2,151 - - (625) - - 898 243 - 308 395 6,281 6,668 7,765 7,438 6,782 6,968 6,TH 7,628 8,318 8,532 - 15 6 - - 442 6 2 - - - 2 - - - 11 56 232 128 69 - 607 6 10 - 23 27 25 3 - - I - - - - 62 21 - - - - - - - 13 13 279 95 - (488) (205) 625 4,020 3,867 1,767 2,118 2,082 2,095 2,235 43,955 47,225 50290 4]927 49,095 82.540 62170 53.154 55,199 56866 S 55,692 S 65,884 S 81,523 S ]5,691 S 72,010 S 101,835 S 78,551 S 81,551 S 77.699 E 86,058 Net (Expense)/Rcwnues Governmental activities S (48,754) S (46,412) S (45,198) S (47,757) $ (55,230) S (46,761) S (50,727) S (34,244) S (39,103) S (38,225) Business -type privities ;0 X943_ _1072 X732 33 1 31074 Tote activities government net expense x.00 T4 543 5 (J8072 X284 S (49.498) ' 3.392 1, 169 5 Io5151) General Revenues and Other Changes in Net Position Governmental activities: General revenues: Property razes Road use tax' Local Sales Option tax Othertaxes Grants and contributions not restricted to specific purposes Earnings an investments htiseelloner. Gam an sale of ossets Tomelars Reassignments Total governmental activities Business -type activities: General revenues: Earnings on investments Gain an sale of assets Miscellaneous Transfers Reassignments Special items Extraordinary items Total business -type activities Total primary government Change in Net Position Governmental activities Business -type activities Total primary government S 43,400 S 47,085 S 49,467 S 48,011 S 50,516 S 51,017 S 50,551 S 52,205 S 53,114 S 57,649 5,432 5,254 5,525 6,068 6,394 6,589 6,745 - - - - - 8,141 8,911 8,644 8,858 466 - - - 1,435 1,489 1,535 2,464 2,491 2,609 2,778 2,810 2,717 2,802 - - - - - I,O48 2,080 1,583 3,932 3,057 1,766 1,539 1,823 841 973 1,188 1,045 1,397 3,516 4,894 3,893 6,230 4,228 4,390 4,353 5,518 4,464 3,369 (7) - 761 2,950 1,312 1,651 135 218 2,151 488 205 (625) (4,020) (3,867) (10,485) (6,192) (10,057) (6,395) (7,053) 82 58,196 61984 69,702 69,964 73,119 65,131 61,325 52,847 57.325 61,898 3,279 2,577 1,311 954 813 671 494 707 715 938 1,260 360 230 314 336 293 725 856 2,463 69 454 317 464 381 484 918 265 374 362 1,260 (488) (205) 625 4,020 3,867 10,485 6,192 10,057 6,395 7,053 _ _ (82) _ (574) - - (5,000) 4,505 3,049 2630 5669 500 12367 ],6]6 11,420 9,853 9,320 _L_6 2701 S 65,033 S 72,332 S 75,03 S 77.679 S 77,498 S 69,001 S 61267 S 67,178 S 71,218 S 9,442 S 15,572 S 24,504 S 22,207 $ 17,949 S 18,370 S 10,598 S 18,603 S 18,222 S 23,673 7514 7592 10702 11953 6232 45759 8687 -S-fG',95� aE3'fT -5�3 ,3b r7- �3'-Td,735 TSI- -Stir :129- -$ ZST-5-39l 12,394 36'.iSZ--$-SO111',ST� 'The City of Iowa City reclassified the Mass Transportation Ford from the General Fund to an Enterprise Fund effective the fiscal year ending Jme 30, 2013. a The City of lona City ruehissJed the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. a The City of Iowa City reclassified Road Use Tax from General Revenues to Operating Grants effective for the fiscal year ending June 30, 2015, 121 CITY OF IOWA CITY, IOWA FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified accrual basis of accounting) (amounts expressed in thousands) All other Govemni Funds 2008 2009 2010 2011' 2012 2013' 2014 2015 2016' 2017 General Fund - - 34,889 34,853 28,108 31,285 27,897 38,266 63,941 Reserved 3,107 5,339 3,903 - - - - - - - Designated for long-term debt 8,691 Nonspendable S - S - S - S 331 S 314 S 69 S 69 S 69 S 69 S 788 Restricted - - - 16,268 23,779 25,689 26,533 25,291 18,975 9,974 Committed - - - - - - - - 4,699 5,199 Assigned - - - 3,542 5,191 1,744 3,400 - 1,143 1,342 Reserved 446 555 406 - - - - 4,453 - - Unassigned - - - 15,931 14,273 17,113 17,907 19,286 23,366 24,793 Unreserved 14,488 15,362 26,101 - - - - - - - Total general fund $ 14,934 $ 15,917 S 26,507 $ 36,072 $ 43,557 S 44,615 $ 47,909 S 49,129 $ 48,252 S 42,096 All other Govemni Funds Nonspendable S - S - S - S - S - S - S - S - S - S 344 Restricted - - - 34,889 34,853 28,108 31,285 27,897 38,266 63,941 Reserved 3,107 5,339 3,903 - - - - - - - Designated for long-term debt 8,691 11,759 13,952 - - - - - - - Unassigned - - - (1,741) (366) (5,844) (9) - - - Unreserved, reported in' Special revenue funds 2,571 (1,852) (1,674) - - - - - - - Capital projects funds 11,118 10,960 8,043 - - - - - - - Total all other governmental funds 5 25,487 S 26,206 S 24,224 S 33.148 S 34,487 S 22,264 S 31,276 S 27,897 S 38,266 S 64,285 t The City of Iowa City implemented GASB Statement No. 54, Fund Balance Reporting and Governmen al Fund Type Definitions, issued March 2009, effective the fiscal year ending June 30, 2011, This Statement establishes new standards for fund balance classifications based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. ' The City of Iowa City reclassified the Mass Transportation Fund from the General fund to an Enterprise Fund effective the fiscal year ending June 30, 2013. ' The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July I, 2015. 122 Revenues: Property taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Use of money and property Miscellaneous Total governmental activities revenues Expenditures Current Public safety Public works Culture and recreation Community and economic development General government Debt service Principal Interest Capital projects Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Issuance of long-term debt Issuance of refunding debt Sale of capital assets Insurance Recoveries Premium (discount) on issuance of bonds Payment of refunded bonds Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Debt service as a percentage of noneapiml expenditures CITY OF IOWA CITY, IOWA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) 2008 2009 2010 2011 2012 2013' 2014 2015 2016' 2017 S 44,835 S 48,572 $ 59,143 S 59,387 S 61,649 S 62,483 S 53,797 S 55,014 S 55,831 $ 60,452 1,270 1,284 1,211 1,412 1,307 1,784 1,660 1,806 3,056 3,521 12,764 19,521 31,404 29,870 21,952 19,941 17,636 21,086 20,230 24,140 2,228 2,498 2,433 2,515 2,614 1,800 1,819 2,204 3,357 2,355 - - - - - - - - 760 750 3,206 2,645 1,599 1,479 1,768 782 909 1,080 946 1235 3,977 5,302 4,784 7,749 5,750 6,325 6,040 7,045 2,913 2,101 $ 68,280 $ 79,822 S 100,574 S 102,412 S 95,040 S 93,115 $ 81,861 S 88,235 S 87,093 $ 94,554 S 18,705 $ 18,752 $ 19,108 S 18,717 S 20,091 S 20,648 S 21,370 $ 21,996 S 21,701 $ 22,513 12,108 12,405 13,311 14,766 15,462 8,503 8,432 12,071 9,466 9,186 10,703 10,849 11,266 12,498 13,075 13,000 13,087 11,821 12,257 13,341 4,437 8,037 10,520 8,878 8,037 8,219 8,196 5,711 5,346 7,695 7,207 7,300 7,191 7,695 7,553 7,286 7,184 7,608 6,007 5,882 7,323 8,418 9,354 10,386 13,294 16,465 13,560 12,564 13,230 13,305 3,556 3,364 3,064 2,889 2,543 2,339 1,903 1,669 1,475 1,597 11,811 17,096 17,690 21,873 16,006 17,861 14,528 14,762 14;848 18,405 S 75.850 S 86,221 S 91.504 S 97,702 $ 96,061 S 94.321 S 88,260 S 88,202 S 84,330 S 91,924 $ (7,570) $ (6,399) $ 9,070 $ 4,710 $ (1,021) $ (1,206) S (6,399) S 33 S 2,763 $ 2,630 $ 9,150 S 30,035 $ - S 16,165 S 9,690 S 2,655 $ 19,730 $ 7,785 $ 9,405 S 22,570 - - - 10,930 - - - - - - 111 554 222 845 3,619 1,369 1,684 165 252 2292 - - 20 594 53 - - - - - 16 552 - 394 165 (42) 385 199 441 120 - (23,140) - (11,085) - - - - - - 25,413 16,486 16,742 18,658 19,499 25,198 13,040 13,089 25,133 34,675 (23,328) (16,386) (17,446) (22,722) (23,181) (35,493) (16,134) (23,430) (28,502) (47,033) S 11,362 S 8,101 S (462) $ 13,779 $ 9,845 S (6,313) S 18,705 S (2,192) S 6,729 $ 12,624 $ 3,792 S 1,702 S 8,608 $ 18,489 S 8,824 S(7,5191 $ 12,306 X2,159 S 9,492 S 15,254 16.6% 17.0% 15.3% 16.2% 18.6% 24.0% 20.7% 19.8% 21.2% 19.9% ' The City of Iowa City reclassified the Mass Transportation Fund from the General fund to an Enterprise Fund effective the fiscal year ending June 30, 2013- 2 The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. 123 CITY OF IOWA CITY, IOWA GENERAL GOVERNMENT TAX REVENUES BY SOURCE Last Ten Fiscal Years (Modified accrttal basis of accounting) (amounts expressed in thousands) Fiscal Local Option Utility Year Property Tax Road Use Tax Hotel/Motel Tax Sales Tax' Franchise Fee' Total 2008 44,101 5,432 734 - - 50,267 2009 47,861 5,254 713 - - 53,828 2010 50,256 5,525 699 8,141 47 64,668 2011 48,831 6,068 776 8,912 868 65,455 2012 51,374 6,394 811 8,644 822 68,045 2013 51,836 6,589 872 8,858 918 69,073 2014 51,331 6,745 967 466 1,031 60,540 2015 53,056 7,231 1,057 - 902 62,246 2016 53,878 8,320 1,079 - 874 64,151 2017 58,375 8,672 1,137 - 939 69,123 ' 1 % Local Option Sales Tax went into effect 7/l/09 and was effective through 6/30/13. ' 1 % Utility Franchise Fee went into effect 4/1/10. 124 CITY Or IOWA CITY, IOWA ASSESSED AND TAXABLE VALUE OF PROPERTY Last Ten Fiscal Years (amounts express.) in thousands) Collection Commercial, Industrial Incrtmental Volae Gas & Residential Taxable Value Total Year Ended Agricultural & Utilities (excluding pl8iury Net (Debt Service Elewic Utilities Total Rollback as a Percentage Direct Lmr30 Residential ffaerd el Ae Rat rl Gas&Electric) Exemptions Vebution Lm 0.1 (Isei"M Value Per_cemaee of Asa..rcd Volar Rase 2008 Assessed 2,72;954 1,534 1,058,580 3,424 S 3,779,444 94,864 54,053 S 3,928,361 Taxable 1,234,872 1,534 1,058,580 3,424 S 2,291,562 94,864 41,542 S 2,427,968 45.560 61.806 17297 2009 Assessed 2,991,702 1,565 1,108,113 3,396 S 4,097,994 111,540 54,081 S 4,263,615 Taxable 1,307,511 1,410 1,105,109 3,3% S 2,410,634 111,540 44,597 S 2,566,771 44.080 60.202 17717 2010 Assascd 3,065,279 1,499 1,133,818 3,324 S 4,197,272 117,813 61,066 S 4,376,151 Taxable 1,384,088 1,407 1,133,818 3,324 S 2,515,989 117,813 45,157 S 2,678,959 45.589 61,217 17853 2011 Assessed 3,122,875 2,315 1.223,304 3,239 S 4,345,255 ]5,409 79,196 $ 4,449,860 Taxable 1,46,644 1,534 1,211,304 3,139 S 2,686,243 25,409 46,333 S 2,757,985 46.909 61979 17,757 2012 Assessed 3,182,636 ;264 1,231,756 3,163 S 4,413,493 25409 81,240 S 4,520,142 Taxable 1,544,261 1,562 1,231,756 3,163 S 2,774,416 25,409 48,338 S 2,848,163 48.530 63.010 17842 2013 Assessed 3,284,249 2,516 1,236,609 3,097 5 4,520,277 11,712 83,538 S 4,615,527 Tuable 1666,036 1,448 I,D6,609 3,097 S 2,90.996 11,712 47,404 S 2,9W, 112 50.752 64.134 17,269 2014 Assessed 3,367,052 2,656 130,457 3,060 S 4,567,105 14,114 87,100 5 4,668,319 Taxable 1,T26,096 1,592 1,20.457 3,%0 S 2,975,085 14,114 46,813 S 3,036,012 52.817 65,034 16.805 2015 Assessed 7,488,113 3,681 1338,018 2,939 S 4,726,873 21,132 78,643 $ 4,826,648 Taxable 1894,080 1,598 1,175,921 2,939 S 3,068,660 21,132 47,005 S 3,136,797 54,400 64989 16705 2016 Assessw 3,603,744 3,554 1,216,054 2,828 S 4,820,524 42,307 87,728 S 4,950,559 Taxable 2,008,493 1,588 1095,272 2,828 S 3,102,525 33,331 46,785 S 3,182,641 55.734 64.289 16.651 2017 Assessed 3,882,757 3,721 1,30,840 2,728 S 5,184,590 72,651 92,997 $ 5,350,228 Taxable 2,155,033 1,707 1,149,736 2,728 S 3,303,748 72,651 44,987 S 3,421,386 55.626 63,948 16583 Source: Iowa Department of Ma tagament Not.: Property is reassessed in the odd numbered yea. to make adjustments to all property values, according to current market values. Asp.lhe Code oflosva,all real property subje.to Mauen s ibevalutaatitsactualvalueand,exceptasolhersvimprovided,dullbevams at 100°/ofinarnul value. 125 CITY OF IOWA CITY, IOWA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Inst Ten Fiscal Yeas (pQ $1,000 sssmsd vuluation) Source: "Tex Levin for Johnson County,lown" compild by the Johnson County Auditor. Note: rincludn Johnson County, City oflowa City Assessor, and Agicultural Ext.ioo levies. Tax ram me per $1.000 ofassessd value. 126 Overlapping Meta Total Cityoflowa City Iowa City Kirlreaod Direct& Collection Operating Debt Service Tow City Jobnson School Community Statcof Overlapping Yon ar, n millacc Ntil.on C=W ni.Vrlet LWltge Inca Hams 2008 13.511 3.786 17.297 6.823 13.852 0.855 0.O 38.831 2009 13.414 4.303 17.717 7.803 14.192 0.852 0.004 40568 2010 13.634 4.219 17.853 7.708 14.191 0.840 0.003 40.595 2011 13.319 4.438 17.757 7.540 14.690 0.926 0.003 40.916 2012 13.193 4.649 17.842 7.320 14.591 0.999 0.003 40.755 2013 12.826 4.443 17.269 7.075 14.073 1.079 0.003 39.499 2014 12.775 4.030 16.805 7.Or 13.688 1.065 OA03 38.638 2015 12575 4.130 16.705 7.062 13.700 1.058 0.003 38.528 2016 12.822 3.829 16.651 7.228 13868 1.061 0003 38.811 2017 13.005 3.578 16.583 7.093 13.989 1.080 0.003 38 743 Source: "Tex Levin for Johnson County,lown" compild by the Johnson County Auditor. Note: rincludn Johnson County, City oflowa City Assessor, and Agicultural Ext.ioo levies. Tax ram me per $1.000 ofassessd value. 126 CITY OF IOWA CITY, IOWA PROPERTY TAX BUDGETS AND COLLECTIONS Last Ten Fiscal Years (Cash basis of accounting) (amounts expressed in thousands) Source: Certificate of City Taxes and Johnson County Treasurer's Office Note: This schedule is presented on a cash basis of accounting. Taxes are collected by the Johnson County Treasurer and submitted to the City in the following month. Because of the month delay, some years will show Current Tax Collections in excess of the Total Tax Levied. I Delinquent tax collection is presented by collection year, rather than levy year, because information is not available from Johnson County Treasurer by levy year. 127 Percent of Total as Collection Total Tax Current Tax Levy Delinquent Tax Total Tax a Percent of Year Levied Collections Collected Collectionst Collections Lev 2008 39,973 39,768 99.5 70 39,838 99.7 2009 43,168 43,118 99.9 18 43,136 99.9 2010 45,393 45,318 99.8 17 45,335 99.9 2011 47,789 47,826 100.1 8 47,834 100.1 2012 49,595 49,543 99.9 1 49,544 99.9 2013 50,407 50,139 99.5 3 50,142 99.5 2014 50,307 49,835 99.1 1 49,836 99.1 2015 51,609 51,292 99.4 3 51,295 99.4 2016 52,034 52,074 100.1 0 52,074 100.1 2017 55,330 55,331 100.0 0 55,331 100.0 Source: Certificate of City Taxes and Johnson County Treasurer's Office Note: This schedule is presented on a cash basis of accounting. Taxes are collected by the Johnson County Treasurer and submitted to the City in the following month. Because of the month delay, some years will show Current Tax Collections in excess of the Total Tax Levied. I Delinquent tax collection is presented by collection year, rather than levy year, because information is not available from Johnson County Treasurer by levy year. 127 CITY OF IOWA CITY, IOWA PRINCIPAL TAXPAYERS Curtevt Year and Nine Yearn Ago (amounts expressed m Wousnnds) Ten lamrsr lamxvmt Tnre nl Rrnlnm ACP Inc (Am College Testing Ptgrm) Educetionvl Testing Service Mid-AmericanEanrgy Company Publie Gasand Elatrie Utility Am Gmen Most(fomaaly Russell Gadia) Warehousing Midwestme Bank Fimnncial Drier Pmpatia IC LLC (Billion Auto) Ca Dealerships Practm&Gamble LLC Manufacturing Company BBCS Hawkeye Housing LLC Real Estate Maagment Vesper Iowa City LLC Real Estate Developer Alpha Inc. bndumiel National Computer Syaevss(Pereme) luformnrivn Services 3ameAand Lortctm Clank Apmtmate Kobria Dave Co be (Southgate Dov Co) Real Estate Developer Plena Towers LLC Coodo/HoteVCommamial spam MEHSM LC(Symeema, Mall) Shopping Mall Russell Gadin Tmeking Company United Natural Foods Wholesale Distribution Company Total Sources: 'City of Iowa City Asseswh Office -2016 Annual Report 2008 2017 %of Total %ofToMl Triable T.M. Tiesible T.ble Ya18aBOB Beak 2111m lml Illumdall Bub YaloWm S 34,535 2 1.42 % S 47,791 1 1.40 % 44,496 1 1.83 31,555 2 0.92 - - N/A 22,836 3 0.67 N/A 21,066 4 0.62 - - N/A 18,889 5 055 11,985 10 0.49 16,459 6 0.48 - - N/A 15,328 7 0.45 - - N/A 14,358 8 0.42 - - N/A 13,949 9 0.41 16,87 5 0.67 12,815 10 037 28,506 3 1.17 - - N/A 19,267 4 0.79 - - N/A 15,300 6 0.63 - - N/A 15,011 7 0.62 - - WA 14,611 B 0.60 - - N/A 13,059 9 0.54 - - N/A S 212,997 8.76 % S 215,046 6.29 % 128 129 CITY OF IOWA CITY, IOWA PRINCIPAL WATER SYSTEM CUSTOMERS C.tY..dNiue Yeam Ago Total Water System Charges Sources: City of Iowa City Revenue Division S 7,976536 130 $ 9,156,005 2008 2017 fndmmrr Nnme LL&= Sub Parrenfaoe (boron 1pp4 Percentnne Proctor&Gamble $ 630,949 1 7.91 % $ 768,168 1 8.39 % Vtterms Admivisnarion MedicalCmter 98,229 2 1.23 115,589 2 1.26 Mark W Apt. - - N/A 69,603 3 0.76 Campus Apartm®ts 65,318 5 0.82 65,672 4 0.72 Merry Hospital 72,710 3 0.91 65,422 5 0.71 University of Iowa (Mayflower Apartments) 42,709 8 0.54 43,148 6 0.47 Oalmoll Re&..t Residence - - N/A 39,154 7 0.43 Serine Ap¢ - - N/A 37,563 8 0.41 Iowa City School District - - N/A 35,999 9 0.39 RBD Iowa City LLC DBA Sheraton - - N/A 33,165 10 0.36 Dolphin Lake Point(Rm Properties Mn rnt) 67,054 4 0.84 - - N/A Robert's Dairy 63,503 6 0.80 - - N/A ACI' 50,923 7 0.64 - - N/A Lear Carp 38,531 9 0.48 - - N/A Sheraton bmIloliday Um 34,970 10 0.44 - - N/A S 1,164,896 14.61 % S 1,273,483 13.90 % Total Water System Charges Sources: City of Iowa City Revenue Division S 7,976536 130 $ 9,156,005 CITY OF IOWA CITY, IOWA SALES HISTORY AND TOTAL WATER CHARGES Last Ten Fiscal Years Fiscal Water Sales Water System Year Cubic Feet Sold Charees 2008 249,361,929 7,976,536 2009 234,804,167 7,497,903 2010 234,342,825 7,568,378 2011 236,838,370 7,661,898 2012 246,618,257 7,953,738 2013 254,616,773 8,194,467 2014 239,790,719 7,778,364 2015 1 240,423,612 8,161,522 2016 255,524,943 8,758,683 2017 267,511,531 9,156,005 Sources: City of Iowa City Revenue Department Notes: `Beginning in March 2015, Water Sales by Cubic Feet Sold also includes unbilled usage. 131 CITY OF IOWA CITY, IOWA PRINCIPAL SEWER SYSTEM CUSTC C=mt Year and N eYears Ago 2008 fn.mmr. N.roe fh,,", 3888 UNversiry .flows S 2.017,440 1 Patas& Gamble 1,131,315 2 Iowa City Landfill 106,445 7 Vete Admwsuation MWical Cmtec 110,306 5 Mercy Hospital 118,333 4 Mark N Apm 66,229 10 C.P. Apanmmt9 85,198 8 Wdversiry of lowa MayBowec 71,611 9 Oahvoll Retic®mt Residence - - RBD Iowa City LLC DBA Shm m - - Dolphia Wee Point (Rut Properties Maga) 110,129 6 Ruben's Dairy 160,445 3 $ 3.977,451 TOW S. St. Charges S 12,221,769 Sao.: City of Iowa City Re mue Depvanmt Pr onlan 16.51 % 916 0.87 0.90 0.97 0.54 0.70 0.59 NIA NIA 0.90 1.31 32.55 °6 132 2017 Cho[ . Beth vee ml.o 5 1,80"3 1 ISM 8: 1,086,165 2 8.76 159,650 3 1.29 135,049 4 1.09 104,653 5 0.84 91,500 6 0.74 76,669 7 0.62 68,568 8 0.55 55,788 9 0.45 53,955 10 0.43 - - NIA $ 3,692,990 29.77 % S 12,404160 CITY OF IOWA CITY, IOWA SALES HISTORY AND TOTAL SEWER CHARGES Last Ten Fiscal Years Fiscal Sewer Sales Sewer System Year Cubic Feet Sold Charees 2008 285,492,596 12,221,769 2009 276,455,246 12,499,949 2010 265,375,857 12,541,905 2011 280,303,237 12,748,695 2012 282,134,840 12,784,321 2013 285,472,392 12,883,641 2014 269,494,125 12,382,031 20151 266,830,947 12,278,153 2016 270,547,701 12,022,203 2017 277,712,785 12,404,360 Sources: City of Iowa City Revenue Department Notes: I Beginning in March 2015, Sewer Sales by Cubic Feet Sold also includes unbilled usage. 133 Governmental Activities Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. I Bonds reported net of related premiums and discounts. 3 Population and personal income information can be found on page 144. 134 General Fiscal Obligation Revenue Year Bonds Bonds' 2008 82,268,532 - 2009 81,222,533 - 2010 71,791,737 - 2011 77,743,957 - 2012 74,225,654 - 2013 57,688,803 2,614,644 2014 64,132,510 2,616,768 2015 59,421,203 2,618,892 2016 55,998,392 2,491,016 2017 52,571,254 15,168,140 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. I Bonds reported net of related premiums and discounts. 3 Population and personal income information can be found on page 144. 134 CITY OF IOWA CITY, IOWA RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Business -Type Activities Capital General Total Percentage Loan Obligation Revenue Primary of Personal Note Bonds' Bonds Government Income 211,000 4,885,710 94,549,386 181,914,628 3.04 211,000 4,317,787 87,875,855 173,627,175 2.92 211,000 3,731,167 79,281,888 155,015,792 2.57 211,000 3,130,849 75,857,306 156,943,112 2.38 211,000 1,483,473 69,059,307 144,979,434 2.08 211,000 1,182,315 62,764,738 124,461,500 1.72 211,000 886,157 57,568,517 125,414,952 1.65 211,000 590,000 45,566,903 108,407,998 1.43 211,000 295,000 39,951,661 98,947,069 1.26 211,000 - 34,670,297 102,620,691 1.25 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. I Bonds reported net of related premiums and discounts. 3 Population and personal income information can be found on page 144. 134 CITY OF IOWA CITY, IOWA RATIOS OF GENERAL OBLIGATION BONDED DEBTt TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Last Ten Fiscal Years (amounts expressed in thousands, except per capita) Notes: General Obligation bonds, net of related premiums and discounts City of Iowa City Budget Book. 3 Population data can be found on page 144. 135 Property Debt Debt Net General Ratio of Net Net Bonded Fiscal Assessed Payable from Payable from Gross Debt Service Obligation Bonded Debt to Debt Year Value Governmental Proprietary Bonded Debt Fund Balance Bonded Debt Assessed Value Per Capita 2008 3,928,361 82,268 4,886 87,154 8,691 78,463 19.97:1000 1,157 2009 4,263,615 81,222 4,318 85,540 11,759 73,781 17.30:1000 1,068 2010 4,376,151 71,792 3,731 75,523 13,952 61,571 14.07:1000 907 2011 4,449,860 77,744 3,131 80,875 13,151 67,724 15.22:1000 982 2012 4,520,142 74,226 1,483 75,709 11,009 64,700 14.31:1000 938 2013 4,615,527 57,689 1,182 58,871 6,527 52,344 11.34:1000 746 2014 4,668,319 64,133 886 65,019 6,872 58,147 12.46:1000 812 2015 4,826,648 59,421 590 60,011 7,052 52,959 10.97:1000 721 2016 4,950,559 55,998 295 56,293 6,573 49,720 10.04:1000 670 2017 5,350,228 52,571 - 52,571 7,756 44,815 8.38:1000 602 Notes: General Obligation bonds, net of related premiums and discounts City of Iowa City Budget Book. 3 Population data can be found on page 144. 135 CITY OF IOWA CITY, IOWA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES' Last Ten Fiscal Years (amounts expressed in thousands) 136 Total General Fiscal Year Governmental Ratio of Debt Ended Tom[ Expenditures Service to General ,lune 30 Principal Interest° Debt Service and Transfers Expenditures 2008 7,323 3,556 10,879 99,178 11. 1.00 2009 8,418 3,364 11,782 102,607 11 100 2010 9,354 3,064 12,418 108,950 11 100 2011 10,386 2,889 13,275 120,424 11 100 2012 13,294 2,543 15,837 119,242 13 100 2013 16,465 2,339 18,804 129,814 14 100 2014 13,560 1,903 15,463 104,394 .15 1.00 2015 12,564 1,669 14,233 111,632 .13 : 100 2016 13,230 1,475 14,705 112,832 13. 1.00 2017 13,305 1,597 14,902 138,957 .11: 1.00 Notes: 'General Fund, Special Revenue Funds, Debt Service Fund and Capital Projects Funds, 2 Beginning in FY13, Taxable Urban Renewal Revenue Bonds are also included. 136 Name of Governmental Unit City of Iowa City Iowa City Community School District Johnson Countyr Clear Creek- Amana Community School District' Kirkwood Comm. College Total Overlapping Debt Total Direct & Overlapping Debt Per capita assessed value CITY OF IOWA CITY, IOWA COMPUTATION OF DIRECT AND OVERLAPPING DEBT 3,205 10,970 58,795 79,468 152,438 $ 220,388 57.23 June 30, 2017 42.54 (amounts expressed in thousands, except per capita) Total General Percent Amount Long -Term Applicable Applicable Direct Debt to the City of to the City of Outstandine Iowa City Iowa City $ 67,950 100.00 % $ 67,950 3,205 10,970 58,795 79,468 152,438 $ 220,388 57.23 1,834 42.54 4,667 0.04 26 14.17 11,261 17,788 $ 85,738 Debt/Actual Market Value r Per Capita 1.27 % $ 913.3310 0.03 24.6512 0.09 62.7302 0.00 0.3495 0.21 151.3616 239.0925 1,152.4235 $ 71,914 I Long term debt outstanding includes only GO debt. 2City Property Assessed Value of 5,350,228 came from the Iowa Department of Management Population for FY17 of 74,398 came from the US Census Bureau Source: Johnson County Auditor's Office. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is home by the residents and businesses of Iowa City. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire burden bome by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 137 CITY OF IOWA CITY, IOWA LEGAL, DEBT MARGIN INFORMATION Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Debt Limit $ 196,418 $ 213,181 $ 218,808 $ 222,493 $ 226,007 $ 230,776 $ 233,416 $ 241,332 $ 247,528 $ 267,511 Total net debt applicable to limit 87,090 84,995 75,050 80,575 75,320 61,205 67,075 77,506 71,963 84,864 Legal debt margin $ 109,328 $ 128,186 $ 143,758 $ 141,918 $ 150,687 $ 169,571 $ 166,341 $ 163,826 $ 175,565 $ 182,647 Tota] net debt applicable to the limit as a percentage of debt limit 44.34% 39.87% 34.30% 36.21% 33.33% 26.52% 28.74% 32.12% 29.07% 31.72% Legal Debt Margin Calculation for Fiscal Year 2017 Total Assessed Valuation $ 5,350,228 Debt Limit - 5% of Total Assessed Valuation 267,511 Less: Amount of Debt Applicable to Debt Limit 84,864 Legal Debt Margin $ 182,647 Note: Under Iowa code, the city's outstanding general obligation debt should not exceed 5 percent of total assessed property value. 138 CITY OF IOWA CITY, IOWA GENERAL OBLIGATION DEBT ANNUAL MATURITY SCHEDULE 139 Principal Outstanding at Beginning of Fiscal Year 55,350,000 51,645,000 43,685,000 35,560,000 27,230,000 20,140,000 14,600,000 9,955,000 6,090,000 3,175,000 1,085,000 Payments Funding Source(s) Fiscal Property Tax Tax Increment Year Principal Interest Total Revenue Financing Water Revenue 2017 13,470,000 1,255,554 14,725,554 13,826,542 598,112 300,900 2018 7,960,000 1,197,996 9,157,996 8,397,916 760,080 - 2019 8,125,000 1,031,994 9,156,994 8,398,894 758,100 - 2020 8,330,000 835,606 9,165,606 8,409,476 756,130 - 2021 7,090,000 613,841 7,703,841 6,947,453 756,388 - 2022 5,540,000 438,663 5,978,663 5,278,182 700,481 - 2023 4,645,000 325,063 4,970,063 4,271,748 698,315 - 2024 3,865,000 217,512 4,082,512 3,537,650 544,862 - 2025 2,915,000 135,063 3,050,063 2,813,353 236,710 - 2026 2,090,000 74,200 2,164,200 2,001,416 162,784 - 2027 1,085,000 27,125 1,112,125 948,808 163,317 - Total $ 6,135,279 $ 300,900 71,267,617 $ 64,831,438 $ 6,152,617 $ $ 65,115,000 139 Principal Outstanding at Beginning of Fiscal Year 55,350,000 51,645,000 43,685,000 35,560,000 27,230,000 20,140,000 14,600,000 9,955,000 6,090,000 3,175,000 1,085,000 CITY OF IOWA CITY. IOWA SCHEDULE OF REVENUE BOND COVERAGE Last Ten Fiscal Years (amounts expressed in thousands) Fiscal 9,258 5,348 3,910 955 1,229 2,184 1.79 Year 8,833 5,726 Net Revenue 995 Annual Debt Servicer 2,166 Ended 2010' 8,336 Available for 3,183 680 1,055 Ratio of June 30 Revenue Expenses Debt Service Principal Interest Total Coverage 2,012 1.44 2012' Parking Revenuer 5,653 2,996 1,200 861 2,061 1.45 2013' 9,342 6,348 2,994 845 758 2008 4,995 2,454 2,541 355 606 961 2.64 2009 5,630 3,024 2,606 370 584 954 2.73 2010' 5,509 3,149 2,360 390 504 894 2.64 2011 5,389 2,920 2,469 420 391 811 3.04 2012 4,945 3,034 1,911 500 339 839 2.28 2013 5,122 3,549 1,573 515 324 839 1.87 2014 5,365 2,969 2,396 530 308 838 2.86 2015' 5,620 3,828 1,792 540 254 794 2.26 2016 - - - - - - - 2017 - - - - - - - Wastewater Treatment Revenue 2008' 13,332 4,581 8,751 4,105 3,071 7,176 1.22 2009' 13,462 5,202 8,260 4,260 2,813 7,073 1.17 2010' 13,174 5,050 8,124 4,205 2,307 6,512 1.25 2011' 13,281 5,477 7,804 1,840 2,054 3,894 2.00 2012 13,175 5,663 7,512 4,615 1,693 6,308 1.19 2013 13,301 5,340 7,961 4,865 1,547 6,412 1.24 2014 12,835 5,708 7,127 3,250 1,428 4,678 1.52 2015 12,620 6,574 6,046 3,370 1,305 4,675 1.29 2016 12,681 6,513 6,168 3,520 1,175 4,695 1.31 2017 13,383 6,357 7,026 3,625 985 4,610 1.52 Water Revenues 2008' 9,258 5,348 3,910 955 1,229 2,184 1.79 2009' 8,833 5,726 3,107 995 1,171 2,166 1.43 2010' 8,336 5,153 3,183 680 1,055 1,735 1.83 2011 8,354 5,464 2,890 1,110 902 2,012 1.44 2012' 8,649 5,653 2,996 1,200 861 2,061 1.45 2013' 9,342 6,348 2,994 845 758 1,603 1.87 20146 8,613 5,818 2,795 1,335 650 1,985 1.41 2015 8,715 5,632 3,083 1,380 610 1,990 1.55 2016 9,323 5,387 3,936 1,715 579 2,294 1.72 2017 9,529 6,332 3,197 1,760 524 2,284 1.40 Notes: 1 Excludes depreciation and interest. r Includes principal and interest of revenue bonds only. 3 Puking Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.25. Wastewater Treatment Revenue bonds ratio of "Net Revenue Available for Debt Service" to 'Total Annual Debt Service" is required to be at least 1.10. s Water Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.10. 6 Refunded Revenue Bonds paid are excluded from the principal of Annual Debt Service. 7 Parking Revenue Bonds defeased are excluded from the principal and interest of Annual Debt Service. 140 CITY OF IOWA CITY, IOWA REVENUE DEBT ANNUAL MATURITY SCHEDULE Notes: 'Additional principal payments above the funding sources for 2017 were funded through the refunding of bonds issued June 2017. 141 Payments Funding Source(s) Principal Outstanding at Fiscal Tax Increment Beginning of Fiscal Year Principal Interest Total Sewer Revenue Water Revenue Financing Year 2017 16,190,000 t 1,577,137 17,767,137 9,855,265 7,707,837 204,035 40,945,000 2018 5,170,000 1,606,970 6,776,970 4,336,332 1,849,143 591,495 48,020,000 2019 5,110,000 1,327,039 6,437,039 4,057,850 1,789,854 589,335 42,850,000 2020 5,525,000 1,137,000 6,662,000 4,267,400 1,802,965 591,635 37,740,000 2021 5,750,000 926,361 6,676,361 4,264,625 1,823,041 588,695 32,215,000 2022 5,460,000 744,165 6,204,165 2,812,500 1,836,190 1,555,475 26,465,000 2023 4,950,000 562,315 5,512,315 2,137,125 1,852,145 1,523,045 21,005,000 2024 2,850,000 436,171 3,286,171 - 1,800,826 1,485,345 16,055,000 2025 2,430,000 373,577 2,803,577 - 1,351,082 1,452,495 13,205,000 2026 1,665,000 320,589 1,985,589 - 561,244 1,424,345 10,775,000 2027 990,000 280,725 1,270,725 - - 1,270,725 9,110,000 2028 895,000 250,365 1,145,365 - - 1,145,365 8,120,000 2029 915,000 222,495 1,137,495 - - 1,137,495 7,225,000 2030 940,000 193,820 1,133,820 - - 1,133,820 6,310,000 2031 965,000 164,325 1,129,325 - - 1,129,325 5,370,000 2032 995,000 133,950 1,128,950 - - 1,128,950 4,405,000 2033 815,000 102,300 917,300 - - 917,300 3,410,000 2034 840,000 77,850 917,850 - - 917,850 2,595,000 2035 865,000 52,650 917,650 - - 917,650 1,755,000 2036 890,000 26,700 916,700 - - 916,700 890,000 Total $ 64,210,000 S 10,516,504 $ 74,726,504 S 31,731,097 S 22,374,327 $ 20,621,080 Notes: 'Additional principal payments above the funding sources for 2017 were funded through the refunding of bonds issued June 2017. 141 Fiscal Year LV11 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total CITY OF IOWA CITY, IOWA REVENUE DEBT ANNUAL MATURITY BY FUNDING SOURCE Sewer Principal Interest Total $ 8,870,000 $ 985,265 $ 9,855,265 3,580,000 756,332 4,336,332 3,465,000 592,850 4,057,850 3,820,000 447,400 4,267,400 3,980,000 284,625 4,264,625 2,660,000 152,500 2,812,500 2,085,000 52,125 2,137,125 2020 1,565,000 237,965 $ 28,460,000 $ 3,271,097 $ 31,731,097 (continued) 142 Water Outstanding Fiscal Year Principal Interest Total 2017 $ 7,190,000 $ 517,837 $ 7,707,837 2018 1,455,000 394,143 1,849,143 2019 1,510,000 279,854 1,789,854 2020 1,565,000 237,965 1,802,965 2021 1,630,000 193,041 1,823,041 2022 1,690,000 146,190 1,836,190 2023 1,755,000 97,145 1,852,145 2024 1,745,000 55,826 1,800,826 2025 1,325,000 26,082 1,351,082 2026 555,000 6,244 561,244 2027 - - - 2028 - Total $ 20,420,000 $ 1,954,327 $ 22,374,327 142 CITY OF IOWA CITY, IOWA REVENUE DEBT ANNUAL MATURITY BY FUNDING SOURCE (continued) Fiscal Year 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Total Taxable Urban Renewal Principal $ 130,000 135,000 135,000 140,000 140,000 1,110,000 1,110,000 1,105,000 1,105,000 1,110,000 990,000 895,000 915,000 940,000 965,000 995,000 815,000 840,000 865,000 890,000 $ 15,330,000 Outstanding Interest $ 74,035 456,495 454,335 451,635 448,695 445,475 413,045 380,345 347,495 314,345 280,725 250,365 222,495 193,820 164,325 133,950 102,300 77,850 52,650 26,700 $ 5,291,080 143 Total $ 204,035 591,495 589,335 591,635 588,695 1,555,475 1,523,045 1,485,345 1,452,495 1,424,345 1,270,725 1,145,365 1,137,495 1,133,820 1,129,325 1,128,950 917,300 917,850 917,650 916,700 $ 20,621,080 144 Retail Sales 958,509,729 905,139,461 725,329,723 741,407,021 767,122,555 793,201,342 649,794,164 838,853,686 853,258,347 874,928,988 CITY OF IOWA CITY, IOWA DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Calendar Years Per Capita Calendar Personal Personal Average School Unemployment Year Populations Income Income' Increase Enrollment' Rate' 2008 67,831 5,981,912 40,201 3.47 12,911 3.1 2009 69,086 5,943,049 39,214 -2.46 13,049 4.3 2010 67,862 6,039,549 39,477 0.67 13,319 5.0 2011 68,947 6,606,394 42,471 7.58 13,638 4.8 2012 68,947 6,956,611 43,809 3.15 13,862 4.1 2013 70,133 7,217,188 44,608 1.82 14,057 3.8 2014 71,591 7,594,813 46,204 3.58 14,162 3.5 2015 73,415 7,846,426 47,036 1.80 14,495 2.9 2016 74,220 8,031,750 47,574 1.14 15,186 3.2 2017' 74,398 8,217,043 48,672 2.31 15,299 3 Sources and Notes: 'Personal Income and Per Capita Personal Income based on metropolitan Iowa City / Comlville and based on figures from Bureau of Economic Analysis. Personal Income expressed in thousands. 'Iowa City Community School District and local private schools 'Iowa Workforce Development Center 4Iowa Retail Sales & Use Report, Iowa Department of Revenue and Finance. Fiscal year ending June 30. 5 Personal Income and Per Capita Personal Income for 2017 are not available. Amounts projected based on aveage increase over previous 9 years. 'US Census Bureau 144 Retail Sales 958,509,729 905,139,461 725,329,723 741,407,021 767,122,555 793,201,342 649,794,164 838,853,686 853,258,347 874,928,988 CITY OF IOWA CITY, IOWA PRINCIPAL EMPLOYERS CLment Year and Niue Yens Ago mrnol,,.rs Employees Oniv hyoflowa 28,236 Vdcam Admin "tion Medical Center 1,351 Iowa City Coau000ity School District 1,700 Mercy Hospital 1,383 ACT loc.(formerly American Co2oge Testing Prcgmm) 1,646 Hy -Vee 1,166 NCS Pearson 982 Proctor & Gamble 664 City oflowe City - Tohmon County - Systeurs Gdhuited 681 Ivtevafioval Automotive Components (formerly Lear Corp) 750 38,559 Total Employees 90,300 Sources: loxes Cory Area Developmeot Group Various Employee Renk 1 5 2 4 3 6 7 10 9 8 145 Per me Employees Rank due 31.3 % 30,110 1 29.1 1.5 2,300 2 2.2 1.9 1,844 3 1.8 1.5 1,347 4 13 1.8 1,244 5 1.2 1.3 1,222 6 1.2 1.1 1,150 7 1.1 0.7 1,130 8 1.1 N/A 942 9 0.9 N/A 544 10 0.5 0.8 - - N/A 0.8 - - N/A 42.8 % 41,833 40.5 103,400 Public Salty Nh. 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Homing AmhorVy Tm9 Sours: City's Fmmcial Nm CITY OF IOWA CIT$ IOWA FULI-TIME EQUIVALENT CTCV GOVERNMENT EMPLOYEES BY FUNCTION 14s3Tm Fmil Tans FWI-Time Eqwval® Eit,loym a oflwc 30 zone zoo9-777-xou 201: zou xo14 %m 103M 10535 98 97 103 105 6 6 6 6 6 57 57 57 66 65 65 65 1538 1535 15.55 15.55 1555 1555 1335 2 2 2 2 2 2 2 1135 11.35 1135 121 12.1 111 111 - - - 0.4 0.4 0.4 0.38 2 2 2 2 2 2 2 15.42 15.42 15.42 15.42 15.42 15.42 15.42 13 13 U 13 13 13 13 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 43.14 43.14 43.14 43.14 43.64 43.63 45.13 631 6.31 631 Gil 65 M 63 8.95 9.05 9.05 9.1 9.1 8A 8.95 7 ] ] ] ] ] ] 4 4 4 4 4 4 4 6.6 6 6 5.6 5.6 5.6 5.6 3 3 3 3 3 5 6 4 4 4 4 4 4 3 23 25 2.5 25 M 2 2 26.5 263 26.3 26.24 2733 23,17 23.97 4.96 4.% 4.% 4.96 4.83 4.83 4.83 025 ox o.25 - - - 54.75 585 585 56.25 56.25 - - 039 0.29 029 026 0.55 0.55 0.55 2 2 - - - 1.6 1.6 - - 3.W 3.88 3.88 3.83 3.0 333 2.98 0.2 - 4.15 4.15 4.15 4.15 4.15 4.15 4.15 23.5 255 253 255 25.5 255 255 6.6 6.6 6.6 6.6 6.6 5.6 5.6 - - - - 1.6 1.62 1 1 1 1 I 1 3 5 6 6 123 123 12.3 11.3 118 10.86 M6 11.26 1116 1126 11.26 11.26 10.75 10.75 0]5 0.75 0.75 0.75 0.75 0.76 OS 1.73 1.93 1.93 201 1.8 1.8 1.8 32.75 33M 33M 32.75 3275 2925 26.25 - - - 51.75 5125 253 25.6 25.6 25.6 25A 25.4 24.4 32.75 3275 3275 3275 3275 32.75 31.75 AM 34.85 35.85 35.85 37.85 37.85 35.85 1.6 1.75 1.75 1.75 1.75 1 1 6.19 6.44 6.44 6.69 6.63 6.63 663 2 1.9 L9 1.9 2.1 2.1 2.1 1325 0.25 13M 1335 1335 13.18 12.19 614.81 629.01 610.03 63337 6377 621.91 615.16 146 2035 2016 2017 105 105 las m 6 6 1535 12.85 13.5 2 2 2 121 12 16 2 2 2 15.42 K42 15.42 13 13 16 3 3 3 3 3 3 3 45.13 60.0 46.17 65 45 7 8.95 10.8 1263 7 7 7 4 4 4 5.6 5.5 53 6 103 103 3 3 3 2 2 2 2247 23.07 23.13 4.83 $.33 4.33 045 a55 0.55 2.98 2.83 4.15 3.9 4.5 254 2526 254 51 4.7 4.7 $ 4 9.86 9.86 9.g 1075 10.75 10.75 0.5 0.5 0.5 1.8 1.8 1.8 26Z 23.13 21.63 5115 51.13 53A3 24.66 24.66 25.4 32 32 31.75 35.85 3335 313 I I 1 5.0 2.6 26 2.1 10.19 10.19 9.6 607.66 59&93 599.89 'Btgmi gm H13.Avimai 5aviw u a3m0a aPolice ' Begimiogm FY13, Commmicm Mmimh b mows Dom Fwmccm City 6 ,a 'Bjg ngwM3.T it wm movW Oom WcGmacl l wmlmtgmvc Fm6 •Bryj gw M6. Cablewu mo W BommFNv3w'c Fina m We G lFoml 'Bq 'vg w H17. C,i Pmiat enm vm mwmmFn�mwg 147 Sam.: Various .ity divisions. Net.: t Nmabers are bazd on a colmdar year and 2017 figura are compild Nmugb 10/15/17. 10.1 CITY OF IOWA CITY, IOWA OPERATING INDICATORS BY F"MON Last Too Final Ycaa 2013 2015 2017 2014 2003 2009 2010 2011 2012 2016 Public Safety Police t Physical arrests 6434 6,486 5,983 6,590 5,911 4,468 6,192 5395 5,465 4,000 Traffic Violsfio. 5,827 4,460 4,446 3,403 3,761 2,499 3,718 3.356 2,989 2.387 Firet Numbaofcallsamwvcd 4,257 4,152 4,472 4,635 5,173 4,713 5,828 6,016 6,974 5.354 Inspections conducted 1,712 1,959 2,145 1,806 1,970 1,431 2,032 1,903 2,459 817 Pelting Puking Violations 147,673 126,050 118,717 109,553 96,117 88.909 60.680 65,196 57,549 62,930 Wastewater Ttemment Daily ay.ge montmrnt in million gallons 12.81 12.34 12.86 10.37 8.28 9.84 10.02 9.76 10.48 8.32 Maximum daily capacity .(,lent in ombian gall.. 41.0 41.0 41.1 41.1 41.1 41.1 41.1 433 433 433 Nunbcr of. syuem customers 22,909 23,161 23,344 23,527 23,529 24,059 24.399 24,533 25,085 25,485 Weser Dilly avmage co.maptio , inmilliongallons SAS 551 5.48 551 5.49 5.54 5.64 5.33 5.32 550 Maximum daily capacity of plant in million gall.. 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 Customers by Classification Rmidmtiil 23,097 23391 23,657 23,875 24,086 24,442 24,790 23,089 23,638 24,025 Commccial 1,465 1,494 1,481 1,498 1,489 1,491 1,491 1,409 1,415 1,425 lod.hid 14 15 15 15 15 IS 15 14 14 14 Other 138 144 153 156 200 204 202 135 131 134 Total Chstome t 24,714 25,044 25,306 25344 25,790 26.152 26.498 24,647 25,198 25,598 Sanitation Nmober of Cantata. 14,574 14,700 14,831 14,926 15,030 15,177 15331 14,811 15,620 15,917 Tonnage 8,834 8,747 8.869 8,969 8,935 8,956 9,160 9,210 9,476 9,623 Inndfdl Tonnage 132,760 140,810 ISO,369 147,265 148,953 111,445 115,624 123,692 126,875 137,025 Sam.: Various .ity divisions. Net.: t Nmabers are bazd on a colmdar year and 2017 figura are compild Nmugb 10/15/17. 10.1 CITY OF IOWA CITY, IOWA CAPITAL ASSETS BY FUNCTION Les Tee Fis.l Yens 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Public Safety Poli. Statues 1 1 1 1 1 1 1 1 1 1 heelr.im 17 17 Is 18 18 18 20 20 20 24 Fuc Susie. 3 3 3 3 4 4 4 4 4 4 F. apparatus 9 9 9 9 11 II 11 11 10 10 Public Wwks Suety Mils 269 270 2M 272 275 276 279 281 283 286 Sweet lights 3,403 3,408 3,410 3,412 3,412 3,412 3,412 3,412 3,412 3,612 Cultured Remrabon Library 1 1 1 1 I 1 1 1 1 1 Cemetery 1 I I 1 1 1 I I 1 1 Acreage 40 40 40 40 40 40 40 40 40 40 Parka 61 61 40 41 41 42 43 46 46 49 Acreage 1,603 1,603 1,335 1,354 1,491 1,506 1,897 1,897 1,902 1,932 Receeotion Reacuaon cmtos 2 2 2 2 2. 2 2 2 2 2 swimming pills 3 3 3 3 3 3 3 3 3 3 Bell diamonds 31 3D 30 30 30 27 27 27 27 27 Tennis touts 12 12 12 12 12 12 12 12 12 9 Soccer fields 25 20 20 20 20 20 20 20 20 20 Pickle Ball Courts 8 Fuuul Cowls 2 FLIT BaskdbaO Courts 3 Parking Facilities 5 5 5 5 5 5 5 5 5 6 Spaces 3,085 3,086 3,086 3,086 3,086 3,086 3,086 3,086 3,086 306 Westn,sac,Treatment Milcsofcenimrycewu 288 289 291 292 294 295 298 300 301 304 mlcsofstorm. 118 120 122 124 127 128 131 133 136 139 Nuwberofueamet plants 2 2 2 2 2 2 I 1 1 1 Nuwboofaervi.cooew. 22,576 22,875 23.093 23,308 23,529 23,851 24,175 24533 25,085 25,485 Water Miles; ofwmer m6". 262 263 264 264 M6 268 271 273 275 277 Numberefcityownedfuebydmnu 2,575 2,635 2,662 2,680 2,735 3,330 3,385 3,415 3,447 3,503 Sanitation ImdfiUs 1 1 1 1 1 I I 1 I I Ac a . 395 395 395 395 411 411 411 418 418 418 Sources: Vwious city divisions 149 150 Compliance Section Tab EideBailly® CPAs A, BUSINESS ADVISORS Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Honorable Mayor and Members of the City Council City of Iowa City, Iowa We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Iowa City, Iowa (City) as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated December 11, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 151 What inspires you, inspires us. let's taL I sidebailly.tom 1545 Associates Dr., Ste. 101 Dubuque, IA 520022299 1 T 563.556.1790 1 F 563.557.7942 1 EOE Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Comments involving statutory and other legal matters about the City's operations for the year ended June 30, 2017, are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the City and are reported in Part IV of the accompanying Schedule of Findings and Questioned Costs. Since our audit was based on tests and samples, not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. X/L7' Dubuque, Iowa December 11, 2017 152 X0'1 EideBailly® ��. CPAs t RMESS ADVISORS Independent Auditor's Report on Compliance for F,ach Major Federal Program and Report on Internal Control over Compliance Required by the Uniform Guidance To the Honorable Mayor and Members of the City Council City of Iowa City, Iowa Report on Compliance for Each Major Federal Program We have audited the City of Iowa City, Iowa's (City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2017. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor's Responsibility Our responsibility is to express an opinion on the compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of City of Iowa City, Iowa's compliance. Opinion on Each Major Federal Program In our opinion, the City of Iowa City, Iowa, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major Federal programs for the year ended June 30, 2017. 153 What inspires you, inspires us. let's talk. eidebailly.tom 1545 Assxiales Dr., 51e. 101 Dubuque, IA 52002-2299 T 563.556.1790 1 F 563.557.7842 1 EOE Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. X/G� Dubuque, Iowa December 11, 2017 154 Federal Grantor/Pass-Through Grantor/Program or Cluster Title U.S. Department of Agriculture: Pass-through program from: Iowa Department of Agriculture: Specialty Crop Block Grant Program - Farm Bill U.S. Department of Housing and Urban Development: Direct program: CDBG - Entitlement Grants Cluster: Community Development Block Grants/ Entitlement Grants Community Development Block Grants/ Entitlement Grants Community Development Block Grants/ Entitlement Grants Cluster total Home Investment Partnerships Program Home Investment Partnerships Program Home Investment Partnerships Program Home Investment Partnerships Program Public and Indian Housing Public and Indian Housing Housing Voucher Cluster: Section 8 Housing Choice Vouchers Public Housing Capital Fund Public Housing Capital Fund City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2017 Federal Pass -Through Amounts Passed- CFDA Entity Identifying Federal Through to Number Number Expenditures Subrecipients 10.170 15SCBGPIA0001 $ 13,236 $ 13,236 14.218 886,190 669,355 14.218 364,183 227,273 14.218 309,144 142,213 1,559,517 1,038,841 14.239 82,554 12,971 14.239 62,823 39,521 14.239 36,300 - 14.239 10,405 3,000 192,082 55,492 14.850 135,284 14.850 125,354 260,638 14.871 8,154,473 14.872 61,572 14.872 54,951 116,523 Total U.S. Department of Housing and Urban Development 155 10,283,233 1,094,333 City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2017 Direct program: Federal Pass -Through Amounts Passed - Federal Grantor/Pass-Through CFDA Entity Identifying Federal Through to Grantor/Program or Cluster Title Number Number Expenditures Subrecipients U.S. Department of Justice: Assistance Grant Program 16.738 14 -JAG -158322 94,041 61,041 108,303 74,698 Pass-through program from: Iowa Department of Justice: Violence Against Women Formula Grants 16.588 VW -17 -04 -CJ $ 63,583 $ Direct program: Bulletproof Vest Partnership Program 16.607 389 Pass-through program from: Governor's Office of Drug Control Policy: Public Safety Partnership and Community Policing Grants 16.710 15 -CAMP -03 3,906 3,020 Direct program: Edward Byme Memorial Justice Assistance Grant Program 16.738 13,657 13,657 Edward Byrne Memorial Justice Assistance Grant Program 16.738 605 - Pass-through program from: Governor's Office of Drug Control Policy: Edward Byrne Memorial Justice Assistance Grant Program 16.738 14 -JAG -158322 94,041 61,041 108,303 74,698 Total U.S. Department of Justice U.S. Department of Transportation: Direct program: Airport Improvement Program 20.106 Pass-through program from: Highway Planning and Construction Cluster: Iowa Department of Transportation: Highway Planning and Construction 20.205 Highway Planning and Construction 20.205 Iowa Department of Transportation and Metropolitan Planning Organization of Johnson County: Highway Planning and Construction 20.205 Cluster total 156 176,181 77,718 68,382 HDP -3715(652) --71-52 6,713,789 IA -95-X018-371-15 76,114 17MPO-MPOJC 147,608 6,937,511 Federal Grantor/Pass-Through Grantor/Progxam or Cluster Title U.S. Department of Transportation: (continued) Pass-through program from: (continued) Metropolitan Transportation Planning and State and Non - Metropolitan Planning and Research Federal Transit Cluster: Direct program: Federal Transit — Formula Grants City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2017 Federal Pass -Through CFDA Entity Identifying Number Number Amounts Passed - Federal Through to Expenditures Subrecipients 20.505 17MPO-MPOJC $ 42,392 $ 20.507 1,622,763 Pass-through program from: Iowa Department of Transportation: Bus and Bus Facilities Formula Program 20.526 Cluster total Pass-through program from: Iowa Department of Transportation: Public Transportation for Nonurbanized Areas Transit Services Program Cluster: Enhanced Mobility of Seniors and Individuals with Disabilities IA -2016-019-371- 16#18520 242,614 1,865,377 20.509 IA -2016-027-371- 16#18518 76,114 20.513 IA -2016-026-371-17 #18404 112,960 Highway Safety Cluster: Iowa Department of Public Safety: Governor's Traffic Safety Bureau: National Priority Safety Programs 20.616 PAP 17-405d- M6OT, Task 24 National Priority Safety Programs 20.616 PAP 16-405d- M6OT, Task 21 Cluster total Total U.S. Department of Transportation 157 21,451 7,743 29,194 9,131,930 City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2017 158 Federal Pass -Through Amounts Passed - Federal Grantor/Pass-Through CFDA Entity Identifying Federal Through to Grantor/Program or Cluster Title Number Number Expenditures Subrecipients U.S. Department of Homeland Security: Pass-through program from: Iowa Homeland Security and Emergency Management Division: Disaster Grants — Public Assistance (Presidentially Declared Disasters) 97.036 FEMA DR4187-IA $ 28,513 $ Hazard Mitigation Grant 97.039 DR -4187-0003-01 467,242 Total U.S. Department of Homeland Security 495,755 Total $ 20,100,335 $ 1,185,287 158 City of Iowa City, Iowa Notes to the Schedule of Expenditures of Federal Awards Year Ended June 30, 2017 Note 1 - Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Iowa City, Iowa, and is presented on the modified accrual basis of accounting for governmental funds and the full accrual basis of accounting for proprietary funds. The information in this schedule is presented in accordance with the requirements of Uniform Guidance. The City received federal awards both directly from federal agencies and indirectly through pass-through entities. Federal financial assistance provided to a subrecipient is treated as an expenditure when it is paid to the subrecipient. Note 2 - Significant Accounting Policies Governmental and proprietary fund types account for the City's federal grant activity. Therefore, expenditures in the schedule of expenditures of federal awards are recognized on the modified accrual basis — when they become a demand on current available financial resources in the governmental fund types and on the full accrual basis — when expenditures are incurred in the proprietary fund types. The City's summary of significant accounting policies is presented in Note 1 in the City's basic financial statements. The City has not elected to use the 10% de minimis cost rate. 159 City of Iowa City, Iowa Schedule of Findings and Questioned Costs Year Ended June 30, 2017 Part I: Summary of the Independent Auditor's Results: Financial Statements Type of auditor's report issued Unmodified Internal control over financial reporting: Material weaknesses identified No Significant deficiencies identified not considered to be material weaknesses None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weaknesses identified No Significant deficiencies identified not considered to be material weaknesses None reported Type of auditor's report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with Uniform Guidance 2 CFR 200.516: No Identification of major programs: Name of Federal Program CFDA Number CDBG - Entitlement Grants Cluster: 14.218 Community Development Block Grants/ Entitlement Grants Highway Planning and Construction Cluster: 20.205 Highway Planning and Construction Dollar threshold used to distinguish between type A and type B programs: $ 750,000 Auditee qualified as low-risk auditee? Yes Part II: Findings Related to the Financial Statements: There were no findings to report. 160 City of Iowa City, Iowa Schedule of Findings and Questioned Costs Year Ended June 30, 2017 Part III: Findings and Questioned Costs for Federal Awards: There were no findings and questioned costs to report. Part IV: Other Findings Related to Required Statutory Reporting: 2017 -IA -A Certified Budget — Disbursements during the year ended June 30, 2017, did not exceed the amount budgeted. 2017 -IA -B Questionable Expenditures — We noted no expenditures that we believe may fail to meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979. 2017 -IA -C Travel Expense — No expenditures of City money for travel expenses of spouses of City officials or employees were noted. 2017 -IA -D Business Transactions — No business transactions between the City and City officials or employees were noted. 2017 -LA -E Bond Coverage — Surety bond coverage of City officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to ensure the coverage is adequate for current operations. 2017 -IA -F Council Minutes — No transactions were found that we believe should have been approved in the City Council minutes but were not. 2017 -IA -G Deposits and Investments — No instances of non-compliance with the deposit and investment provisions of Chapters 12B and 12C of the Code of Iowa and the City's investment policy were noted. 2017 -IA -H Revenue Bonds — No instances of non-compliance with the provisions of the City's revenue bond resolutions were noted. 2017 -IA -I Annual Urban Renewal Report - The annual urban renewal report was properly approved and certified to the Iowa Department of Management on or before December 1. 161 City oflowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Tamble General Obligation Bonds, Series 2018B APPENDIX B BOOK -ENTRY -ONLY ISSUANCE 1. The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully - registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. 2. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a S&P Global Ratings rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security (`Beneficial Owner") is in tum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. l31 City oflowa City, Johnson County, lowa 58,895.000' General Obligation Bonds, Series 1018.4 $3.100,000' Taxable General Obligation Bonds, Series 2018B 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to any Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to any Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book - entry credit of tendered Securities to any Tender/Remarketing Agent's DTC account. 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 11. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. MR City of Iowa City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bonds, Series 2018B APPENDIX C DRAFT' FORMS OF OPINION OF BOND COUNSEL Ameny Cooney, Law P.c. AttorneAHLERS COONEY 100 CourAenu 100 Court Avenue, Suite 600 -22 AT T O ON E Y S Des Moines, law 50309-2231 Phone: 5155-243-7611 Fax: 515-243-2149 www.shleralaw.con [draft] We hereby certify that we have examined a certified transcript of the proceedings of the City Council and acts of administrative officers of the City of Iowa City, State of Iowa (the 'Issuer"), relating to the issuance of General Obligation Bonds, Series 2018A, by said City, dated 2018, in the denomination of $5,000 or multiples thereof, in the aggregate amount of $ (the 'Bonds"). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion as bond counsel. As to questions of fact material to our opinion, we have relied upon representations of the Issuer contained in the resolution authorizing issuance of the Bonds (the "Resolution") and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based on our examination and in reliance upon the certified proceedings and other certifications described above, we are of the opinion, under existing law, as follows: 1. The Issuer is duly created and validly existing as a body corporate and politic and political subdivision of the State of Iowa with the corporate power to adopt and perform the Resolution and issue the Bonds. 2. The Bonds are valid and binding general obligations of the Issuer. 3. All taxable property in the territory of the Issuer is subject to ad valorem taxation without limitation as to rate or amount to pay the Bonds. Taxes have been levied by the Resolution for the payment of the Bonds and the Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Bonds to the extent the necessary funds are not provided from other sources. 4. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax; however, such interest is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations for taxable years beginning before January 1, 2018. The opinion set forth in the preceding sentence is subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal Miami a Salt -1889, Gurruey a Bary -1893. 9aay A SOW- 1901, Supp. Party. Bannister d Star waer- 1911. Sannuler. Carpenter MI"R a Cw, -1950, Ahler, Cooney. D.Mr. ABpee Hayne 6 $eleh — 1974. Ahlers, C..y. Domeier, Hayne Smut 8 Mlhee PC - 19N C-1 City oflowa City, Johnson County, Iowa 88,895,000* General Obligation Bonds, Series 1018.4 83.100,000' Taxable General Obligation Bonds, Series 1018B City of Iowa City, State of Iowa $ General Obligation Bonds, Series 2018A Page 2 income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. We express no opinion regarding the accuracy, adequacy, or completeness of the Official Statement or other offering material relating to the Bonds. Further, we express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. The rights of the owners of the Bonds and the enforceability of the Bonds are limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. 01472612-1110714-130 Respectfully submitted, C-2 City of Iowa City, Johnson Cowry, Iowa $$895,000* General Obligation Bonds, Series 2018.4 $3,100,000' Tumble General Obligation Bonds, Series 10188 Ahlan 6 Cooney, P.C. Attorneys at Law AHLERS COO Court ONEY 1D 100 Court Avenue, Suite 600 A T T O R N E Y S Des Moines, Iowa 50309-2222 31 Phots: 515-243-7611 Fox: 515-243-2149 www.ahlenlaw.cnn [draft] We hereby certify that we have examined a certified transcript of the proceedings of the City Council and acts of administrative officers of the City of Iowa City, State of Iowa (the "Issuer"), relating to the issuance of Taxable General Obligation Bonds, Series 2018B, by said City, dated , 2018, in the denomination of $5,000 or multiples thereof, in the aggregate amount of S (the "Bonds'). We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion as bond counsel. As to questions of fact material to our opinion, we have relied upon representations of the Issuer contained in the resolution authorizing issuance of the Bonds (the "Resolution") and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based on our examination and in reliance upon the certified proceedings and other certifications described above, we are of the opinion, under existing law, as follows: I. The Issuer is duly created and validly existing as a body corporate and politic and political subdivision of the State of Iowa with the corporate power to adopt and perform the Resolution and issue the Bonds. 2. The Bonds are valid and binding general obligations of the Issuer. 3. All taxable property in the territory of the Issuer is subject to ad valorem taxation without limitation as to rate or amount to pay the Bonds. Taxes have been levied by the Resolution for the payment of the Bonds and the Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Bonds to the extent the necessary funds are not provided from other sources. 4. The interest on the Bonds is not excluded from gross income for federal income tax purposes under Section 103(a) of the Internal Revenue Code of 1986, as amended. THE HOLDERS OF THE BONDS SHOULD TREAT THE INTEREST THEREON AS SUBJECT TO FEDERAL INCOME TAXATION. We express no other opinion regarding any other federal or state income tax consequences caused by the receipt or accrual of interest on the Bonds. NSstiard 8 Baily - 1988. Guemeey 8 Body- 1893, Baily b Sapp -1901. Stipp, Parry. Bannisterd Staranger - 1914, Sannnier. Caipenwr. Ahkrs S Cooney - 1950. Mlen. Cooney, Corweller. Mines, Haynie 6 SmM - 1974. Mbm, Cooney, Ger Iw, Haynie, Smith & Mleee. P.C. -1990 C-3 City of Iowa City, Johnson County. Iowa $8,895,000' General Obligation Bonds. Series 2018A $3, 100,000* Taxable General Obligation Bonds, Series 2018B City of Iowa City, State of Iowa S Taxable General Obligation Bonds, Series 2018B Page 2 We express no opinion regarding the accuracy, adequacy, or completeness of the Official Statement or other offering material relating to the Bonds. Further, we express no opinion regarding tax consequences arising with respect to the Bonds other than as expressly set forth herein. The rights of the owners of the Bonds and the enforceability of the Bonds are limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity. This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. 01472625-1110714.131 Respectfully submitted, C4 City ofIowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Triable General Obligation Bonds, Series 2018B APPENDIX D DRAFT CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the City of Iowa City, State of Iowa (the "Issuer"), in connection with the issuance of $ General Obligation Bonds, Series 2018A and $ Taxable General Obligation Bonds, Series 2018B (collectively, the "Bonds") dated 2018. The Bonds are being issued pursuant to Resolutions of the Issuer approved on , 2018 (the "Resolutions"). The Issuer covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2 - 12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Resolutions, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Financial Information" shall mean financial information or operating data of the type included in the final Official Statement, provided at least annually by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Business Day" shall mean a day other than a Saturday or a Sunday or a day on which banks in Iowa are authorized or required by law to close. "Dissemination Agent" shall mean the Issuer or any Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation. "Holders" shall mean the registered holders of the Bonds, as recorded in the registration books of the Registrar. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "Municipal Securities Rulemaking Board" or "MSRB" shall mean the Municipal Securities Rulemaking Board, 1300 I Street NW, Suite 1000, Washington, DC 20005. "National Repository" shall mean the MSRB's Electronic Municipal Market Access website, a/k/a "EMMA" (emma.msrb.org). D-1 City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 1018A $3,100,000* Taxable General Obligation Bonds, Series 1018B "Official Statement" shall mean the Issuer's Official Statement for the Bonds, dated .2018. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State" shall mean the State of Iowa. Section 3. Provision of Annual Financial Information. a) The Issuer shall, or shall cause the Dissemination Agent to, not later than two hundred ten (210) days after the end of the Issuer's fiscal year (presently June 30th), commencing with information for the 2017/2018 fiscal year, provide to the National Repository an Annual Financial Information filing consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Financial Information filing must be submitted in such format as is required by the MSRB (currently in "searchable PDF" format). The Annual Financial Information filing may be submitted as a single document or as separate documents comprising a package. The Annual Financial Information filing may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Financial Information filing and later than the date required above for the filing of the Annual Financial Information if they are not available by that date. If the Issuer's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). b) If the Issuer is unable to provide to the National Repository the Annual Financial Information by the date required in subsection (a), the Issuer shall send a notice to the Municipal Securities Rulemaking Board, if any, in substantially the form attached as Exhibit A. c) The Dissemination Agent shall: i. each year file Annual Financial Information with the National Repository; and ii. (if the Dissemination Agent is other than the Issuer), file a report with the Issuer certifying that the Annual Financial Information has been filed pursuant to this Disclosure Certificate, stating the date it was filed. Section 4. Content of Annual Financial Information. The Issuer's Annual Financial Information filing shall contain or incorporate by reference the following: D-2 City ofIowa City. Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bonds, Series 2018B a) The last available audited financial statements of the Issuer for the prior fiscal year, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under State law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with generally accepted accounting principles, noting the discrepancies therefrom and the effect thereof. If the Issuer's audited financial statements for the preceding years are not available by the time Annual Financial Information is required to be filed pursuant to Section 3(a), the Annual Financial Information filing shall contain unaudited financial statements of the type included in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Financial Information when they become available. b) A table, schedule or other information prepared as of the end of the preceding fiscal year, of the type contained in the frial Official Statement under the captions "Property Valuations and Trend of Valuations", "Larger Taxpayers", "Tax Rates", "Levies and Collections", "Debt Limit", "Direct Debt". Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been filed with the National Repository. The Issuer shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. a) Pursuant to the provisions of this Section, the Issuer shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than 10 Business Days after the day of the occurrence of the event: i. Principal and interest payment delinquencies; ii. Non-payment related defaults, if material; iii. Unscheduled draws on debt service reserves reflecting financial difficulties; iv. Unscheduled draws on credit enhancements relating to the Bonds reflecting financial difficulties; v. Substitution of credit or liquidity providers, or their failure to perform; vi. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the D-3 City oflowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018.4 $3,100,000* Taxable General Obligation Bonds, Series 2018B tax-exempt status of the Series Bonds, or material events affecting the tax-exempt status of the Bonds; vii. Modifications to rights of Holders of the Bonds, if material; viii. Bond calls (excluding sinking fund mandatory redemptions), if material, and tender offers; ix. Defeasances of the Bonds; x. Release, substitution, or sale of property securing repayment of the Bonds, if material; xi. Rating changes on the Bonds; xii. Bankruptcy, insolvency, receivership or similar event of the Issuer; xiii. The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and xiv. Appointment of a successor or additional trustee or the change of name of a trustee, if material. b) Whenever the Issuer obtains the knowledge of the occurrence of a Listed Event, the Issuer shall determine if the occurrence is subject to notice only if material, and if so shall as soon as possible determine if such event would be material under applicable federal securities laws. c) If the Issuer determines that knowledge of the occurrence of a Listed Event is not subject to materiality, or determines such occurrence is subject to materiality and would be material under applicable federal securities laws, the Issuer shall promptly, but not later than 10 Business Days after the occurrence of the event, file a notice of such occurrence with the Municipal Securities Rulemaking Board through the filing with the National Repository. Section 6. Termination of Reporting Obligation. The Issuer's obligations under this Disclosure Certificate with respect to each Series of Bonds shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds of that Series or upon the Issuer's receipt of an opinion of nationally recognized bond counsel to the effect that, because of legislative action or final judicial action or administrative actions or proceedings, the failure of the Issuer to comply with the terms hereof will not cause Participating Underwriters to be in violation of the Rule or other applicable requirements of the Securities Exchange Act of 1934, as amended. M City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A $3,100,000* Taxable General Obligation Bands, Series 2018B Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Issuer pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the Issuer. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Issuer may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: a) If the amendment or waiver relates to the provisions of Section 3(a), 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and c) The amendment or waiver either (i) is approved by the Holders of the Bonds in the same manner as provided in the Resolutions for amendments to the Resolutions with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Issuer shall describe such amendment in the next Annual Financial Information filing, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Financial Information filing or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Financial Information filing or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Certificate to update such information or include it in any future Annual Financial Information filing or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such D-5 City oflowa City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 2018A $3,100,000• Taxable General Obligation Bonds, Series 2018B actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Certificate. Direct, indirect, consequential and punitive damages shall not be recoverable by any person for any default hereunder and are hereby waived to the extent permitted by law. A default under this Disclosure Certificate shall not be deemed an event of default under the Resolutions, and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties. Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attomeys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Date: day of 2018. ATTEST: IN City Clerk CITY OF IOWA CITY, STATE OF IOWA 9. Mayor City of lowa City, Johnson County, Iowa $8,895,000• General Obligation Bonds, Series 2018A $3,100,000" Taxable General Obligation Bonds, Series 2018B NOTICE TO NATIONAL REPOSITORY OF FAILURE TO FILE ANNUAL FINANCIAL INFORMATION Name of Issuer: City of Iowa City, Iowa. Name of Bond Issue: $ General Obligation Bonds, Series 2018A Dated Date of Issue: 2018 NOTICE IS HEREBY GIVEN that the Issuer has not provided Annual Financial Information with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Certificate delivered by the Issuer in connection with the Bonds. The Issuer anticipates that the Annual Financial Information will be filed by Dated: day of 20_ 01472611 -Nona -130 CITY OF IOWA CITY, STATE OF IOWA By: Its: D-7 OFFICIAL BID FORM — SERIES 2018A BONDS City of Iowa City 410 E. Washington Street Iowa City, Iowa 52240 Council Members: Tuesday, May 1, 2018 Speer Financial, Inc. Facsimile: (319) 341-4008 For the $8,895,000' General Obligation Bonds, Series 2018A (the "Tax -Exempt Bonds"), of the City of Iowa City, Johnson County, Iowa (the "City"), as described in the annexed Official Terms of Offering, which is expressly made a part of this bid, we will pay you $ (no less than $8,823,840). The Tax -Exempt Bonds are to bear interest at the following respective rates (each a multiple of 1/8 or 1/100 of 1%) for the Bonds of each designated maturity. I:\u [III1�Y KYi�\►i 1)uTI:V IlIJ7�l Y111.�1111`►) afJ $810,000............2019 % $855,000............2022 Less Premiunt/Plus Discount % $940,000............2026 % 825,000 ............ 2020 % 875,000 ............ 2023 % 960,000 ............ 2027 840,000 ............ 2021 % 895,000 ............ 2024 % 980.000 ............ 2028 915,000 ............ 2025 % Any consecutive maturities may be aggregated into term bonds at the option ofthe bidder, in which case the mandatary redemption provisions shall be on the same schedule as above. Maturities. Term Maturity_ Maturities: Term Maturity_ Maturities: Term MaturityMaturities: Term Maturity_ "Subject to principal adjustment in accordance with the Official Terms of Offering. In submitting this bid, we represent that (i) this bid constitutes a firm offer to purchase the Tax -Exempt Bonds, and (ii) we have an established industry reputation for underwriting new issuances of municipal bonds and notes. The Tax -Exempt Bonds are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa. The City will pay for the legal opinion. The Purchaser agrees to apply for CUSIP numbers and pay the fee charged by the CUSIP Service Bureau and will accept the Tax -Exempt Bonds with the CUSIP numbers as entered on the Tax -Exempt Bonds. As evidence of our good faith, if we are the winning bidder, we will wire transfer the amount of TWO PERCENT OF PAR (the "Deposit") WITHIN TWO HOURS after the bid opening time to the City's good faith bank and under the terms provided in the Official Terms of Offering for the Tax -Exempt Bonds. Alternatively, we have wire transferred or enclosed herewith a check payable to the City in the amount of the Deposit under the terms provided in the Official Terms of Offering for the Tax -Exempt Bonds. Attached hereto is a list of members of our account on whose behalf this bid is made. Form of Deposit (Check One) Account Manneer Information Bidders Option Insurance Prior to Bid Opening: Certified/Cashier's Check [ ] Wire Transfer [ ] Within TWO Hours of Bid Opening: Wire Transfer [ ] Amount: $177,900 Underwriter/Bank Address Authorized Rep City State/Zip Direct Phone ( 1 FAX Number ( ) E -Mail Address We have purchased insurance from: Name of Insurer (Please fill in) Premium: Maturities: (Check One) U Years U All The foregoing bid was accepted and the Tax -Exempt Bonds sold by resolution of the City on Tuesday, May 1, 2018, and receipt is hereby acknowledged of the good faith Deposit which is being held in accordance with the terms of the annexed Official Terms of Offering. ATTEST: CITY OF IOWA CITY JOHNSON COUNTY, IOWA City Clerk Mayor NOT PART OF THE BID Calculation a true interest cost Gross Interest $ Less Premiunt/Plus Discount $ Toe Interest Cost s Toe Interest Rate % TOTAL ON YEARS 50,510.00 AVERAGE LIFE 5.678Yc.. City ofloxes City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A OFFICIAL TERMS OF OFFERING $8,895,000* CITY OF IOWA CITY Johnson County, Iowa General Obligation Bonds, Series 2018A The City of Iowa City, Johnson County, Iowa, (the "City"), will receive electronic bids on the SpeerAuction ("SpeerAuction") website address "www.SpeerAuction.com" for its $8,895,000* General Obligation Bonds, Series 2018A (the "Tax -Exempt Bonds"), on an all or none basis between 10:00 A.M. and 10:30 A.M., C.D.T., Tuesday, May 1, 2018. To bid electronically, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City's sale (as described below). The City will also receive sealed bids for the Tax -Exempt Bonds, on an all or none basis, at City Hall, 410 E. Washington Street, Iowa City, Iowa, before 10:30 A.M., C.D.T., Tuesday, May 1, 2018. The City will also receive facsimile bids at (319) 341-4008 for the Tax -Exempt Bonds, on an all or none basis, before 10:30 A.M., C.D.T., Tuesday, May 1, 2018. Upon receipt, facsimile bids will be sealed and treated as sealed bids, and along with all other sealed bids will be publicly opened and, together with any electronic bids, read. Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to reject all bids, to reject any bid proposal not conforming to this Official Terms of Offering, and to waive any irregularity or informality with respect to any bid. Additionally, the City reserves the right to modify or amend this Official Terms of Offering; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the Tax -Exempt Bonds and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thomson Municipal News. The Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property within the corporate limits of the City without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors' rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. Establishment of Issue Price (10% Test to Apply if Competitive Sale Requirements are Not Satisfied) The winning bidder shall assist the City in establishing the issue price of the Tax -Exempt Bonds and shall execute and deliver to the City at Closing an "issue price" or similar certificate setting forth the reasonably expected initial offering price to the public or the sales price or prices of the Tax -Exempt Bonds, together with the supporting pricing wires or equivalent communications, substantially in the forms attached hereto as Exhibit A to this Official Terms of Offering, with such modifications as may be appropriate or necessary, in the reasonable judgment of the winning bidder, the City and Bond Counsel. The City intends that the provisions of Treasury Regulation Section 1.148-1(f)(3)(i) (defining "competitive sale" for purposes of establishing the issue price of the Tax -Exempt Bonds) will apply to the initial sale of the Tax -Exempt Bonds (the "competitive sale requirements") because: (1) the City shall disseminate this Official Terms of Offering to potential underwriters in a manner that is reasonably designed to reach potential underwriters; (2) all bidders shall have an equal opportunity to bid; (3) the City may receive bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds; and (4) the City anticipates awarding the sale of the Tax -Exempt Bonds to the bidder who submits a firm offer to purchase the Tax -Exempt Bonds at the highest price (or lowest true interest cost), as set forth in this Official Terms of Offering. City of Iowa City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 10I8A Any bid submitted pursuant to this Official Terms of Offering shall be considered a firm offer for the purchase of the Tax -Exempt Bonds, as specified in the bid. In the event that the competitive sale requirements are not satisfied, the City shall so advise the winning bidder. The City shall treat the fust price at which 10% of a maturity of the Tax -Exempt Bonds (the "10% test') is sold to the public as the issue price of that maturity, applied on a maturity -by -maturity basis (and if different interest rates apply within a maturity, to each separate CUSIP number within that maturity). The winning bidder shall advise the City if any maturity of the Tax -Exempt Bonds satisfies the 10% test as of the date and time of the award of the Tax -Exempt Bonds. The City will not require bidders to comply with the "hold -the -offering -price rule" and therefore does not intend to use the initial offering price to the public as of the sale date of any maturity of the Tax -Exempt Bonds as the issue price of that maturity. Bids will not be subject to cancellation in the event that the competitive sale requirements are not satisfied. Bidders should prepare their bids on the assumption that all of the maturities of the Tax -Exempt Bonds will be subject to the 10% test in order to establish the issue price of the Tax -Exempt Bonds. If the competitive sale requirements are not satisfied, then until the 10% test has been satisfied as to each maturity of the Tax -Exempt Bonds, the winning bidder agrees to promptly report to the City the prices at which the unsold Tax - Exempt Bonds of that maturity have been sold to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Tax -Exempt Bonds of that maturity or until all Tax -Exempt Bonds of that maturity have been sold. By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the Tax -Exempt Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the selling group, and each broker-dealer that is a party to such retail distribution agreement, as applicable, to report the prices at which it sells to the public the unsold Tax -Exempt Bonds of each maturity allotted to it until it is notified by the winning bidder that either the 10% test has been satisfied as to the Tax -Exempt Bonds of that maturity or all Tax -Exempt Bonds of that maturity have been sold to the public, if and for so long as directed by the winning bidder and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the initial sale of the Tax -Exempt Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Tax -Exempt Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to report the prices at which it sells to the public the unsold Tax -Exempt Bonds of each maturity allotted to it until it is notified by the winning bidder or such underwriter that either the 10% test has been satisfied as to the Tax -Exempt Bonds of that maturity or all Tax -Exempt Bonds of that maturity have been sold to the public, if and for so long as directed by the winning bidder or such underwriter and as set forth in the related pricing wires. Sales of any Tax -Exempt Bonds to any person that is a related party to an underwriter shall not constitute sales to the public for purposes of this Official Terms of Offering. Further, for purposes of this Official Terms of Offering: (1) "public' means any person other than an underwriter or a related party, (2) "underwriter" means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Tax -Exempt Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Tax -Exempt Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Tax -Exempt Bonds to the public), City of Iowa City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 2018A (3) a purchaser of any of the Tax -Exempt Bonds is a "related party" to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (4) "sale date" means the date that the Tax -Exempt Bonds are awarded by the City to the winning bidder. Bond Details The Tax -Exempt Bonds will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, to which principal and interest payments on the Tax -Exempt Bonds will be paid. Individual purchases will be in book -entry form only. Interest on each Bond shall be paid by check or draft of the Bond Registrar to the person in whose name such Bond is registered at the close of business on the fifteenth day of the month next preceding an interest payment date on such bond. The principal of the Tax -Exempt Bonds shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Bond Registrar in St. Paul, Minnesota. Semiannual interest is due June 1 and December 1 of each year, commencing December 1, 2018 and is payable by U.S. Bank, St. Paul, Minnesota (the "Bond Registrar"). The Tax -Exempt Bonds are dated the date of delivery (expected to be on or about June 1, 2018). $810,000 ........................2019 825,000 ........................2020 840,000 ........................2021 AMOUNTS* AND MATURITIES — JUNE 1 $855,000 ........................2022 875,000 ........................2023 895,000 ........................2024 915,000 ........................2025 $940,000 ....................... 2026 960,000 ....................... 2027 980,000 ....................... 2028 Any consecutive maturities may be aggregated into term bonds at the option ofthe bidder, in which case the mandatory redemption provisions sha0 be an the same schedule as above. The Tax -Exempt Bonds due June 1, 2019 - 2024, inclusive, are non -callable. The Tax -Exempt Bonds due June 1, 2025 - 2028, inclusive, are callable in whole or in part and on any date on or after June 1, 2024, at a price of par and accrued interest. If less than all the Tax -Exempt Bonds are called, they shall be redeemed in any order of maturity as determined by the City and within any maturity by lot. *ADJUSTMENTS TO PRINCIPAL AMOUNTAFTER DETERMINATION OFBESTBID. Da aggregate principal amount of the Tax -Exempt Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the Winning Bidder. The City may increase or decrease each maturity in increments of 55,000, but the total amount to be issued will not exceed $8,895,000. Interest rates specified by the Winning Bidderfor each maturity will not change. Final adjuslments shall be in lite sole discretion of the City. Die dollar amount of the purchase price proposed by the Winning Bidder will be changed if the aggregate principal amount of the Tox-Exempt Bonds is adjusted as described above. Any charge in the principal amount of any maturity of the Tax -Exempt Bonds will be made while maintaining, as closely as possible, the Winning Bidder's net compensation, calculated as apercentage ofbondprincipal. The Winning Biddermay not withdraw or modify its bid as a result ofanypost-bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the Winning Bidder. Method of Bidding Electronically Notwithstanding the fact that the City permits receiving bids electronically using SpeerAuction, all bidders must have a signed, but uncompleted, Official Bid Form delivered to Speer Financial, Inc., Suite 608, 531 Commercial Street, Waterloo, Iowa, (319) 291-8628 facsimile, prior to the close of bidding to which a printout of the electronic bid will be attached and delivered to the City. City of Iowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A All -or -none bids must be submitted via the internet address www.SpeerAuction.com. The use of SpeerAuction shall be at the bidder's risk and expense and the City shall have no liability with respect thereto, including (without limitation) liability with respect to incomplete, late arriving and non -arriving bids. To bid via the SpeerAuction webpage, bidders must first visit the SpeerAuction webpage where, if they have not previously registered with either SpeerAuction, Grant Street Group (the "Auction Administrator") or any other website administered by the Auction Administrator, they may register and then request admission to bid on the Tax -Exempt Bonds. Bidders will be notified prior to the scheduled bidding time of their eligibility to bid. Only registered broker-dealers and dealer banks with DTC clearing arrangements will be eligible to bid electronically. The "Rules" of the SpeerAuction bidding process may be viewed on the SpeerAuction webpage and are incorporated herein by reference. Bidders must comply with the Rules of SpeerAuction in addition to the requirements of the City's Official Terms of Offering. In the event the Rules of SpeerAuction and this Official Terms of Offering conflict, this Official Terms of Offering shall be controlling. All electronic bids must be submitted on the SpeerAuction webpage. Electronic bidders may change and submit bids as many times as they choose during the sale period but may not delete a submitted bid. The last bid submitted by an electronic bidder before the deadline for receipt of bids will be compared to all other final bids to determine the winning bidder. During the bidding, no bidder will see any other bidder's bid nor the status of their bid relative to other bids (e.g., whether their bid is a leading bid). The electronic bidder bears all risk of transmission failure. Any questions regarding bidding on the SpeerAuction website should be directed to Grant Street Group at (412) 391-5555 x 370. Each bidder shall be solely responsible for making necessary arrangements to access SpeerAuction for purposes of submitting its intemet bid in a timely manner and in compliance with the requirements of the Terms of Offering. The City is permitting bidders to use the services of the SpeerAuction solely as a communication mechanism to conduct the internet bidding and the SpeerAuction is not an agent of the City. Provisions of the Terms of Offering and Official Bid Form shall control in the event of conflict with information provided by the Internet Bid System. Electronic Facsimile Bidding: Bids may be submitted via facsimile at (319) 341-4008. Electronic facsimile bids will be sealed and treated as sealed bids. Neither the City nor its agents will assume liability for the inability of the bidder to reach the above named fax numbers prior to the time of sale specified above. Transmissions received after the deadline will be rejected. Bidders electing to submit bids via facsimile transmission bear full and complete responsibility for the transmission of such bid. Neither the City nor its agents will assume responsibility for the inability of the bidder to reach the above specified fax number prior to the time of sale. Time of receipt shall be the time recorded by the person receiving the facsimile and shall be conclusive. Bidding Parameters and Award of the Tax -Exempt Bonds All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid shall be in non -descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed six percent (6%). All bids must be for all of the Tax -Exempt Bonds and must be for not less than $8,823,840. Award of the Tax -Exempt Bonds: The Tax -Exempt Bonds will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi-annually) necessary to discount the debt service payments on the Tax -Exempt Bonds from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the Tax -Exempt Bonds shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted first in time on the SpeerAuction webpage or if all such bids are not submitted electronically, the winning bid shall be determined by lot. City of Iowa City, Johnson County, Iowa $8,895,000' General Obligation Bonds, Series 2018A The Tax -Exempt Bonds will be awarded to the bidder complying with the terms of this Official Terms of Offering whose bid produces the lowest true interest cost rate to the City as determined by the City's Registered Municipal Advisor, which determination shall be conclusive and binding on all bidders; provided, that the City reserves the right to reject all bids or any non -conforming bid and reserves the right to waive any informality in any bid. Electronic bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding. The premium or discount, if any, is subject to pro rata adjustment if the maturity amounts of the Tax -Exempt Bonds are changed, allowing the same dollar amount of profit per $1,000 bond as bid. The true interest cost of each electronic bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by the City's Municipal Advisor, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The City or its Municipal Advisor will notify the bidder to whom the Tax -Exempt Bonds will be awarded, if and when such award is made. The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-36. The winning bidder will be required to pay the standard MSRB charge for Tax -Exempt Bonds purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association ("SIFMA") will be required to pay SIFMA's standard charge per Bond. The winning purchaser will be required to certify to the City immediately after the opening of bids: (i) the initial public offering price of each maturity of the Tax -Exempt Bonds (not including bond houses and brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Tax - Exempt Bonds (not less than 10% of each maturity) were sold to the public; or (ii) if less than 10% of any maturity has been sold, the price for that maturity determined as of the time of the sale based upon the reasonably expected initial offering price to the public; and (iii) that the initial public offering price does not exceed their fair market value of the Tax -Exempt Bonds on the sale date. The winning purchaser will be required to provide a certificate satisfactory to Bond Counsel and the City at closing confirming the information required by this paragraph. Good Faith Deposit and Other Matters The winning bidder is required to a wire transfer from a solvent bank or trust company to the City's good faith bank the amount of TWO PERCENT OF PAR (the "Deposit") WITHIN TWO HOURS after the bid opening time as evidence of the good faith of the bidder. Alternatively, a bidder may submit its Deposit upon or prior to the submission of its bid in the form of a certified or cashier's check on, or a wire transfer from, a solvent bank or trust company for TWO PERCENT OF PAR payable to the Treasurer of the City. The City reserves the right to award the Tax -Exempt Bonds to a winning bidder whose wire transfer is initiated but not received within such two hour time period provided that such winning bidder's federal wire reference number has been received. In the event the Deposit is not received as provided above, the City may award the Tax -Exempt Bonds to the bidder submitting the next best bid provided such bidder agrees to such award. If a wire transfer is used for the Deposit, it must be sent according to the following wire instructions: Amalgamated Bank of Chicago Corporate Trust 30 North LaSalle Street 381 Floor Chicago, IL 60602 ABA # 071003405 Credit To: 3281 Speer Bidding Escrow RE: City of Iowa City, Johnson County, Iowa bid for $8,895,000* General Obligation Bonds, Series 2018A City oflowa City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 2018A If the wire shall arrive in such account prior to the date and time of the sale of the Tax -Exempt Bonds. Contemporaneously with such wire transfer, the prospective purchaser shall send an email to biddingescrow@aboc.com with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such prospective purchaser is not awarded the Tax - Exempt Bonds. The City and any prospective purchaser who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. ("Speer") shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful prospective purchaser; (ii) if the bid is accepted, the Deposit shall be forwarded to the City, (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the prospective purchaser; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer. The City covenants and agrees to enter into a written agreement, certificate or contract, constituting an undertaking (the "Undertaking") to provide ongoing disclosure about the City for the benefit of the beneficial owners of the Tax -Exempt Bonds on or before the date of delivery of the Tax -Exempt Bonds as required under Section (b)(5) of Rule 15c2-12 (the "Rule") adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The Underwriter's obligation to purchase the Tax -Exempt Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the Tax -Exempt Bonds. The Tax -Exempt Bonds will be delivered to the successful purchaser against full payment in immediately available funds as soon as they can be prepared and executed, which is expected to be on or about June 1, 2018. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser's interest in and liability for the Tax -Exempt Bonds will cease. The Official Statement, when father supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the Tax -Exempt Bonds, and any other information required by law or deemed appropriate by the City, shall constitute a "Final Official Statement" of the City with respect to the Tax -Exempt Bonds, as that term is defined in the Rule. By awarding the Tax -Exempt Bonds to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the Tax -Exempt Bonds are awarded, up to 50 copies of the Final Official Statement to permit each "Participating Underwriter" (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the Tax -Exempt Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the Tax -Exempt Bonds agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the Tax -Exempt Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. By submission of its bid, the senior managing underwriter of the successful purchaser agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the Tax -Exempt Bonds. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the Tax -Exempt Bonds to the purchaser in New York, New York (or arrange for "FAST' delivery) through the facilities of DTC and will pay for the bond attorney's opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the Tax -Exempt Bonds: (1) the legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa, that the Tax -Exempt Bonds are lawful and enforceable obligations of the City in accordance with their terms; (2) the opinion of said attorneys that the interest on the Tax -Exempt Bonds is exempt from federal income taxes as and to the extent set forth in the Official Statement for the Tax - Exempt Bonds; and (3) a no litigation certificate by the City. City of lawn City, Johnson County, Iowa $8,895,000* General Obligation Bonds, Series 1018A The City intends to designate the Tax -Exempt Bonds as "qualified tax-exempt obligations" pursuant to the small issuer exception provided by Section 265(b) (3) of the Internal Revenue Code of 1986, as amended. The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the Tax -Exempt Bonds. Copies of such Official Statement or additional information may be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 E. Washington Street, Iowa City, Iowa 52240 or an electronic copy of this Official Statement is available from the www.speerfinancial.com website under "Official Statement Sales/Competitive Calendar" or from the Registered Municipal Advisor to the City, Speer Financial, Inc., 531 Commercial Street, Suite 608, Waterloo, Iowa 50701 (telephone (319) 291-2077), and One North LaSalle Street, Suite 4100, Chicago, Illinois 60602 (telephone (312) 346-3700). /s/ DENNIS BOCKENSTEDT Finance Director CITY OF IOWA CITY Johnson County, Iowa City of Iowa City, Johnson County, Iowa 58,895,000` General Obligation Bonds, Series 2018A 1*14111.30r_� EXAMPLE ISSUE PRICE CERTIFICATE [from bond counsel] USE FOR COMPETITIVE SALES — 3 BIDS RECEIVED EXHIBIT A $[PRINCIPAL AMOUNT] [BOND CAPTION] ISSUE PRICE CERTIFICATE The undersigned, on behalf of [NAME OF UNDERWRITER] ("Purchaser"), hereby certifies as set forth below with respect to the sale of the above -captioned obligations (the 'Bonds"). Reasonably Expected Initial Offering Price. a) As of the Sale Date, the reasonably expected initial offering prices of the Bonds to the Public by Purchaser are the prices listed in Schedule A (the "Expected Offering Prices"). The Expected Offering Prices are the prices for the Maturities of the Bonds used by Purchaser in formulating its bid to purchase the Bonds. Attached as Schedule B is a true and correct copy of the bid provided by Purchaser to purchase the Bonds. b) Purchaser was not given the opportunity to review other bids prior to submitting its bid.' c) The bid submitted by Purchaser constituted a firm offer to purchase the Bonds. 2. Defined Terms. a) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. b) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter. The term 'related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. c) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is [DATE]. d) Underwriter means (i) the Purchaser or any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Purchaser's interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer[ and the Borrower] with respect to certain of the representations set forth in the [Tax Certificate] and with respect to compliance with the federal income tax rules affecting the Bonds, and by [BOND COUNSEL] in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038[ -G][ -GC][ -TC], and other federal income tax advice that it may give to the Issuer [ and the Borrower] from time to time relating to the Bonds. Dated: [ISSUE DATE] UNDERWRITER By: Name: SCHEDULE A EXPECTED OFFERING PRICES (Attached) SCHEDULE B COPY OF UNDERWRITER'S BID (Attached) USE FOR GENERAL RULE 10% EXHIBIT A $[PRINCIPAL AMOUNT] [BOND CAPTION] ISSUE PRICE CERTIFICATE The undersigned, on behalf of [NAME OF UNDERWRITER/REPRESENTATIVE] (["Purchaser")][the "Representative")][, on behalf of itself and [NAMES OF OTHER UNDERWRITERS] (together, the "Underwriting Group"),] hereby certifies as set forth below with respect to the sale and issuance of the above -captioned obligations (the Bonds"). 1. Sale of the Bonds. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A. 2. Defined Terms. a) Issuer means [DESCRIBE ISSUER]. b) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. c) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related parry to an Underwriter. The term "related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. d) Underwriter means (i) the Purchaser or any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents [Purchaser's][the Representative's] interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer[ and the Borrower] with respect to certain of the representations set forth in the [Tax Certificate] and with respect to compliance with the federal income tax rules affecting the Bonds, and by [BOND COUNSEL] in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038[-G][- GC][ -TC], and other federal income tax advice that it may give to the Issuer [ and the Borrower] from time to time relating to the Bonds. Dated: [ISSUE DATE] UNDERWRITER REPRESENTATIVE By: Name: SCHEDULE A SALE PRICES (Attached) OFFICIAL BID FORM — TAXABLE BONDS (SERIES 2018B) City of Iowa City 410 E. Washington Street Iowa City, Iowa 52240 Council Members: Tuesday, May 1, 2018 Speer Financial, Inc. Facsimile: (319) 341-4008 For the $3,100,000* Taxable General Obligation Bonds, Series 2018B (the "Taxable Bonds"), of the City of Iowa City, Johnson County, Iowa (the "City"), as described in the annexed Official Terms of Offering, which is expressly made a part of this bid, we will pay you $ (no less than $3,075,200). The Taxable Bonds are to bear interest at the following respective rates (each a multiple of 1/8 or 1/100 of 1%) for the Taxable Bonds of each designated maturity. AMOUNTS* AND MATURITIES—JUNE 1 $2,100,000 .................2019 a/o $1,000,000.........2020 a/o Any consecutive maturities may be aggregated into a term bond at the option ofthe bidder, in which case the mandanny redemption provisions shall be on the same schedule as above. Maturities: Term Maturity -Subject to principal adjustment in accordance with the Official Terms of Offering. The Taxable Bonds are to be executed and delivered to us in accordance with the terms of this bid accompanied by the approving legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa. The City will pay for the legal opinion. The Purchaser agrees to apply for CUSIP numbers and pay the fee charged by the CUSIP Service Bureau and will accept the Taxable Bonds with the CUSIP numbers as entered on the Taxable Bonds. As evidence of our good faith, if we are the winning bidder, we will wire transfer the amount of TWO PERCENT OF PAR (the "Deposit") WITHIN TWO HOURS after the bid opening time to the City's good faith bank and under the terms provided in the Official Terms of Offering for the Taxable Bonds. Alternatively, we have wire transferred or enclosed herewith a check payable to the City in the amount of the Deposit under the terms provided in the Official Terms of Offering for the Taxable Bonds. Attached hereto is a list of members of our account on whose behalf this bid is made. Form of Deposit (Check One) Prior to Bid Opening: Certified/Cashier's Check [ ] Wire Transfer [] Within TWO Hours of Bid Opening: Wire Transfer I Amount: $62,000 Account Manager Information Underwriter/Bank Address Authorized Rep City State/Zip Direct Phone ( ) FAX Number ( ) E -Mail Address We have purchased insurance from: Name of Insurer (please fill in) Premium: Maturities: (Check One) LI 1 LI An The foregoing bid was accepted and the Taxable Bonds sold by resolution of the City on Tuesday, May 1, 2018, and receipt is hereby acknowledged of the good faith Deposit which is being held in accordance with the terms of the annexed Official Terms of Offering. ATTEST: CITY OF IOWA CITY JOHNSON COUNTY, IOWA City Clerk Mayor NOT PART OF THE BID (Calculation of me interest cost) Gross Interest $ Less Premium/Plus Discount $ True Interest Cost $ True Interest Rate % TOTAL BOND YEARS 4,100.00 AVERAGE LIFE I.M Years City oflowa City, Johnson County, Iowa 83,700,000• Taxable General Obligation Bonds, Series 2018B $3,100,000* CITY OF IOWA CITY Johnson County, Iowa Taxable General Obligation Bonds, Series 2018B The City of Iowa City, Johnson County, Iowa, (the "City"), will receive electronic bids on the SpeerAuction ("SpeerAuction") website address "www.SpeerAuction.com" for its $3,100,000* Taxable General Obligation Bonds, Series 2018B (the "Taxable Bonds"), on an all or none basis between 10:30 A.M. and 11:00 A.M., C.D.T., Tuesday, May 1, 2018. To bid electronically, bidders must have: (1) completed the registration form on the SpeerAuction website, and (2) requested and received admission to the City's sale (as described below). The City will also receive sealed bids for the Taxable Bonds, on an all or none basis, at City Hall, 410 E. Washington Street, Iowa City, Iowa, before 11:00 A.M., C.D.T., Tuesday, May 1, 2018. The City will also receive facsimile bids at (319) 341-4008 for the Taxable Bonds, on an all or none basis, before 11:00 A.M., C.D.T., Tuesday, May 1, 2018. Upon receipt, facsimile bids will be sealed and treated as sealed bids, and along with all other sealed bids will be publicly opened and, together with any electronic bids, read. Award will be made or all bids rejected at a meeting of the City on that date. The City reserves the right to reject all bids, to reject any bid proposal not conforming to this Official Terms of Offering, and to waive any irregularity or informality with respect to any bid. Additionally, the City reserves the right to modify or amend this Official Terms of Offering; however, any such modification or amendment shall not be made less than twenty-four (24) hours prior to the date and time for receipt of bids on the Taxable Bonds and any such modification or amendment will be announced on the Amendments Page of the SpeerAuction webpage and through Thomson Municipal News. The Taxable Bonds will constitute valid and legally binding obligations of the City payable both as to principal and interest from ad valorem taxes levied against all taxable property within the corporate limits of the City without limitation as to rate or amount, all except as limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to the enforcement of creditors' rights generally and except that enforcement by equitable and similar remedies, such as mandamus, is subject to the exercise of judicial discretion. Bond Details The Taxable Bonds will be in fully registered form in the denominations of $5,000 and integral multiples thereof in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, New York, to which principal and interest payments on the Taxable Bonds will be paid. Individual purchases will be in book -entry form only. Interest on each Bond shall be paid by check or draft of the Bond Registrar to the person in whose name such Bond is registered at the close of business on the fifteenth day of the month next preceding an interest payment date on such bond. The principal of the Taxable Bonds shall be payable in lawful money of the United States of America at the principal office maintained for the purpose by the Bond Registrar in St. Paul, Minnesota. Semiannual interest is due June 1 and December 1 of each year, commencing December 1, 2018 and is payable by U.S. Bank, St. Paul, Minnesota (the "Bond Registrar"). The Taxable Bonds are dated the date of delivery (expected to be on or about June 1, 2018). AMOUNTS* AND MATURITIES —JUNE 1 $2,100,000 .....................2019 1,000,000 ...................... 2020 Any consecutive maturities may be aggregated into a term bond at the option ofthe bidder, in which case the mandatory redemption provisions shall be on the same schedule as above. The Taxable Bonds are not subject to optional redemption prior to maturity. *ADJUSTMENTS TO PRINCIPAL AMOUNT AFTER DETERMINATION OF BEST BID. Vie aggregate principal amount of the Taxable Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination ofthe Winning Bidder. The City may increase or decrease each maturity in increments of $5,000, but the total amount to be issued will not exceed S3,100,000. Interest rates specified by the Winning Bidderfor each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollaramount of the purchase price proposed by the Winning Bidder will be changed ifthe aggregateprincipal amount ofthe Taxable Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Taxable Bonds will be made while maintaining, as closely as possible, the Winning Bidder's net compensation, calculated as a percentage of bond principal. The Winning Bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon tire Winning Bidder. City of Iowa City, Johnson County, Iowa $3,100,000• Taxable General Obligation Bonds, Series 20I8B Method of Bidding Electronically Notwithstanding the fact that the City permits receiving bids electronically using SpeerAuction, all bidders must have a signed, but uncompleted, Official Bid Form delivered to Speer Financial, Inc., Suite 608, 531 Commercial Street, Waterloo, Iowa, (319) 291-8628 facsimile, prior to the close of bidding to which a printout of the electronic bid will be attached and delivered to the City. All -or -none bids must be submitted via the internet address www.SpeerAuction.com. The use of SpeerAuction shall be at the bidder's risk and expense and the City shall have no liability with respect thereto, including (without limitation) liability with respect to incomplete, late arriving and non -arriving bids. To bid via the SpeerAuction webpage, bidders must first visit the SpeerAuction webpage where, if they have not previously registered with either SpeerAuction, Grant Street Group (the "Auction Administrator") or any other website administered by the Auction Administrator, they may register and then request admission to bid on the Taxable Bonds. Bidders will be notified prior to the scheduled bidding time of their eligibility to bid. Only registered broker-dealers and dealer banks with DTC clearing arrangements will be eligible to bid electronically. The "Rules" of the SpeerAuction bidding process may be viewed on the SpeerAuction webpage and are incorporated herein by reference. Bidders must comply with the Rules of SpeerAuction in addition to the requirements of the City's Official Terms of Offering. In the event the Rules of SpeerAuction and this Official Terms of Offering conflict, this Official Terms of Offering shall be controlling. All electronic bids must be submitted on the SpeerAuction webpage. Electronic bidders may change and submit bids as many times as they choose during the sale period but may not delete a submitted bid. The last bid submitted by an electronic bidder before the deadline for receipt of bids will be compared to all other final bids to determine the winning bidder. During the bidding, no bidder will see any other bidder's bid nor the status of their bid relative to other bids (e.g., whether their bid is a leading bid). The electronic bidder bears all risk of transmission failure. Any questions regarding bidding on the SpeerAuction website should be directed to Grant Street Group at (412) 391-5555 x 370. Each bidder shall be solely responsible for making necessary arrangements to access SpeerAuction for purposes of submitting its internet bid in a timely manner and in compliance with the requirements of the Terms of Offering. The City is permitting bidders to use the services of the SpeerAuction solely as a communication mechanism to conduct the internet bidding and the SpeerAuction is not an agent of the City. Provisions of the Terms of Offering and Official Bid Form shall control in the event of conflict with information provided by the Internet Bid System. Electronic Facsimile Biddine: Bids may be submitted via facsimile at (319) 341-4008. Electronic facsimile bids will be sealed and treated as sealed bids. Neither the City nor its agents will assume liability for the inability of the bidder to reach the above named fax numbers prior to the time of sale specified above. Transmissions received after the deadline will be rejected. Bidders electing to submit bids via facsimile transmission bear full and complete responsibility for the transmission of such bid. Neither the City nor its agents will assume responsibility for the inability of the bidder to reach the above specified fax number prior to the time of sale. Time of receipt shall be the time recorded by the person receiving the facsimile and shall be conclusive. Bidding Parameters and Award of the Taxable Bonds All interest rates must be in multiples of one-eighth or one one-hundredth of one percent (1/8 or 1/100 of 1%), and not more than one rate for a single maturity shall be specified. The rates bid shall be in non -descending order. The differential between the highest rate bid and the lowest rate bid shall not exceed five percent (5%). All bids must be for all of the Taxable Bonds and must be for not less than $3,075,200. City of Iowa City, Johnson County, Iowa $3,100,000* Taxable General Obligation Bonds, Series 2018B Award of the Taxable Bonds: The Taxable Bonds will be awarded on the basis of true interest cost, determined in the following manner. True interest cost shall be computed by determining the annual interest rate (compounded semi- annually) necessary to discount the debt service payments on the Taxable Bonds from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the Taxable Bonds shall be deemed to become due in the principal amounts and at the times set forth in the table of maturities set forth above. In the event two or more qualifying bids produce the identical lowest true interest cost, the winning bid shall be the bid that was submitted fust in time on the SpeerAuction webpage or if all such bids are not submitted electronically, the winning bid shall be determined by lot. The Taxable Bonds will be awarded to the bidder complying with the terms of this Official Terms of Offering whose bid produces the lowest true interest cost rate to the City as determined by the City's Registered Municipal Advisor, which determination shall be conclusive and binding on all bidders; provided, that the City reserves the right to reject all bids or any non -conforming bid and reserves the right to waive any informality in any bid. Electronic bidders should verify the accuracy of their final bids and compare them to the winning bids reported on the SpeerAuction Observation Page immediately after the bidding. The premium or discount, if any, is subject to pro rata adjustment if the maturity amounts of the Taxable Bonds are changed, allowing the same dollar amount of profit per $1,000 bond as bid. The true interest cost of each electronic bid will be computed by SpeerAuction and reported on the Observation Page of the SpeerAuction webpage immediately following the date and time for receipt of bids. These true interest costs are subject to verification by the City's Municipal Advisor, will be posted for information purposes only and will not signify an actual award of any bid or an official declaration of the winning bid. The City or its Municipal Advisor will notify the bidder to whom the Taxable Bonds will be awarded, if and when such award is made. The winning bidder will be required to make the standard filings and maintain the appropriate records routinely required pursuant to MSRB Rules G-8, G-11 and G-36. The winning bidder will be required to pay the standard MSRB charge for Taxable Bonds purchased. In addition, the winning bidder who is a member of the Securities Industry and Financial Markets Association ("SIFMA") will be required to pay SIFMA's standard charge per Bond. Good Faith Deposit and Other Matters The winning bidder is required to a wire transfer from a solvent bank or trust company to the City's good faith bank the amount of TWO PERCENT OF PAR (the "Deposit") WITHIN TWO HOURS after the bid opening time as evidence of the good faith of the bidder. Alternatively, a bidder may submit its Deposit upon or prior to the submission of its bid in the form of a certified or cashier's check on, or a wire transfer from, a solvent bank or trust company for TWO PERCENT OF PAR payable to the Treasurer of the City. The City reserves the right to award the Taxable Bonds to a winning bidder whose wire transfer is initiated but not received within such two hour time period provided that such winning bidder's federal wire reference number has been received. In the event the Deposit is not received as provided above, the City may award the Taxable Bonds to the bidder submitting the next best bid provided such bidder agrees to such award. If a wire transfer is used for the Deposit, it must be sent according to the following wire instructions: Amalgamated Bank of Chicago Corporate Trust 30 North LaSalle Street 381 Floor Chicago, IL 60602 ABA # 071003405 Credit To: 3281 Speer Bidding Escrow RE: City of Iowa City, Johnson County, Iowa bid for $3,100,000* Taxable General Obligation Bonds, Series 2018B City of Iowa City, Johnson County, Iowa $3,100,000' Taxable General Obligation Bonds, Series 2018B If the wire shall arrive in such account prior to the date and time of the sale of the Taxable Bonds. Contemporaneously with such wire transfer, the prospective purchaser shall send an email to biddingescrow@aboc.com with the following information: (1) indication that a wire transfer has been made, (2) the amount of the wire transfer, (3) the issue to which it applies, and (4) the return wire instructions if such prospective purchaser is not awarded the Taxable Bonds. The City and any prospective purchaser who chooses to wire the Deposit hereby agree irrevocably that Speer Financial, Inc. ("Speer") shall be the escrow holder of the Deposit wired to such account subject only to these conditions and duties: (i) if the bid is not accepted, Speer shall, at its expense, promptly return the Deposit amount to the unsuccessful prospective purchaser; (ii) if the bid is accepted, the Deposit shall be forwarded to the City, (iii) Speer shall bear all costs of maintaining the escrow account and returning the funds to the prospective purchaser; (iv) Speer shall not be an insurer of the Deposit amount and shall have no liability except if it willfully fails to perform, or recklessly disregards, its duties specified herein; and (v) income earned on the Deposit, if any, shall be retained by Speer. The City covenants and agrees to enter into a written agreement, certificate or contract, constituting an undertaking (the "Undertaking") to provide ongoing disclosure about the City for the benefit of the beneficial owners of the Taxable Bonds on or before the date of delivery of the Taxable Bonds as required under Section (b)(5) of Rule 15c2-12 (the "Rule") adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The Undertaking shall be as described in the Official Statement, with such changes as may be agreed in writing by the Underwriter. The Underwriter's obligation to purchase the Taxable Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the Taxable Bonds. The Taxable Bonds will be delivered to the successful purchaser against full payment in immediately available funds as soon as they can be prepared and executed, which is expected to be on or about June 1, 2018. Should delivery be delayed beyond sixty (60) days from the date of sale for any reason beyond the control of the City except failure of performance by the purchaser, the City may cancel the award or the purchaser may withdraw the good faith deposit and thereafter the purchaser's interest in and liability for the Taxable Bonds will cease. The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts, and interest rates of the Taxable Bonds, and any other information required by law or deemed appropriate by the City, shall constitute a "Final Official Statement" of the City with respect to the Taxable Bonds, as that term is defined in the Rule. By awarding the Taxable Bonds to any underwriter or underwriting syndicate, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide, without cost to the senior managing underwriter of the syndicate to which the Taxable Bonds are awarded, up to 50 copies of the Final Official Statement to permit each "Participating Underwriter" (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the Taxable Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the Taxable Bonds agrees thereby that if its bid is accepted by the City it shall enter into a contractual relationship with all Participating Underwriters of the Taxable Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. By submission of its bid, the senior managing underwriter of the successful purchaser agrees to supply all necessary pricing information and any Participating Underwriter identification necessary to complete the Official Statement within 24 hours after award of the Taxable Bonds. Additional copies of the Final Official Statement may be obtained by Participating Underwriters from the printer at cost. The City will, at its expense, deliver the Taxable Bonds to the purchaser in New York, New York (or arrange for "FAST" delivery) through the facilities of DTC and will pay for the bond attomey's opinion. At the time of closing, the City will also furnish to the purchaser the following documents, each dated as of the date of delivery of the Taxable Bonds: (1) the legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa, that the Taxable Bonds are lawful and enforceable obligations of the City in accordance with their terms; and (2) a no litigation certificate by the City. City of Iowa City, Johnson County, Iowa $3,100,000• Taxable General Obligation Bonds, Series 1018B The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the Taxable Bonds. Copies of such Official Statement or additional information may be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 E. Washington Street, Iowa City, Iowa 52240 or an electronic copy of this Official Statement is available from the www.speerfinancial.com website under "Official Statement Sales/Competitive Calendar" or from the Registered Municipal Advisor to the City, Speer Financial, Inc., 531 Commercial Street, Suite 608, Waterloo, Iowa 50701 (telephone (319) 291-2077), and One North LaSalle Street, Suite 4100, Chicago, Illinois 60602 (telephone (312) 346-3700). /s/ DENNIS BOCKENSTEDT Finance Director CITY OF IOWA CITY Johnson County, Iowa IPIS Minutes of the Joint Meeting between Johnson County Board of Supervisors, University of Iowa, Iowa City Community School District Board, Clear Creek Amana Community School District Board, and the following Cities: Coralville, Hills, Iowa City, Lone Tree, North Liberty, Oxford, Shueyville, Solon, Swisher, Tiffin, and University Heights Monday, April 16, 2018 Iowa City Community School District Educational Services Center 1725 N. Dodge Street Iowa City, Iowa 52245 Call to Order Janet Godwin called the meeting to order at 4:30 pm. Welcome and Introductions Godwin welcomed everyone and asked for introductions. Elected Officials introduced themselves as follows: Iowa City City Council Members: Mayor Jim Throgmorton, Susan Mims, Rockne Cole, Pauline Taylor, John Thomas North Liberty City Council Members: Mayor Terry Donahue, Chris Hoffman Coralville City Council Members: Mayor John Lundell, Laurie Goodrich Iowa City Community School District: Janet Godwin, Shawn Eyestone, Phil Hemingway, Paul Roesler Johnson County Board of Supervisors: Rod Sullivan, Kurt Friese, Mike Carberry, Lisa Green -Douglass, Janelle Rettig Hills: Mayor Tim Kemp, Tiffin: Mayor Steve Berner University Heights: Mayor Louise From Staff members from the school districts and local governments were in attendance as well as members of the public Update on FMP (ICCSDI Superintendent Murley provided an update on the Facilities Master Plan (FMP). The FMP calls for projects to be complete by 2024. The District has been looking at opportunities to accelerate the projects to finish by 2021, which would amount to about a $10,000,000 savings. The Board has had several meetings to discuss acceleration and will have a work session on April 24 with the hope of taking action by the end of May. Godwin stated that a student potential analysis shows growth in the district and this would be an opportunity to accelerate building capacity where needed. Solarized Johnson Countv (Board of Supervisors Becky Soglin, Johnson County Sustainability Coordinator, reported on a group purchasing program for residential solar. The program is offered by offered by Johnson County, six partner cities (Iowa City, Coralville, North liberty, Solon Shueyville, and West Branch), and the Midwest Renewable Energy Association and allows homeowners throughout Johnson County and West Branch to participate in a program to pool their buying power and secure significant discounts that make installing solar more affordable. Solar Power Hours are information sessions on the basics of solar, its financial implications for your household, and how the Solarize program works. Solar Power Hours will be held on various dates through August 2, 2018. Moxie Solar, installers, will provide free on-site (no obligation) assessments. Those interested have until August 31, 2018 to decide whether to get solarthrough the program. The program is offered to homeowners or businesses and it does not matter which power company provides you service. Update on Attendance Area Work (ICCSD) Godwin reported on an initiative to balance elementary schools with no more than 50% FRL. Research suggests balanced schools perform better and there are strong positives for moving in that direction. A process is being planned to engage the community yet this school year about the vision we are trying to accomplish, why it is so important, and to solicit input from the community. Proposals will be developed from that input and brought back to the community for further input in the fall. Any solutions will be voted on by December to allow time to communicate, understand, and implement change. The Board will potentially be looking at sister schools and magnet schools and boundaries will be part of the discussions as well. The Board recognizes there will be implications, such as transportation, and will be looking for partners in the community to help solve and work through those impacts. The Board recognizes the benefits to all stakeholders long term by going this direction and appreciates the support in the process. The Board is very committed to better equity for elementary schools. Eyestone added it is a multi -tier process. The work now is to communicate the why: to improve the equity piece in schools. People really need to understand and buy into it. The why comes first, then the how. Godwin stated there will be holistic supports to help people through the change and the change needs to be sustainable. Cole stated this process was tried 3-4 years ago and inquired what lessons learned from that process. Godwin stated intestinal fortitude, long-term urban planning, and being very clear on goals, benefits, and vision of what is to be accomplished. Transportation is a huge expense and we need to work together for ways to provide transportation to students in a fair and safe way. Carberry stated that it is an entire community problem, not just a school problem. Concentrated affordable housing does not help, there is a need to mixed housing as we move forward. Hoffman encouraged Godwin to continue to reach out the municipalities for support and help. 1-380 (City of Iowa City) Mayor Throgmorton reported that the Department of Transportation (DOT) is soliciting views regarding the widening of 1- 380 from Forevergreen Road north. The City Council directed Throgmorton to write a letter to the DOT expressing their views concerning the widening. The Council has a strong desire to collaborate effectively and would like to convene a working group of elected officials go through concerns to see if they can modify them or improve them in a way we know would work on a regional scale and be mutually satisfactory. Green -Douglass inquired if it was a little late for this as the plan is already in progress. It is too late for the third lane but not for a fourth lane. North Liberty, Johnson County, and Coralville expressed interest to work with Iowa City. There are implications for schools if ICCD would like to be involved too. Fruin will help organize the group and will invite Cedar Rapids, Swisher, and Shueyville to participate. Sullivan encouraged them to include Marc Moen as well. Gateway/summer/fall road project update (City of Iowa City) Ron Knoche reported on construction projects for the 2018 calendar year including Gateway project (North Dubuque Street), Pedestrian Mall project, Clinton Street and Burlington Street intersection, HMA overlay (Governor Street, Burlington Street, South Johnson Street), and HMA overlay Highway 6/Riverside Drive. Other Business Rettig reported that May is Older American's Month and provided a hand out of five May events Livable Community is holding. Hoffman reported on today's Chamber of Commerce luncheon that included a presentation by Jennifer Daly President and CEO of ICR Iowa, introducing the new name and brand of the Joint Venture between ICAD and the Cedar Rapids Metro Economic Alliance. He encouraged anyone who did not attend to research it. Kelly Hayworth reported that temporary signals are in place for the closure of a portion of HWY 965 that will last approximately 2.5 months. Geoff Fruin reported that at 10:00 am tomorrow Iowa City would unveil their RAGBRAI theme. They are looking at City Park for the main campsite and downtown will hold the entertainment. They will have more specifics after May 1. Rettig stated she is the co-chair of the housing committee and they are looking for homes to host riders. Mayor Kemp reported that Hills is looking forward to being a pass through town for RAGBRAL Mayor Donohue reported that the UI North Liberty health care clinic is phasing down to one doctor. Next Meeting North Liberty will host the next meeting on July 16, 2018. Adjournment The meeting adjourned at 5:19 pm. IP7 Kellie Fruehling From: City of Iowa City <CityoflowaCity@public.govdelivery.com> Sent: Wednesday, April 18, 2018 3:02 PM To: Kellie Fruehling Subject: Reminder: Public invited to attend Community Police Review Board forum O SHriRE Having trouble viewing this email? View it as a Web page. �Ma 10WACITY FOR IMMEDIATE RELEASE Date: 04/18/2018 Contact: Chris Olney, Administrative Secretary Phone: 319-356-5043 Public invited to Community Police Review Board forum The Community Police Review Board will host its annual Community Forum to hear views on Iowa City Police Department policies, practices and procedures. The forum will begin at 6 p.m., Monday, April 23, 2018, at the Iowa City Public Library, Meeting Room A, 123 S. Linn St. Police Chief Jody Matherly and Downtown Liaison Officer Colin Fowler will also attend the forum and be available to meet and talk with participants. The forum will also be recorded and later shown on City Channel 4. View programming and the schedule at www.citychannel4.com. Questions? Contact Us CITY OI 10%VA CITY U045CO Em Of lnEtAtuN STAY CONNECTED: wtYinU SUBSCRIBER SERVICES: Manage Preferences 1 Unsubscribe I Help V4 -1y-10 IP8 Kellie Fruehlin From: Sarah Cupp <smcupp0902@gmail.com> Sent: Monday, April 16, 2018 3:06 PM To: Peggy Loveless; mhedspec@gmail.com Subject: May 23 & 25 Mental Health First Aid - Coralville Attachments: MHFAflyer_May23_25-2018-CPL (1).doc; Overview MHFA Class.doc; MHFAflyer_May23_ 25 -2018 -CPL (1).pdf Hello, Enrollment is open for an upcoming Mental Health First Aid Class on Wednesday, May 23rd and Friday, May 25th from 12:30-5:30pm at the Coralville Public Library. Please sign up soon if interested, we will offer other classes this summer and fall. Please see attached flyer and help us spread the word. The class is offered at no cost thanks to the Mental Health & Disability Services of the East Central Region. Registration is required, to sign up email the instructor Peggy Loveless at mhedspecialists@gmail.com. Continuing Education Credits are available through Kirkwood upon request, please let Peggy know in advance if you would like to receive CEUs. Adult Mental Health First Aid Class Wednesday, May 23rd and Friday, May 25th 12:30 pm -- 5:30 pm Coralville Public Library: 14015th St, Coralville, IA 52241 Classes are offered at no cost Sponsored by Mental Health & Disability Services of the East Central Region What is Mental Health First Aid? The Mental Health First Aid (MHFA) program is an interactive 8 -hour certification class that introduces participants to risk factors and warning signs of mental health problems, builds understanding of their impact, and overviews common treatments. Specifically, participants learn: The potential risk factors and warning signs for a range of mental health problems, including: depression, anxiety/trauma, psychosis and psychotic disorders, eating disorders, substance use disorders, and self -injury, An understanding of the prevalence of various mental health disorders in the U.S. and the need for reduced stigma in their communities, A 5 -step action plan encompassing the skills, resources and knowledge to assess the situation, to select and implement appropriate interventions, and to help the individual in crisis connect with appropriate professional care, The appropriate professional, peer, social, and self-help resources available to help someone with a mental health problem. Similar to CPR, you will become certified as a Mental Health First Aider. Who should become a Mental Health First Aider? All of the following will probably be in church congregations — so all apply! Rather than list all below, I would say — everyone from your church/synagogue/tempt%tc. because they include (use following list) Participants for each training vary, but include hospitals and federally qualified health centers, state policymakers, employers and chambers of commerce, faith communities, school personnel, state police and corrections staff, nursing home staff, mental health authorized support staff, young people, families, and the general public. More Information on this Evidence Based Class https://www.mentalhealthfirstaid.org/cs/ Thank you, Peggy Loveless, Ph.D. Mental Health Education Specialists Mental Health First Aid Trainer 13 Riverview Drive NE Iowa City, IA 52240 319.530.9847 Show your support by liking our facebook page F What is Mental Health First Aid? The Mental Health First Aid (MHFA) program is an interactive 8 -hour certification class that introduces participants to risk factors and warning signs of mental health problems, builds understanding of their impact, and overviews common treatments. Specifically, participants learn: • The potential risk factors and warning signs for a range of mental health problems, including: depression, anxiety/trauma, psychosis and psychotic disorders, eating disorders, substance use disorders, and self -injury, • An understanding of the prevalence of various mental health disorders in the U.S. and the need for reduced stigma in their communities, • A 5 -step action plan encompassing the skills, resources and knowledge to assess the situation, to select and implement appropriate interventions, and to help the individual in crisis connect with appropriate professional care, The appropriate professional, peer, social, and self-help resources available to help someone with a mental health problem. Similar to CPR, you will become certified as a Mental Health First Aider. Who should become a Mental Health First Aider? All of the following will probably be in church congregations — so all apply! Rather than list all below, I would say— everyone from your church/synagogue/temple%tc. because they include (use following list) Participants for each training vary, but include hospitals and federally qualified health centers, state policymakers, employers and chambers of commerce, faith communities, school personnel, state police and corrections staff, nursing home staff, mental health authorized support staff, young people, families, and the general public. You are more likely to encounter someone in an emotional or mental crisis than someone having a heart attack. Anyone can take the Mental Health First Aid course — from professionals to caring community members. Sometimes, first aid isn't a bandage, or CPR, or the Heimlich, or calling 911. Sometimes, first aid is YOU! Someone you know could be experiencing a mental illness or crisis. You can help them. Mental Health First Aid teaches a 5 -step action plan to offer initial help to people with the signs and symptoms of a mental illness or in a crisis, and conned them with the appropriate professional, peer, social, or self help care. Anyone can take Mental Health First Aid including primary care professionals, nurses, educators, nurse educators, social workers, state policymakers, volunteers, families, and the general public. Sometimes, the best first aid is you. Take the course, save a life, strengthen your community. MENTAL HEALTH FIRST AID MENTAL HEALTH FIRST AID TRAINING May 23 & 25, 2018; 12:30 to 5:30; Coralville Public Library Attendance at all classes are required to be certified and earn CEUS Instructor: Peggy Loveless, Ph.D., Mental Health Education Specialists PRE -ENROLLMENT IS REQUIREDIIi Contact: Peggy Loveless: mhedspeclallstsLcyctmall.com, W Phone: 319.530.9847 , 0 NO COST TO PARTICIPANTS — SPONSORED BY Lk Mental Health/DisabiIities Services of the East Central Region ?OL t ALGEE, the Mental Health First Aid Action Plan Assess for risk of suicide or harm FULL ATTENDANCE AT BOTH CLASSES IS MANDATORY TO EARN A CERTIFICATE OR CEUS. Listen nonjudgmentally CEUs/CEHs: Approved for nurses 0.89 CEUS through Kirkwood Community r Give reassurance and /nformatlon College, IBN Provider #30. Social workers will receive a certificate of Encourage appropriate professorial help completion for 8.9 contact hours. Other allied health professionals are advised Encourage self-help and other support strategies to consult the governing rules of their boards to determine if appropriate subject matter criteria will apply. A course evaluation will be available upon program completion. -i DRAFT IP9 COMMUNITY POLICE REVIEW BOARD MINUTES —April 17, 2018 CALL TO ORDER: Chair Townsend called the meeting to order at 5:30 p.m. MEMBERS PRESENT: Monique Green, Don King, David Selmer, Royceann Porter (5:39) MEMBERS ABSENT: None STAFF PRESENT: Staff Chris Olney, Legal Counsel Patrick Ford (5:39) STAFF ABSENT: None OTHERS PRESENT: Iowa City Police Chief Matherly RECOMMENDATIONS TO COUNCIL None. CONSENT CALENDAR Motion by King, seconded by Green, to adopt the consent calendar as presented or amended. • Minutes of the meeting on 03/19/18 • ICPD General Orders 89-05 (Radio Communications Procedures) Motion carried, 4/0, Porter Absent. NEW BUSINESS None. OLD BUSINESS Proposed Ordinance Change Discussion - Townsend suggested that the discussion be deferred until the next meeting as prior to the next meeting the subcommittee of Townsend and Selmer will meet with Legal Counsel to draft another memo to be presented to the Board for further review. Community Forum Discussion — Olney stated that the Community Forum 2nd general news release will be issued this week and that no correspondence had been received from the public, also discussed handouts to have available for the public at the meeting. PUBLIC DISCUSSION None. BOARD INFORMATION Porter will be absent at the April 23, 2018 Forum Meeting. Green indicated a conflict to the tentative meeting date of July 10, 2018. Staff suggested to address this at a time closer to the date in question. STAFF INFORMATION Olney noted a correction to the previous Complaint Calendar, complaint number should be 18-01 not 18-03. CPRB April 17, 2018 Page 2 TENTATIVE MEETING SCHEDULE and FUTURE AGENDAS (subiect to change) • April 23, 2018, 6:00 PM, IC Library Meeting Rm A (Community Forum) • May 8, 2018, 5:30 PM, Helling Conference Rm • June 12, 2018, 5:30 PM, Helling Conference Rm • July 10, 2018, 5:30 PM, Helling Conference Rm ADJOURNMENT Motion for adjournment by Porter, seconded by Selmer. Motion carried, 5/0. Meeting adjourned at 5:43 P.M. COMMUNITY POLICE REVIEW BOARD ATTENDANCE RECORD YEAR 2017-2018 tmp.otino natal KEY: X = Present O = Absent O/E = Absent/Excused NM = No meeting --- = Not a Member TERM 4/12 5/9 7/11 7/31 8/8 8/29 9/12 10/10 11/14 12/7 1/9/18 2/13/18 3/19/18 4/17/18 NAME EXP. Joseph 7/1/17 X O/ — — — — — — — — — Treloar E -- — _ saarahir 7/1/21 X O/ X X X X X X X O/E "— -- SnBh E -- --- Donald 7/1/19 X X X X X X X X X X O X X X King Monique 7/]/20 X X X O/E X X X X X X X X X X Green Orville 7/1/20 X X X X X X X X X X X X X X Townsend Royceann 7/1/21 — -- ---- --- --- ---- --- ---- ---- --- --- X O/E X Porter David 7/1/21 — X O/E X X O X O/E X X X X X Selmer KEY: X = Present O = Absent O/E = Absent/Excused NM = No meeting --- = Not a Member 04-19 IP10 MINUTES PRELIMINARY HISTORIC PRESERVATION COMMISSION EMMA J. HARVAT HALL MARCH 8, 2018 MEMBERS PRESENT: Thomas Agran, Esther Baker, Kevin Boyd, Zach Builta, Sharon DeGraw, G. T. Karr, Cecile Kuenzli, Pam Michaud, Ginalie Swaim, Frank Wagner MEMBERS ABSENT: Gosia Clore STAFF PRESENT: Jessica Bristow OTHERS PRESENT: Nick Lindsley, John Logel RECOMMENDATIONS TO COUNCIL: (become effective only after separate Council action) CALL TO ORDER: Chairperson Swaim called the meeting to order at 5:30 p.m. PUBLIC DISCUSSION OF ANYTHING NOT ON THE AGENDA: There was none. CERTIFICATES OF APPROPRIATENESS: 10 South Gilbert Street. Bristow said this is the former Unitarian -Universalist Church that became a local landmark last year and that the Commission reviewed a portion of the new development more recently. She said the current project is the stair and elevator tower addition on the south side of the Church building. She showed the front of the church and then the south side of the Church and the new addition. Bristow stated that staff had worked with the architect to discuss options to tie into the building. She said staff had suggested a roofline that mimicked the gable roofline of the church. She said the architect had pointed out how that would cause more of the church building to be altered by the new addition. She said staff agreed that a separate structure would be better for the church. Bristow said that looking at Preservation Brief 14 from the National Park Service would be appropriate for this project. She showed images from the document and talked about how they are simple forms. She said that they are behind the historic buildings and that one has a "hyphen" or indent that separates it from the historic building. Then she showed a church and said it had a larger addition with the same roof as the church. She said this addition is separated but it is also a meeting space. She said that it is a larger space so it can have the bigger roof like the church. She said the meeting space is not small like a stair tower. Bristow showed the south side of the church and showed a diagram of the openings the addition will make in the wall. She showed the diagram of opening from the interior. Bristow stated that the original idea had a smaller addition but would reduce the size of the organ room. Bristow said the stair and elevator are all outside the historic church so the church does not change for that. HISTORIC PRESERVATION COMMISSION March 8, 2018 Page 2 of 8 Bristow showed the plans for the addition and an image of the addition with the development behind. She said that the brick will match the church and the windows will be a kind of dark storefront material. She showed the addition from the other side. Bristow said that staff finds the addition acceptable because it places everything outside the church and does not impact the church structure. She said the materials will blend with the church and staff recommends approval. Kuenzli asked if the brick will match because the picture was not very clear and it didn't look like it would be right. Bristow said that the architect will have samples and match the church. Lindsley said that the brick will match the church. He said if this doesn't match well another brick will be chosen. Michaud asked if the addition could have a roof with a slope so that water does not leak inside the Church or the Addition. Lindsley said that they looked at a gable roof. He said that the elevator in the addition has an area above it, above the top floor for equipment. He said that because of that space, if a gable roof is put above that it becomes tall enough that the addition roof begins to compete with the church roof. Lindsley said that they do not want to impact the Church more than they have to in order to add a stair and elevator. He said that the owner will do a tax credit project for the work on the older church building. He said they set the addition in from the sides so that the structure of the church will remain intact. The addition could be removed in the future. Michaud asked if the color of the window frame will match the dark brown. Lindsley said the dark bronze frame is chosen to match the dark brown trim on the church. Michaud asked if the south church wall will be repaired. Lindsley referred to the diagram of openings and said that the concrete block that is not removed for the new openings will be replaced with brick and the old brick arch in the wall will remain. Swaim said that passersby might see the elevator/stair addition and assume it is part of the surrounding new buildings. Agran said that the addition does not bother him because it echoes the style of the new buildings being built around it. MOTION: Agran moved to approve a certificate of appropriateness for the project at 10 S. Gilbert Street, as presented in the staff report. Boyd seconded the motion. The motion carried on a vote of 10-0 (Clore absent). 8 Bella Vista Place Wagner recused himself from this project Bristow said this is the same house that had the front terrace approved and then a new garage and kitchen. She said this application is for the basement egress windows. She said the applicant is now finishing the basement and with new finished basements an egress window is required. Bristow showed the front and south sides of the house. She said that egress windows are usually on the back but with this house it is paved. She said that the egress window should not go on the front and the north side slopes down and away so egress windows would be very visible. She said that the south side is the best option. HISTORIC PRESERVATION COMMISSION March 8, 2018 Page 3 of 8 Bristow showed the south side and three basement windows there. She said that the front window is alone and the two back windows are like a pair because they are next to each other. Bristow said that to get more light and have them be the same, the applicant would like to make both of the back windows egress windows. Bristow said that staff finds this acceptable. Kuenzli asked if the front window will not match then. Bristow said that the two new windows will be casement windows for egress. She said they will be black to match the other basement windows instead of white like the upper windows. She said they will have a muntin bar to appear similar to a double hung window. She said the upper portion will have three divided lights to look like the other basement windows. Bristow said that window wells will usually match the foundation which on this house is brick. She said this house has concrete window wells so the new ones will match that. MOTION: Boyd moved to approve a certificate of appropriateness for the project at 8 Bella Vista Place, as presented in the staff report with the condition that window product material is approved by staff. Agran seconded the motion. The motion carried on a vote of 9-0 (Clore absent and Waoner recused). 720 North Dodoe Street Bristow said this house is a pristine, well -cared -for example of a bungalow in the Brown Street Historic District. She said the application is for a kitchen and bathroom addition. She showed an image of the back yard. Bristow said she spoke with the applicants last fall about the location of the addition. She said that it has a very small back yard and a nearby cistern. Bristow showed an image of the side yard and also where the cistern is located. She said that as people drive down Dodge street it is hard to see the North side of the house. She said that the area on the back of the house is too tight to put the addition there so staff found it acceptable to build the addition on the north side set back from the street. Bristow showed the north side of the house and showed where the front window will remain and the addition will be behind that. She showed another small window that will be moved to the north wall of the addition. She showed another window that will be replaced because it is too small. Bristow said that the project also went through several versions. She said that the roof was originally a shed roof which ties in awkwardly to the house. The front window was very small. Staff worked with the applicant to refine the design. She said that they looked at other one-story additions in the neighborhood. It appeared that the additions with flat roofs tended to work best. Bristow showed the plan and the location of the new windows and said they would be Marvin Integrity Double Hung windows. She showed the elevation drawings and how the roof is now a low hip roof. Kuenzli asked if a shed roof would be better since the house has a rear shed roof addition and has a shed roof on the bump -out. Bristow said that the addition was too long to have a shed roof look right on the house because it creates an awkward wall condition facing the street. The angle of the roof would be different from the bump out. The low hip roof creates a better street presence because of the horizontal roof edge. Bristow said that all of the trim details, siding, and foundation would match the house. She said that at the time the agenda packet was made, there were questions about some of the windows HISTORIC PRESERVATION COMMISSION March 8, 2018 Page 4 of 8 and the roof. She said, for the windows, the front window will be only 10 inches shorter than the front windows. It needs to be shorter because of the bathroom layout. Bristow said that the applicant is going to reroof the house in architectural shingles and the new addition will be the same. MOTION: Agran moved to approve a certificate of appropriateness for the project at 720 North Dodge Street, as presented in the staff report Baker seconded the motion. The motion carried on a vote of 10-0 (Clore absent). 727 Dearborn Street Bristow said this house is in the Dearborn Street Conservation District and at the time of the survey of the area it was non -historic. Now that it is 50 years old it could be considered historic but it is unclear whether it would be considered contributing or non-contributing to the District. Bristow showed the front of the house and commented that the metal chimney was added, as was the bay projection on the north side. She showed the back of the house and the rear gable projection with a bay window that is not centered. Bristow said that the glass block window is also not original. Bristow said the project now is to add an addition to the back of the house on the south end. She said the addition would be set in one foot from the south side of the house. She said the addition would project 14 and a half feet toward the rear of the lot. Bristow said the roof slope and eave line of the new addition will match the existing house. She said that the aluminum siding had previously been approved to be removed and new cement board siding was approved to replace it. She said the applicants will work with staff to review any trim details after the aluminum is removed. She said the new addition will match the main house. Bristow showed drawings of the addition and said that the addition will encroach on the rear projection so that its roofline will be centered over it and the bay window will be more centered. She also said that the existing skylights in the main roof will likely be removed and the owner wants to install two Sonotube skylights in the new addition. She said that they would be located in the back facing north and would not be visible from most locations. Bristow showed the north side of the new addition and said it is next to the deck and will not have any windows. She said that in the plan that area is a closet and a bathroom. She said that because the space faces the deck and the house is likely non-contributing to the district, staff finds this acceptable. Bristow showed the south side of the new addition and said that the two windows are narrower than the ones on the south side of the existing house and spaced further apart. She showed an image of the side of the house and said that the property line is right there and the neighbor has a tall fence. She said that it will be difficult to see the side of the addition from the street. She said that since the house is likely non-contributing and the house has narrow bay windows to mimic with these windows, staff finds the windows acceptable. Michaud asked if the depth of the addition would exceed that of the existing deck so the tree would need to be removed. Bristow confirmed that it would. HISTORIC PRESERVATION COMMISSION March 8, 2018 Page 5 of 8 MOTION: Michaud moved to approve a certificate of appropriateness for the project at 727 Dearborn Street, as presented in the staff report with the condition that the applicant work with staff on the siding details. Karr seconded the motion. The motion carried on a vote of 10-0 (Clore absent). 424 Davenport Street. Wagner recused himself from this project Bristow said that house is a foursquare built in 1909. She said the project is a garage demolition and reconstruction. She said that the garage was built in 1912 and is severely deteriorated. She showed a picture of the corner and said the garage looks like it has been hit by a car. Bristow said this garage is a single -story garage with a gable roof, exposed rafter tails and Dutch lap siding. She said the project would replicate the existing garage. She showed pictures of the roof and said that it is rotten and shows underneath. She showed a picture of the windows and said the new garage would have new windows because some of the sashes are missing and they are boarded up now. Bristow showed details of the wood trim and siding. She said that she didn't know if the garage could be salvaged at all because the material is checked and has dry rot. She showed the large doors on the alley and said the garage has a sliding door with two swinging doors next to it to enlarge the opening. She said all of the garage details would be copied in the new garage. Bristow showed an aerial photograph. She said that the only change to the new garage will be the location. She said that the current garage is on the east property line and too close to the alley. Bristow said that to satisfy zoning codes the new garage will be built 4 feet off the property line and 5 feet off the alley. MOTION: Kuenzli moved to approve a certificate of appropriateness for the project at 424 Davenport Street, as presented in the staff report with the condition that the window and door product materials are approved by staff. DeGraw seconded the motion. The motion carried on a vote of 9-0 (Clore absent, Wagner recused). John Logel, who owns 720 Dodge with his wife, thanked the commissioner for their work and especially Jessica Bristow for working through various options with him and his wife. He said that they have long enjoyed living in the neighborhood but thought they might have to move if they could not figure out how to add an addition. They are pleased to stay in the house and neighborhood. CONSIDERATION OF MINUTES FOR FEBRUARY 8, 2018: MOTION: Baker moved to approve the minutes of the Historic Preservation Commission's February 8, 2018 meeting. Kuenzli seconded the motion. The motion carried on a vote of 10-0 (Clore absent). COMMISSION INFORMATION AND DISCUSSION: HISTORIC PRESERVATION COMMISSION March 8, 2018 Page 6 of 8 Swaim said that we have multiple additions to this section of the meeting Annual Work Plan Report to City Council. Bristow explained that the packet includes the Annual Work Plan Report which the Commission approved at the last meeting. Gloria Dei Letter to Ginalie Swaim re: Sanxav-Gilmore House. Bristow said that correspondence from Gloria Dei Lutheran Church to the mayor and to Commission Chair Swaim is included in the packet. She said that responses by the mayor and Swaim were handed out to the Commission. Kuenzli asked what the reference to Hodge refers to in the church's letter. Swaim said that as owner, Hodge had offered to donate land in the courtyard at 130 Jefferson to Gloria Dei so that the house could be moved there. Kuenzli asked what happens next. Swaim said that first off, the good news is that the historic courtyard at 130 Jefferson has been saved. She said that there are several issues to figure out regarding 109 Market. She said that Bristow and staff are looking for possible lots where the house could be relocated, and that issues of distance, street width, tree cover, and cost will all figure in. Kuenzli asked if only city -owned lots are being sought. Bristow said that available lots might include city -owned property, or lots owned by the University of Iowa or Mercy Hospital, for example, that they no longer want. Swaim encouraged commissioners to contact Bristow with any ideas. Bristow said that a structural engineer or architect skilled in historic structures will need to assess the house in terms of the construction of its additions and how they are joined to the original part and to each other to evaluate the feasibility of moving the house. Kuenzli asked about the size of this house and how moving it would compare to moving the Houser -Metzger House. Bristow said the Sanxay-Gilmore House is 36 feet wide and that some of the streets are 40 feet wide. Bristow said that the moving company charged about $35,000 for the Houser -Metzger House, and that there is an estimate of about $125,000 for moving the Sanxay-Gilmore House. Swaim said that the house is obviously a lot heavier because it is made of brick. Kuenzli asked if it could be a single-family home again. Bristow said that is one possibility. Bristow said there are several unknowns regarding costs and outcomes. Chuck Grassley Letter to Mayor James Throqmorton re: Historic Tax Credits. Bristow said that included in the packet is a letter from Senator Grassley in response to a letter from Mayor Throgmorton regarding historic tax credits. Channel 4 video proposal. HISTORIC PRESERVATION COMMISSION March 8, 2018 Page 7 of 8 Bristow said that she received a memo from Ty Coleman, from local Channel 4, which has been producing brief videos about various topics of city government. Coleman's idea is to produce some videos about the city's boards and commissions, and how the members view their work. Bristow said that since the Historic Preservation Commission has long had an opening for the Jefferson Street Historic District and will have potentially four additional openings this summer, a video on the commission would be useful, if the commission is open to this idea. Swaim agreed that this could helpful. Bristow said that the video would be three to five minutes long, that it would be produced quite soon, and asked for volunteers to be interviewed. Agran, Boyd, Michaud, and Swaim volunteered. Kuenzli asked if questions could be given ahead of time so interviewees could prepare their answers. Bristow said that this might be possible and she would inquire. City Park Cabin restoration update. Bristow said that a few city staffers, including Bob Miklo and some of Parks and Recreation staff, recently drove to Clemons, Iowa, to observe progress on the two log cabins from City Park. She said that a preservation grant is paying for work on the roof. Bristow said that the Heritage Wood Works had numbered each piece of the cabins, disassembled them, and then transported them to their workshop in Clemons. Bristow showed photos of the project. In the photo the original logs are quite dark and are marked with yellow tags. New replacement logs appear much lighter. Bristow said that one of the reasons for deterioration of the cabins was because small pieces of wood had been added to the chinking in especially large gaps between existing logs. This had introduced moisture and rot. Bristow said that an epoxy -like material was added to the original logs to help preserve them. Bristow showed photos of the hand tools used and of a worker making wood shingles by hand. Boyd asked about the timeline for completion. Bristow said that final completion is expected by October 2018. Michaud asked if the cabins would be returned to their original site in City Park. Bristow said yes. Local Landmarks Bristow said that the landmark nominations of the seven properties would be on the Planning and Zoning Commission agenda for March 15. Michaud asked if these were the brick houses. Bristow confirmed that this included the six brick houses plus the Byfield House on Park Road in Manville Heights. Agran asked if they would be presented and voted on as a group or as individual properties. Bristow said they would be presented individually and voted on individually. She said that Planning and Zoning's criteria is how these fit in with the Comprehensive Plan and related neighborhood plans. Bristow encouraged commissioners to attend the meeting if possible. Boyd asked if the Planning and Zoning Commission accepted written comments. Bristow said yes. Swaim affirmed this. ADJOURNMENT: The meeting was adjourned at 6:40 p.m. HISTORIC PRESERVATION COMMISSION ATTENDANCE RECORD 2017-2018 NAME TERM EXP. 6/15 7/31 8/10 9/14 10/12 11/9 12114 1/11 2/8 3/8 4/12 5/10 6/14 AGRAN, THOMAS 7/1/20 X X X X X X X X X X BAKER, ESTHER 7/1/18 X X X X X X X X X X BOYD, KEVIN 7/1/20 X O/E X O/E X X X X X X BUILTA, ZACH 7/1119 X O/E X X X X X X O/E X CLORE, GOSIA 7/1/20 X X O/E X X X O/E O/E X O/E DEGRAW, SHARON 7/1/19 X X X X X X O/E X X X KARR, G. T. 7/1120 — X X X X X X X X X KUENZLI, CECILE 7/1119 X O/E O/E X O/E X X X X X MICHAUD, PAM 7/1/18 X X O/E X X X X X X X SWAIM, GINALIE 7/1118 X X X X X O/E X X X X WAGNER, FRANK 7/1/18 0/E O/E X O/E X X O/E O/E X X KEY: X = Present O = Absent O/E = Absent/Excused .— = Not a Member Ua-ta-ts IPJ 1 MINUTES HOUSING AND COMMUNITY DEVELOPMENT COMMISSION MARCH 15, 2018 — 6:30 PM SENIOR CENTER, ROOM 202 F"111 dl`Jal l MEMBERS PRESENT: Syndy Conger, Charlie Eastham, Vanessa Fixmer-Oraiz, Christine Harms, Bob Lamkins, John McKinstry, Harry Olmstead, Paula Vaughan MEMBERS ABSENT: Maria Padron STAFF PRESENT: Sue Dulek, Stan Laverman, Kirk Lehmann OTHERS PRESENT: Maryann Dennis. Brian Loring, Ron Berg, Angel Taylor, Ashley Gillette, Carla Phelps, Maryann Dennis, Kari Wilken, Roger Goedken, Roger Lusala, Scott Hawes RECOMMENDATIONS TO CITY COUNCIL: By a vote of 8-0 the Commission recommends that no CDBG allocation be made to the Arthur Street Healthy Life Center but that City Council considers offering tax abatement for the same services as a for- profit provider. By a vote of 7-1 (Eastham dissenting) the Commission recommends to the City Council the following FY19 Community Development Block Grant and HOME Investment Partnership Program Funding: Housing Requested Amount CDBG Recomm. HOME Recomm. The Housing Fellowship Operating $25,000 NA $21,000 Habitat for Humanity Ownership $80,000 $0 $80,000 Mayor's Youth Rental Acq. $75,000 $0 $75,000 Successful Living Rental Acq. $310,000 $0 $194,000 The Housing Fellowship Rental Acq. $100,000 $0 $100,000 Prelude Rental Rehab. $82,010 $34,000 NA City of Iowa City Rehab./Resell $100,000 $0 $100,000 Unlimited Abilities Rental Acq. $200,000 $0 $0 Subtotal $972,010 $34,000 $570,000 Public Facilities Arthur Street Healthy Living Center $100,000 $0 NA NCJC—Siding Rehabilitation $51,467 $41,000 NA Subtotal $151,467 $41,000 $0 Total $1,123,477 $75,000 $570,000 Housing and Community Development Commission March 15, 2018 Page 2 of 9 By a vote of 8-0 the Commission recommends that City Council have Staff analyze the neighborhood stabilization and racial equity impacts of the South District Partnership as it is carried out, including the use of the racial equity toolkit. By a vote of 8-0 the Commission recommends to the City Council that should federal funding not be within 20 percent of FYI grant amounts, then the HCDC will review the allocations. Otherwise, staff will proportionally adjust funding as needed to match the CDBG and HOME grants for FY19. CALL MEETING TO ORDER: Olmstead called the meeting to order at 6:30 PM. APPROVAL OF THE FEBRUARY 15. 2018 MINUTES: Eastham moved to approve the minutes of February 15, 2018. Harms seconded the motion. A vote was taken and the motion passed 7-0 (Conger not present for vote). PUBLIC COMMENT FOR TOPICS NOT ON THE AGENDA: Maryann Dennis (The Housing Fellowship) wanted to announce that their project, Del Ray Ridge Limited Partnership, was,awarded low-income housing tax credits yesterday at the Iowa Finance Authority Board meeting. The Board received 29 applications, 12 of which were approved. Dennis reminded the Commission that they recommended to the Council that they receive the $330,000 that they set aside and now they will move forward to build at 628 South Dubuque Street with 33 units, 29 affordable and 4 at market value, 4 will be ADA compliant and 1 will be adapted for visual impaired and the income targeted is 60/40/30 percent of median income. Overall it will be $6.5 million project. Lehmann used a spreadsheet to track the discussions and keep track of the recommended amounts. He noted there was extra monies available, they thought they would have $570,000 total to allocate, and it will actually be $645,000 total. $570,000 in HOME funds and $75,000 in CDBG. Eastham noted he had submitted a revised scoring criteria and funding recommendations. Lehmann noted he updated the funding recommendations but did not realize the scoring criteria had been revised. Eastham noted he revised the scoring criteria for the Systems Unlimited application, he changed the score from 17 to 66. Lehmann made that change on his spreadsheet. Eastham suggested beginning the review by looking at the CDBG funds and reviewing those applications by the highest score and going on from there, everyone agreed. Olmstead began with review of the Arthur Street Healthy Living Center Project. Eastham noted he gave it a score of 66 but does feel it is an interesting project, but to him since it is a privately -owned entity it will be subject to property taxes and he suggests the applicant and the City, with this commission's encouragement, look at a property tax abatement method of doing the necessary financing. Housing and Community Development Commission March 15, 2018 Page 3 of 9 Olmstead asked how much extra the Commission had, Lehmann replied an extra $75,000 for HOME. CDBG is still only $75,000 total to allocate. Eastham moved that no CDBG allocation be made to the Arthur Street Healthy Life Center but that City Council considers offering tax abatement for the same services as a for-profit provider. McKinstry seconded the motion. Olmstead echoed this motion believing it was a great idea. A vote was taken and the motion passed 8-0. Olmstead moved to the next application, the Neighborhood Centers of Johnson County (NCJC) siding project, which has a median proposed allocation of $42,000 and an average of $43,400. The request of $51,467. Conger asked about the proposal and noted there was mention of going with a less expensive siding so on that basis allocated $30,000. Brian Loring (Neighborhood Centers of Johnson County) said they would not change out the siding completely but might do some of the unexposed sides in a cheaper siding. He would have to talk with the contractor on that and what it would look like in total cost. McKinstry feels that the allocation has to be higher than $30,000 to achieve the project, it is a high need category and a great organization. Lamkins agreed, noting that using cheaper siding now would result in replacement needed sooner, so better to go with a higher quality product now. Eastham feels the organization can do some fundraising or use other funds to contribute to the project as well. Olmstead moved to the Prelude — Transitional Housing Upgrades project, Lehmann noted the median proposed allocation is $29,000 and the average is $23,800. Vaughn noted that the City is the only entity that will fund this type of project for Prelude, it is not necessarily something people will get excited about and fundraise for, and so for that reason feels the funding is important. She questioned the water heaters and if the type of water heater purchased might alter the total cost. Ron Berg (CEO Prelude) noted the project is for carpeting and stair trends in the transitional housing and replacing the water heater that serves all 12 apartments. They would like to replace that with two or three tankless heaters that would be installed in sequence as the advantage to having a couple tankless in sequence is if one goes down there can still be some hot water in the building. He stated that the total cost of the project is pretty split between the floors and water heaters, the water heaters will cost $34,665. Vaughn asked about the carpet cost and the architect fee. Berg said the cost estimates came from the architects and when they go out to bid the architects would prepare the bid documents, collect them and make sure all requirements are met. However after learning that they will not have to go out for construction sealed bids, the cost will decrease and the architect fee will not be needed. Harms asked about prioritizing and if the Commission was only able to award partial funds, how would Prelude prioritize carpet over the water heater. Berg said he would move forward with the water heater first. Harms recommends $41,000 to NCJC and $34,000 to Prelude so it would allow at least for the purchase of the water heater. Vaughn agreed. All other Commissioners agreed. Olmstead moved on to the HOME Eligible allocations. First is The Housing Fellowship — CHDO Operating. The median proposed allocation is $21,000, the average is $21,400 and the request is $25.000. Eastham believes the maximum available is $21,000. Lehmann confirmed. Therefore Eastham suggests an allocation of $21,000, all are in agreement. Housing and Community Development Commission March 15, 2018 Page 4 of 9 Olmstead moved on to the Habitat for Humanity — Homeownership request. The median was $70,000 with an average of $62,000 and the request was $80,000. Eastham suggests an allocation of $80,000 due to the additional funds now available and therefore would allow for the purchase of two lots. Vaughn agreed as did the rest of the Commission. Olmstead next discussed Mayor's Youth Empowerment Program — HOME Acquisition. $75,000 was the median, $75,000 was the average and the request was $75,000. He noted that it appears everyone is in agreement for $75,000. Next is Successful Living — four new rental houses. Olmstead noted $155,000 is the median, $124,200 is the average and the request is for $310,000. Eastham noted his allocation was based on a response to Tracy Hightshoe's recommendation to not allocate funding for housing acquisition projects that are proposing to not acquire all the buildings within the coming program year. However he would like to come back to this application after reviewing the rest. Olmstead and others agree. Lehmann noted he will put the allocation at $155,000 since that seems to be the median and use that as a marker as the other applications are discussed. All agree. Olmstead moved on to The Housing Fellowship — Rental. The median is $100,000 the average is $96,000 and the request was $100,000. Eastham suggested moving forward with the $100,000 allocation and all agree. Next is the City — South District Home Investment Partnership. Olmstead stated the median was $86,000 the average was $57,200 and the request was $100,000. Eastham noted this project proposes buying two duplexes for housing units on Taylor and Davis Streets and doing modifications and then selling those units as owner occupied. The application states that the City would purchase duplexes that are now being rented and Eastham looked at the 2010 Census for the race and ethnicity for residents on Taylor and Davis Streets and it appears 38% of residents on those two streets are black or African American households and that is about six times the City-wide average. Eastham stated that the City Council is in the process of adopting a racial impact toolkit for the purpose of making sure City policies and practices have a racially neutral impact across the community and he does not see this proposal as conforming to that upcoming City Council goal. He also does not see this proposal as being fair for black or African American households; if Staff is convinced there is an overriding policy need for decreasing the proportion of rental households in parts of the community, there are plenty of other streets in this neighborhood that have a more balance of white, African American and Hispanic households closer to that of the city. Eastman also notes the houses are being sold to homebuyers and it has been documented that black and African American households have a harder time obtaining financing than white households. Therefore, he does not feel this proposal passes the test of a reasonable treatment of African American households. Vaughn noted that if the houses are for sale, then anyone can buy them. Eastham agreed but the notion is that the City is interjecting themselves into the process. Vaughn is questioning how the racial piece comes into play. Conger agreed. Eastham said the African American households are being displaced. Lamkins noted that these programs do help with lower -affordable housing purchasing options and is similar to the UniverCity, Program. The City will purchase these homes, go in and upgrade them and not pass that charge onto the buyer so they will get a pretty nice home way below the market price. McKinstry noted he lives in a neighborhood where the UniverCity Program worked, the Northside, and within a couple blocks of his house there are a number of these homes that he thinks created a significant positive impact in the neighborhood with increased stability, so he feels there is a positive social good in the program. He understands Eastham is saying that perhaps up to four African American families may be displaced out of their rentals, and that the people who buy the homes are less likely to be African American due to financing challenges, but McKinstry wonders how to avoid that racial bias. Eastham Housing and Community Development Commission March 15, 2018 Page 5 of 9 believes they could choose different streets, and not two streets that are predominately occupied by African Americans. Conger believes one of the purposes of this program is neighborhood stabilization in the sense of too many rentals in one area. Lamkins disagrees that this would be discrimination against African American and based on the numbers he feels there is more likelihood an African American family would purchase the four homes as well. Harms feels that if this was put in an all-white neighborhood it could be seen as stabilizing only white neighborhoods which could also be discrimination. Eastham noted it should be done on streets that have a better mix of white, African American and Hispanic residents, not in a just white neighborhood. Harms added that worst case scenario is if all four homes are purchased by white families it will actually help diversify those streets. Eastham is not worried about diversification he is worried about displacement. Stan Laverman (City of Iowa City) stated that one of the reasons they chose Taylor and Davis Streets is because of the high concentration of rentals, the number of nuisance complains, and the success they have seen with UniverCity Programs to stabilize neighborhoods. An example is Douglass Court where there were able to go in and purchase a few homes there and really turn that neighborhood around. Laverman noted that Taylor and Davis are the two streets that need stabilization, and they are looking at houses where the occupants have been transient in nature, not looking at acquiring homes that have had long term tenants. Eastham asked if those occupants that are transient primarily black. Laverman could not say, he cannot affirm nor deny, they have not looked at that data; they were looking more at types of landlords they would like to incentivize to sell. Eastham asked why they cannot look at other streets that are more diverse. Laverman said due to the ratio of rentals the Taylor and Davis area is the place to start because it would get the most bang for the buck. Lehmann added that those two streets also had more nuisance complaints than other streets. Eastham stated then because those two streets are majority transient and have the most nuisances the City wants to move blacks out of there. Laverman stated that was not at all what he was saying, those are facts and reasons to stabilize the neighborhood. McKinstry said the focus needs to be on what good the program will do for the neighborhood and weigh that against if some families will be displaced. Harms noted that no matter where this happened in the city that would be true. Lamkins agreed and feels it is a good program for neighborhood stabilization and the UniverCity Program has proven to work over the long term. Conger noted she is not discounting Eastham's concerns and feels it should be in the Commission purview when looking at applications. She would like to move forward in terms of funding while still addressing the concern. She asked if Eastham was against funding this program completely. Eastham noted that if the supposed purpose of reducing the percentage of rental occupied housing in an area can be accomplished without the cost of displacing people of color he is in favor, so the program could be done on other streets and in other areas so it won't have the racial disparity. Fixmer-Oraiz noted that if the current landlords decide to sell the duplexes, they would be displacing these tenants as well, so fails to see the difference. Laverman added it is not just the stabilization of the neighborhood, it will be four families that will be able to buy a home who wouldn't likely otherwise be able to buy a home. Eastham still feels that can be done in other areas in such a way. Lamkins understands Eastham's argument however the only way to accomplish what he wants, creating affordable home buying opportunities for African Americans is to target that group which cannot be done when selling houses. Lamkins recommends allocating $100,000 to this project. Majority of the Commission agrees. Olmstead notes that this issue is important and wonders if City Council could request that staff might look at the effects of this program in terms of racial impacts. Housing and Community Development Commission March 15, 2018 Page 6 of 9 Conger notes that she would like the City to arrange some sort of follow up study or check in to see what has happened to the housing and the neighborhood. Vaughan suggested potentially expanding the study to all neighborhoods and how stabilization has worked overall for the City. Eastham adds that it makes sense for City Council to analyze this project using the available racial equity toolkit. Staff already has access to these analytical tools, and the City is focusing on racial equity. Conger notes that would be a piece of the analysis, but that she hopes it wouldn't be the whole follow up. Conger wants to be sure the City looks at neighborhood and housing improvement as well. Fixmer-Oraiz notes that she's not sure what the Commission wants to motion. She suggests having the City evaluate the impact of this project, and one of the ways to do this is using the racial equity toolkit. Lamkins states what exactly did the Commission want staff to do, evaluate just this project or all neighborhood stabilization efforts? Fixmer-Oraiz said she's surprised a study has not already been done regarding stabilization for other neighborhood stabilization programs. Conger asked whether the City has done other studies already. Laverman noted that staff has looked at other neighborhoods for stabilization, such as the Douglass Court area, however it is important for the City to be able to justify actions in these neighborhoods and not take credit for everything good that happens in the neighborhoods just because the City had some interaction in the neighborhoods. They keep track of areas with nuisance complaints, and realized with the new occupancy standards there will be a lot of revisiting of these issues over the next few years. Eastham suggests that the study be confined to the South District Partnership rather than the City at -large. Fixmer-Oraiz agrees. Olmstead adds that the City Council will receive a copy of these minutes, so they should have an understanding of this discussion. Conger moved that City Council have staff analyze the neighborhood stabilization and racial equity impacts of the South District Partnership as it is carried out, including the use of the racial equity toolkit. McKinstry seconded. A vote was taken and the motion passed 8-0. Olmstead moved on to Unlimited Abilities, the median was $65,000 average was $67,000 and the request was $200,000 Fixmer-Oraiz noticed the scoring was for this application was low and was curious why Eastham changed his allocation. Eastham noted he sees this application as basically a MYEP, a home for people with special needs, specifically for people with intellectual disabilities. Their application was to buy one home entirely using City funds, so given the total amount of money available for all applications, to fund Unlimited Abilities as they attempt to establish a group home agency is something he feels he can support for one home initially using City funds for down payment and financing the rest through private mortgage lenders. He realizes it is a new program and not established like MYEP but he does think the federal money available to the City should be used to help establish new organizations where there is a need. Angel Taylor (Unlimited Abilities) came forward to answer questions. The home would be for adults with disabilities so the funding to support the residents would come from Medicaid. McKinstry noted that with cuts in Medicaid funding that may not be sufficient. Eastham is not concerned about the Medicaid issues, he feels they have a plan in place to achieve enough income from the three to four residents in this one house. Taylor confirmed they do have private funding sources as well. Taylor Housing and Community Development Commission March 15, 2018 Page 7 of 9 stated the request was for $200,000 howeverjust to get enough for a down payment would be helpful and they can look to a private lender for the rest. Fixmer-Oraiz agrees with using funds to support start-ups, especially where there is a need such as housing for adults with disabilities, however her concern is the application asked for $200,000 and stated the City was the only source for funding, and then now saying they could seek funding elsewhere is confusing. Lamkins is fine with leaving the $39,000 in the Unlimited Abilities allocation, he also likes the idea of supporting a start-up, but also would be okay with putting those funds into one of the other two larger project applications, like Successful Living. Lehmann noted that HOME funds cannot fully fund a project, at least 25% must be matched so the Commission could not allocate the entire award to fully purchase the home. Vaughn asked if there would be 24/7 staffing at the Unlimited Abilities home. Taylor said it would be 2417 staffing so there would need to be two to three staff members supporting the home. Harms feels there is not enough information with this application to know that they will be stable enough to be able to fulfill this project. She is concerned that the plan is not developed and that is why she didn't allocate any funds to this in her projections. Vaughn agrees there was not enough information in the application to base an allocation on and seeing a cash flow in today's climate. Olmstead is also concerned with the instability of Medicaid and what happens when it falls through or payments are late. Eastham stated he will not defend the application, he just felt after thinking about it there was a similarity to MYEP except MYEP has larger support, budgets, staffing etc., and this is a start-up and should be supported. Harms noted that the Commission has been very sympathetic to start-ups in the past (such as Inside Out) but they had a clearer objective and requests that could be met. It took a couple years for them to show they could sustain and effectively use the money. Taylor added that the Foundation will also generate income through rentals. Eastham acknowledged that is common in group home support. Harms is leaning towards an allocation of zero this year and placing the $39,000 into another application that can put the funds to good use this year. Lamkins is also leaning towards zero. Lamkins suggested moving the remaining $39,000 in HOME funds to the Successful Living allocation. Lamkins moved to recommend the following to City Council regarding applications for FY19 Community Development Block Grant and HOME Investment Partnership Program Funding: o $21,000 HOME funds to The Housing Fellowship for Community Housing Development Organization Operations o $60,000 HOME funds to the Iowa Valley Habitat for Humanity for homeownership o $75,000 HOME funds to Mayor's Youth Empowerment Program for home acquisition o $194,000 HOME funds to Successful Living for new rental houses o $100,000 HOME funds to The Housing Fellowship for rental acquisition o $100,000 HOME funds to the City of Iowa City for the South District Home Investment Partnership program o $34,000 CDBG funds to Prelude for transitional housing improvements o $41,000 CDBG funds to the Neighborhood Centers of Johnson County for the Broadway Center siding improvements McKinstry seconded. Housing and Community Development Commission March 15, 2018 Page 8 of 9 Eastham noted he will not vote in favor of this recommendation due to the allocation to the City of Iowa City South District Home Investment Partnership Program. A vote was taken and the motion passed 7-1 (Eastham against) Lamkins moved to that should federal funding not be within 20 percent of FY18 grant amounts, then the HCDC will review the allocations. Otherwise, staff will proportionally adjust funding as needed to match the CDBG and HOME grants for FY19. Conger seconded. Passed 8-0. STAFF/COMMISSION COMMENT: Lehmann noted the next meeting is Thursday, April 19, and they will be reviewing the Annual Action Plan for recommendation to City Council. There is a change that the deadline normally followed may be delayed due to federal funding. At the April 19 meeting they will also discuss delayed and unsuccessful CDBG and HOME projects from FYI 8. Meeting announcement regarding the League of Women Voters on Sunday, March 19 where the panel will discuss housing in Iowa City. Sarah Barren of the Affordable Housing Coalition invites interested Commissioners to a panel discussion on Friday, March 23 at noon at the County Health Services Building. Lehmann reminded the Commission they need to avoid a quorum if possible so please sign up. Tuesday, April 17 is the third fair housing training session, it is complimentary, and it will celebrate the 50�1 anniversary of the Fair Housing Act and there are two sessions at 10am and 1:30pm. ADJOURNMENT: Conger moved to adjourn. Fixmer-Oraiz seconded. Passed 8-0. Housing and Community Development Commission Attendance Record 2017-2018 Name Terms Exp. 3/7 4/20 6/15 8/17 9/21 10/30 11/16 1/18 2/15 3/15 Conger, Syndy 7/1/2018 X X X X X X O/E X X X Eastham, Charlie 7/1/2020 --- --- --- X X X X X X X Fixmer-Oraiz, Vanessa 7/1/2020 --- --- --- X X X X X O/E X Harms, Christine 7/1/2019 X X X X X X X I X X X Lamkins, Bob 7/1/2019 X O/E X X O/E X 0/E X 0/E X McKinstry, John 7/1/2020 X O/E X X X X X X X X Olmstead, Harry 7/1/2015 X X X X X O/E X X X X Padron, Maria 7/1/2018 --- --- --- O/E X X X X O/E O/E Vaughan, Paula 7/1/2019 X X X X X X 0/E X X X X = Present 0 = Absent O/E = Absent/Excused --- = Vacant or prior commissioner Key. -arTrT8___ IN2 MINUTES PRELIMINARY PLANNING AND ZONING COMMISSION APRIL 2, 2018 — 5:15 PM —WORK SESSION HELLING CONFERENCE ROOM,CITYHALL MEMBERS PRESENT: Carolyn Dyer, Ann Freerks, Mike Hensch, Phoebe Martin, Max Parsons, Mark Signs, Jodie Theobald MEMBERS ABSENT: STAFF PRESENT: Sara Hektoen, Bob Miklo, Sarah Walz OTHERS PRESENT: CALL TO ORDER: Freerks called the meeting to order at 5:15 PM. REZONING ITEM (REZ18-00002): Discussion of an application submitted by Ross Nusser for a rezoning of approximately 1.89 acres from Planned Development Overlay/High Density Single Family Residential (OPD/RM-12) zone to Low Density Multifamily Residential (RM -12) zone for the property located at 1705 Prairie Du Chien Road. Walz noted the Commission had asked for more information and staff is hopeful that by Thursday's meeting the applicant will have a proposal regarding relocation assistance for current residents. Martin asked if the confusion is because City Council stated that there had to be 12 units displaced to require a relocation plan and there are only 10 in this situation. Hektoen said that is for projects where there is no rezoning, there is a rezoning in this situation and the Commission can impose conditions to meet public need imposed by the rezoning and require relocation or transition plans. Walz noted that this is a unique situation as it is manufactured housing and while a person may own their home, they have no rights to the land. Freerks added that because the home are all older and may not be able to be moved, so this is a special case and not like an apartment structure that is being removed and there are other apartment options. Freerks also asked if the homes were rented, who received the relocation money, the home owner or the renter. Those are the details and questions that need to be decided. Walz said most are long-term occupied, but unsure of how many are owner -occupied or rentals. Freerks added that in the past they have required relocation plans for manufactured housing areas before, such as when HyVee was built on 15l Avenue, so there are plans to follow. Parsons added that these situations are difficult and it takes a while to go through all the steps and make sure the best solution is found. Planning and Zoning Commission April 2, 2018 — Work Session Page 2 of 6 Freerks asked about the proposal, and the underground parking and the outdoor plaza. Walz said that will likely be patio space. Freerks noted that the best view from that property is the back and perhaps that is where the outdoor plaza should be. Parsons asked if the building was two or three stories. There was an indication that it would be limited to two but some of the pictures show three. Walz said staff has not had a chance to have a conversation with the applicant to clarify, her sense is that the photos they submitted are examples of possible designs. Freerks noted she hopes the applicant has design images to show on Thursday to the Commission. Miklo stated the applicant expressed a concern regarding the expense of drawing up a design plan with the uncertainty of when the rezoning would be approved. Miklo felt the bigger concern for the Commission and Council should be the relocation. Walz added that staff felt if the applicant is unsure of what exactly they wanted to build, if they could at least present footprints of how they would arrange the lot, a concept of how many units they would propose, etc. REZONING ITEM (REZ17-00015): Discussion of an application submitted by Cardinal Pointe West, LLC for a rezoning of approximately 7.84 acres from Interim Development Research Development Park (IDRP) zone to Low Density Multifamily (RM -12) zone for the property located west of Camp Cardinal Boulevard and east of Deer Creek Road. Miklo recalled one of the concerns of the Commission at the last meeting were the buffer from the Highway 218 and the applicant has submitted a new plan. When the City rewrote the Subdivision Code in 2008 they did research and looked at HUD and DOT guidelines about residential development near highways and of course the farther you get away, the better, and there is also a decibel level that is considered acceptable through HUD (for financing). So that is when the 300 foot buffer was created, from research as to that being where the noise level begins to drop off. The other concern is the fumes, the closer one lives to the highway the more carcinogens one is exposed to. So those are the rationales for the City's guideline of 300 feet buffer. Hektoen added that this situation is similar to the last one, it is not required by zoning for this situation to have the 300 foot buffer (it is not a subdivision), however again the Commission can the Commission can impose conditions to meet public need imposed by the rezoning. Freerks stated this is exactly a situation where they would apply such a condition as a principle. Miklo clarified that the 300 feet is measured from the right-of-way of Highway 218. He stated that the applicant has submitted a new plan to address the concerns of the Commission. Previously the one building was 35 feet from the property line and approximately 190 feet from Highway 218 and the new plan shows that building 67 feet from the property line and about 230 feet from Highway 218. In moving the building back 30 feet they then were also able to provide a landscaping buffer on their property, not partially in the city right-of-way as previously shown. The City Forrester had voiced a concern regarding being responsible for maintaining trees in that location. Additionally moving the tree buffers 30 feet places them higher on the lot and better Planning and Zoning Commission April 2, 2018 — Work Session Page 3 of 6 able to buffer Miklo stated to achieve the greater setback the applicant basically cut off the ends of the buildings and took that square footage and added it to a fourth floor to two of the buildings, one building will remain only three floors. Miklo added that the Zoning Code allows for the maximum height of the building to be increased because they have increased the front, side and rear setbacks. In this situation, with the increased setbacks proposed on this plan, building A may have a maximum height of 64 feet; it is proposed to be approximately 50 feet tall. Building B is allowed a height of 58 feet; it is proposed to be approximately 60 feet tall. Building C is allowed a height of 50 feet; it is proposed to be approximately 60 feet tall. The result is a 2 foot height increase above what is allowed in the RM -12 zone for building B and a 10 foot height increase for building C. Therefore, the applicant is requesting approval of a Planned Development Overlay (OPD) to allow buildings B and C to be increased in height. Miklo noted the criteria for review of a Planned Development Overlay are listed in the staff memo and noted that staff is still reviewing the recently submitted OPD plan and hopes to present additional comments at the April 5 meeting. Freerks asked if the number of total units remains the same from the old plan to the new. Miklo said there are two additional units added with the additional floor. Miklo noted the other concern of the Commission was the usable open space for residents and the applicant has addressed that by adding four deck structures that would provide outdoor space overlooking the pond that is located to the north of this property. A sidewalk is proposed to provide a pedestrian connection between the buildings and the deck space. Freerks asked about the criteria for the Planned Development Overlay noting that Section 14-3A- 4 of the zoning code allows consideration of variations in the dimensional requirements including building height in order to facilitate the provision of desired neighborhood amenities or open space and if the criteria reviewed addresses that. Miklo said it is a subjective call that the Commission makes to ensure it will be a livable neighborhood. Freerks is concerned because she feels the application is just meeting the minimum standards and wants to make sure the Commission has some leeway to set guidelines the Planned Development Overlay must meet. Miklo noted the only other way to meet the standards is for the applicant to lose parts of the buildings and number of units. Freerks noted that Section 14-3A-4 of the zoning code states: desired neighborhood amenities or open space; to preserve or protect natural, historic, or cultural features; to achieve compatibility with surrounding development; or to create a distinctive or innovative neighborhood environment. Signs asked how many stories were the Village Cooperative building and the building on Camp Cardinal Boulevard. Miklo was unsure, but knew the Village Cooperative building to the north was at least three stories with underground parking. The building is actually in Coralville. Martin reiterated that again these areas (here and also the Prairie Du Chien application) are at entrances to Iowa City and should be maintained and kept at a certain level. She doesn't feel this proposal speaks to her in a way that shows what the community gains from this development, does it fill a need, will it enhance the entrance to Iowa City. Hensch does feel it will fulfill a need, if someone is a commuter to Cedar Rapids, this area is Planning and Zoning Commission April 2, 2018 — Work Session Page 4 of 6 ideal for access to Highway 218. He also noted that when the quarry is abandoned in the future the land will be dedicated to the County and used for recreation so that area will be nice for residents. Hensch agrees it is a very difficult parcel to develop, but he feels it fills a niche for commuters, and it is their obligation to make it as healthful as they can given people will know they are moving in next to Highway 218. The Commissions role is to mitigate sound, health hazards, try to make some amenities for people that live there. He doesn't see this a long-term housing for people, more a year or two until they transition to something else. It can be a pleasant experience for them, there are a lot of trees in the area with a view of the pond, it is just next to a major highway. Freerks noted her concern is that it seems applicants are always just meeting the minimums or asking for exceptions and while there are checks and balances in place for such requests it seems like they are asking and need more accommodations and she doesn't feel this application creates a distinctive and innovative environment or protects a cultural or historical feature as called for OPD zoning waivers. She is concerned they are always setting precedents, if they approve an application for one, what's to say they don't do this for everyone and that is why they have standards and exceptions to the standards, but now they are creating exceptions to the exceptions of the standards. Hensch agrees there isn't any cultural or historical about the area but what they can do is be innovative by how the buildings appear. People will drive by this every day and may say "those are cool buildings" because it will be visible from the highway. The Commission can require a more innovative design due to the location and visibility. Theobald agrees with Freerks and would like to see the applicant needs to bring the proposal up to better standards. Parsons agreed, he would like to see a better building design and something distinctive. Miklo asked the Commission how they felt about the outdoor deck areas, if it was sufficient. Freerks feels it is better, it is still minimal. Martin agreed, it is an effort. Signs would like to see sketches to make sure they are child -safe. Hektoen asked about the setback from Highway 218 and if the Commission felt that and the landscaping buffer was sufficient. Freerks said having the tree buffer on the applicant's property rather than the city right-of-way was a good start. However, the added height may affect the ability to buffer the noise. Hensch suggested that if the Commission approves the added building height, perhaps they can require more mature tree plantings so residents won't have to wait 15 years to get something out of the trees. Martin asked about the fire truck lanes. Miklo said there must be a surface where a fire truck can park to fight a fire and the one building did not meet that requirement so a lane was added. Signs feels that the layout does preserve a lot of the woodland trees and the applicant should be given credit for that. Theobald questions how much of the woodland will be damaged or removed once they get in there and start doing construction. Oaks have very shallow roots and could be damaged by a large truck running over it. She added that construction fences often damage trees, the barrier levels for fences and construction vehicles are often insufficient to Planning and Zoning Commission April 2, 2018 — Work Session Page 5 of 6 protect the trees. Signs proposed the developer looking at making that fire lane from a mesh like concrete substance that would allow grass to grow as well to keep that area green. Miklo said he would check with the Fire Marshall to ask about such options. Adjournment: Martin moved to adjourn. Signs seconded. A vote was taken and the motion passed 7-0. PLANNING & ZONING COMMISSION ATTENDANCE RECORD 2017-2018 KEY: X = Present O = Absent O/E = Absent/Excused --- = Not a Member 7/20 8/3 8/17 9/7 9/21 10/5 10/19 11/2 12/7 12/21 1/4 1/18 2/15 3/1 (W.S) 3/12 3/15 (W.S.) 4/2 DYER, CAROLYN X X X X X X X O/E X X X X X X X O/E X FREERKS, ANN X X O/E X X X X X O/E X X O/E X X X X X HENSCH, MIKE X X X X X X X X X X X X X X O/E O/E X MARTIN, PHOEBE X X X X X X X X X O/E O/E X X X O/E X X PARSONS, MAX X X X O/E X X X X X X X X O/E X X X X SIGNS, MARK X X X X X X X X --X—1 X X X X X X X X THEOBALD, JODIE X O/E X X X X X X X X O!E X O/E X X X X KEY: X = Present O = Absent O/E = Absent/Excused --- = Not a Member