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2019-04-25 Info Packet
I k L tF � 4 Ilk {CITY 01 10VVA CITY way.icgov.org City Council Information Packet April 25, 2019 IP1. Council Tentative Meeting Schedule Miscellaneous IP2. Notice of Sale $12,535,000 General Obligation Bonds, Series 2019 Official Statement IP3. Copy of Press Release: Community Police Review Board forum: April 29 IP4. Invitation from Johnson County Affordable Housing Coalition: Tomorrow the fight for Mobile Homes -April 26 IPS. Invitation (Iowa City Free Medical and Dental Clinic Fundraiser): You're Invited to Friday After Clinic -April 26 IP6. Civil Service Entrance Examination: Maintenance Worker II -Wastewater Treatment IP7. Civil Service Entrance Examination: Water Services Clerk April 25, 2019 City of Iowa City Page 1 Item Number: 1. Awl Q- CITY OE IOWA CITY www.icgov.org April 25, 2019 Council Tentative Meeting Schedule ATTACHMENTS: Description Council Tentative Meeting Schedule r 1 ' .®S4 �!.�m met CITY OF IOWA CITY Date City Council Tentative Meeting Schedule Subject to change Time Meeting April 25, 2019 Location Tuesday, May 7, 2019 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, May 21, 2019 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, June 4, 2019 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, June 18, 2019 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, July 2, 2019 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Monday, July 15, 2019 4:00 PM Reception City of Coralville 4:30 PM Joint Entities Meeting TBA Tuesday, July 16, 2019 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, August 6, 2019 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, August 20, 2019 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting +r V ,l CITY O� IOWA CITY www.icgov.org April 25, 2019 Notice of Sale $12,535,000 General Obligation Bonds, Series 2019 Official Statement ATTACHMENTS: Description Notice of Sale $12,535,000 General Obligation Bonds, Series 2019 Official Statement New Issue Investment Rating: Date of Sale: Tuesday, May 7, 2019 Moody's Investors Service ... Between 10:30 and 11:00 A.M., C.D.T. (Closed Speer Auction) (Rating Requested) Before 11:00 A.M., C.D.T. (Sealed Bids) (Alternate Bid Methods) Official Statement Assuming compliance with certain covenants, in the opinion ofAhlers & 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'), interest on the Bonds is excludable from gross income for federal income tax purposes. Interest on the Bonds is not an item of tax preference for federal alternative minimum tax purposes. Interest on the Bonds is not exempt from present Iowa incomes taxes. The Bonds will NOT be designated as "qualified tax-exempt obligations". See "TAX MATTERS" herein for a more detailed discussion. r - AR, CITY OF IOWA CITY Dated Date of Delivery $12,535,000* CITY OF IOWA CITY Johnson County, Iowa General Obligation Bonds, Series 2019 Book -Entry Due Serially June 1, 2020 - 2029 The $12,535,000* General Obligation Bonds, Series 2019 (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, 2019. 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 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 following years and amounts. Any consecutive maturities may be aggregated into term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above OPTIONAL REDEMPTION Bonds due June 1, 2020 - 2025, inclusive, are not subject to optional redemption. Bonds due June 1, 2026 - 2029, inclusive, are callable in whole or in part on any date on or after June 1, 2025, at a price of par and accrued interest. If less than all the 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. PURPOSE, LEGALITY AND SECURITY The proceeds of the Bonds are expected to be used to: (i) finance the cost of various essential and general corporate purpose capital improvements, and (ii) 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 of judicial discretion. This Official Statement is dated April 25, 2019, and has been prepared under the authority of the City. An electronic copy of this Official Statement is available from the www.speerfinancial.com web site under "Official Statement Sales Calendar". Additional copies may be obtained from Mr. Dennis Bockenstedt, Director of Finance, City of Iowa City, 410 E. Washington Street, Iowa City, Iowa, 52240, or from the Registered Municipal Advisors to the City. Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS • ESTABLISHED 1954 ONE NORTH LASALLE STREET, SUPTE 41M- CHICAGO. R.LINOIS 60802 Tele9houe: (312) 3463]80; Feu : (312) 3468833 531 COMMERCIAL STREET, SUITE 608 • WATERLOO, IOWA 50701 hleph (319) 291-2077; Feee .:(319)291-8628 ,nvw. Pea+./Inmv,lal.cwn *Subject to principal adjustment in accordance with the Official Terms of Offering. (1) CUSIP numbers appearing in this Oficial Statement have been provided by the CUSIP Service Bureau, which is managed on behalfofthe American Bankers Association by S&P Capital IQ, apart 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 on the cover of this Oficial Statement. AMOUNTS*, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS Principal Due Interest Price or CUSIP Principal Due Interest Price or CUSIP Amount' June 1 Rate Yield Number(1) Amount* June 1 Rate Yield Number(1) $4,125,000......... 2020 % % $875,000........... 2025 % % 905,000......... 2021 % % 905,000........... 2026 % % 925,000......... 2022 % % 940,000........... 2027 % % 955,000......... 2023 % % 960,000........... 2028 % % 985,000......... 2024 % % 960,000........... 2029 % % Any consecutive maturities may be aggregated into term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above OPTIONAL REDEMPTION Bonds due June 1, 2020 - 2025, inclusive, are not subject to optional redemption. Bonds due June 1, 2026 - 2029, inclusive, are callable in whole or in part on any date on or after June 1, 2025, at a price of par and accrued interest. If less than all the 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. PURPOSE, LEGALITY AND SECURITY The proceeds of the Bonds are expected to be used to: (i) finance the cost of various essential and general corporate purpose capital improvements, and (ii) 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 of judicial discretion. This Official Statement is dated April 25, 2019, and has been prepared under the authority of the City. An electronic copy of this Official Statement is available from the www.speerfinancial.com web site under "Official Statement Sales Calendar". Additional copies may be obtained from Mr. Dennis Bockenstedt, Director of Finance, City of Iowa City, 410 E. Washington Street, Iowa City, Iowa, 52240, or from the Registered Municipal Advisors to the City. Speer Financial, Inc. INDEPENDENT MUNICIPAL ADVISORS • ESTABLISHED 1954 ONE NORTH LASALLE STREET, SUPTE 41M- CHICAGO. R.LINOIS 60802 Tele9houe: (312) 3463]80; Feu : (312) 3468833 531 COMMERCIAL STREET, SUITE 608 • WATERLOO, IOWA 50701 hleph (319) 291-2077; Feee .:(319)291-8628 ,nvw. Pea+./Inmv,lal.cwn *Subject to principal adjustment in accordance with the Official Terms of Offering. (1) CUSIP numbers appearing in this Oficial Statement have been provided by the CUSIP Service Bureau, which is managed on behalfofthe American Bankers Association by S&P Capital IQ, apart 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 on the cover of this Oficial Statement. 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 EITHER 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 BOND ISSUE SUMMARY....................................................................................................................................................1 BONDHOLDERS' RISKS..................................................................................................................................................... 2 SecondaryMarket............................................................................................................................................................... 2 RatingsLoss........................................................................................................................................................................2 Forward -Looking Statements.............................................................................................................................................. 3 TaxMatters and Loss of Tax Exemption............................................................................................................................ 3 DTC -Beneficial Owners..................................................................................................................................................... 3 ContinuingDisclosure........................................................................................................................................................ 4 Cybersecurity...................................................................................................................................................................... 4 Suitabilityof Investment..................................................................................................................................................... 4 Bankruptcy.......................................................................................................................................................................... 4 Legislation........................................................................................................................................................................... 5 TaxLevy Procedures.......................................................................................................................................................... 5 Federal Funds Orders and State Funds Legislation............................................................................................................. 5 OtherFactors....................................................................................................................................................................... 5 THECITY.............................................................................................................................................................................. 5 CityOrganization and Services........................................................................................................................................... 6 CommunityLife.................................................................................................................................................................. 6 Education............................................................................................................................................................................ 6 Transportation..................................................................................................................................................................... 6 SOCIOECONOMICINFORMATION.................................................................................................................................. 7 Population........................................................................................................................................................................... 7 Employment........................................................................................................................................................................ 7 Housing............................................................................................................................................................................... 9 Income................................................................................................................................................................................. 9 RetailSales........................................................................................................................................................................10 THEPROJECT.....................................................................................................................................................................11 DEFAULTRECORD...........................................................................................................................................................11 SHORT-TERM BORROWING AND ADDITIONAL GENERAL OBLIGATION DEBT...............................................11 DEBTINFORMATION.......................................................................................................................................................11 DEBTLIMIT....................................................................................................................................................................11 DIRECTDEBT.................................................................................................................................................................12 GENERAL OBLIGATION DEBT(1)(2)..........................................................................................................................13 STATEMENT OF BONDED INDEBTEDNESS(])(2)...................................................................................................14 OTHER OBLIGATIONS.................................................................................................................................................14 PROPERTY ASSESSMENT AND TAX INFORMATION................................................................................................14 PropertyTax Assessment..................................................................................................................................................14 BUILDINGPERMITS.....................................................................................................................................................15 PropertyTax Collection....................................................................................................................................................15 LevyLimits.......................................................................................................................................................................17 TaxLevy Procedures........................................................................................................................................................18 UtilityProperty Tax Replacement....................................................................................................................................18 TaxIncrement Financing..................................................................................................................................................19 Legislation.........................................................................................................................................................................19 FINANCIALINFORMATION............................................................................................................................................ 21 FinancialReports.............................................................................................................................................................. 21 No Consent or Updated Information Requested of the Auditor........................................................................................ 21 Summary Financial Information....................................................................................................................................... 21 EMPLOYEE RETIREMENT AND OTHER POST EMPLOYMENT BENEFIT OBLIGATIONS ................................... 25 PENSIONS.......................................................................................................................................................................25 OTHER POST -EMPLOYMENT BENEFITS (OPEB).................................................................................................... 26 REGISTRATION, TRANSFER AND EXCHANGE........................................................................................................... 28 (i) TAXMATTERS................................................................................................................................................................... 28 TaxExemption.................................................................................................................................................................. 28 NOT Qualified Tax -Exempt Obligations.......................................................................................................................... 29 Tax Accounting Treatment of Discount and Premium on Certain Bonds........................................................................ 29 OtherTax Advice.............................................................................................................................................................. 29 Audits................................................................................................................................................................................ 30 Reportingand Withholding............................................................................................................................................... 30 TaxLegislation................................................................................................................................................................. 30 Enforcement...................................................................................................................................................................... 30 Opinion............................................................................................................................................................................. 31 CONTINUINGDISCLOSURE............................................................................................................................................ 31 OPTIONALREDEMPTION................................................................................................................................................ 31 LITIGATION........................................................................................................................................................................ 32 LEGALMATTERS.............................................................................................................................................................. 32 OFFICIAL STATEMENT AUTHORIZATION.................................................................................................................. 32 INVESTMENTRATING.....................................................................................................................................................33 UNDERWRITING............................................................................................................................................................... 33 MUNICIPALADVISOR...................................................................................................................................................... 33 CERTIFICATION................................................................................................................................................................ 33 APPENDIX A -FISCAL YEAR 2018 COMPREHENSIVE ANNUAL FINANCIAL REPORT APPENDIX B -DESCRIBING BOOK -ENTRY -ONLY ISSUANCE APPENDIX C -DRAFT FORM OF LEGAL OPINION APPENDIX D -DRAFT FORM OF CONTINUING DISCLOSURE CERTIFICATE OFFICIAL BID FORM OFFICIAL TERMS OF OFFERING Exhibit A — Example Issue Price Certificate City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 Form, which are provided for the convenience of potential investors and should be reviewed in their entirety by potential investors. Issuer: City of Iowa City, Johnson County, Iowa. Issue: $12,535,000* General Obligation Bonds, Series 2019. Dated Date: Date of delivery (expected to be on or about June 4, 2019). Interest Due: Each June 1 and December 1, commencing December 1, 2019. Principal Due: Serially each June 1, commencing June 1, 2020 through 2029, as detailed on the cover page of this Official Statement. Optional Redemption: Bonds maturing on or after June 1, 2026, are callable at the option of the City on any date on or after June 1, 2025, at a price of par plus accrued interest. See "OPTIONAL REDEMPTION" herein. Authorization: The Bonds are being issued pursuant to authority established in Code of Iowa 2019 as amended, 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: An investment rating for the Bonds has been requested from Moody's Investors Service, New York, New York. See "INVESTMENT RATING" herein. Purpose: The proceeds of the 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 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 Bonds as discussed under "TAX MATTERS" in this Official Statement. Interest on the Bonds is not exempt from present State of Iowa income taxes. See APPENDIX C for a draft form of legal opinion for the Bonds. Bond Registrar/Paying Agent: Delivery: Book -Entry Form: Denomination: Municipal Advisor: *Subject to change. U.S. Bank, N.A., St. Paul, Minnesota. The Bonds are expected to be delivered on or about June 4, 2019. 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. $5,000 or integral multiples thereof. Speer Financial, Inc., Waterloo, Iowa and Chicago, Illinois. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 Rockne Cole Pauline Taylor Geoff Fruin City Manager Dennis Bockenstedt Director of Finance Secondary Market CITY OF IOWA CITY JOHNSON COUNTY, IOWA Jim Throgmorton Mayor Council Members Susan Mims Bruce Teague Officials BONDHOLDERS' RISKS Mazahir Salih 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, 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 " " 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. 2 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 Various factors, including 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 and Loss of Tax Exemption As discussed under the heading "TAX MATTERS" herein, the interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the 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 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 Bonds, and there is no provision for an adjustment of the interest rate on the 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 Bonds will alter the tax status of the Bonds, and, in the extreme, remove the tax exempt status from the Bonds. In that instance, the Bonds are not subject to mandatory prepayment, and the interest rate on the Bonds does not increase or otherwise reset. A determination of taxability on the Bonds, after closing of the Bonds, could materially adversely affect the value and marketability of the 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. 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. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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. The City will covenant in a Continuing Disclosure Certificate for the benefit of the Owners and Beneficial Owners of the Bonds to provide annually certain financial information and operating data relating to the City (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events. The Annual Report is to be filed by the City no later than two hundred ten (210) days after the close of each fiscal year, commencing with the fiscal year ending June 30, 2019, with the Municipal Securities Rulemaking Board, at its internet repository named "Electronic Municipal Market Access" ("EMMA" ). The notices of events, if any, are also to be filed with EMMA. See "APPENDIX D — FORM OF CONTINUING DISCLOSURE CERTIFICATE." The specific nature of the information to be contained in the Annual Report or the notices of events, and the manner in which such materials are to be filed, are summarized in "APPENDIX D — FORM OF CONTINUING DISCLOSURE CERTIFICATE." These covenants have been made in order to assist the Underwriter in complying with SEC Rule 15c2 -12(b)(5) (the "Rule"). Cybersecurity The City, like many other public and private entities, relies on a large and complex technology environment to conduct its operations. As such, it may face multiple cybersecurity threats including but not limited to, hacking, viruses, malware and other attacks on computer or other sensitive digital systems and networks. There can be no assurances that any security and operational control measures implemented by the City will be completely successful to guard against and prevent cyber threats and attacks. Failure to properly maintain functionality, control, security, and integrity of the City's information systems could impact business operations and/or digital networks and systems and the costs of remedying any such damage could be significant. Along with significant liability claims or regulatory penalties, any security breach could have a material adverse impact on the City's operations and financial condition. The City has a $1,000,000 Cyber -Liability Policy. The City cannot predict whether this policy will be sufficient in the event of a cyberattack. However, the Bonds are secured by an unlimited ad valorem property tax as described herein. Suitability of Investment The interest rate borne 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. 4 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 Legislation From time to time, there are proposals pending in Congress and in the Iowa Legislature that could, if enacted, alter or amend one or more of the matters described herein in certain respects or would adversely affect the market value of the Bonds, or otherwise prevent holders of the Bonds from realizing the full benefit of the tax exemption of interest on the Bonds. Further such proposals may impact the marketability or market value of the 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 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 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 Bonds would be impacted thereby. 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 Funds Orders and State Funds Legislation Various federal executive orders, and Iowa Code Chapter 825 (collectively "ICE Enforcement Initiatives"), impose requirements intended to ensure compliance with the federal immigration detainment processes. The ICE Enforcement Initiatives impose various penalties for non-compliance, 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. 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. 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 oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 560 full-time, 66 permanent part-time and 369 temporary employees, including a police force of 84 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, 2020; and Fire fighters ("IAFF") which contract expires June 30, 2024. 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), 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 j azz 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 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 14,285 for Fiscal Year 2018-19. There are approximately 1,575 full and part-time employees of the District. The District owns and operates several pre-school sites, twenty-one elementary schools, three middle schools, three 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 2,382 for Fiscal Year 2018-19. Four year college programs and vocational training are available throughout the area including the University of Iowa and Kirkwood Community College. 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. 0 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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(]) Note: (1) Source: U.S. Bureau of the Census Employment Following are lists of large employers located in the City. Major City Employers(]) 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(]) Name Product/Service Universityof Iowa...................................................................... Education......................................................................................... Veterans Affairs Health Care System ........................................ Healthcare........................................................................................ Iowa City Community School District ......................................... Education......................................................................................... MercyHospital........................................................................... Health Services................................................................................ ACT, Inc.................................................................................... Education Testing Services............................................................... Proctor and Gamble.................................................................. Health and Beauty Products............................................................. Hy-Vee(3).................................................................................. Grocery ............................................................................................. Cityof Iowa City........................................................................ Government...................................................................................... NCS Pearson............................................................................ Education Testing Services............................................................... JohnsonCounty........................................................................ Government...................................................................................... 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. The remainder of this page was left blank intentionally. 7 Approximate Employment(2) 29,705 2,150 1,575 1,325 1,187 1,084 1,012 995 775 609 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 2013 - 2017 American Community Survey 5 -year estimated values. Employment By Industry(]) The County The City Classification Number Percent Agriculture, forestry, fishing and hunting, and mining ........................... 144 0.4% Construction........................................................................................ 1,300 3.2% Manufacturing...................................................................................... 2,782 6.8% Wholesale trade.................................................................................. 469 1.1% Retail trade.......................................................................................... 4,027 9.8% Transportation and warehousing, and utilities ...................................... 868 2.1% Information.......................................................................................... 633 1.5% Finance and insurance, and real estate and rental and leasing............ 1,629 4.0% Professional, scientific, and management, and administrative and 8.8% 7,517 waste management services............................................................. 3,028 7.4% Educational services, and health care and social assistance ............... 18,395 44.7%° Arts, entertainment, and recreation, and accommodation and 3.4% 4.7% food services..................................................................................... 5,781 14.1% Other services, except public administration ........................................ 1,463 3.6% Public administration........................................................................... 621 1.5% Total.................................................................................................. 41,140 100.0% The County Number Percent 911 1.1% 3,488 4.3% 6,497 8.0% 1,398 1.7% 8,165 10.0% 2,443 3.0% 1,016 1.2% 4,620 5.7% 6,345 7.8% 34,081 41.7% 8,407 10.3% 2,671 3.3% 1,659 2.0% 81,701 100.0% Note: (1) Source: U. S. Bureau of the Census, American Community Survey 5 -Year Estimates from 2013 - 2017. Employment By Occupation(]) Note: (1) Source: U. S. Bureau of the Census, American Community Survey 5 -Year Estimates from 2013 - 2017 States The State The City The County Classification Number Percent Number Percent Management, business, science, and arts occupations ....................... 19,576 47.6% 38,400 47.09% Service occupations............................................................................ 8,485 20.6% 14,561 17.8% Sales and office occupations............................................................... 7,937 19.3% 17,008 20.8% Natural resources, construction, and maintenance occupations........... 1,517 3.7% 4,215 5.2% Production, transportation, and material moving occupations .............. 3,625 8.8% 7,517 9.2% Total.................................................................................................. 41,140 100.0% 81,701 100.0% Note: (1) Source: U. S. Bureau of the Census, American Community Survey 5 -Year Estimates from 2013 - 2017 States The State Number Percent 61,618 3.9% 100,925 6.3% 241,327 15.1% 46,221 2.9% 186,277 11.6% 73,774 4.6% 26,772 1.7% 121,725 7.6% 117,560 7.3% 387,957 24.3% 117,554 7.3% 68,339 4.3% 49,669 3.1% 1,599,718 100.0% The State Number Percent 564,694 35.3% 263,453 16.5% 363,159 22.7% 151,391 9.5% 257,021 16.1% 1,599,718 100.0% The following shows the annual average unemployment rates for the City, the County, the State and the United Annual Average Unemployment Rates(])(2) Calendar The The The United Year Citv County State States 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 ........................ 1.9% 1.9% 2.5% 3.9% 2019(3) .................... 1.5% 1.7% 2.7% 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 2019. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 Housing The U.S. Census Bureau 5 -year estimated values reported that the median value of the City's owner -occupied homes was $202,200. This compares to $210,400 for the County and $137,200 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 2013 - 2017 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 Cit Number Percent 847 6.0% 766 5.4% 2,009 14.2% 3,340 23.6% 4,459 31.5% 2,212 15.6% 496 3.5% 48 0.3% 14,177 100.0% The Count Number Percent 2,890 8.5% 1,809 5.3% 4,391 12.9% 6,756 19.9% 9,452 27.8% 6,587 19.4% 1,847 5.4% 300 0.9% 34,032 100.0% The State Number Percent 90,767 10.2% 203,149 22.8% 196,759 22.1% 153,250 17.2% 147,859 16.6% 73,685 8.3% 19,079 2.1% 4,737 0.5% 889.285 100.0% Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5 -year estimates 2013 - 2017. Mortgage Status Housing units with a mortgage ............. Housing units without a mortgage........ Total.................................................. Mortgage Status(]) The City Number Percent 9,462 66.7% 4,715 33.3% 14,177 100.0% The County Number Percent 23,013 67.6°/a 11,019 32.4% 34,032 100.0% The State Number Percent 541,664 60.9% 347,621 39.1% 889,285 100.0% Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5 -year estimates 2013 - 2017. Income The U.S. Census Bureau 5 -year estimated values reported that the City had a median family income of $82,659. This compares to $89,700 for the County and $72,270 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 2013 - 2017 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 City Number Number Percent 467 3.5% 396 3.0% 886 6.7% 570 4.3% 1,543 11.7% 2,052 15.6% 1,932 14.7% 2,744 20.8% 1,171 8.9% 1,414 10.7% 13,175 100.0% The County Number Percent 893 2.8% 618 2.0% 1,406 4.5% 1,196 3.8% 3,398 10.8% 4,886 15.6% 5,246 16.7% 7,332 23.4% 3,117 9.9% 3,294 10.5% 31,386 100.0% The State Number Percent 24,497 3.1% 16,991 2.1% 46,528 5.8% 59,737 7.5% 102,312 12.8% 168,411 21.0% 139,013 17.4% 150,051 18.7% 50,929 6.4% 42,107 5.3% 800,576 100.0% Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5 -year estimates 2013 to 2017. 0 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 The U.S. Census Bureau 5 -year estimated values reported that the City had a median household income of $45,991. This compares to $59,965 for the County and $56,570 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 2013 - 2017 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...................................................... Household Income(]) The City Number Percent 4,412 14.9% 1,852 6.2% 3,139 10.6% 2,405 8.1% 3,964 13.3% 4,220 14.2% 3,137 10.6% 3,470 11.7% 1,420 4.8% 1,678 5.7% 29,697 100.0% The County Number Percent 5,715 10.0% 2,477 4.3% 5,016 8.7% 4,342 7.6% 7,038 12.3% 9,135 15.9% 7,502 13.1% 8,745 15.2% 3,596 6.3% 3.857 6.7% 57,423 100.0% The State Number Percent 71,544 5.7% 57,984 4.6% 124,425 9.9% 123,477 9.9% 175,714 14.0% 244,762 19.6% 175,018 14.0% 174,081 13.9% 56,730 4.5% 47,852 3.8% 1,251,587 100.0% Note: (1) Source: U.S. Bureau of the Census, American Community Survey 5 -year estimates 2013 - 2017. 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 + (-) 2009 ............................. $905,139,461 n/a 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% 2018 ............................. 854,538,416 (2.33%) Note: (1) Source: the Iowa Department of Revenue The remainder of this page was left blank intentionally. 10 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 of. (i) improving, remodeling and equipping of city buildings, including the Robert A. Lee Recreation Center; (ii) trail improvements along Highway 1 between Sunset Street and Mormon Trek Boulevard; (iii) 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, and pedestrian underpasses and overpasses, 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; (iv) acquisition, construction, reconstruction, and improvement of all waterways, and real and personal property, useful for the protection or reclamation of property situated within the corporate limits of cities from floods or high waters, and for the protection of property in cities from the effects of flood waters, including the deepening, widening, alteration, change, diversion, or other improvement of watercourses, within or without the city limits, the construction of levees, embankments, structures, impounding reservoirs, or conduits, and the establishment, improvement, and widening of streets, avenues, boulevards, and alleys across and adjacent to the project, as well as the development and beautification of the banks and other areas adjacent to flood control improvements; and (v) rehabilitation and improvement of parks already owned, including facilities, equipment, and improvements commonly found in city parks. DEFAULT RECORD The City has no record of default and has met its debt repayment obligations promptly. SHORT-TERM BORROWING AND ADDITIONAL GENERAL OBLIGATION DEBT 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. The City does not expect to issue any additional general obligation debt in calendar year 2019. DEBT INFORMATION 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 2017 valuation currently applicable to the Fiscal Year 2018-19 is as follows: 2017 Actual Valuation of Property ......................................... $5,907,660,998 Legal Debt Limit of 5% .......................................................... 0.05 Legal Debt Limit.................................................................... $ 295,383,050 Less: TIF Revenue Debt Subject to Debt Limit ...................... (14,930,000) Less: Total G.O. Debt Subject to Debt Limit .......................... (52,470,000) Less: Other Loans................................................................. (810,000) Less: Other Legal Indebtedness (TIF Rebates) ..................... (28,165,000) Total Applicable Debt............................................................ (96,375,000) Net Debt Limit....................................................................... $ 199,008,050 11 City oflowa City, Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 DIRECT DEBT Summary of General Obligation and Tax Increment Debt(]) (Principal Only) General Obligation Series 2012A ....................................................... $ 2,935,000 Series 2013A ....................................................... 3,380,000 Series 2014 ......................................................... 4,875,000 Series 2015 ......................................................... 4,915,000 Series 2016A ....................................................... 6,785,000 Series 2017A ....................................................... 7,960,000 Series 2018A ....................................................... 8,085,000 Series 2018B ....................................................... 1,000,000 The Bonds........................................................... 12,535,000 Total General Obligation .................................. $52,470,000 Tax Increment Financing Revenue: Series 2012D ...................................................... $ 2,125,000 Series 2016E ....................................................... 12,805,000 Total Tax Increment ......................................... $14,930,000 Notes: (1) Source: the City. (2) After the June 1, 2019 principal payments on the outstanding debt. The remainder of this page was left blank intentionally. 12 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 GENERAL OBLIGATION DEBT(1)(2) (Principal Only) Fiscal Year Outstanding Ending Series Series Series Series Series Series Series Series General Obligation June 30 2012A 2013A 2014 2015 2016A 2017A 2018A 2018B Debt 2020 ........................................... $ 955,000 $ 820,000 $ 925,000 $ 765,000 $ 910,000 $ 920,000 $ 825,000 $1,000,000 $ 7,120,000 2021 ........................................... 975,000 835,000 950,000 785,000 930,000 940,000 840,000 0 6,255,000 2022 ........................................... 1,005,000 855,000 970,000 805,000 950,000 955,000 855,000 0 6,395,000 2023 ........................................... 0 870,000 1,000,000 830,000 965,000 980,000 875,000 0 5,520,000 2024 ........................................... 0 0 1,030,000 850,000 985,000 1,000,000 895,000 0 4,760,000 2025 ........................................... 0 0 0 880,000 1,010,000 1,025,000 915,000 0 3,830,000 2026 ........................................... 0 0 0 0 1,035,000 1,055,000 940,000 0 3,030,000 2027 ........................................... 0 0 0 0 0 1,085,000 960,000 0 2,045,000 2028 ........................................... 0 0 0 0 0 0 980,000 0 980,000 2029 ........................................... 0 0 0 0 0 0 0 0 0 Total ......................................... $2,935,000 $3,380,000 $4,875,000 $4,915,000 $6,785,000 $7,960,000 $8,085,000 $1,000,000 $39,935,000 Fiscal Year Outstanding Total Ending General Obligation The General Obligation Cumulative Retirement(3) Principal & June 30 Debt Bonds(3) Debt(3) Amount Percent Interest(3) 2020 ........................................... $ 7,120,000 $ 4,125,000 $11,245,000 $11,245,000 21.43% $12,560,249 2021 ........................................... 6,255,000 905,000 7,160,000 18,405,000 35.08% 8,200,784 2022 ........................................... 6,395,000 925,000 7,320,000 25,725,000 49.03% 8,196,236 2023 ........................................... 5,520,000 955,000 6,475,000 32,200,000 61.37% 7,184,698 2024 ........................................... 4,760,000 985,000 5,745,000 37,945,000 72.32% 6,292,248 2025 ........................................... 3,830,000 875,000 4,705,000 42,650,000 81.28% 5,113,398 2026 ........................................... 3,030,000 905,000 3,935,000 46,585,000 88.78% 4,227,523 2027 ........................................... 2,045,000 940,000 2,985,000 49,570,000 94.47% 3,172,835 2028 ........................................... 980,000 960,000 1,940,000 51,510,000 98.17% 2,039,480 2029 ........................................... 0 960,000 960,000 52,470,000 100.00% 996,000 Total ......................................... $39,935,000 $12,535,000 $52,470,000 $57,983,448 Notes: (1) Source: the City. (2) After the June 1, 2019 principal payments on the outstanding debt. (3) Subject to change. The remainder of this page was left blank intentionally. 13 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 STATEMENT OF BONDED INDEBTEDNESS(1)(2) City Actual Value, January 1, 2017............................................................................................................................................................. $ 2,100,000 Series 2016D ...................................................... 2,865,000 Series 2017C ...................................................... 5.300.000 $5,907,660,998 City Taxable Value, January 1, 2017.......................................................................................................................................................... Revenue Debt Payable from Net Revenues of the Municipal Sewer System: Series 2016C ...................................................... $ 5,600,000 Series 20178 ....................................................... 4,275,000 $3,745,477,705 $ 9,875,000 Revenue Debt Payable from Net Revenues of the Municipal Parking System: Series 2017 ......................................................... $ 9,413,024 Total(1)(2)(3)..................................................... $ 9,413,024 Per Capita (2) After the June 1, 2019 principal payments on the outstanding debt. Applicable Ratio to City Ratio to City (2010 Pop. Total Percent Amount Actual Value Taxable Value 67,862) Direct Bonded Debt(3)................................... $ 52,470,000 100.00% $ 52,470,000 0.89% 1.40% $ 773.19 TIF Revenue Debt(3)..................................... 14,930,000 100.00% 14,930,000 0.25% 0.40% 220.01 Overlapping Debt: Iowa City Community School District ............. $131,790,000 57.24% $ 75,436,596 1.28% 2.01% 1,111.62 Clear Creek-Amana Community School Dist. 75,770,000 0.04% 30,308 0.00% 0.00% 0.45 Kirkwood Community College(4) ................... 80,768,483 14.19% 11,461,048 0.19% 0.31% 168.89 Johnson County ............................................ 10.640.000 42.22% 4,492,208 0.08% 0.12% 66.20 Total Overlapping Bonded Debt ................... $298,968,483 $ 91,420,160 1.55% 2.44% $ 1,347.16 Total Direct and Overlapping Bonded Debt ................................................$158,820,160 2.69% 4.24% $2,340.36 PerCapita Actual Value................................................................................................................................................................................ $87,054.04 PerCapita Taxable Value.............................................................................................................................................................................. $55,192.56 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 27, 2019 for Overlapping Debt. (3) After the June 1, 2019 principal payments on the outstanding debt. (4) Excludes $32,315,000 in Industrial New Jobs Training Certificates, which are expected to be paid by proceeds from anticipated job credits from withholding taxes. OTHER OBLIGATIONS Revenue Debt Payable from Net Revenues of the Municipal Water System Series 2012C ...................................................... $ 2,100,000 Series 2016D ...................................................... 2,865,000 Series 2017C ...................................................... 5.300.000 Total(1)(2)......................................................... $10,265,000 Revenue Debt Payable from Net Revenues of the Municipal Sewer System: Series 2016C ...................................................... $ 5,600,000 Series 20178 ....................................................... 4,275,000 Total(1)(2)......................................................... $ 9,875,000 Revenue Debt Payable from Net Revenues of the Municipal Parking System: Series 2017 ......................................................... $ 9,413,024 Total(1)(2)(3)..................................................... $ 9,413,024 Notes: (1) Source: the City. (2) After the June 1, 2019 principal payments on the outstanding debt. (3) After an early redemption payment of $2,000,000 on June 1, 2019. 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: 14 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 PERCENTAGES FOR TAXABLE VALUATION AFTER ROLLBACKS(]) Property is assessed on a calendar year basis. The assessments finalized as of January 1 of each year are applied to the following tax year. For example, the assessments finalized on January 1, 2017, are used to calculate tax liability for the tax year starting July 1, 2018 through June 30, 2019. BUILDING PERMITS New construction building permits valuation have averaged $217,790,114 over the last 5 years in the City, excluding the value of land. City Building Permits(]) (Excludes the Value of Land) Calendar Multi- Ag Land New Construction Fiscal Year Residential Residential(2) & Buildings Commercial 2010/11 ................ 46.9094% N/A 66.2715% 100.0000% 2011/12 ................ 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% 2015/16 ................ 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% 2019/20 ................ 56.9180% 75.0000% 56.1324% 90.0000% Notes: (1) Source: the Iowa Department of Revenue. (2) New category beginning with fiscal year 2017. Property is assessed on a calendar year basis. The assessments finalized as of January 1 of each year are applied to the following tax year. For example, the assessments finalized on January 1, 2017, are used to calculate tax liability for the tax year starting July 1, 2018 through June 30, 2019. BUILDING PERMITS New construction building permits valuation have averaged $217,790,114 over the last 5 years in the City, excluding the value of land. City Building Permits(]) (Excludes the Value of Land) Calendar Year: 2015 New Construction No. of New Permits .................................... 184 Valuation: .................................................. $106,350,572 Remodeling Repair and Additions: No. of New Permits: ................................... 461 Valuation: .................................................. $ 31,960,941 Total Permits ............................................. 645 Total Valuations ......................................... $138,311,513 Notes: (1) Source: the City. (2) As of March 31, 2019. Property Tax Collection 2016 2017 2018 2019(2) 262 211 151 18 $295,339,497 $108,285,647 $115,872,543 $38,618,000 532 507 467 91 $ 93,087,526 $108,532,366 $ 76,942,267 $23,912,126 794 718 618 109 $388,427,023 $216,818,013 $192,814,810 $62,530,126 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. 15 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 PROPERTY VALUATIONS AND TREND OF VALUATIONS ACTUAL (100%) VALUATIONS FOR THE CITY(1)(2) For the January 1, 2018 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(])(2) Preliminary Fiscal Year: 2015/16 2016/17 2017/18 2018/19 2019/20 Property Class Levy Year: 2014 2015 2016 2017 2018 Residential........................................................ $3,617,590,930 $3,893,541,900 $4,011,317,530 $4,279,194,820 $4,431,104,380 Agricultural........................................................ 3,553,520 3,736,510 3,443,020 2,626,150 2,539,080 Commercial....................................................... 1,155,761,766 856,972,664 877,491,737 964,588,039 1,000,704,323 Industrial........................................................... 76,495,918 79,053,598 79,474,988 74,013,639 79,346,989 Multi-residential(3)............................................. 0 415,208,021 420,082,751 482,118,763 502,252,347 Railroads........................................................... 4,015,580 4,096,577 3,984,932 3,549,414 3,601,348 Utilities without Gas and Electric(4) ................... 8,239,789 7,375,066 6,734,894 7,099,293 7,386,408 Gas and Electric Utility(4).................................. 87,728,294 92,987,351 94,582,279 97,050,716 109,124,421 Less: Military Exemption ................................... (2,828,002) (2,727,994) (2,635,396) (2,579,836) (2,489,088) Total................................................................ $4,950,557,795 $5,350,243,693 $5,494,476,735 $5,907,660,998 $6,133,570,208 Percent Change +(-) ........................................ 2.57%(5) 8.07% 2.70% 7.52% 3.82% Notes: (1) Source: Iowa Department of Management. (2) Includes tax increment finance (TIF) valuations used in the following amounts: January 1: 2014 2015 2016 2017 2018 TIF Valuation ............................... $42,307,287 $72,650,838 $80,559,947 $85,379,369 $115,175,495 (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 2013 Actual Valuation of $4,826,647,177. For the January 1, 2018 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(])(2) 16 Preliminary Fiscal Year: 2015/16 2016/17 2017/18 2018/19 2019/20 Property Class Levy Year: 2014 2015 2016 2017 2018 Residential........................................................ $2,016,210,314 $2,165,817,742 $2,284,007,603 $2,380,126,625 $2,522,095,595 Agricultural........................................................ 1,588,496 1,706,955 1,618,090 1,429,547 1,425,151 Commercial....................................................... 1,040,185,590 771,275,414 789,742,578 868,129,247 900,633,903 Industrial........................................................... 68,846,326 71,148,238 71,527,489 66,612,275 71,412,290 Multi-residential(3)............................................. 0 358,117,010 346,568,385 379,668,606 376,689,677 Railroads........................................................... 3,614,022 3,686,919 3,586,439 3,194,473 3,241,213 Utilities without Gas and Electric(4) ................... 8,239,789 7,375,066 6,734,894 7,099,293 7,386,408 Gas and Electric Utility(4).................................. 46,785,426 44,986,783 41,702,196 41,797,475 42,719,065 Less: Military Exemption ................................... (2,828,002) (2,727,994) (2,635,396) (2,579.836) (2,489,088) Total................................................................ $3,182,641,961 $3,421,386,133 $3,542,852,278 $3,745,477,705 $3,923,114,214 Percent Change +(-) ........................................ 1.46%(5) 7.50% 3.55% 5.72% 4.74% Notes: (1) Source: Iowa Department of Management. (2) Includes tax increment finance (TIF) valuations used in the following amounts: January 1: 2014 2015 2016 2017 2018 TIF Valuation ............................... $33,331,128 $72,650,838 $80,559,947 $85,379,369 $115,175,495 (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 2013 Taxable Valuation of $3,136,795,629. 16 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 LEVIES AND TAX COLLECTIONS(]) The following shows the trend in the City's tax extensions and 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 56,525,799 100.12% 2017 ............... 2018-19.............. 59,173,825 - -In 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. 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 $8.10 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 remainder of this page was left blank intentionally. 17 Levy Year 2017 Taxpayer Name Business/Service Taxable Valuation(2) American College Testing, Inc (aka ACT, Inc.) .............. Commercial................................................................. $ 50,377,182 MidAmerican Energy ..................................................... Utility........................................................................... 39,501,682 BBCS-Hawkeye Housing LLC ....................................... Real Estate Management/Apartments.......................... 25,227,744 Ann S Gerdin Revocable Trust ...................................... Commercial................................................................. 22,903,407 MidWestOne Bank ......................................................... Banking....................................................................... 20,850,984 Dealer Properties IC LLC ............................................... Commercial................................................................. 19,318,887 Procter & Gamble LLC ................................................... Industrial...................................................................... 16,805,285 Vesper Iowa City LLC... ................................................. Apartments .................................................................. 15,123,579 AlplaInc........................................................................Industrial...................................................................... 14,019,426 National Computer Systems Inc ..................................... Commercial................................................................. 13,673,205 Total................................................................................................................................................................. $237,801,381 Ten Largest Taxpayers as Percent of City's 2017 Taxable Valuation ($3,745,477,705) .................................... 6.35% 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 $8.10 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 remainder of this page was left blank intentionally. 17 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 TAX RATES Levy Years 2013 - 2017(1)(2) (Per $1,000 Actual Valuation) Fiscal Year: 2014/15 2015/16 2016/17 2017/18 2018/19 Levy Year: 2013 2014 2015 2016 2017 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 .............................................. 4.12963 3.92833 3.82846 3.57846 3.22846 Employee Benefits ............................................. 2.96331 3.11277 3.14415 3.14415 3.34415 Capital Improvement .......................................... 0.00000 0.00000 0.00000 0.00000 0.00000 Other.................................................................. 1.51226 1.50986 1.51044 1.51044 1.51044 Total City.......................................................... $16.70520 $16.65096 $16.58305 $16.33305 $16.18305 Johnson County ................................................. $6.74168 $6.90337 $6.77140 $6.85143 $6.53594 Iowa City Community School District .................. 13.69999 13.86773 13.98935 13.95855 14.85629 Kirkwood............................................................ 1.05754 1.06125 1.08048 1.13174 1.20354 Other.................................................................. 0.32315 0.32784 0.32450 0.33036 0.30557 Total Tax Rate(3)............................................. $38.52756 $38.81115 $38.74878 $38.60513 $39.08439 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. 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. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 2018 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 2018 was $115,175,495. 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. For instance, the Iowa Legislature is currently considering varies proposals that would cap property tax revenues under certain circumstances. The impact this legislation would have upon the City's over-all financial position and its ability to fund essential services is uncertain. 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) reduced the maximum annual taxable value growth percent, due to revaluation of existing residential and agricultural property to 3%, (ii) assigned a "rollback" (the percentage of a property's value that is subject to tax) to commercial, industrial and railroad property of 90%, (iii) created a new property tax classification for multi -residential properties (apartments, nursing homes, assisted living facilities and certain other rental property) and assigned 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) exempted a specified portion of the assessed value of telecommunication properties. 19 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 subj ect 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 were 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. 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. The remainder of this page was left blank intentionally. 1 US Public Finance Weekly Credit Outlook, May 30, 2013, Moody's Investors Service. 20 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 audited financial statements of the City, including the audited financial statements for the fiscal year ended June 30, 2018 (the "2018 CAFR'). The 2018 CAFR has been audited by Bohnsack & Frommelt LLP, Certified Public Accountants, Moline, Illinois, (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 2018 CAFR; nor has the City requested that the Auditor consent to the use of the Excerpted Financial Information and the 2018 CAFR in this Official Statement. The inclusion of the Excerpted Financial Information and the 2018 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 2018 CAFR. Questions or inquiries relating to financial information of the City since the date of the 2018 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 2018 CAFR. The City's expects its General Fund balance for the fiscal year ending June 30, 2019 to decrease by approximately $2,800,000. The decrease is primarily due to capital improvement expenditures. The City has approved a budget for fiscal year 2020 with an anticipated increase to the General Fund balance of approximately $865,000. The remainder of this page was left blank intentionally. 21 City oflowa City, Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 STATEMENT OF NET POSITION GOVERNMENTAL ACTIVITIES(]) (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 Depreciation)......... TotalAssets....................................................................... DEFERRED OUTFLOWS OF RESOURCES:(2) Pension Related Deferred Outflows ......................................... $ 0 $ 6,767 $ 7,192 $ 13,131 $ 11,477 OPEB Related Deferred Outflows ............................................ 0 0 0 0 637 Total Deferred Outflows of Resources ................................. $ 0 $ 6,767 $ 7,192 $ 13,131 $ 12,114 LIABILITIES: AccountsPayable.................................................................... ContractsPayable................................................................... Accrued Liabilities................................................................... InterestPayable...................................................................... Deposits.................................................................................. Advances from Grantors.......................................................... Due to Other Governments...................................................... NotesPayable......................................................................... 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 Liability ............................ NotesPayable..................................................................... BondsPayable.................................................................... Total Liabilities................................................................... DEFERRED INFLOWS OF RESOURCES: Unavailable Revenues: $ 2,523 $ 2,296 Audited as of June 30 $ 2,127 $ 5,168 2014 2015 2016 2017 2018 $ 60,279 $ 63,571 $ 84,052 $111,030 $109,860 51,828 52,240 55,482 56,639 59,538 530 718 953 820 817 165 364 284 428 920 17,787 17,308 16,252 5,524 5,304 (11,066) (12,127) (13,688) (15,494) (16,069) 7,410 10,298 5,987 4,519 4,067 0 0 10 811 810 597 656 688 730 602 2,108 2,170 582 750 562 46,909 45,981 36,914 24,560 26,108 23 25 40 35 0 38,211 48,032 48,275 52,545 73,176 149,443 151,620 158,947 173,598 174,835 $364,224 $380,856 $394,778 $416,495 $440,530 DEFERRED OUTFLOWS OF RESOURCES:(2) Pension Related Deferred Outflows ......................................... $ 0 $ 6,767 $ 7,192 $ 13,131 $ 11,477 OPEB Related Deferred Outflows ............................................ 0 0 0 0 637 Total Deferred Outflows of Resources ................................. $ 0 $ 6,767 $ 7,192 $ 13,131 $ 12,114 LIABILITIES: AccountsPayable.................................................................... ContractsPayable................................................................... Accrued Liabilities................................................................... InterestPayable...................................................................... Deposits.................................................................................. Advances from Grantors.......................................................... Due to Other Governments...................................................... NotesPayable......................................................................... 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 Liability ............................ NotesPayable..................................................................... BondsPayable.................................................................... Total Liabilities................................................................... DEFERRED INFLOWS OF RESOURCES: Unavailable Revenues: $ 2,523 $ 2,296 $ 3,374 $ 2,127 $ 5,168 1,418 5,468 2,773 2,521 3,663 3,964 4,145 4,143 4,182 4,193 190 168 110 133 134 1,068 1,078 1,715 1,230 952 29 69 47 144 124 36 636 402 42 29 1,943 2,004 582 663 475 1,163 1,148 1,185 1,252 1,253 11,780 11,255 10,384 8,230 9,612 941 928 947 989 987 0 24,556 30,539 39,080 38,867 2,659 2,932 3,227 3,660 5,472 211 211 211 211 211 54,969 50,785 48,105 59,509 58,307 82,894 $107,679 $107,744 $123,973 $129,447 Pension Related Deferred Inflows .......................................... $ 0 $ 10,791 $ 3,740 $ 1,603 $ 1,565 OPEB Related Deferred Inflows ............................................ 0 0 0 0 246 Succeeding Year Property Taxes .......................................... 51,609 52,035 55,330 56,459 59,173 Notes..................................................................................... 11,523 11,422 11,226 0 0 Grants................................................................................... 0 0 12 0 0 Total Deferred Inflows of Resources .................................. 63,132 74,248 70,308 $58,062 60,984 NET POSITION: Net Investment in Capital Assets ............................................. $138,482 $153,729 $163,362 $183,651 $157,106 Restricted for or by: Employee Benefits................................................................. 1,713 1,593 1,671 2,810 3,119 Capital Projects..................................................................... 30,692 27,014 31,456 30,856 21,463 Debt Service.......................................................................... 6,718 6,921 6,463 7,221 8,423 Police.................................................................................... 529 510 458 349 283 Other Purposes..................................................................... 306 409 1,657 2,590 4,469 Grant Agreement................................................................... 0 0 449 3,850 3,733 Unrestricted............................................................................. 39,758 15,520 18,402 16,264 63,617 Total Net Position.............................................................. $218,998 $245AM $22.3.918 $242,591 $262,293 Note: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2014 through 2018. 22 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 STATEMENT OF ACTIVITIES GOVERNMENTAL ACTIVITIES(]) (Amounts Expressed in Thousands) FUNCTION/PROGRAMS: Governmental Activities: PublicSafety......................................................................... PublicWorks......................................................................... Culture and Recreation.......................................................... Community and Economic Development ............................... General Government............................................................. Interest on Long -Term Debt ................................................... Total Governmental Activities .............................................. 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................................................................................. Reassignment of Cable Television to Governmental Activities................................................................................ Total General Revenues and Transfers ............................... Changes in Net Position .................................................... Net Position Beginning of Year ................................................ Net Position End of Year ......................................................... Audited for the Year Ended June 30 2014 2015 2016 2017 2018 $ (18,609) $ (16,991) $ (15,969) $ (18,053) $ (20,466) (2,901) 8,350 998 6,746 (3,084) (15,349) (13,208) (13,535) (14,573) (15,189) (7,414) (6,101) (4,322) (6,264) (10,166) (4,657) (4,777) (4,988) (4,600) (5,338) (1,797) (1,517) (1,287) (1,481) (1,414) $(50,727) $(34,244) $(39,103) $(38,225) $(55,657) $ 50,551 $ 52,205 $ 53,114 $ 57,649 $ 59,046 6,745 1,057 1,079 1,137 1,046 967 851 764 726 684 780 902 874 939 976 466 1,048 2,080 1,583 1,547 1,031 1,188 1,045 1,397 2,368 973 135 218 2,151 140 1,651 5,518 4,464 3,369 3,656 4,353 (10,057) (6,395) (7,053) 1,814 6192 0 82 0 0 61,32 52,847 57,325 61,898 71,277 $ 10,598 $ 18,603 $ 18,222 $ 23,673 $ 15,620 207.600 $218198 187,093(2) $205 696 205.696 $2232 223,918 5247 591 246.593(2) $262213 Notes: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2014 through 2018. (2) Restated. The remainder of this page was left blank intentionally. 23 City oflowa City, Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 BALANCESHEET GENERAL FUND(]) (Amounts Expressed in Thousands) ASSETS: Equity in Pooled Cash and Investments ................................... Receivables: PropertyTaxes....................................................................... Accounts and Unbilled Usage ................................................. Interest................................................................................... Notes...................................................................................... Advances to Other Funds......................................................... Due from Other Governments................................................... PrepaidItem............................................................................. Assets Held for Resale............................................................. Restricted Assets: Equity in Pooled Cash and Investments .................................. TotalAssets...................................................................... LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES: Liabilities: AccountsPayable................................................................... Accrued Liabilities................................................................... Due to Other Governments..................................................... InterestPayable..................................................................... NotesPayable........................................................................ Liabilities Payable from Restricted Assets: Deposits.............................................................................. Advances from Grantors...................................................... Total Liabilities.................................................................. 30,047 30,141 21,277 10,268 1,904 85,521 $K,_416 WMB $1 lau M AZ5 $ 1,251 $ 1,328 Audited as of June 30 $ 1,191 $ 1,492 2014 2015 2016 2017 2018 $19,461 $19,001 $30,214 $32,500 $36,321 29,610 29,922 31,825 32,965 34,973 281 250 449 410 496 100 217 163 161 276 1,281 1,340 1,305 1,292 1,276 686 2,681 0 0 0 2,112 1,859 1,758 1,887 1,941 0 0 10 719 726 1,943 2,005 582 750 562 30,047 30,141 21,277 10,268 1,904 85,521 $K,_416 WMB $1 lau M AZ5 $ 1,251 $ 1,328 $ 1,376 $ 1,191 $ 1,492 823 887 1,141 1,321 1,391 36 312 29 38 29 36 37 0 4 5 1,943 2,004 582 663 475 1,030 1,072 1,710 1,224 947 0 27 0 7 113 5,119 5,667 4, 838 $4,448 4,452 DEFERRED INFLOWS OF RESOURCES: Unavailable Revenues: Succeeding Year Property Taxes .......................................... $29,486 $29,805 $31,739 $32,863 $34,764 Notes..................................................................................... 1,281 1,340 1,305 0 0 Grants................................................................................... 375 82 15 6 9 Other..................................................................................... 1.351 1,393 1.434 1.539 1,600 Total Deferred Inflows of Resources .................................... $32,493 $32,620 $34,493 $34,408 $36,373 FUND BALANCES: Nonspendable......................................................................... $ 69 $ 69 $ 69 $ 788 $ 793 Restricted................................................................................ 26,533 25,291 18,975 9,974 1,942 Committed............................................................................... 0 0 4,699 5,199 4,962 Assigned................................................................................. 3,400 4,483 1,143 1,342 1,437 Unassigned............................................................................. 17,907 19,286 23,366 24,793 28,516 Total Fund Balances.......................................................... $47,909 $49,129 $48,252 $42,096 $37,650 Total Liabilities, Deferred Inflows of Resources and Fund Balances.......................................................... $85521 $87.415 $87583 $8.0_952 $Z8 475 Note: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2014 through 2018 The remainder of this page was left blank intentionally. 24 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND(]) (Amounts Expressed in Thousands) EMPLOYEE RETIREMENT AND OTHER POST EMPLOYMENT BENEFIT OBLIGATIONS lmlfy [IX3.1 The City participates in two public pension systems, Iowa Public Employee's Retirement System (IPERS) and Municipal Fire and Police Retirement System of Iowa (MFPRSI). Summary descriptions of each Plan follow, for more detail as to each available see APPENDIX A - Note 7. In fiscal year 2018, pursuant to the IPERS' required rate, the City's employees contributed 5.95% of pay and the City contributed 8.93% for a total rate of 14.88%. The City's contributions to IPERS for the year ended June 30, 2018 were $2,696,017. The City's contribution to MFPRSI for year ended June 30, 2018 was $2,758,801. The City's share of the contributions, payable from the applicable funds of the City, is provided by a statutorily authorized annual levy of taxes without limit or restriction as to rate or amount. The City has always made its full required contributions to IPERS and MFPRSI. At June 30, 2018, the City reported a liability of $26,432,957 for its proportionate share of the IPERS net pension liability. The net pension liability was measured as of June 30, 2017 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The discount rate used to measure the total pension liability was 7%. 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. 25 Audited Fiscal Year Ended June 30 2014 2015 2016 2017 2018 REVENUES: Taxes........................................................................................ $ 31,388 $ 31,909 $ 32,229 $ 34,290 $ 35,363 Licenses and Permits .......................................... -................... 1,660 1,806 3,056 3,521 2,734 Intergovernmental..................................................................... 2,790 3,487 3,830 3,574 3,786 Charges for Service................................................................... 1,321 1,460 1,543 1,665 1,465 Fines and Forfeits...................................................................... 0 0 760 750 695 Use of Money and Property....................................................... 677 845 749 839 1,164 Miscellaneous............................................................................ 4,578 5,835 1,430 1,692 1,878 Total Revenues....................................................................... $42,414 $45,342 $43,597 $46,331 $47,085 EXPENDITURES: Current: Public Safety........................................................................... $ 20,802 $ 21,087 $ 20,967 $ 22,005 $ 22,762 Public Works........................................................................... 1,150 1,624 1,312 1,803 1,871 Cultural and Recreation........................................................... 12,687 11,698 12,038 12,890 13,099 Community and Economic Development ................................. 2,390 3,187 2,842 3,074 2,785 General Government............................................................... 6,680 7,093 5,479 5,471 5,550 Capital Outlay............................................................................ 3.255 3,333 1,651 1,463 2,124 Total Expenditures................................................................... $46,964 $48,022 $44,289 $46,706 $48,191 Excess (Deficiency) of Revenues Over (Under) Expenditures ....................... ..................................... - ....... ..... (4,550) (2,680) 692 375 (1,106 Other Financing Sources (Uses): Issuance of Debt....................................................................... $ 981 $ 0 $ 0 $ 0 $ 17 Sale of Capital Assets............................................................- 1,684 164 252 268 140 Premiums on Issuance of Bonds ............................................... 19 0 0 0 0 Transfers In............................................................................... 9,152 8,780 10,692 10,725 10,138 Transfers Out............................................................................ (3.992) (5,04 1( 1,12 1( 8,02 1� 3,635 Total Other Financing Sources and (Uses) .............................. 7,84 3,900 185 (7,030) (3,340 Net Change in Fund Balances ................................................... $ 3,294 $ 1,220 $ (877) $ (7,405) $ (4,446) Fund Balances, Beginning........................................................ $44,615 $47,909 $49,129 $49,501(2) $42,096 Fund Balances, Ending............................................................. $ 47 909 $ 37 650 Notes: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2014 through 2018. (2) Restated. EMPLOYEE RETIREMENT AND OTHER POST EMPLOYMENT BENEFIT OBLIGATIONS lmlfy [IX3.1 The City participates in two public pension systems, Iowa Public Employee's Retirement System (IPERS) and Municipal Fire and Police Retirement System of Iowa (MFPRSI). Summary descriptions of each Plan follow, for more detail as to each available see APPENDIX A - Note 7. In fiscal year 2018, pursuant to the IPERS' required rate, the City's employees contributed 5.95% of pay and the City contributed 8.93% for a total rate of 14.88%. The City's contributions to IPERS for the year ended June 30, 2018 were $2,696,017. The City's contribution to MFPRSI for year ended June 30, 2018 was $2,758,801. The City's share of the contributions, payable from the applicable funds of the City, is provided by a statutorily authorized annual levy of taxes without limit or restriction as to rate or amount. The City has always made its full required contributions to IPERS and MFPRSI. At June 30, 2018, the City reported a liability of $26,432,957 for its proportionate share of the IPERS net pension liability. The net pension liability was measured as of June 30, 2017 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The discount rate used to measure the total pension liability was 7%. 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. 25 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 OTHER POST -EMPLOYMENT BENEFITS (OPEB) The City operates one self-funded medical and dental plan for all employees, which is offered to current and retired employees and their dependents. Group insurance benefits are established under Iowa Code Chapter 509A.13. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. The following table shows the City's total OPEB liability: Total OPEB Liability Beginning of Year, as Restated ............................. $6,412,170 Changes for the year ServiceCost.......................................................................... 502,071 Interest................................................................................- 244,435 Difference Between Expected and Actual Experience ........... (376,818) Changes in Assumptions....................................................... 982,333 Benefit Payments.................................................................. (174.451) Net Changes......................................................................................... 1.177.570 Total OPEB Liability End of Year........................................................... $7,589,740 See APPENDIX A — Notes (7) and (8) herein for further discussion of the City's employee retirement benefit obligations. Defined Benefit Pension Plan — Municipal Fire and Police Retirement System of Iowa 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.mfprsi.org. Defined Benefit Pension Plan — Iowa Public Employee's Retirement System The City also contributes to the Iowa Public Employees' Retirement System ("IPERS"). The City's employees are provided with pensions through a cost-sharing multiple employer defined pension plan administered by IPERS. IPERS benefits are established under Iowa Code, Chapter 97B and the administrative rules thereunder. The City's employee who completed seven years of covered service or has reached the age of 65 while in IPERS covered employment becomes vested. If the City's employee retires before normal retirement age, the employee's monthly retirement benefit will be permanently reduced by an early retirement reduction. IPERS provides pension benefits as well as disability benefits to City employees and benefits to the employees' beneficiaries upon the death of the eligible employee. Copies of IPERS annual financial report may be obtained from www.ipers.org. However, the information presented in such financial reports or on such websites is not incorporated into this Official Statement by any reference. Although the actuarial contribution rates are calculated each year, the contribution rates were set by state law through June 30, 2012 and did not necessarily coincide with the actuarially calculated contribution rate. As a result, from June 30, 2002 through June 30, 2013, the rate allowed by statute was less than the actuarially required rate. Effective July 1, 2012, as a result of a 2010 law change, IPERS contribution rates for the City and its employees are established by IPERS following the annual actuarial valuation (which applies IPERS' Contribution Rate Funding Policy and Actuarial Amortization method.) State statute, however, limits the amount rates can increase or decrease each year to one (1) percentage point. Therefore, any difference between the actuarial contribution rates and the contributions paid is due entirely to statutorily set contributions that may differ from the actual contribution rates. As a result, while the contribution rate in the fiscal year ended June 30, 2017 equaled the actuarially required rate, there is no guarantee, due to this statutory limitation on rate increases, that the contribution rate will meet or exceed the actuarially required rate in the futures. 26 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 The following table sets forth the contributions made by the City and employees to IPERS for the period indicated. 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 UAAL 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 ended June 30, 2014 through, and including, 2018 (collectively, the "IPERS CAFRs (2014-2018)"), and the actuarial valuation reports provided to IPERS by Cavanaugh MacDonald Consulting, LLC (collectively, the "IPERS Actuarial Reports (2014-2018)"). Additional information regarding IPERS and its latest actuarial valuations can be obtained by contacting IPERS administrative staff. Funded Unfunded Actuarial Ratio Accrued Liability (Actuarial Valuation Actuarial Value Market Value Actuarial Accrued (Actuarial Value) Value) Date of Assets ral of Assets rbl Liability rcl rcl-[al a / c 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% 2018..... 31,827,755,864 32,314,588,595 38,642,833,653 6,815,077,789 82.36% Source: IPERS Reports. Unfunded % of Payroll % of Payroll Fiscal Year Paid by the City Paid by Employee 2015 ........................... 8.93% 5.95% 2016 ........................... 8.93% 5.95% 2017 ........................... 8.93% 5.95% 2018 ........................... 8.93% 5.95% 2019 ........................... 9.44% 6.29% 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 UAAL 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 ended June 30, 2014 through, and including, 2018 (collectively, the "IPERS CAFRs (2014-2018)"), and the actuarial valuation reports provided to IPERS by Cavanaugh MacDonald Consulting, LLC (collectively, the "IPERS Actuarial Reports (2014-2018)"). Additional information regarding IPERS and its latest actuarial valuations can be obtained by contacting IPERS administrative staff. Funded Unfunded Actuarial Ratio Accrued Liability (Actuarial Valuation Actuarial Value Market Value Actuarial Accrued (Actuarial Value) Value) Date of Assets ral of Assets rbl Liability rcl rcl-[al a / c 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% 2018..... 31,827,755,864 32,314,588,595 38,642,833,653 6,815,077,789 82.36% Source: IPERS Reports. Unfunded Funded UAAL as a Actuarial Ratio Percentage of Accrued Liability (Market Covered (Market Value) Value) Covered (Actuarial Value) rcl-rbl 11?1M Payroll rdl b -a / c $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% 6,328,245,058 83.62% 7,983,219,527 85.37% According to IPERS, the market value investment return on program assets is as follows: Fiscal Year Ended Investment June 30 Return % 2014............................................................ 15.88% 2015............................................................ 3.96% 2016............................................................ 2.15% 2017............................................................ 11.70% 2018............................................................ 7.97% Source: IPERS Reports Detailed information about the pension plan's fiduciary net position is available in the separately issue IPERS financial report which is available on IPERS' website at www.ipers.org. Bond 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 IPERS 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. 27 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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. 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 Exemption Federal tax law contains a number of requirements and restrictions that apply to the Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of Bond proceeds and facilities financed with Bond proceeds, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the interest on the Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. W. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 Subject to the City's compliance with the above referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Bonds is excludable from gross income of the owners thereof for federal income tax purposes. Interest on the Bonds is not an item of tax preference for federal alternative minimum tax purposes, but is included in the adjusted current earnings of corporations for purposes of determining the federal alternative minimum tax applicable to taxable years beginning before January 1, 2018. Prospective purchasers of the Bonds should be aware that ownership of the Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Bond Counsel will not express any opinion as to such collateral tax consequences. Prospective purchasers of the Bonds should consult their tax advisors as to collateral federal income tax consequences. The interest on the Bonds is not exempt from present Iowa income taxes. Ownership of the Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Bonds. Prospective purchasers of the Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. NOT Qualified Tax -Exempt Obligations The City will NOT designate the Bonds as "qualified tax-exempt obligations". Tax Accounting Treatment of Discount and Premium on Certain Bonds The initial public offering price of certain Bonds may be less than the amount payable on such 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 hi addition to the income tax consequences described above, potential investors should consider the additional tax consequences of the acquisition, ownership, and disposition of the 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 Bonds. 29 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 Bonds. If an audit is commenced, under current procedures the Service may treat the City as a taxpayer and the Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Bonds until the audit is concluded, regardless of the ultimate outcome. 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 Current and future legislative proposals, including some that carry retroactive effective dates, if enacted into law or clarification of the Code may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent owners of the Bonds from realizing the full current benefit of the tax status of such interest. Also, future legislative proposals, or clarification of the Code, may affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding pending or proposed tax legislation, as to which Bond Counsel expresses no opinion. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any proposed or pending legislation, regulatory initiatives or litigation. Enforcement Owners of the 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 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 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 Bonds, there is no provision for acceleration of maturity of the principal of the Bonds. Consequently, the remedies of the owners of the 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 Bonds cannot foreclose on property within the boundaries of the Issuer or sell such property in order to pay the debt service on the Bonds. In addition, the enforceability of the rights and remedies of owners of the Bonds may be subject to limitation as set forth in Bond Counsel's opinion. The opinion to be delivered concurrently with the delivery of the 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. 30 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 Bonds. 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 BONDS (INCLUDING BUT NOT LIMITED TO THOSE LISTED ABOVE). 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 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 Bonds due June 1, 2020 - 2025 inclusive, are not subject to optional redemption. Bonds due June 1, 2026 - 2029, inclusive, are callable in whole or in part on any date on or after June 1, 2025, at a price of par and accrued interest. If selection by lot within a maturity is required, the Registrar shall designate the Bonds to be redeemed by random selection of the names of the registered owners of the entire annual maturity until the total amount of Bonds to be called has been reached. 31 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 If less than all of the maturity is called for redemption, the City will notify DTC of the particular amount of such maturity to be redeemed prior to maturity. DTC will determine by lot the amount of each Participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. Thirty days' written notice of redemption shall be given to the registered owner of the 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. 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. 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", 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. A legal opinion in substantially the form set forth 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. 32 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 INVESTMENT RATING 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. UNDERWRITING The Bonds were offered for sale by the City at a public, competitive sale on May 7, 2019. The best bid submitted at the sale was submitted by (the "Underwriter"). The City awarded the contract for sale of the Bonds to the Underwriter at a price of $ (reflecting the par amount of $ , plus a reoffering premium of $ , and less an Underwriter's discount of $ ). The Underwriter has represented to the City that the 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 We have examined this Official Statement dated April 25, 2019, for the $12,535,000* General Obligation Bonds, Series 2019, believe it to be true and correct and will provide to the purchaser of the Bonds at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge, information 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. /s/ DENNIS BOCKENSTEDT Director of Finance CITY OF IOWA CITY Johnson County, Iowa *Subject to change. 33 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 APPENDIX A CITY OF IOWA CITY JOHNSON COUNTY, IOWA FISCAL YEAR 2018 COMPREHENSIVE ANNUAL FINANCIAL REPORT w'- -774 W,-- 611 COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF IOWA CITY, IOWA FOR THE FISCAL YEAR ENDED JUNE 309 2018 PREPARED BY: FINANCE DEPARTMENT CITY OF IOWA CITY, IOWA h '', .'�i, � �-� -.. Introductory Section Tab CITY OF IOWA CITY, IOWA TABLE OF CONTENTS June 30, 2018 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.................................................................................................................. 33 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 ............ 39 Statement of cash flows — proprietary funds................................................................................ 40 Statement of fiduciary assets and liabilities................................................................................. 41 Notes to financial statements.......................................................................................................... 42 REQUIRED SUPPLEMENTARY INFORMATION Budgetary comparison schedule — budget and actual — all governmental funds and enterprise funds — budgetary basis.................................................................................... 84 Budgetary comparison schedule — budget to GAAP reconciliation ................................... 86 Note to required supplementary information — budgetary reporting ................................... 87 Schedule of the City's proportionate share of MFPRSI net pension liability ........................ 89 Schedule of City's MFPRSI contributions............................................................... 90 Notes to required supplementary information — MFPRSI pension liability ......................... 92 Schedule of the City's proportionate share of IPERS net pension liability .......................... 93 Schedule of City's IPERS contributions.................................................................. 94 Notes to required supplementary information — IPERS pension liability ........................... 96 Required supplementary information — schedule of changes in the City's total OPEB liability, related ratios and notes.................................................................................... 98 COMBINING FUND STATEMENTS Combining balance sheet — nonmaj or governmental funds............................................................ 100 Combining statement of revenues, expenditures, and changes in fund balances — nonmajor governmentalfunds...................................................................................................................... 101 Combining statement of net position — internal service funds ........................................................ 104 Combining statement of revenues, expenses, and changes in fund net position — internal service funds............................................................................................................................................. 105 1 CITY OF IOWA CITY, IOWA TABLE OF CONTENTS June 30, 2018 Page COMBINING FUND STATEMENTS (continued) Combining statement of cash flows — internal service fund............................................................ 106 Statement of changes in assets and liabilities — agency funds......................................................... 108 STATISTICAL SECTION (UNAUDITED) Netposition by component................................................................................................................. 111 Changesin net position...................................................................................................................... 112 Fund balances — governmental funds................................................................................................. 114 Changes in fund balances — governmental funds............................................................................... 115 General government tax revenues by source...................................................................................... 116 Assessed and taxable value of property.............................................................................................. 117 Property tax rates — direct and overlapping governments.................................................................. 118 Property tax budgets and collections.................................................................................................. 119 Principaltaxpayers............................................................................................................................. 120 Principal water system customers...................................................................................................... 122 Sales history and total water charges.................................................................................................. 123 Principal sewer system customers...................................................................................................... 124 Sales history and total sewer charges................................................................................................. 125 Ratios of outstanding debt by type..................................................................................................... 126 Ratios of general obligation bonded debt to assessed value and net bonded debt per capita ............. 127 Ratio of annual debt service expenditures for general bonded debt to total general governmental expenditures..................................................................................................................................... 128 Computation of direct and overlapping debt...................................................................................... 129 Legal debt margin information........................................................................................................... 130 General obligation debt annual maturity schedule............................................................................. 131 Schedule of revenue bond coverage................................................................................................... 132 Revenue debt annual maturity schedule............................................................................................. 133 Revenue debt annual maturity by funding source.............................................................................. 134 Demographic and economic statistics................................................................................................ 136 Principalemployers............................................................................................................................ 137 Full-time equivalent city government employees by function........................................................... 138 Operating indicators by function........................................................................................................ 139 Capitalassets by function................................................................................................................... 140 COMPLIANCE SECTION Independent auditor's report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government AuditingStandards............................................................................................................................. 141 Independent auditor's report on compliance for each major federal program and report on internal control over compliance required by the Uniform Guidance............................................................. 143 Schedule of expenditures of federal awards....................................................................................... 145 Notes to the schedule of expenditures of federal awards................................................................... 148 Schedule of findings and questioned costs......................................................................................... 149 December 11, 2018 To the Citizens, Honorable Mayor, Members of the City Council and City Manager City of Iowa City, Iowa I t l _Z _ -Arjht k:_uim 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, 2018 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. Bohnsack & Frommelt, 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, 2018. 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 494 full-time and 43 part-time permanent municipal employees and 404 temporary employees, including a police force of 83 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. 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 29,700 employees. The University of Iowa had an enrollment in fall 2018 of 32,948 students, which is a decrease of 616 students from a record high of 33,564 students in the fall of 2017. The academic and research missions of the University, along with the health care services provided at its hospitals and clinics, have an extremely positive economic impact on the area. The City also has a significant number of national and international businesses, including Fortune 500 companies: ACT Inc., NCS Pearson, and Procter & Gamble. 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 in this new facility is approximately $100 million. Overall, the continued economic development efforts with the Iowa City and Coralville Chambers of Commerce, private interests, the University of Iowa, other surrounding communities, and the Iowa City Area Development Group, have produced positive results with the retention and expansion of businesses. In addition, Iowa's Creative Corridor is a seven -county alliance surrounding Iowa City and has been identified as one of the major growth areas for new business development in the State of Iowa. This Corridor gives employers workforce access to a region uniquely Iowan, founded with a manufacturing heritage, but actively seeking new frontiers and opportunities in information technology, biotechnology and bioprocessing, renewable energy, insurance and financial services, advanced manufacturing, and educational services. Continued developments within Iowa City and the region have a favorable impact upon the City's economy. As a whole, the City's economy continues to grow. 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 2.2% for the month of June 2018, as compared to 2.7% for the State of Iowa, and 4.0% 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 157 new single-family houses in 2017 as compared to 172 in 2016; multi -family dwelling units added during fiscal year 2017 was 203, compared to 556 in 2016; and mixed commercial/residential developments added 150 dwelling units in 2017 versus 340 residential units in 2016. Altogether these housing additions totaled 510 units valued at $99,676,806 in 2017 versus a total of 1,068 units valued at $206,478,670 in 2016. In addition to the decrease in residential construction in 2017, the City also had a decrease in commercial construction. The value of permits for commercial construction decreased by $57,651,210 to $5,005,776 from 2016 to 2017; however, the value of remodeling permits for residential and commercial properties increased by $14,578,688 to $107,666,214 from 2016 to 2017. Although there was a decrease in building permit issuance in 2017 versus 2016, the 2016 building permit issuance was an all-time high for the City. 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 2017 is estimated to be 75,798 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, helps to insulate the City from any significant negative economic impacts of any recessions. 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 Kirkwood Community College, 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: 1. Promote a Strong and Resilient Local Economy • Undertake a comprehensive assessment of the current public transit system and implement changes to assure that the service best meets the needs of the entire community • Effectively market and grow the local food economy • Through cooperation with the Iowa City School District, Iowa Workforce Development, Kirkwood Community College, Iowa Works, and others, increase opportunities for marginalized populations and low-income individuals to obtain access to skills training and good jobs • Work with Procter & Gamble and impacted supply chain companies, local economic development organizations, and labor unions to respond effectively to the company's decision to terminate its local production of beauty care products 2. Encourage a Vibrant and Walkable Urban Core • Collaborate with the University of Iowa on its redevelopment of University -owned property located in the Riverfront Crossings District, and on improving the quality, accessibility, and use of the Iowa River Corridor • Preserve important parts of Iowa City's history by considering the designation of additional buildings as historic landmarks, and by considering the creation of a historic preservation district for part of the downtown after consulting with stakeholders • Evaluate existing strategies and consider additional actions to address the need for reinvestment in the city's existing private housing stock 3. Foster Healthy Neighborhoods throughout the City • Modify the existing Affordable Housing Action Plan to include new strategies to improve the availability and affordability of housing in Iowa City • Embed the "Missing Middle" concept into the City's land development practices by adopting a Form Based Code for at least one (preferably two) of our neighborhoods • Ensure the next two budgets contain sufficient funds to make meaningful progress toward achieving the goals of the Bicycle Master Plan and Parks Master Plan • Complete an analysis of traffic accident data and identify actions to improve the safety of our roadways for motorists, bicyclists, and pedestrians 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 • Experiment with innovative ways of engaging with diverse populations in person and on social media • Improve collaborative problem -solving with governmental entities in the region on topics of shared interest • Improve relationships with the executive branch and legislature by reaching out to legislators and other elected officials and working with City lobbyists 6. Promote Environmental Sustainability • Adopt an effective Climate Action and Adaptation Plan and ensure the next two budgets contain sufficient funds to facilitate achieving its goal • Support efforts to increase the reach of the Parks and Recreation Foundation 7. Advance Social Justice and Racial Equity • Support organizations and efforts that provide services to people experiencing and recovering from trauma and crisis related to mental health and substance abuse • Consider a policy to limit city business to vendors that pay all employees a wage of $10.10 or higher • Explore expanded use of a racial equity toolkit within City government, embedding it within city department and Council levels • Consider elevating hourly staff wages to $15/hour or more within two years 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 features 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 park 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 through 3 of the park began in 2017 and are expected to be completed during 2018. On the north side of the Riverfront Crossing area, the University of Iowa recently constructed the Voxman School of Music. On the adjacent corner, the redevelopment of an empty lot is under construction which will include a 7 -story, mixed-use building with 40 apartment units, retail space on the street level, and office space on the second floor. An adjacent building will house a 7 -story extended stay hotel. The estimated cost of these developments is approximately $40 million and are expected to be completed in 2019. There have also been numerous public and private developments that have recently been completed in this area including a 12 -story, $33 million Hilton Garden Inn, an $102.5 million mixed-use development with a 14 -story tower and a 15 -story tower that will include the Hyatt Place hotel, apartments, retail space, and office space, and the $50-$60 million redevelopment of a lumber store into a 40,000 square foot brewery, restaurant, and tap room which will be flanked by nearly 300 dwelling units. The City also completed construction of a $15.3 million, 600 space parking garage in April 2017 to service growth in this area, which subsequently had 28 new townhomes constructed around it. 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 construction and are expected to be completed in 2019. Other buildings in the downtown that are undergoing or have recently completed major re- development include the Wilson Building and public space which 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 is currently under construction. Also under construction is the redevelopment of the City Hall parking lot and neighboring church into 126 residential units, parking, and commercial space. The project is estimated to cost $33.4 million. Both of these projects are expected to be completed in 2019. 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 in the area recently completed was a $7.4 million senior housing complex with 40 units which was built on the former site of a dilapidated commercial structure. Also, currently under construction is the consolidation and redevelopment of two older gas stations located on the primary intersection in this district into a new gas station/marketplace. 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 and additional multi - residential housing units were also constructed or renovated. 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 began in 2018 and will continue into 2019. Near 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 beginning in 2018 and anticipated completion in 2019. Long-term Financial Planning It is management's intent to support the major City Council initiatives through budget appropriations, departmental operations, and employee development so that the organization as a whole is moving in the same direction. A significant influence in the preparation of the three-year financial plan (FY2018 — FY2020) 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 were 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 $17,181,000 between fiscal year 2015 to fiscal year 2024, and the maximum reimbursement from the State during that time period would be $16,572,000 for a net loss in revenues of $609,000. For fiscal years 2015 through 2018, the City received actual State "backfill" payments for the commercial and industrial rollback totaling $6,257,898. 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 $21,560,000 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 $15,945,500, 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 from this provision in fiscal year 2017 was $946,740; the estimated loss in fiscal year 2018 is $1,200,714. Due to the passage of SF295, the City estimates its net revenue losses to be $5,872,655 for fiscal years 2015 through 2018. The cumulative net revenue loss from fiscal years 2015 through 2024 is estimated to be $38,115,000. 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. In fiscal year 2013, the City's property tax levy rate was $17.269 per $1,000 of assessed value. The property tax levy rate has been reduced for five consecutive years to $16.183 in fiscal year 2019. This has been a reduction of $1.086 per $1,000 of assessed value or 6.29% over that time period. In looking at expenses for the FY 18 — FY20 Financial Plan and FY19 operating budget, the City will generally experience increased expenditures; however, at a modest pace. Bargaining unit cost -of -living wage increases are approximately 2.00% to 2.60% each year; however, the budgeted full time equivalents (FTE) has decreased from 607.66 in FY15 to 605.54 in FY19. In addition, public safety pension contribution rates increased slightly in FY19 but are projected to decrease slightly in FY20. The City has averaged an increase in its health insurance premium rates of approximately 3.11% over the previous six years, and is not projecting any dramatic changes to this trend in FY19 or FY20. Employee contributions, deductibles, and out-of-pocket maximums are expected to increase in both FY19 and FY20. In balancing the budget for the three-year period, the City attempted to mitigate the growth of costs while continuing to provide high quality services by identifying and eliminating redundancies within the organization, examining existing and potential new revenue sources, strategically funding new programming and economic development to ensure strong property values, providing for necessary improvements to existing infrastructure, and upholding fiscal integrity by maintaining adequate cash reserves. 10 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, 2017. 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-three 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, 2018. 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 seventh consecutive year the City has received this award. 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, 2018. 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, 2017 Executive Director/CEO 12 City of Iowa City Organization Chart Community City Council Com i rt I I City dttorney I City (Manager I I City (Clerk I I ib Airport City Attorney City Manager City Clerk Library Airport Operations City Attorney City Manager City Clerk Library Operations Communications Office Library Foundation Human Resources Human Rights Economic Development Fire Parks & Senior Police Recreation Center Administration Administration Emergency Operations Support Services Administration Senior Center Fire Prevention Field Operations Recreation Operations Training Park Maintenance Cemetery Finance Administration Accounting Purchasing Revenue Risk Management Information Technology Services Neighborhood & Development Services Administration Development Services Neighborhood Services Metropolitan Planning Organization of Johnson County 13 Public Works Administration Engineering Streets Wastewater Water Resource Management Equipment Transportation Services 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, 2018 ELECTED OFFICIALS Jim Throgmorton Pauline Taylor Rockne Cole John Thomas Kingsley Botchway II Susan Mims Mazahir Salih 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 14 Ashley Monroe Tracy Hightshoe Susan Craig Ron Knoche Darian Nagle Gamm LaTasha DeLoach John Grier Juli Seydell Johnson Dennis Bockenstedt Jody Matherly Term Expires January 2, 2020 January 2, 2020 January 2, 2020 January 2, 2020 January 2, 2022 January 2, 2022 January 2, 2022 Date of Hire November 28, 2011 July 10, 2000 March 18, 1996 December 1, 2016 August 27, 2001 July 28, 1975 April 28, 1999 May 21, 2008 July 31, 2018 August 10, 1992 January 4, 2016 February 15, 2013 January 23, 2017 Financial Section Tabs Bohns,ack & Frommeit LLP Certified Public Accountants Independent Auditor's Report To the Honorable Mayor and Members of City Council City of Iowa City, Iowa 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, as of and for the year ended June 30, 2018, 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 financial 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 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, 2018, 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 As discussed in Note 14 to the basic financial statements, the City implemented Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. As a result, the City's net positions for governmental activities and business -type activities, and the aggregate remaining fund information has been restated. 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, budgetary comparison information, schedule of changes in the City's total OPEB liability and related ratios, schedules of the City's proportionate share of the net pension liabilities for pension retirement systems, and schedules of the City's contributions for pension retirement systems on pages 19-29 and 84-98, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual nonmajor fund financial statements, schedule of expenditures of federal awards as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and the other information, including the introductory and statistical sections, are presented for purposes of additional analysis and are not a required part of the basic financial statements. 16 The combining and individual nonmajor fund financial statements and 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 supplementary information of the combining and individual nonmajor fund financial statements and schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the basic financial statements as a whole. 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 it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 11, 2018 on our consideration of the City'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 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 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. Moline, Illinois December 11, 2018 17 (This page left blank intentionally.) 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, 2018. 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, 2018 by $651,667,000 (net position). Of this amount, $136,743,000 (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 $21,828,000 during the fiscal year. Governmental activities increased by $15,620,000 and business -type activities increased by $6,208,000. • At the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $101,810,000, a decrease of $4,571,000 in comparison with the prior year. Of this total amount, approximately $28,478,000 or 28.0% 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 $28,516,000 or 59.2% 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. 19 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 ou flows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements and is typically the basis that is used in developing the next annual budget. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison. The City has six major governmental funds: General Fund, Other Shared Revenue and Grants Fund, Employee Benefits Fund, Other Construction 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 government -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 internally among the City's various functions. The City has four Internal Service Funds: Equipment Maintenance, Central Services, Loss Reserve, and Information Technology. Because these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the government -wide financial statements. Proprietary funds financial statements provide the same type of information as the government -wide financial statements, only in more detail. Parking, Transit, Wastewater Treatment, Water, Sanitation, Stormwater and Housing Authority are considered to be major funds and are reported individually throughout the report. The only non -major enterprise fund, Airport, is listed as non -major on the basic proprietary fund financial statements. 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 — 40 of this report. 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. 20 The basic fiduciary funds financial statements can be found on page 41. 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 42 - 82 of this report. Other Information: The combining statements referred to in the above paragraphs in connection with non - major governmental 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 $651,667,000 at the close of the fiscal year ended June 30, 2018. 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, 2018 (amounts expressed in thousands) 21 Governmental Business -type activities activities Total 2017 2017 2017 2018 (not restated) 2018 (not restated) 2018 (not restated) Current and other assets $ 192,519 $ 190,352 $ 120,389 $ 119,968 $ 312,908 $ 310,320 Capital assets 248,011 226,143 335,893 335,064 583,904 561,207 Total assets 440,530 416,495 456,282 455,032 896,812 871,527 Deferred outflows ofresources 12,114 13,131 2,806 2,345 14,920 15,476 Longterm liabilities outstanding 114,709 112,931 62,121 68,385 176,830 181,316 Current and other liabilities 14,738 11,042 6,730 4,379 21,468 15,421 Total liabilities 129,447 123,973 68,851 72,764 198,298 196,737 Deferred inflows of resources 60,984 58,062 783 799 61,767 58,861 Net position: Net investment in capital assets 157,106 183,651 294,109 285,912 451,215 469,563 Restricted 41,490 47,676 22,219 21,238 63,709 68,914 Unrestricted 63,617 16,264 73,126 76,664 136,743 92,928 Total net position $ 262,213 $ 247,591 $ 389,454 $ 383,814 $ 651,667 $ 631,405 21 A portion of the City's net position, $63,709,000 or 9.8%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of the unrestricted net position, $136,743,000 or 21.0%, 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, 2018, 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 FYI 8's operation. Governmental Activities: Governmental activities increased the City's net position by $15,620,000. 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 FY18 were $88,464,000. Governmental activities are primarily funded through taxes, $61,752,000 or 69.8%, and grants and contributions, $11,704,000 or 13.2%. Taxes increased from the prior year by $1,301,000, mostly due to increased property taxes which was due to an increase in the taxable value of all property. Grants and contributions decreased from prior year by $9,076,000 which is due to City's expenses for a large flood mitigation project that were reimbursed in the prior year. Expenses for governmental activities totaled $74,658,000. Governmental activities are tracked by function including Public Safety, Public Works, Community and Economic Development, Culture and Recreation, and General Government. In FY18, Public Safety accounted for the highest portion of governmental expenses, $25,191,000 or 33.7%, and increased over the prior year due to increases in salaries and benefits. Culture and Recreation expenses of $16,363,000 or 21.9% made up another large portion of the governmental expenses and increased over the prior year due mainly to an increase in pension expense. Public Works expenses of $12,813,000 or 17.2% made up the third highest portion of governmental expenses and increased due to increases in salaries and benefits. Business -type Activities: Business -type activities increased the City's total net position by $6,208,000. The increase in net position was primarily from the Parking and Transit funds. The increase in Parking is due to the sale of land. The increase in Transit is due to grants to purchase buses. For all business -type activities, revenues exceeded expenses by $8,022,000. Revenues for business -type activities totaled $65,014,000. The primary revenue source for business -type activities is charges for services, $42,208,000 or 64.9%. In addition for FY18, the City's business type -activities had a significant portion, $18,416,000 or 28.3%, 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 FY18 were $56,992,000. Wastewater Treatment represented the highest portion of business -type activities, $11,392,000 or 20.0%, with Housing Authority, $9,535,000 or 16.7%, Water, $9,472,000 or 16.6%, Sanitation, $9,408,000 or 16.5%, and Transit, $8,071,000 or 14.2%, making up the remainder of the majority of business -type activities expenses. 22 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 2017 2017 2018 (not restated) 2018 (not restated) 2018 (not restated) Revenues: Program Revenues: Charges for services $ 7,297 $ 8,412 $ 42,208 $ 41,231 $ 49,505 $ 49,643 Operating grants and contributions 10,245 10,828 11,230 10,836 21,475 21,664 Capital grants and contributions 1,459 9,952 7,186 4,799 8,645 14,751 General Revenues: Property takes 59,046 57,649 - - 59,046 57,649 Other taxes 2,706 2,802 - - 2,706 2,802 Grants and contributions not restricted to specific purposes 1,547 1,583 - - 1,547 1,583 Earnings on investments 2,368 1,397 1,496 938 3,864 2,335 Gain on disposal of capital assets 140 2,151 2,438 69 2,578 2,220 Other 3,656 3,369 456 1,260 4,112 4,629 Total revenues 88,464 98,143 65,014 59,133 153,478 157,276 Expenses: Public safety 25,191 24,002 - - 25,191 24,002 Public works 12,813 12,032 12,813 12,032 Culture and recreation 16,363 15,525 16,363 15,525 Community and economic development 12,019 8,253 - 12,019 8,253 General government 6,858 6,124 6,858 6,124 Interest on long-term debt 1,414 1,481 - - 1,414 1,481 Wastewater treatment - - 11,392 11,233 11,392 11,233 Water 9,472 8,921 9,472 8,921 Sanitation 9,408 9,123 9,408 9,123 Housing authority 9,535 8,798 9,535 8,798 Parking 5,590 4,620 5,590 4,620 Airport 1,680 1,402 1,680 1,402 Stormwater 1,844 2,432 1,844 2,432 Transit - - 8,071 7,263 8,071 7,263 Total expenses 74,658 67,417 56,992 53,792 131,650 121,209 Change in net position before transfers 13,806 30,726 8,022 5,341 21,828 36,067 Transfers 1,814 (7,053) (1,814) 7,053 - - Change in net position 15,620 23,673 6,208 12,394 21,828 36,067 Net position beginning ofyear, as restated 246,593 223,918 383,246 371,420 629,839 595,338 Net position end of year $ 262,213 $ 247,591 $ 389,454 $ 383,814 $ 651,667 $ 631,405 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 FY2018 Revenue by Source Misc. Charges for Other Taxes Other 3% services 7% 8% Property taxes 67% Grants and Contributions 15% Business-Type Activities FY2018 Revenue by Source Misc. Other Grants and 7% Contributions 1 28% Charges for services 65% 24 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, 2018, the City's governmental funds reported combined ending fund balances of $101,810,000, a decrease of $4,571,000 in comparison with the prior year. Of this total amount, $28,478,000 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 $65,975,000 or 64.8% contains external restraints on its use. The committed and assigned fund balances of $4,962,000 or 4.9% and $1,437,000 or 1.4%, respectively, have been identified by the City to be used for specific purposes. The nonspendable fund balance is $958,000 or 0.9%, 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, 2018, the unassigned fund balance of the General Fund was $28,516,000 while General Fund's total fund balance was $37,650,000. 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 59.2% of total General Fund expenditures of $48,191,000, while total fund balance represents 78.1% of that same amount. During the current fiscal year, the fund balance of the City's General Fund decreased by $4,446,000. This is due to transfers out to other funds. The fund balance in the Bridge, Street, and Traffic Control Construction Fund was $15,098,000, a decrease of $439,000. 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 $26,752,000, a decrease of $604,000. 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 transfers out to other funds. The ending fund balance of the Debt Service Fund was $8,609,000, an increase of $853,000, 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 $2,847,000, an increase of $326,000 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 $373,385,000, an increase in net position of $5,633,000. 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, $294,109,000 is net investment in capital assets. Unrestricted net position totaled $57,057,000, a decrease of $4,113,000 compared to the previous year. The Internal Service funds showed net position totaling $40,949,000 as of June 30, 2018, an increase of $1,472,000 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 $7,592,000 or 5.2% to a total of $152,606,000 and the expenditure budget by $74,315,000 or 42.9% to a total of $247,645,000. 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, 2018 amounts to $583,904,000, 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, 2018 increased by $21,868,000 for governmental activities compared to the prior year and increased by $829,000 for business - type activities from the prior year. The following table reflects the $583,904,000 investment in capital assets, net of accumulated depreciation. City of Iowa City's Capital Assets (net of depreciation) (amounts expressed in thousands) 27 Gove rnme ntal Business -type Activities Activitie s Total 2018 2017 2018 2017 2018 2017 Land $ 30,894 $ 29,778 $ 30,317 $ 30,737 $ 61,211 $ 60,515 Buildings 38,998 39,464 69,855 73,297 108,853 112,761 Improvements other than buildings 3,766 3,954 4,220 4,341 7,986 8,295 Machinery and equipment 17,279 16,686 10,396 7,470 27,675 24,156 Infrastructure 114,792 113,494 205,809 209,505 320,601 322,999 Construction in progress 42,282 22,767 15,296 9,714 57,578 32,481 Total $ 248,011 $ 226,143 $ 335,893 $ 335,064 $ 583,904 $ 561,207 27 Major capital asset events during the current fiscal year included the following: Work was completed for Phase 1 of the Riverfront Crossings Park. This park was constructed on the old wastewater plant site and it will also serve as a floodable area/wetlands area. The construction in progress balance at the beginning of the year was $382,000. Additional expenses of $2,727,000 were added in FY 18. The total cost of the project that was capitalized was $3,109,000 and is funded primarily by the state. The Iowa Flood Mitigation Board approves funding for flood mitigation projects using either sales tax increments or funds appropriated by the General Assembly. Expenses for a variety of street and bridge construction were moved into construction in progress at the end of FYI for a total balance of $48,008,000. This construction in progress includes $46,356,000 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 $94,730,000. Of this amount, $51,880,000 comprises debt backed by the full faith and credit of the City. $4,435,000 or 8.5% of these bonds is debt that will be paid with Tax Increment Financing revenues. $42,850,000 represents revenue bonds secured solely by specific revenue sources. City of Iowa City's Outstanding Debt General Obligation and Revenue Bonds (amounts expressed in thousands) Governmental B us ine s s -type Activities Activitie s 2018 2017 2018 2017 General obligation bonds $ 51,880 $ 51,645 $ - $ - Revenue bonds 15,065 15,200 27,785 32,820 Total $ 66,945 $ 66,845 $ 27,785 $ 32,820 2018 $ 51,880 42,850 $ 94,730 Total 2017 $ 51,645 48,020 $ 99,665 The City issued $11,995,000 of General Obligation bonds during FYI 8. This increase in debt was offset by the retirement of debt for a net decrease of City's total bonded debt by $4,935,000. 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, 2018 were as follows: General obligation bonds Wastewater treatment revenue bonds Water revenue bonds Aaa Aa2 Aa2 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 $274,723,000. With outstanding debt applicable to this limit of $92,432,000 we are utilizing 33.6% of this limit. More detailed information on debt administration is provided in Note 6 of the financial statements. 28 Economic Factors and Next Year's Budget and Rates 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 budget where expenditures exceed revenues by $2.3million in the General Fund for FY19 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 3.229 Employee Benefits Levy 3.344 Transit Levy 0.950 Liability Insurance Levy 0.290 Library Levy 0.270 Total City Levy $ 16.183 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, 2018 (amounts expressed in thousands) Assets Equity in pooled cash and investments Receivables: Property tax Accounts and unbilled usage Interest Notes Internal balances Due from other governments Prepaid item Inventories Assets held for resale Restricted assets: Equity in pooled cash and investments Capital assets: Land and construction in progress Other capital assets (net of accumulated depreciation) Total assets Deferred Outflows of Resources Pension related deferred outflows OPEB related deferred outflows Total deferred outflows of resources 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 Capital lease obligation Bonds payable Due in more than one year: Employee vested benefits Net pension liability Other post employment benefits liability Notes payable Capital lease obligation Bonds payable Landfill closure/post-closure liability Total liabilities Governmental Business -type Activities Activities Total $ 109,860 $ 63,520 $ 173,380 59,538 - 59,538 817 3,660 4,477 920 647 1,567 5,304 397 5,701 (16,069) 16,069 - 4,067 1,327 5,394 810 97 907 602 733 1,335 562 - 562 26,108 33,939 60,047 73,176 45,613 118,789 174,835 290,280 465,115 440,530 456,282 896,812 11,477 2,561 14,038 637 245 882 12,114 2,806 14,920 5,168 2,402 7,570 3,663 1,407 5,070 4,193 479 4,672 134 520 654 952 1,819 2,771 124 - 124 29 103 132 475 - 475 1,253 424 1,677 - 545 545 9,612 5,269 14,881 987 302 1,289 38,867 8,966 47,833 5,472 2,117 7,589 211 - 211 - 11,413 11,413 58,307 23,826 82,133 - 9,259 9,259 $ 129,447 $ 68,851 $ 198,298 30 (continued) CITY OF IOWA CITY, IOWA STATEMENT OF NET POSITION (continued) Deferred inflows of resources Unavailable revenues: Pension related deferred inflows OPEB related deferred inflows Deferred amount on refunding Succeeding year property taxes Total deferred inflows of resources Net position Net investment in capital assets Restricted for or by: Employee benefits Capital projects Debt service Police Other purposes Bond ordinance State statute Future improvements Grant agreement Unrestricted Total net position June 30, 2018 (amounts expressed in thousands) Governmental Business -type Activities Activities Total $ 1,565 $ 475 $ 2,040 246 95 341 - 213 213 59,173 - 59,173 60,984 783 61,767 157,106 294,109 451,215 3,119 - 3,119 21,463 - 21,463 8,423 - 8,423 283 - 283 4,469 - 4,469 - 13,111 13,111 - 5,876 5,876 - 100 100 3,733 3,132 6,865 63,617 73,126 136,743 $ 262,213 $ 389,454 $ 651,667 The notes to the financial statements are an integral part of this statement. 31 h 32 CITY OF IOWA CITY, IOWA STATEMENT OF ACTIVITIES For the Year Ended June 30, 2018 (amounts expressed in thousands) The notes to the financial statements are an integral part of this statement. 33 Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Charges Grants and Grants and Governmental Business -type Functions/Programs: Expenses for Services Contributions Contributions Activities Activities Total Governmental activities: Public safety $ 25,191 $ 4,438 $ 272 $ 15 $ (20,466) $ $ (20,466) Public works 12,813 62 8,572 1,095 (3,084) (3,084) Culture and recreation 16,363 836 16 322 (15,189) (15,189) Community and economic development 12,019 441 1,385 27 (10,166) (10,166) General government 6,858 1,520 - - (5,338) (5,338) Interest on long-term debt 1,414 - - - (1,414) (1,414) Total governmental activities 74,658 7,297 10,245 1,459 (55,657) (55,657) Business -type activities: Wastewater treatment 11,392 12,626 - 1,913 3,147 3,147 Water 9,472 9,473 - 483 484 484 Sanitation 9,408 10,014 3 22 631 631 Housing authority 9,535 323 9,065 - (147) (147) Parking 5,590 5,648 - - 58 58 Airport 1,680 348 72 49 (1,211) (1,211) Stormwater 1,844 1,560 2 892 610 610 Transit 8,071 2,216 2,088 3,827 60 60 Total business -type activities 56,992 42,208 11,230 7,186 3,632 3,632 Total $ 131,650 $ 49,505 $ 21,475 $ 8,645 (55,657) 3,632 (52,025) General revenues: Property taxes, levied for general purposes 59,046 - 59,046 Hotel/motel tax 1,046 1,046 Gas and electric tax 684 684 Utility franchise tax 976 976 Grants and contributions not restricted to specific purposes 1,547 - 1,547 Earnings on investments 2,368 1,496 3,864 Gain on disposal of capital assets 140 2,438 2,578 Miscellaneous 3,656 456 4,112 Transfers 1,814 (1,814) - Total general revenues and transfers 71,277 2,576 73,853 Changes in net position 15,620 6,208 21,828 Net position beginning of year, as restated 246,593 383,246 629,839 Net position end of year $ 262,213 $ 389,454 $ 651,667 The notes to the financial statements are an integral part of this statement. 33 The notes to the financial statements are an integral part of this statement 34 CITY OF IOWA CITY, IOWA BALANCESHEET GOVERNMENTAL FUNDS June 30, 2018 (amounts expressed in thousands) Special Revenue Capital Projects Bridge, Other Street, and Shared Traffic Other Revenue and Employee Other Control Debt Governmental General Grants Benefits Construction Construction Service Funds Total Assets Equity in pooled cash and investments $ 36,321 $ 3,708 $ 2,696 $ 11,919 $ 12,630 $ 7,834 $ 2,260 $ 77,368 Receivables: Property tax 34,973 - 12,165 - - 12,029 371 59,538 Accounts and unbilled usage 496 21 - - 205 - - 722 Interest 276 8 117 103 168 6 678 Notes 1,276 - - - 362 3,666 5,304 Advances to other funds - - - - - 111 - 111 Due from other governments 1,941 653 299 262 753 108 4,016 Inventories - 81 - - - - - 81 Prepaid item 726 - 84 810 Assets held for resale 562 - - - - - 562 Restricted assets: Equity in pooled cash and investments 1,904 1,207 17,088 5,852 57 26,108 Total assets S 78,475 $ 5,678 $ 15,244 $ 29,386 $ 19,543 $ 20,561 $ 6,411 $ 175,298 Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable $ 1,492 $ 223 $ 1 $ 1,213 $ 1,316 $ - $ 382 $ 4,627 Contracts payable - - - 1,311 2,352 - 3,663 Accrued liabilities 1,391 96 2 - 19 23 1,531 Advances from other funds - 111 - - - - - 111 Due to other governments 29 - - - - - - 29 Interest payable 5 - - - - - - 5 Notes payable 475 - - 475 Liabilities payable from restricted assets: Deposits 947 5 - 952 Advances from grantors 113 6 5 124 Total liabilities 4,452 441 3 2,529 3,687 405 11,517 Deferred inflows of resources Unavailable revenues: Succeeding year property taxes 34,764 - 12,095 - - 11,952 362 59,173 Grants 9 1 - 13 753 - 26 802 Other 1,600 299 92 5 1,996 Total deferred inflows of resources 36,373 1 12,394 105 758 11,952 388 61,971 Fund balances: Nonspendable 793 81 84 - - - - 958 Restricted 1,942 5,155 2,763 26,752 15,098 8,609 5,656 65,975 Committed 4,962 - - - - - - 4,962 Assigned 1,437 - 1,437 Unassigned 28,516 (38) 28,478 Total fund balances 37,650 5,236 2,847 26,752 15,098 8,609 5,618 101,810 Total liabilities, deferred inflows ofresources and fund balances $ 78,475 $ 5,678 $ 15,244 $ 29,386 $ 19,543 $ 20,561 $ 6,411 $ 175,298 The notes to the financial statements are an integral part of this statement 34 CITY OF IOWA CITY RECONCILIATION OF THE BALANCE SHEET OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2018 (amounts expressed in thousands) Total governmental fund balances $ 101,810 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 and OPEB related deferred outflows of resources and deferred inflows of resources are 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 liabilities 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 are 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 financial statements are an integral part of this statement. 35 40,949 2,798 235,805 $ 11,667 (1,722) 9,945 (37,449) (2,126) (5,191) (67,919) (211) (129) (16,069) $ 262,213 CITY OF IOWA CITY, IOWA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2018 (amounts expressed in thousands) Special Revenue Capital Projects Bridge, Other Street, and Shared Traffic Other Revenue and Employee Other Control Debt Governmental General Grants Benefits Construction Construction Service Funds Total Revenues Current: (under) expenditures Taxes $ 35,363 $ $ 10,908 $ $ $ 12,700 $ 2,782 $ 61,753 Licenses and permits 2,734 5,885 - 1,850 10,052 - - 2,734 Intergovernmental 3,786 8,656 292 371 127 332 1,380 14,944 Charges for services 1,465 422 316 43 49 - - 2,295 Fines and forfeits 695 - - - - - - 695 Use of money and property 1,164 85 - 245 184 207 52 1,937 Miscellaneous 1,878 156 153 163 477 968 12,274 48 2,875 Total revenues 47,085 9,319 11,669 822 837 13,239 4,262 87,233 Expenditures Current: (under) expenditures (1,106) 2,598 10,701 (11,452) Public safety 22,762 - 591 7 - 23,360 Public works 1,871 5,885 - 446 1,850 10,052 Culture and recreation 13,099 - 1,109 - - 14,208 Community and economic development 2,785 492 - 5,352 - 2,445 11,074 General government 5,550 - 377 29 61 - 6,017 Debt service: - 104 131 1 - 236 Principal - 1,092 - - 11,895 11,895 Interest - - - 1,570 1,570 Capital outlay 2,124 344 5,331 20,426 28,225 Total expenditures 48,191 6,721 968 12,274 22,276 13,526 2,445 106,401 Excess (deficiency) of revenues over (under) expenditures (1,106) 2,598 10,701 (11,452) (21,439) (287) 1,817 (19,168) Other Financing Sources (Uses) Issuance of debt 17 - - 5,258 6,665 55 - 11,995 Sale of capital assets 140 - - - - - - 140 Premiums on issuance of bonds - - - 104 131 1 - 236 Transfers in 10,138 1,092 6,413 15,603 1,084 336 34,666 Transfers out (13,635) (4,975) (10,375) (927) (1,399) (1,129) (32,440) Total other financing sources and (uses) (3,340) (3,883) (10,375) 10,848 21,000 1,140 (793) 14,597 Net change in fund balances (4,446) (1,285) 326 (604) (439) 853 1,024 (4,571) Fund Balances, Beginning 42,096 6,521 2,521 27,356 15,537 7,756 4,594 106,381 Fund Balances, Ending $ 37,650 $ 5,236 $ 2,847 $ 26,752 $ 15,098 $ 8,609 $ 5,618 $ 101,810 Ae notes to the financial statements are an integral part of this statement. 36 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, 2018 (amounts expressed in thousands) Net change in fund balances - total governmental funds $ (4,571) 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 $ 27,549 Capital assets contributed 945 Depreciation expense (6,877) 21,617 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 (11,995) Premium on bonds issued (236) Repayments of debt 11,895 Amortization of premium 156 (180) 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. (284) 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 2 Pension expense (1,429) Change in accrued post employment benefit liability (432) 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. 897 Change in net position of governmental activities $ 15,620 The notes to the financial statements are an integral part of this statement. 37 Assets Current assets: Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Accounts and unbilled usage Interest Notes Due from other governments Inventories Prepaid item Total current assets Noncurrent assets: Restricted assets: Equity in pooled cash and investments Advances to other funds 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 OPEB related deferred outflows Total deferred outflows ofresources Liabilities Current liabilities: Accounts payable Contracts payable Accrued liabilities Employee vested benefits Due to other governments Interest payable Capital lease obligation Bonded debt payable (net of unamortized premium and discounts) Total current liabilities Noncurrent liabilities: Liabilities payable from restricted assets: Deposits Advances from other funds Employee vested benefits Capital lease obligation Bonded debt payable (net of unamortized premium and discounts) Net pension liability Other post employment benefits liability Landfill closure/postclosure liability Total noncurrent liabilities Total liabilities Deferred Inflows of Resources Pension related deferred inflows OPEB related deferred inflows Deferred amount on refunding Total deferred inflow of resources Net Position CITY OF IOWA CITY, IOWA 20 STATEMENT OF NET POSITION 5,163 PROPRIETARY FUNDS - June 30, 2018 110 (amounts expressed in thousands) - - Governmental Business -type Activities - Enterprise Funds Activities - 1,666 Intemal Wastewater Housing Nonmajor Service Parking Transit Treatment Water Sanitation Stormwater Authority Airport Total Funds $ 12,971 $ 6,979 $ 14,856 $ 8,223 $ 14,762 $ 1,550 $ 3,929 $ 250 $ 63,520 $ 32,492 14 81 1,569 1,112 693 164 3 24 3,660 95 82 34 132 102 226 11 58 2 647 242 - - - - - - 397 - 397 - - 1,169 - 58 49 - 34 17 1,327 51 325 - 408 - - - - 733 521 19 19 19 18 22 97 13,067 8,607 16,576 9,922 15,748 1,725 4,421 315 70,381 33,401 1 20 9,991 5,163 14,743 - 3,911 110 33,939 - - - - - 1,666 - - - 1,666 - 3,489 2,630 759 6,296 2,264 2,264 620 11,995 30,317 45 41,647 15,399 36,858 24,019 5,467 - 5,350 5,377 134,117 1,487 328 - 7,261 2,742 421 - 9 396 11,157 50 1,575 14,252 7,633 10,833 252 27 106 293 34,971 21,748 - 955 149,981 63,824 17,366 61,227 - 17,868 311,221 2,101 (20,632) (15,633) (80,228) (39,112) (16,375) (14,933) (4,566) (9,707) (201,186) (13,561) 14,215 1,306 7,961 3,494 821 1,634 1,506 80 15,296 336 26,408 18,929 140,216 77,259 26,625 50,219 5,430 26,412 371,498 12,206 39,475 27,536 156,792 87,181 42,373 51,944 9,851 26,727 441,879 45,607 251 716 408 490 471 38 172 15 2,561 415 25 77 34 44 51 1 12 1 245 32 276 793 442 534 522 39 184 16 2,806 447 124 1,579 80 385 184 5 31 - 426 205 705 4 46 151 68 85 86 8 37 127 61 80 83 1 - 13 1 27 1 - 40 - 330 150 - - 545 - - - - _ - 3,729 1,540 - 823 1,870 4,695 2,472 1,059 18 26 19 2,402 541 - 36 1,407 - 31 4 479 2,662 33 2 424 64 61 - 103 - - 520 - 1,666 545 27 _ 5,269 58 151 61 11,149 3,267 1 6 - 1,017 7 - 779 9 1;819 - 1,666 - - - - - - - 1,666 - 27 87 42 58 61 1 24 2 302 50 11,413 - - - - - - - 11,413 - - - 13,358 10,468 - - - - 23,826 - 894 2,512 1,404 1,680 1,678 143 602 53 8,966 1,418 214 665 293 383 439 11 101 11 2,117 281 9,259 9,259 14,215 3,270 15,097 13,606 11,444 155 1,506 75 59,368 1,749 15,038 5,140 19,792 16,078 12,503 173 1,657 136 70,517 5,016 47 133 74 89 89 8 32 3 475 75 10 29 13 17 20 1 5 - 95 14 123 90 213 57 162 210 196 109 9 37 3 783 89 Net investment in capital assets 14,449 18,909 113,015 59,480 10,216 50,219 1,519 26,302 294,109 12,206 Restricted by bond ordinance - - 9,661 3,450 - - - - 13,111 - Restricted by state statute - - - 5,876 - - - 5,876 - Restricted for future improvements - - - - - - - 100 100 - Restricted by grant agreement - - - - - - 3,132 - 3,132 - Unrestricted 10,207 4,118 14,556 8,511 14,191 1,582 3,690 202 57,057 28,743 Total net position $ 24,656 $ 23,027 $ 137,232 $ 71,441 $ 30,283 $ 51,801 $ 8,341 $26,604 $ 373,385 $ 40,949 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 16,069 Net position of business -type activities $ 389,454 The notes to the financial statements are an integral part of this statement 38 Net Position, Beginning, as restated 22,047 19,472 137,820 70,371 31,438 50,537 8,365 27,702 Net Position, Ending $ 24,656 $ 23,027 $137,232 $71,441 $30,283 $ 51,801 $ 8,341 $ 26,604 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 575 Change in net position ofbusiness-type activities $ 6,208 The notes to the financial statements are an integral part of this statement. 39 $ 40,949 CITY OF IOWA CITY, IOWA STATEMENT OF REVENUES, EXPENSES AND CIIANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended June 30, 2018 (amounts expressed in thousands) Governmental Business -type Activities - Enterprise Funds Activities - Internal Wastewater Housing Nonmajor Service Parking Transit Treatment Water Sanitation Stormwater Authori Airport Total Funds Operating Revenues: Charges for services $ 5,648 $ 2,216 $ 12,626 $ 9,473 $10,014 $ 1,560 $ 323 $ 348 $42,208 $ 19,284 Miscellaneous 35 69 87 73 79 7 93 13 456 - Total operating revenues 5,683 2,285 12,713 9,546 10,093 1,567 416 361 42,664 19,284 Operating Expenses: Personal services 1,674 4,127 2,948 3,463 2,960 314 905 85 16,476 2,317 Commodities 502 810 1,250 1,427 403 73 85 70 4,620 2,258 Services and charges 1,614 2,235 2,424 2,059 5,301 217 8,434 393 22,677 10,832 3,790 7,172 6,622 6,949 8,664 604 9,424 548 43,773 15,407 Depreciation 1,268 906 4,436 2,372 1,526 1,240 120 1,003 12,871 1,884 Total operating expenses 5,058 8,078 11,058 9,321 10,190 1,844 9,544 1,551 56,644 17,291 Operating income (loss) 625 (5,793) 1,655 225 (97) (277) (9,128) (1,190) (13,980) 1,993 Nonoperating Revenues (Expenses): Gain (loss) on disposal of capital assets 2,423 (23) (53) 3 - - 2 (144) 2,208 (30) Operating grants - 2,088 - - 3 2 9,065 72 11,230 - Interest income 129 80 468 292 444 24 54 5 1,496 430 Interest expense (568) - (375) (259) - - - - (1,202) - Total nonoperatingrevenues (expenses) 1,984 2,145 40 36 447 26 9,121 (67) 13,732 400 Income (loss) before capital contributions and transfers 2,609 (3,648) 1,695 261 350 (251) (7) (1,257) (248) 2,393 Capital contributions - 31827 1,913 483 22 892 - 49 7,186 - Transfers in 3,376 531 1,041 1 1,623 30 110 6,712 1,202 Transfers out - (4,727) (715) (1,528) (1,000) (47) - (8,017) (2,123) Change in net position 2,609 3,555 (588) 1,070 (1,155) 1,264 (24) (1,098) 5,633 1,472 Net Position, Beginning, as restated 22,047 19,472 137,820 70,371 31,438 50,537 8,365 27,702 Net Position, Ending $ 24,656 $ 23,027 $137,232 $71,441 $30,283 $ 51,801 $ 8,341 $ 26,604 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 575 Change in net position ofbusiness-type activities $ 6,208 The notes to the financial statements are an integral part of this statement. 39 $ 40,949 Cash Flows From Noncapital Financing Activities CITY OF IOWA CITY, IOWA STATEMENT OF CASH FLOWS Grants received - 3,706 PROPRIETARY FUNDS - 1 84 8,993 140 For the Year Ended June 30,.2018 - Transfers from other funds - 3,376 231 (amounts expressed in thousands) 1 - 30 110 3,748 - Transfers to other funds Governmental - (2,000) Business -type Activities - Enterprise Funds (486) (1,000) Activities - - (4,248) (1,453) Repayment/(payment) of notes receivable - Intemal - - Wastewater Housing Nonmajor 143 Service 143 Parking Transit Treatment Water Sanitation Storrawater Authority Airport Total Funds Cash Flows From Operating Activities 235 - - - 235 Receipts from customers and users $ 5,679 $ 2,219 $ 12,669 $ 9,472 $ 10,118 $ 1,557 $ 717 $ 360 $ 42,791 $ 19,362 Payments to suppliers (2,187) (1,678) (3,839) (3,294) (5,082) (358) (8,500) (471) (25,409) (13,078) Payments to employees (1,769) (4,005) (3,084) (3,482) (2,939) (276) (928) (78)t( 6,561) (2,400) Net cash flows from (used for) operating activities 1,723 (3,464) 5,746 2,696 2,097 923 (8,711) (189) 821 3,884 Cash Flows From Noncapital Financing Activities Financing Activities: Grants received - 3,706 - - 1 84 8,993 140 12,924 - Transfers from other funds - 3,376 231 - 1 - 30 110 3,748 - Transfers to other funds - - (2,000) (715) (486) (1,000) (47) - (4,248) (1,453) Repayment/(payment) of notes receivable - - - - - - 143 - 143 - Repayment of advances from other funds - - - - 235 - - - 235 - Repayment of advances to other funds 235 - - - - - - - (235) Net cash flows. from (used for) noncapital financing activities (235) 7,082 (1,769) 715 (249) (916) 9,119 250 12,567 (1,453) Cash Flows From Capital and Related Financing Activities Capital grants received - 3,108 1,291 - 20 - - 78 4,497 - Acquisition and construction of property and equipment (70) (4,830) (4,522) (1,198) (1,185) (22) (22) (152) (12,001) (1,870) Proceeds from sale of property 2,679 - 10 3 - - 2 20 2,714 237 Principal paid on capital lease obligation (2,524) - - - - - - - (2,524) - Interest paid on capital lease obligation (576) - - - - - - - (576) - Principal paid on bonded debt - - (3,556) (1,443) - - - - (4,999) - Interest paid on bonded debt - - (755) (395) - - - - (1,150) Net cash flaws used for capital and related financing activities (491) (1,722) (7,532) (3,033) (1,165) (22) (20) (54)1( 4,039) (1,633) Cash Flows From Investing Activities Interest on investments 78 61 436 232 310 18 61 4 1,200 277 Net increase (decrease) in cash and cash equivalents 1,075 1,957 (3,119) (820) 993 3 449 11 549 1,075 Cash and Cash Equivalents, Beginning 11,897 5,042 27,966 14,206 28,512 1,547 7,391 349 96,910 31,417 Cash and Cash Equivalents, Ending $ 12,972 $ 6,999 $ 24,847 $13,386 $ 29,505 $ 1,550 $ 7,840 $ 360 $ 97,459 $ 32,492 Reconciliation of operating income (loss) to net cash flows from (used for) operating activities: Operating income( loss) $ 625 $ (5,793) $ 1,655 $ 225 $ (97) $ (277) $ (9,128) $ (1,190) $(13,980) $ 1,993 Adjustments to reconcile operating income (loss) to net cash flows from (used for) operating activities: Depreciation expense 1,268 906 4,436 2,372 1,526 1,240 120 1,003 12,871 1,884 Changes in: Receivables: Accounts and unbilled usage (4) (66) (44) (69) 5 (10) (3) - (191) 62 Due from other governments - - - (57) 18 - 144 - 105 16 Inventories - (31) - 61 - - - - 30 (55) Prepaid item - (19) (19) (19) (18) - - (19) (94) 12 Accounts payable (71) 1,420 (145) 148 (27) (68) (8) 11 1,260 55 Accrued liabilities 3 15 (1) 4 14 (1) 3 2 39 (84) Employee vested benefits (2) 17 (3) 17 - - 2 1 32 1 Due to other governments - (3) (1) 2 (1) - 27 - 24 - Deposits - - - 52 2 - 160 (1) 213 - Net pension liability (101) 84 (65) 12 30 33 (6) 4 (9) 21 Deferred outflowsofresomces (25) (107) (87) (104) (100) 2 (38) (2) (461) (66) Deferred inflows ofresources (4) 9 (26) (7) 9 2 I - (16) l Other post employment benefits liability 34 104 46 59 68 2 15. 2 330 44 Landfill closure/postclosure liability 668 668 Total adjustments 1,098 2,329 4,091 2,471 2,194 1,200 417 1,001 14,801 1,891 Net cash flows from (used for) operating activities $ 1,723 $ (3,464) $ 5,746 $ 2,696 $ 2,097 $ 923 $ (8,711 $ (189) $ 821 $ 3,884 Noncash Investing, Capital, and Financing Activities: Contributions of capital assets from government and others $ - $ - $ 922 $ 1,524 $ - $ 2,515 $ - $ - $ 4,961 $ 1,202 Contributions of capital assets to government and others $ - $ - $ 2,727 $ - $ 1,042 $ - $ - $ - $ 3,769 $ 670 Capital grants not yet received $ - $ 1,114 $ - $ - $ 2 $ - $ - $ 5 $ 1,121 $ - Operating grants not yet received $ - $ 5 $ - $ - $ 2 $ - $ 34 $ 12 $ 53 $ - The notes to the financial statements are an integral part of this statement. 40 CITY OF IOWA CITY STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES June 30, 2018 (amounts expressed in thousands) Agency Funds Assets Equity in pooled cash and investments $ 150 Interest receivable 1 Total assets $ 151 Liabilities Accounts payable $ 12 Due to agency 139 Total liabilities $ 151 The notes to the financial statements are an integral part of this statement. 41 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS June 30, 2018 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) 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. 42 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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 Other Shared Revenue and Grants Fund is used to account for revenue from various sources, primarily road use tax monies from the State of Iowa and reimbursable programs funded by federal and state grants. The 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. 43 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 The Other Construction Fund accounts for the construction or replacement of other City general fixed assets, such as administrative buildings with various funding sources, including general obligation bonds, intergovernmental revenues, and contributions. The 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. 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 Transit Fund is used to account for the operation and maintenance of the public transportation system. 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. The City has one nonmajor enterprise fund, the Airport Fund is used to account for the operation and maintenance of the airport facility. 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. 44 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds and of the City's internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. Uses of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue, expenditures and expenses, as appropriate, during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of 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. 45 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Income from investments in all fund types and from charges for services in proprietary fund types is recognized when earned. Licenses and permits, fines and forfeitures, fees and refunds, charges for services (in governmental fund types), miscellaneous, and other revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Inventories Inventories are recognized only in those funds in which they are material to the extent of affecting operations. For the City, these are the 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 and OPEB 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. 46 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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 and OPEB related items. 47 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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 $20,830,854 in revenues and other financing sources and by $86,333,581 in expenditures and other financing uses. Appropriations, as adopted or amended, lapse at the end of the fiscal year. 48 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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, 2018 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 or other short-term corporate debt; 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; and warrants or improvement certificates of a drainage district. At June 30, 2018, the City had the following investments: Fair Investment Value Maturities Federal Home Loan Bank Notes $ 10,385,215 November 2018 to October 2022 Federal Home Loan Mortgage Corporation Notes 5,974,160 May 2019 to March 2023 United States Treasury Notes 8,491,315 July 2018 to April 2019 Federal National Mortgage Association 1,058,048 June 2019 Natixis NY Branch Commercial Paper 2,967,427 September 2018 to November 2018 John Deere Capital Corporation Corporate Notes 997,690 October 2018 Toyota Motor Credit Corporation Corporate Notes 1,989,100 February 2019 $ 31,862,955 49 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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. The recurring fair value measurement for the Federal Home Loan Bank securities of $10,385,215, the Federal Home Loan Mortgage Corporation securities of $5,974,160, the Federal National Mortgage Association securities of $1,058,048 and the United States Treasury securities of $8,491,315 were determined using the last reported sales price at current exchange rates (Level 1 inputs). The fair value measurement for the Natixis NY Branch commercial paper of $2,967,427 was determined using the last reported sales price at current exchange rates (Level 1 inputs). The fair value measurements for the John Deere Capital Corporation corporate notes of $997,690 and the Toyota Motor Credit Corporation corporate notes of $1,989,100 were determined using the last reported sales price at current exchange rates (Level 1 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 $14,047,707, 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. 50 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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. 3. Interfund Balances and Transfers Interfund balances for the year ended June 30, 2018, consisted of the following: Advances to: Parking Other Shared Revenue and Grants Total Advances from Debt Service Sanitation Total $ - $ 1,665,852 $ 1,665,852 110,893 $ 110,893 - 110,893 $ 1,665,852 $ 1,776,745 Interfund balances at June 30, 2018, include advances due to/from other funds, which represent amounts for construction loans and a revenue bond redemption loan. $1,423,385 of the $1,665,852 advance to the Parking Fund is not expected to be repaid within the next year. $96,694 of the $110,893 advance to the Other Shared Revenue and Grants Fund is not expected to be repaid within the next year. 51 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Interfund transfers for the year ended June 30, 2018, consisted of the following: Transfer from Capital Projects Bridge, Street Other Capital Projects and Traffic Shared Revenue Employee Other Control Nonmajor General and Grants Benefits Construction Construction Governmental Transfer to General $ - $ 93,553 $ 9,947,001 $ 31,923 $ - $ 18,356 Other Shared Revenue and Grants 650,093 - 427,642 - 13,941 - Debt Service 20,052 - - 256 - 1,064,028 Capital Projects Other Construction 994,403 1,018,570 - - 20,986 17,082 Capital Projects Bridge, Street and Traffic Control Construction 8,338,836 3,212,990 - - - - Nonmajor Governmental 133,935 202,104 - - - - Transit 3,376,455 - - - - - Wastewater Treatment 452 231,020 - 300,000 - - Water 392 - - 87,810 952,848 - Sanitation 1,324 - - - - - Stormwater 249 - - 67,252 411,444 - Housing Authority - - - - - 29,287 Nonmajor Enterprise 109,687 - - - - - Internal Service 8,934 216,377 - 439,364 - - Total Transfer to $ 13,634,812 $ 4,974,614 $ 10,374,643 $ 926,605 $ 1,399,219 $ 1,128,753 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. 52 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Transfer from Wastewater Housing Internal Total Treatment Water Sanitation Stormwater Authority Service Transfer from $ $ - $ - $ - $ 46,779 $ - $ 10,137,612 - - 1,091,676 - 1,084,336 1,622,867 500,000 486,141 300,000 - 1,453,180 6,413,229 2,085,761 215,467 860,954 700,000 - 188,961 15,602,969 - - - - - - 336,039 - - 3,376,455 - - - - 531,472 - - - - 1,041,050 - - - - - - 1,324 1,018,827 - 124,941 - - - 1,622,713 - - - - - 264 29,551 - - - - - - 109,687 - - 56,469 - - 480,516 1,201,660 $ 4,727,455 $ 715,467 $ 1,528,505 $ 1,000,000 $ 46,779 $ 2,122,921 $ 42,579,773 53 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 4. Capital Assets Capital asset activity for the year ended June 30, 2018, was as follows: Acquisitions Disposals Beginning and and Balance July 1, 2017 Transfers Transfers June 30, 2018 Governmental activities: Capital assets, not being depreciated: Land $ 29,778,881 $ 1,115,078 $ - $ 30,893,959 Construction in progress 22,766,982 19,850,327 334,743 42,282,566 Total capital assets, not being depreciated 52,545,863 20,965,405 334,743 73,176,525 Capital assets, being depreciated: Buildings 64,183,861 1,235,069 163,326 65,255,604 Improvements other than buildings 7,501,518 103,346 48,019 7,556,845 Machinery and equipment 44,456,239 4,745,142 5,344,321 43,857,060 Infrastructure 156,922,114 4,915,183 1,038,129 160,799,168 Total capital assets being depreciated 273,063,732 10,998,740 6,593,795 277,468,677 Less accumulated depreciation for: Buildings 24,719,781 1,685,194 146,753 26258,222 Improvements other than buildings 3,547,490 284,040 40,757 3,790,773 Machinery and equipment 27,770,324 3,461,091 4,653,360 26,578,055 Infrastructure 43,427,263 3,331,298 751,064 46,007,497 Total accumulated depreciation 99,464,858 8,761,623 5,591,934 102,634,547 Total capital assets, being depreciated, net 173,598,874 2,237,117 1,001,861 174,834,130 Governmental activities capital assets, net $ 226,144,737 $ 23,202,522 S 1,336,604 $ 248,010,655 54 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Depreciation expense was charged to functions as follows: Governmental activities: Public safety $ 1,579,960 Public works 3,829,983 Culture and recreation 2,890,681 Community and economic development 59,345 General government 401,654 Total depreciation expense - governmental activities $ 8,761,623 Business -type activities Parking $ 1,267,743 Acquisitions Disposals Wastewater treatment 4,435,712 Beginning and and Balance Stormwater July 1, 2017 Transfers Transfers June 30, 2018 1,002,574 Business -type activities: $ 12,869,234 Capital assets, not being depreciated: Land $ 30,737,360 $ - $ 420,175 $ 30,317,185 Construction in progress 9,714,893 6,094,744 512,350 15,297,287 Total capital assets, not being depreciated 40,452,253 6,094,744 932,525 45,614,472 Capital assets, being depreciated: Buildings 134,116,842 - - 134,116,842 Improvements other than buildings 10,888,774 273,123 5,395 11,156,502 Machinery and equipment 30,811,069 4,390,048 229,165 34,971,952 Infrastructure 307,426,024 3,969,414 174,260 311221,178 Total capital assets being depreciated 483242,709 8,632,585 408,820 491,466,474 Less accumulated depreciation for: Buildings 60,819,791 3,441,770 - 64,261,561 Improvements other than buildings 6,548221 392,926 4,586 6,936,561 Machinery and equipment 23,340,652 1,431,732 195,972 24,576,412 Infrastructure 97,920,877 7,602,806 112,346 105,411,337 Total accumulated depreciation 188,629,541 12,869,234 312,904 201,185,871 Total capital assets, being depreciated, net 294,613,168 (4,236,649) 95,916 290,280,603 Business -type activities capital assets, net $ 335,065,421 $ 1,858,095 $ 1,028,441 $ 335,895,075 Depreciation expense was charged to functions as follows: Governmental activities: Public safety $ 1,579,960 Public works 3,829,983 Culture and recreation 2,890,681 Community and economic development 59,345 General government 401,654 Total depreciation expense - governmental activities $ 8,761,623 Business -type activities Parking $ 1,267,743 Transit 905,993 Wastewater treatment 4,435,712 Water 2,371,624 Sanitation 1,525,829 Stormwater 1,239,560 Housing authority 120,199 Nonmajor enterprise 1,002,574 Total depreciation expense - business -type activities $ 12,869,234 55 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 5. Capital Lease Obligation Last 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, $516,596 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, 2018, were as follows: Fiscal Year Ending June 30 2019 2020 2021 2022 2023 2024-2036 Total minimum lease payments Less: amount representing interest Present value of minimum lease payments Changes in Capital Lease Obligation Business -type Activities $ 1,021,221 1,021,221 1,021,221 1,021,221 1,021,221 11,313,343 16,419,448 (4,461,143) $ 11,958,305 Changes in the capital lease obligation for the year ended June 30, 2018, was as follows: Due Within July 1, 2017 Issues Retirements June 30, 2018 One Year Business -type activities: $ 14,482,714 $ - $ 2,524,409 $ 11,958,305 $ 545,281 56 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 6. Long Term Debt Changes in Debt for Bonds Bond debt activity for the year ended June 30, 2018, 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: Revenue bonds Plus: Unamortized Premium Total revenue bonds General Obligation Bonds Due Within July 1, 2017 Issues Retirements June 30, 2018 One Year $ 51,645,000 $ 11,995,000 $ 11,760,000 $ 51,880,000 $ 9,335,000 926,254 235,940 158,670 1,003,524 144,226 52,571,254 12,230,940 11,918,670 52,883,524 9,479,226 15,200,000 - 135,000 15,065,000 135,000 31,860 - 2,124 29,736 2,124 15,168,140 - 132,876 15,035,264 132,876 $ 67,739,394 $ 12,230,940 $ 12,051,546 $ 67,918,788 $ 9,612,102 32,820,000 - 5,035,000 27,785,000 4,975,000 1,600,914 - 290,852 1,310,062 294,351 $ 34,420,914 $ - $ 5,325,852 $ 29,095,062 $ 5,269,351 Various issues of general obligation bonds totaling $51,880,000 are outstanding as of June 30, 2018. The bonds have interest rates ranging from 1.25% to 3.65% and mature in varying annual amounts ranging from $740,000 to $2,100,000 per issue, with the final maturities due in the year ending June 30, 2028. 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. 57 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Ending Governmental Activities June 30 Principal Interest 2019 $ 9,335,000 $ 1,257,050 2020 8,400,000 1,036,338 2021 7,585,000 819,135 2022 6,395,000 631,263 2023 5,520,000 492,013 2024-2028 14,645,000 882,450 $ Total $ 51,880,000 $ 5,118,249 Revenue Bonds As of June 30, 2018, the following unmatured revenue bond issues are outstanding: 58 Wastewater Taxable Urban 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 $ 405,000 to $ 135,000 to $ 2,085,000 $ 1,225,000 $ 965,000 Amount outstanding $ 16,010,000 $ 11,775,000 $ 15,065,000 58 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ending June 30 2019 2020 2021 2022 2023 2024-2028 2029-2033 2034-2038 Total Governmental Activities Principal $ 135,000 140,000 140,000 1,110,000 1,110,000 5,205,000 4,630,000 2,595,000 Interest $ 454,335 451,635 448,695 445,475 413,045 1,573,275 816,890 157,200 Business -type Activities Principal Interest $ 4,975,000 $ 872,703 5,385,000 685,365 5,610,000 477,665 4,350,000 298,690 3,840,000 149,270 3,625,000 88,150 $ 15,065,000 $ 4,760,550 $ 27,785,000 $ 2,571,843 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: Account (a) Revenue Bond and Interest Sinking Reserve (b) Revenue Debt Service Reserve Amount sufficient to pay current bond and interest maturities. Amount required to be deposited in the Revenue Bond and Interest Reserve until the reserve fund equals: 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, 2018, the Wastewater Treatment Fund had net revenue of $6,559,000 and the amount of principal and interest due was $4,336,000. In fiscal year ended June 30, 2018, the Water Fund had net revenues of $2,889,000 and the amount of principal and interest due was $1,849,000. 59 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Summary of Bond Issues General obligation and revenue bonds payable at June 30, 2018, are comprised of the following issues: $ 94,730,000 60 Date of Amount Interest Final Outstanding Issue Issued Rates Maturity June 30, 2018 General Obligation Bonds: Refunded Multi -Purpose and Library Construction (1) June 2011 10,930,000 2.0-3.625 6/21 3,850,000 Multi -Purpose June 2012 9,070,000 2.0-2.25 6/22 3,865,000 Multi -Purpose July 2013 7,230,000 1.0-2.0 6/23 4,185,000 Refunded Multi -Purpose (2) June 2014 11,980,000 2.0-3.0 6/24 5,785,000 Multi -Purpose June 2015 7,785,000 2.0-2.25 6/25 5,655,000 Multi -Purpose June 2016 8,795,000 2.0-3.0 6/26 7,680,000 Multi -Purpose June 2017 9,765,000 2.0-2.5 6/27 8,865,000 Multi -Purpose June 2018 8,895,000 1.8-2.65 6/28 8,895,000 Taxable Multi -Purpose June 2018 3,100,000 2.35-2.6 6/20 3,100,000 Total General Obligation Bonds $ 51,880,000 Date of Amount Interest Final Outstanding Issue Issued Rates Maturity June 30, 2018 Revenue Bonds: Refunded Wastewater Treatment Bonds (3) Apr. 2010 15,080,000 3.0-4.0 7/20 3,940,000 Refunded Wastewater Treatnient Bonds (4) June 2016 9,360,000 3.0-4.0 7/21 7,520,000 Refimded Wastewater Treatment Bonds (5) June 2017 4,550,000 2.0-5.0 7/22 4,550,000 Refunded Water Bonds (6) June 2012 4,950,000 1.5 - 2.1 7/22 2,595,000 Refunded Water Bonds (7) June 2016 3,650,000 1.5- 5.0 7/24 3,270,000 Refimded Water Bonds (8) 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 2,260,000 Taxable Urban Renewal Sept. 2016 12,805,000 3.0 6/36 12,805,000 Total Revenue Bonds $ 42,850,000 $ 94,730,000 60 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 (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 December 2001 and April 2002 Wastewater Revenue Bonds. (4) This bond issue refunded the October 2008 Wastewater Revenue Bond. (5) This bond issue refunded the May 2009 Wastewater Revenue Bonds. (6) This bond issue refunded the October 2002 Water Revenue Bonds. (7) This bond issue refunded the October 2008 Water Revenue Bonds. (8) 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 turn, disburses the payment to the respective bond holders. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2018, there were three series of Industrial Development Revenue Bonds outstanding, with an aggregate principal amount payable of $32,063,059. Debt Legal Compliance Legal Debt Margin: As of June 30, 2018, the general obligation debt issued by the computed as follows (amounts expressed in thousands): Assessed valuation: Real property Utilities Total valuation Debt limit, 5% of total assessed valuation Debt applicable to debt limit: General obligation bonds Urban renewal revenue bonds Letters of credit Other legal indebtedness (TIF rebates) Total net debt applicable to limit Legal debt margin 61 City did not exceed its legal debt limit $ 5,399,877 94,582 5.494.459 274,723 51,880 15,065 475 25,012 92,432 $ 182,291 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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.mfprsi.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. 62 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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 earnable compensation for the year ended June 30, 2018. 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 earnable compensation. The contribution rate was 25.68% for the year ended June 30, 2018. The City's contributions to MFPRSI for the year ended June 30, 2018 was $2,758,801. 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 earnable 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, 2018. Net Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2018, the City reported a liability of $21,398,334 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, 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, 2017, the City's proportion was 3.648635% which was a decrease of .048493% from its proportions measured as of June 30, 2016. 63 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 For the year ended June 30, 2018, the City recognized pension expense of $3,155,702. At June 30, 2018, 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 $ 821,164 $ 1,818,397 876,772 207,083 2,758,801 13,020 243,042 385,959 $ 6,482,217 $ 642,021 $2,758,801 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, 2019. 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, 2019 $ 495,116 June 30, 2020 1,915,916 June 30, 2021 931,810 June 30, 2022 (386,431) June 30, 2023 124,984 $ 3,081,395 64 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Actuarial Assumptions The total pension liability in the June 30, 2017, 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, 2017 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 five years projection of future mortality improvement with Scale BB. 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: Long -Term Expected Asset Class Real Rate of Return Core Plus Fixed Income 3.3 % Emerging Markets 9.0 Emerging Markets Debt 6.3 Large Cap 5.5 Small Cap 5.8 Master Limited Partnerships (MLP) 9.0 International Large Cap 7.3 Tactical Asset Allocation 6.4 Private Equity 9.0 Private Non -Core Real Estate 8.0 Private Core Real Estate 6.0 65 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Discount Rate The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate 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 Chanizes 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%, 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% lower (6.5%) or 1% higher (8.5%) 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: $ 35,166,874 $ 21,398,334 $ 9,946,426 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.mfprsi.org. Payables to the Pension Plan At June 30, 2018, 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. IPERS 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.ipers.org. 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. 66 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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. 67 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 In fiscal year 2018, pursuant to the required rate, Regular members contributed 5.95% of pay and the City contributed 8.93% for a total rate of 14.88%. The City's total contributions to IPERS for the year ended June 30, 2018 were $2,696,017. Net Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2018, the City reported a liability of $26,432,957 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, 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, 2017, the City's proportion was .3968158% which was an increase of .000546% from its proportions measured as of June 30, 2016. For the year ended June 30, 2018, the City recognized pension expense of $3,283,592. At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual experience $ 242,681 $ 229,022 Change of assumptions 4,592,828 Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between City contributions and proportionate share of contributions 23,898 City contributions subsequent to the measurement date 2,696,017 Total $ 7,555,424 68 276,081 891,786 1,396,889 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 $2,696,017 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, 2019 $ 287,057 June 30, 2020 1,728,462 June 30, 2021 1,032,975 June 30, 2022 99,731 June 30, 2023 314,293 $ 3,462,518 Actuarial Assumptions The total pension liability in the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Rate of inflation 2.60% per annum (effective June 30, 2017) Salary increases 3.25 to 16.25%, average, including inflation. Rates vary by (effective June 30, 2017) membership group. Investment rate of return 7.00%, net of pension plan investment (effective June 30, 2017) expense, including inflation Wage growth 3.25% per annum based on 2.60% inflation and 0.65% (effective June 30, 2017) real wage inflation The actuarial assumptions used in the June 30, 2017 valuation were based on the results of actuarial experience study dated March 24, 2017. Mortality rates were based on the RP -2000 Mortality Table for Males or Females, as appropriate, with adjustments for mortality improvements based on Scale AA. 69 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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 Private Real Assets Public Real Assets Public Credit Private Credit Cash Target Allocation 27.0% 24.0 16.0 11.0 7.5 7.0 3.5 3.0 1.0 Total 100.0% Long -Term Expected Real Rate of Return 2.25% 6.25 6.71 11.15 4.18 3.27 3.46 4.25 (0.31) Discount Rate The discount rate used to measure the total pension liability was 7.0%. The projection of cash flows used to determine the discount rate assumed employee 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 to current active and inactive employees. 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 Chanes in the Discount Rate The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.0%, 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% lower (6.0%) or 1% higher (8.0%) than the current rate. 1% Decrease Discount Rate 1% Increase (6.0%) (7.0%) (8.0%) City's proportionate share of the net pension liability: $ 43,550,909 $ 26,432,957 $ 12,050,589 70 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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.ipers.org. Payables to the Pension Plan At June 30, 2018, 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, 2018, was as follows: Due Within July 1, 2017 Issues Retirements June 30, 2018 One Year Governmental activities: $ 211,000 $ - $ - $ 211,000 $ - A note payable was issued to Greater Iowa City Housing Fellowship for the purchase of an 11 unit apartment building for low income and disabled housing in the Peninsula Neighborhood. The terms of the loan are 1%, interest only payments for twenty years with a final balloon payment of $211,000 due on August 1, 2025. Changes in Long -Term Liabilities - Employee Vested Benefits Employee Vested Benefits activity for the year ended June 30, 2018, was as follows: Due Within July 1, 2017 Issues Retirements June 30, 2018 One Year Governmental activities: $ 2,240,847 $ 1,251,119 $ 1,251,482 $ 2,240,484 $ 1,252,770 Business -type activities: $ 691,941 $ 436,353 $ 401,049 $ 727,245 $ 424,180 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. 71 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Changes in Long -Term Liabilities - Landfill Closure Post -closure Care Costs Landfill Closure Post -closure care activity for the year ended June 30, 2018, was as follows: July 1, 2017 Issues Retirements Due Within June 30, 2018 One Year Business -type activities: $ 8,591,189 $ 668,029 $ - $ 9,259,218 $ - 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, 2018, is $9,259,218, which is based on 55.68% usage (filled) of the landfill and is included in accrued liabilities within the Sanitation Fund. It is estimated that an additional amount of approximately $7,370,124 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, 2018, was determined by a licensed professional engineer and approximated at $16,629,342. 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, 2018. 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, 2018, the Sanitation Fund had $13,520,704 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. 72 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Changes in Long -Term Liabilities — Other Postemployment Benefits (OPEB) 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. Group insurance benefits are established under Iowa Code Chapter 509A.13. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. 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. Retired participants must be age 55 or older at retirement. At June 30, 2018, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefit payments 66 Active employees 598 Total 664 Total OPEB Liability: The City's total OPEB liability of $7,589,740 was measured as of June 30, 2018, and was determined by an actuarial valuation as of that date. 73 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Actuarial Assumptions: The total OPEB liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions and the entry age normal actuarial cost method, applied to all periods included in the measurement. Rate of inflation 2.60% per annum (effective June 30, 2018) Rates of salary increases 3.25% per annum based on 2.60% inflation and 0.65% (effective June 30, 2018) real wage inflation Discount rate 3.87%, compounded annually, including inflation (effective June 30, 2018) Healthcare cost trend rate 9.00% initial rate decreasing by .5% annually to an ultimate (effective June 30, 2018) rate of 5.00% Discount Rate: The discount rate used to measure the total OPEB liability was 3.87% which reflects the index rate for 20 -year tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher as of the measurement date. Mortality rates are from the SOA RPH-2017 total dataset mortality table fully generational using Scale MP - 2017. Annual retirement probabilities are based on varying rates by age and turnover probabilities mirror those used by IPERS and MFPRSI. The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an actuarial experience study with dates corresponding to those listed above. Total OPEB Liability Total OPEB liability beginning of year, as restated $ 6,412,170 Changes for the year: Service Cost 502,071 Interest 244,435 Difference between expected and actual experience (376,818) Changes in assumptions 982,333 Benefit payments (174,451) Net changes 1,177,570 Total OPEB liability end of year $ 7,589,740 Changes of assumptions reflect a change in the discount rate from 3.58% in fiscal year 2017 to 3.87% in fiscal year 2018. 74 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Sensitivity of the City's Total OPEB Liability to Changes in the Discount Rate: The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 1 % lower (2.87%) or I% higher (4.87%) than the current discount rate. 1% Decrease Discount Rate 1% Increase (2.87%) (3.87%) (4.87%) Total OPEB liability $ 8,156,991 $ 7,589,740 $ 7,053,281 Sensitivity of the City's Total OPEB Liability to Chanues in the Healthcare Cost Trend Rate: The following presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using healthcare cost trend rate that is 1% lower (8.00%) or 1% higher (10.00%) than the current healthcare cost trend rate. Healthcare Cost 1% Decrease Trend Rate 1% Increase (8.00%) (9.00%) (10.00%) Total OPEB liability $ 6,754,127 $ 7,589,740 $ 8,575,140 OPEB Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB: For the year ended June 30, 2018, the City recognized OPEB expense of $632,606. At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following resources: Deferred Outflows of Resources Differences between expected and actual experience $ - Change of assumptions 884,100 Total $ 884,100 75 Deferred Inflows of Resources $ 339,136 $ 339,136 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 The amount reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows: Year Ended Total June 30, 2019 $ 60,551 June 30, 2020 60,551 June 30, 2021 60,551 June 30, 2022 60,551 June 30, 2023 60,551 Thereafter 242,209 $ 544,964 9. Short Term Debt Changes in Short -Term Liabilities - Notes Payable Notes Payable activity for the year ended June 30, 2018, was as follows: Due Within July 1, 2017 Issues Retirements June 30, 2018 One Year Governmental activities: $ 663,000 $ 480,000 $ 668,000 $ 475,000 $ 475,000 During FY18, the City entered into additional multiple short term loans totaling $480,000 and repaid multiple short term loans totaling $668,000. The outstanding loans mature one year from the date of the loan and bear interest rates ranging from 4.75% to 5.00%. 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. 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. 76 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 • 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. Components of Fund Balance Nonspendable: Perpetual Care Principal Inventory Prepaid Items Total Nonspendable Restricted for: Public Safety Debt Service GO Bond Projects State Funding Grant Agreement Affordable Housing Economic Development Notes Receivable Property Held for Resale Public Safety Employee Benefits Other Restricted Total Restricted Committed to: Emergency Fund Total Committed Assigned to: Library Programs Senior Center Programs Replacement and Acquisition Reserves Other Assigned Total Assigned Unassigned: Total Fund Balances Bridge, Other Street and Shared Traffic Other Revenue and Employee Other Control Debt Governmental General Grants Benefits Construction Construction Service Funds Total $ 69,000 $ - $ - $ - $ - $ - $ - $ 69,000 - 81,070 - - - - - 81,070 724,393 84,162 808,555 793,393 81,070 84,162 958,625 418,408 - - - - - - 418,408 - 8,608,613 - 8,608,613 26,752,495 15,097,510 - - 41,850,005 3,893,383 - - - - - 3,893,383 3,968 - - - - 3,831,389 3,835,357 1,208,851 1,208,851 - - - - - - 1,563,211 1,563,211 1,275,601 - - - - - - 1,275,601 86,800 - - - - - - 86,800 2,762,916 - - - - 2,762,916 161,013 49,156 262,064 472,233 1,941,822 5,155,358 2,762,916 26,752,495 15,097,510 8,608,613 5,656,664 65,975,378 4,961,882 4,961,882 4,961,882 4,961,882 898,683 - - - - - - 898,683 2,876 - - - - - - 2,876 413,371 - - - - - - 413,371 123,065 123,065 1,437,995 1,437,995 28,516,324 (37,619) 28,478,705 $ 37,651,416 $ 5,236,428 $ 2,847,078 $ 26,752,495 $ 15,097,510 $ 8,608,613 $ 5,619,045 $101,812,585 77 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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, 2018 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 thirty 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. 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, 2018 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, 2018 and 2017 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 $9,980,032. 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, 2018 and 2017 are as follows: 2016-2017 2017-2018 Beginning -of - Fiscal -Year Liability $ 350,000 $ 385,000 78 Current -Year Claims and Changes in Estimates 7,356,000 7,893,000 Claim Payments $ 7,321,000 7,868,000 Balance at Fiscal Year -End 385,000 410,000 Current -Year Beginning -of- Claims and Balance at Fiscal -Year Changes in Claim Fiscal Liability Estimates Payments Year -End 2016 —2017 $ 2,489,000 $ 706,000 $ 906,000 $ 2,289,000 2017 —2018 2,289,000 1,309,000 1,425,000 2,173,000 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 $9,980,032. 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, 2018 and 2017 are as follows: 2016-2017 2017-2018 Beginning -of - Fiscal -Year Liability $ 350,000 $ 385,000 78 Current -Year Claims and Changes in Estimates 7,356,000 7,893,000 Claim Payments $ 7,321,000 7,868,000 Balance at Fiscal Year -End 385,000 410,000 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 12. Commitments and Contingencies Contractual Commitments The total outstanding contractual commitments as of June 30, 2018 are as follows: Fund Project Amount Bridge, street and traffic Paving and Bridge Construction, control construction Engineering Design and Consulting $ 10,616,901 Other construction Public Works & Culture and Recreation Constriction 8,310,930 Parking Parking Facility Restoration Repair 274,726 Wastewater Sewer Construction & Riverfront Crossings Park 949,396 Water Water Construction & Water Plant Computer System 612,033 Sanitation Landfill Cell Reconstruction & Road Improvements 1,041,174 Airport Viewing Area Remodel & North T -Hangar Restroom 29,198 Stormwater Stormwater System Improvements & Storm Sewer 4,681 Replacements $ 21,839,039 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 $28,331,453 exist, of which $499,747 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. 79 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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 Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB), was implemented during fiscal year 2018. The revised requirements establish new financial reporting requirements for state and local governments which provide their employees with OPEB benefits, including additional note disclosure and required supplementary information. In addition, GASB Statement No. 75 requires a state or local government employer to use the entry age normal actuarial cost method, and requires deferred outflows of resources and deferred inflows of resources which arise from other types of events related to OPEB to be recognized. During the transition year, as permitted, beginning balances for deferred outflows of resources and deferred inflows of resources are not reported. Beginning net position for governmental and business type activities was restated to retroactively report the change in valuation of the beginning total OPEB liability, as follows: Governmental Internal Service Total Governmental Activities Parking Transit Wastewater Treatment Water Sanitation Stormwater Housing Authority Airport Internal Service Total Business Type Activities Net position June 30, Net OPEB obligation 2017, as previously measured under Total OPEB liability Net position July 1, reported previous standards at June 30, 2017 2017, as restated 223,433 $ 3,563 24,158 62 $ 247,591 $ 3,625 $ 22,065 19,696 137,880 70,494 31,550 50,545 8,376 27,714 15,494 $ 383,814 162 337 187 201 259 1 75 (3) $ (4,386) (237) $ (4,623) (180) (561) (247) (324) (371) (9) (86) (9) $ 1,219 $ (1,787) 80 $ 222,610 23,983 $ 246,593 $ 22,047 19,472 137,820 70,371 31,438 50,537 8,365 27,702 15,494 $ 383,246 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 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. 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, 2018, $139,648 of property tax was diverted from the City 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, 2018 under agreements entered into by any entities. 16. New Governmental Accounting Standards Board (GASB) Standards The Governmental Accounting Standards Board (GASB) has issued six statements not yet implemented by the City. The statements, which might impact the City's financial statements, are as follows: 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. 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. Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, will be effective for fiscal year ending June 30, 2019. The objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. 81 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2018 Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, will be effective for fiscal year ending June 30, 2020. The objectives of this Statement are to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the end of a construction period. Statement No. 90, Majority Equity Interests — an amendment of GASB Statements No. 14 and No. 61 will be effective for fiscal year ending June 30, 2020. The objectives of this Statement are to improve the consistency and comparability of reporting a government's majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. The City's management has not yet determined the effect these statements will have on the City's financial statements. 82 h 83 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, 2018 (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 $ 56,524 $ - $ 56,524 Delinquent property taxes 1 - 1 Tax increment financing taxes 2,459 - 2,459 Other city taxes 2,767 - 2,767 Special assessments - - - Licenses and permits 2,734 9 2,743 Intergovernmental 15,981 16,905 32,886 Charges for services 5,465 40,898 46,363 Use of money and property 1,887 2,377 4,264 Miscellaneous 3,952 570 4,522 Total revenues 91.770 60.759 152.529 Expenditures/Expenses: Public safety 23,915 - 23,915 Public works 8,801 - 8,801 Health and social services 293 - 293 Culture and recreation 13,969 - 13,969 Community and economic development 7,436 - 7,436 General government 8,525 - 8,525 Debt service 13,470 - 13,470 Capital outlay 33,751 - 33,751 Business -type - 76,609 76,609 Total expenditures/expenses 110,160 76,609 186,769 Excess (deficiency) of revenues over (under) expenditures/expenses (18,390) (15,850) (34,240) Other financing sources and uses, net 13,774 2,512 16,286 Net change in fund balances (4,616) (13,338) (17,954) Balances, beginning of year 101,081 110,292 211,373 Balances, end of year $ 96,465 $ 96,954 $ 193,419 See Note to Required Supplementary Information. 84 Budgeted Amounts Final to Actual Variance - Positive Original Final (Negative) $ 56,458 $ 56,458 $ 66 - - 1 2,334 2,455 4 2,720 2,778 (11) 1 1 (1) 1,867 1,867 876 29,463 35,413 (2,527) 46,032 46,457 (94) 2,331 2,340 1,924 3,808 4,837 (315) 145,014 152,606 (77) 24,426 24,605 690 9,703 10,134 1,333 300 300 7 14,280 14,427 458 8,835 10,781 3,345 9,544 9,772 1,247 14,256 13,564 94 32,530 77,563 43,812 59,456 86,499 9,890 173,330 247,645 60,876 (28,316) (95,039) 60,799 17,478 18,698 (2,412) (10,838) (76,341) $ 58,387 133,730 211,373 $ 122,892 $ 135,032 85 CITY OF IOWA CITY BUDGETARY COMPARISON SCHEDULE BUDGET TO GAAP RECONCILIATION REQUIRED SUPPLEMENTARY INFORMATION For the Year Ended June 30, 2018 (dollar amounts expressed in thousands) Governmental Fund Types Accrual Modified Accrual Budget Basis Adjustments Basis Revenues $ 91,770 $ (4,537) $ 87,233 Expenditures 110,160 (3,759) 106,401 Net (18,390) (778) (19,168) Other financing sources and uses, net 13,774 823 14,597 Beginning Fund Balances 101,081 5,300 106,381 Ending Fund Balances $ 96,465 $ 5,345 $ 101,810 Enterprise Fund Types Accrual Accrual Budget Basis Adjustments Basis Revenues $ 60,759 $ 1,817 $ 62,576 Expenditures 76,609 (18,763) 57,846 Net (15,850) 20,580 4,730 Other financing sources and uses, net 2,512 (1,609) 903 Beginning Fund Balances 110,292 257,460 367,752 Ending Fund Balances $ 96,954 $ 276,431 $ 373,385 See Note to Required Supplementary Information. 86 City of Iowa City, Iowa Note to Required Supplementary Information - Budgetary Reporting For the Year Ended June 30, 2018 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 $7,592,000 and expenditures by $74,315,000. 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. 87 h 88 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 Four 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. 89 2018 2017 2016 2015 City's proportion of the net pension liability 3.648635% 3.697128% 3.704972% 3.778137% City's proportionate share of the net pension liability $ 21,398 $ 23,117 $ 17,406 $ 13,696 City's covered payroll 10,347 10,019 9,716 9,648 City's proportionate share of the net pension liability as a percentage of its covered payroll 206.80% 230.73% 179.15% 141.96% Plan fiduciary net position as a percentage of the total pension liability 80.60% 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. 89 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) Statutorily required contributions Contributions in relation to the statutorily required contribution Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll 2018 $ 2,679 2017 $ 2,682 2016 $ 2,782 2015 $ 2,955 (2,679) (2,682) (2,782) (2,955) $ 10,334 $ 10,347 $ 10,019 $ 9,716 25.92% 90 25.92% 27.77% 30.41% 2014 2013 2012 2011 2010 2009 $ 2,906 $ 2,383 $ 2,277 $ 1,654 $ 1,336 $ 1,425 (2,906) (2,383) (2,277) (1,654) (1,336) (1,425) $ 9,648 $ 9,122 $ 9,197 $ 8,310 $ 7,860 $ 7,601 30.12% 26.12% 24.76% 19.90% 17.00% 18.75% 91 City of Iowa City, Iowa Notes to Required Supplementary Information - Pension Liability Municipal Fire and Police Retirement System of Iowa Year ended June 30, 2018 Changes of benefit terms: There were no significant changes of benefit terms. Changes of assumptions: The 2017 valuation added five years projection of future mortality improvement with Scale BB. The 2016 valuation changed postretirement mortality rates to the RP -2000 Blue Collar Combined Healthy Mortality Table with males set -back two years, females set -forward one year and disabled individuals set -forward one year (male only rates), with no projection of future mortality improvement. The 2015 valuation phased in the 1994 Group Annuity Mortality Table for postretirement mortality. This resulted in weighting of 1/12 of the 1971 Group Annuity Mortality Table and 11/12 of the 1994 Group Annuity Morality Table. The 2015 valuation phased in the 1994 Group Annuity Mortality Table for postretirement mortality. This resulted in weighting of 2/12 of the 1971 Group Annuity Mortality Table and 10/12 of the 1994 Group Annuity Morality Table. 92 City of Iowa City, Iowa Required Supplementary Information - Schedule of the City's Proportionate Share of the Net Pension Liability Iowa Public Employees' Retirement System For the Last Four Years* (amounts expressed in thousands) 2018 2017 City's proportion of the net pension liability 0.3968158% 0.3962696% City's proportionate share of the net pension liability $ 26,433 $ 24,938 City's covered payroll 29,619 28,448 City's proportionate share of the net pension liability as a percentage of its covered payroll 89.24% 87.66% Plan fiduciary net position as a percentage of the total pension liability 82.21% 81.82% * 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. 93 2016 2015 0.4159256% 0.4378904% $ 20,549 $ 17,366 28,495 28,654 72.11% 60.61% 85.19% 87.61% 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) Statutorily required contributions Contributions in relation to the statutorily required contribution Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll 2018 2017 $ 2,696 $ 2,645 (2,696) (2,645) $ 30,190 $ 29,619 8.93% 94 8.93% 2016 $ 2,540 2015 $ 2,545 (2,540) (2,545) $ 28,448 $ 28,495 8.93% 8.93% 2014 2013 2012 2011 2010 2009 $ 2,559 $ 2,442 $ 2,327 $ 1,877 $ 1,780 $ 1,659 (2,559) (2,442) (2,327) (1,877) (1,780) (1,659) $ 28,654 $ 28,170 $ 28,833 $ 27,013 $ 26,764 $ 26,133 8.93% 8.67% 8.07% 6.95% 6.65% 6.35% 95 City of Iowa City, Iowa Notes to Required Supplementary Information - Pension Liability Iowa Public Employees' Retirement System Year ended June 30, 2018 Changes of benefit terms: 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% per year measured from the member's first unreduced retirement age to a 6% reduction for each year of retirement before age 65. Changes of assumptions: The 2017 valuation implemented the following refinements as a result of an experience study dated March 24, 2017: • Decreased the inflation assumption from 3.00% to 2.60%. • Decreased the assumed rate of interest on member accounts from 3.75% to 3.5% per year. • Decreased the discount rate from 7.50% to 7.00%. • Decreased the wage growth assumption from 4.00% to 3.25%. • Decreased the payroll growth assumption from 4.00% to 3.25%. 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. 96 • 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. 97 City of Iowa City, Iowa Required Supplementary Information - Schedule of Changes in the City's Total OPEB Liability, Related Ratios and Notes For the Current Year (amounts expressed in thousands) 2018 Service Cost $ 502 Interest 245 Difference between expected and actual experience (377) Changes in assumptions 982 Benefit payments (174) Net change in total OPEB liability 1,178 Total OPEB liability beginning of year, as restated 6,412 Total OPEB liability end of year $ 7,590 City's covered -employee payroll $ 40,524 Total OPEB liability as a percentage of covered -employee payroll 18.73% Note: GASB Statement No. 75 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. Changes of benefit terms: There were no significant changes of benefit terms. Changes of assumptions: Changes in assumptions and other inputs reflect the effects of changes in the discount rate each period. The following are the discount rates used in each period. Year ended June 30, 2018 3.87% Year ended June 30, 2017 3.58% The payroll growth rate, turnover rate and retirement rate assumptions were updated for IPERS employees based on the Iowa Public Employees' Retirement System July 1, 2017 Acturial Valuation Report. The same rates for MFPRSI employees were updated based on the Municipal Fire and Police Retirement System of Iowa July 1, 2017 Actuarial Valuation Report. The mortaility table has been updated from SOA RPH-2015 Total Dataset Mortality Table fully generational using Scale MP -2015 to SOA RPH-2017 Total Dataset Mortality Table fully generational using Scale MP -2017. 98 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. Metropolitan Planning Organization of Johnson County Fund — accounts for the financial activities of the metropolitan/rural cooperative planning organization. 99 100 CITY OF IOWA CITY COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2018 (amounts expressed in thousands) Special Revenue Metropolitan Community Planning Development Organization Economic Block of Johnson Development Grant County Total Assets Equity in pooled cash and investments $ 1,845 $ 181 $ 234 $ 2,260 Receivables: Property tax 371 - - 371 Interest 5 - 1 6 Notes - 3,666 - 3,666 Due from other governments - 56 52 108 Total assets $ 2,221 $ 3,903 $ 287 $ 6,411 Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable $ 334 $ 36 $ 12 $ 382 Accrued liabilities - 10 13 23 Total liabilities 334 46 25 405 Deferred inflows of resources: Unavailable revenues: Succeeding year property taxes 362 - - 362 Grants - 26 - 26 Total deferred inflows of resources 362 26 - 388 Fund balances: Restricted 1,563 3,831 262 5,656 Unassigned (38) - - (38) Total fund balances 1,525 3,831 262 5,618 Total liabilities, deferred inflows of resources and fund balances $ 2,221 $ 3,903 $ 287 $ 6,411 100 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2018 (amounts expressed in thousands) 101 Special Revenue Metropolitan Community Planning Development Organization Economic Block of Johnson Development Grant County Total Revenues Property taxes $ 2,782 $ - $ - $ 2,782 Intergovernmental 31 1,038 311 1,380 Use of money and property 15 34 3 52 Miscellaneous - 42 6 48 Total revenues 2,828 1,114 320 4,262 Expenditures Current: Community and economic development 747 1,107 591 2,445 Excess (deficiency) of revenues over (under) expenditures 2,081 7 (271) 1,817 Other Financing Sources (Uses) Transfers in 60 - 276 336 Transfers out (1,098) (31) - (1,129) Total other financing sources and (uses) (1,038) (31) 276 (793) Net change in fund balances 1,043 (24) 5 1,024 Fund Balances, Beginning 482 3,855 257 4,594 Fund Balances, Ending $ 1,525 $ 3,831 $ 262 $ 5,618 101 h 102 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. 103 104 CITY OF IOWA CITY COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS June 30, 2018 (amounts expressed in thousands) Equipment Central Loss Information Maintenance Services Reserve Technology Total Assets Current assets: Equity in pooled cash and investments $ 13,700 $ 729 $ 15,147 $ 2,916 $ 32,492 Receivables: Accounts and unbilled usage - - 95 - 95 Interest 112 4 109 17 242 Due from other governments 51 - - - 51 Inventories 521 - - - 521 Total current assets 14,384 733 15,351 2,933 33,401 Noncurrent assets: Capital assets: Land 45 - - - 45 Buildings 1,298 - 189 1,487 Improvements other than buildings 50 - - 50 Machinery and equipment 19,941 133 19 1,655 21,748 Infrastructure - - - 2,101 2,101 Accumulated depreciation (12,191) (73) (19) (1,278) (13,561) Construction in progress 83 - - 253 336 Total noncurrent assets 9,226 60 - 2,920 12,206 Total assets 23,610 793 15,351 5,853 45,607 Deferred Outflows of Resources Pension related deferred outflows 185 6 38 186 415 OPEB related deferred outflows 17 1 1 13 32 Total deferred outflows of resources 202 7 39 199 447 Liabilities Current liabilities: Accounts payable 223 6 215 97 541 Accrued liabilities 36 1 2,589 36 2,662 Employee vested benefits 43 2 2 17 64 Total current liabilities 302 9 2,806 150 3,267 Noncurrent liabilities: Employee vested benefits 33 1 2 14 50 Net pension liability 643 21 134 620 1,418 Other post employment benefits liability 146 11 11 113 281 Total noncurrent liabilities 822 33 147 747 1,749 Total liabilities 1,124 42 2,953 897 5,016 Deferred Inflows of Resources Pension related deferred inflows 34 1 7 33 75 OPEB related deferred inflows 7 1 1 5 14 41 2 8 38 89 Net Position Net investment in capital assets 9,226 60 - 2,920 12,206 Unrestricted 13,421 696 12,429 2,197 28,743 Total net position $ 22,647 $ 756 $ 12,429 $ 5,117 $ 40,949 104 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION INTERNAL SERVICE FUNDS For the Year Ended June 30, 2018 (amounts expressed in thousands) 105 Equipment Central Loss Information Maintenance Services Reserve Technology Total Operating Revenues: Charges for services $ 6,495 $ 219 $ 10,313 $ 2,257 $ 19,284 Total operating revenues 6,495 219 10,313 2,257 19,284 Operating Expenses: Personal services 1,054 39 222 1,002 2,317 Commodities 1,707 3 58 490 2,258 Services and charges 559 116 9,805 352 10,832 3,320 15 8 10,085 1,844 15,407 Depreciation 1,619 21 - 244 1,884 Total operating expenses 4,939 179 10,085 2,088 17,291 Operating income (loss) 1,556 40 228 169 1,993 Nonoperating Revenues: Gain on disposal of capital assets 232 - - (262) (30) Interest income 179 10 204 37 430 Total nonoperating revenues 411 10 204 (225) 400 Income (loss) before transfers 1,967 50 432 (56) 2,393 Transfers in 706 - - 496 1,202 Transfers out (1,430) (504) - (189) (2,123) Change in net position 1,243 (454) 432 251 1,472 Net Position, Beginning, as restated 21,404 1,210 11,997 4,866 39,477 Net Position, Ending $ 22,647 $ 756 $ 12,429 $ 5,117 $ 40,949 105 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended June 30, 2018 (amounts expressed in thousands) Equipment Central Loss Information Maintenance Services Reserve Technology Total Cash Flows From Operating Activities 14 305 265 1,075 13,209 Receipts from customers and users $ 6,511 $ 219 $ 10,375 $ 2,257 $ 19,362 Payments to suppliers (2,220) (121) (9,906) (831) (13,078) Payments to employees (1,008) (35) (296) (1,061) (2,400) Net cash flows from operating activities 3,283 63 173 365 3,884 Cash Flows From Noncapital Financing Activities Transfers to other funds Net cash flows from noncapital financing activities Cash Flows From Capital and Related Financing Activities 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 increase in cash and cash equivalents Cash and Cash Equivalents, Beginning Cash and Cash Equivalents, Ending Reconciliation of operating income (loss) to net cash flows from operating activities: Operating income Adjustments to reconcile operating income to net cash flows from 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 Net pension liability Deferred outflows of resources Deferred inflows of resources Other post employment benefits liability Total adjustments Net cash flows from operating activities Noncash Investing, Capital, and Financing Activities: Contributions of capital assets from government and others Contributions of capital assets to government and others (1,430) (23) (1,453) (1,430) (23) (1,453) (1,708) (34) (128) (1,870) 237 - - 237 (1,471) (34) (128) (1,633) 109 8 132 28 277 491 14 305 265 1,075 13,209 715 14,842 2,651 31,417 (55) - (55) $ 13,700 $ 729 $ 15,147 $ 2,916 $ 32,492 $ 1,556 $ 40 $ 228 $ 169 $ 1,993 1,619 21 244 1,884 - 62 62 16 - 16 (55) - (55) - - - 12 12 101 (2) (43) (1) 55 5 - (92) 3 (84) 8 1 1 (9) 1 43 1 16 (39) 21 (35) (1) (1) (29) (66) 3 1 (3) 1 22 2 2 18 44 1,727 23 (55) 196 1,891 $ 3,283 $ 63 $ 173 $ 365 $ 3,884 $ 706 $ - $ - $ 496 $ 1,202 $ - $ 481 $ - $ 189 $ 670 106 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. 107 CITY OF IOWA CITY STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended June 30, 2018 (amounts expressed in thousands) Balance Balance July 1, 2017 Increases Decreases June 30, 2018 Project Green Assets Equity in pooled cash and investments Interest receivable Total assets Liabilities Accounts payable Due to agency Total liabilities $ 163 $ 72 $ 85 $ 150 1 1 1 1 $ 164 $ 73 $ 86 $ 151 $ 4 $ 12 $ 4 $ 12 160 61 82 139 $ 164 $ 73 $ 86 $ 151 108 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 111 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 116 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity 126 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 136 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 138 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. 109 h 110 Governmental activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position Business -type activities Net investment in capital assets Restricted Unrestricted Total business -type activities net position Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position CITY OF IOWA CITY, IOWA NET POSITION BY COMPONENT Last Ten Fiscal Years (Accrual basis of accounting) (amounts expressed in thousands) 2009 2010 2011 2012 2013' 2014 2015 2016' 2017 2018 $ 100,741 $ 111,703 $ 123,935 $ 135,998 S 133,989 $ 138,482 $ 153,729 $ 163,362 $ 183,651 $ 157,106 26,586 25,588 31,179 35,021 22,867 39,958 36,447 42,154 47,676 41,490 17,938 32,478 36,862 38,906 50,744 39,758 15,520 18,402 16,264 63,617 $ 145,265 $ 169,769 $ 191,976 $ 209,925 $ 207,600 $ 218,198 $ 205,696 $ 223,918 $ 247,591 $ 262,213 $ 162,211 $ 172,601 $ 186,177 $ 195,073 $ 253,617 $ 264,727 $ 279,272 $ 279,679 $ 285,912 $ 294,109 19,159 17,588 20,658 20,176 19,033 19,438 22,389 22,269 21,238 22,219 63,842 65,725 61,032 58,850 74,370 71,542 57,367 69,472 76,664 73,126 $ 245,212 $ 255,914 $ 267,867 $ 274,099 $ 347,020 $ 355,707 $ 359,028 $ 371,420 $ 383,814 $ 389,454 $ 262,952 $ 284,304 $ 310,112 $ 331,071 $ 387,606 $ 403,209 $ 433,001 $ 443,041 $ 469,563 $ 451,215 45,025 43,176 51,837 55,197 41,900 59,396 58,836 64,423 68,914 63,709 82,500 98,203 97,894 97,756 125,114 111,300 72,887 87,874 92,928 136,743 $ 390,477 $ 425,683 $ 459,843 $ 484,024 $ 554,620 $ 573,905 $ 564,724 $ 595,338 $ 631,405 $ 651,667 ' 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. Z The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. 111 Expenses Governmental activities: Public safety Public works Culture and recreation Community and economic development General government Debt service Total governmental activities expenses Business -type activities: Wastewater Water Sanitation Housing authority Parking Airport Stormwater Cable television Transit Total business -type activities expenses Total primary government expenses Program Revenues Governmental 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 governmental 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 of accounting) (amounts expressed in thousands) 2009 2010 2011 2012 2013' 2014 2015 2016' 2017 2018 8,419 8,583 8,443 8,527 8,286 8,096 8,259 8,115 8,181 8,467 $ 20,730 $ 19,955 $ 18,867 S 21,186 $ 20,989 $ 22,721 $ 21,193 $ 22,029 $ 24,002 $ 25,191 15,177 16,806 19,145 17,556 10,240 8,258 11,037 10,839 12,032 12,813 9,574 12,238 10,811 13,107 14,481 16,586 14,049 14,422 15,525 16,363 8,726 16,913 16,501 16,305 10,596 10,059 7,093 6,786 8,253 12,019 7,600 7,549 7,356 7,591 7,513 7,687 7,752 6,240 6,124 6,858 3,264 2,970 2,841 2,400 2,237 1,797 1,517 1,287 1,481 1,414 65,071 76,431 75,521 78,145 66,056 67,108 62,641 61,603 67,417 74,658 11,925 11,274 10,971 11,069 10,464 21,139 12,131 11,866 11,233 11,392 9,185 8,309 8,523 8,781 9,074 8,723 8,403 8,149 8,921 9,472 7,296 7,705 7,461 8,315 7,279 8,402 8,114 8,735 9,123 9,408 7,238 7,838 7,448 7,911 7,658 7,703 7,873 8,378 8,798 9,535 4,489 4,536 4,135 4,167 4,579 4,093 4,678 4,460 4,620 5,590 693 724 1,049 1,127 1,086 1,209 1,612 1,597 1,402 1,680 1,223 1,187 1,418 1,304 1,318 1,314 2,091 1,989 2,432 1,844 633 645 638 689 692 781 704 - - - 6,998 7,795 7,379 7,486 7,263 8,071 42,682 42,218 41,643 43,363 49,148 61,159 52,985 52,660 53,792 56,992 $ 107,753 $ 118,649 $ 117,164 $ 121,508 $ 115,204 $ 128,267 $ 115,626 $ 114,263 $ 121,209 $ 131,650 $ 2,968 $ 2,980 $ 3,279 $ 3,401 $ 4,098 $ 3,626 $ 3,926 $ 4,813 $ 5,286 $ 4,438 1,392 1,061 1,117 1,112 52 61 388 628 724 62 715 773 872 825 775 808 801 823 842 836 - - - - - 45 50 1,044 36 441 1,626 2,574 2,931 2,817 2,763 3,030 2,975 1,252 1,524 1,520 8,185 15,554 13,517 8,682 4,731 3,231 8,701 9,941 10,828 10,245 3,773 8,291 6,048 6,078 6,876 5,580 11,556 3,999 9,952 1,459 18,659 31,233 27,764 22,915 19,295 16,381 28,397 22,500 29,192 19,001 12,557 12,637 12,836 12,670 12,832 12,559 12,189 8,107 7,957 8,054 8,419 8,583 8,443 8,527 8,286 8,096 8,259 8,115 8,181 8,467 9,015 181 180 208 207 205 213 237 5,438 5,377 5,234 4,743 5,043 5,294 5,502 248 289 293 306 314 328 349 622 617 641 811 974 1,093 1,147 788 790 809 824 816 773 750 - - - - 2,117 2,185 2,289 112 12,266 12,277 12,626 9,134 9,275 9,473 9,215 9,927 10,014 300 321 323 5,438 5,453 5,648 333 345 348 1,168 1,544 1,560 2,099 2,089 2,216 (continued) Capital grants and contributions: Wastewater Capital grants and contributions: Water Capital grants and contributions: Sanitation Capital grants and contributions: Airport Capital grants and contributions: Stormwater Capital grants and contributions: Housing authority Capital grants and contributions: Parldng Capital grants and contributions: Transit Operating grants and contributions: Housing authority Operating grants and contributions: Water Operating grants and contributions: Airport Operating grants and contributions: Sanitation Operating grants and contributions: Wastewater Operating grants and contributions: Stormwater Operating grants and contributions: Transit Total business -type activities program revenues Total primary government revenues Net (Expense)/ Revenues Governmental activities Business -type activities Total primary government net expense General Revenues and Other Changes in Net Position Governmental activities: General revenues: Property taxes Road use tax' Local Sales Option tax Othertaxes Grants and contributions not restricted to specific purposes Earnings on investments Miscellaneous Gain on sale of assets Transfers Reassignments Total governmental activities Business -type activities: General revenues: Earnings on investments Gain on 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 CITY OF IOWA CITY, IOWA CHANGES IN NET POSITION (continued) Inst Ten Fiscal Years (Accrual basis of accounting) (amounts expressed in thousands) 2009 2010 2011 2012 270'13 2014 2015 2016' 2017 2018 266 2,115 2,394 3,223 30,181 7,105 1,370 3,415 2,226 1,913 132 572 973 977 494 539 581 254 869 483 - 6 - 2 - - - - - 22 3,239 3,311 358 1,576 2,452 5,214 137 260 58 49 68 541 140 436 226 711 792 370 1,251 892 - 25 11 - - - - - - - - - 269 4 - - 135 - - - - - - - 898 243 - 308 395 3,827 6,668 7,765 7,438 6,782 6,968 6,721 7,628 8,318 8,532 9,065 15 6 - - 442 6 2 - - - 2 - - 11 56 232 128 69 72 607 6 10 813 23 27 25 3 - 3 1 - - 336 - 62 21 - 69 - - 464 381 484 13 13 279 95 - 2 (205) 625 4,020 3,867 1,767 2,118 2,082 2,095 2,235 2,088 47,225 50,290 47,927 49,095 82,540 62,170 53,154 55,199 56,866 60,624 $ 65,884 $ 81,523 $ 75,691 $ 72,010 $ 101,835 $ 78,551 $ 81,551 $ 77,699 $ 86,058 $ 79,625 $ (46,412) $ (45,198) $ (47,757) $ (55,230) $ (46,761) $ (50,727) $ (34,244) $ (39,103) $ (38,225) $ (55,657) 4,543 8,072 6,284 5,732 33,392 1,011 169 2,539 3,074 3,632 (41,869)37,126)(41,473)(49,498 (13,369) (49,7]6) (34,075) (36,564) (35,151) (52,025 $ 47,085 $ 49,467 $ 48,011 $ 50,516 $ 51,017 $ 50,551 $ 52,205 $ 53,114 $ 57,649 $ 59,046 5,254 5,525 6,068 6,394 6,589 6,745 - - - - - 8,141 8,911 8,644 8,858 466 - - - - 1,489 1,535 2,464 2,491 2,609 2,778 2,810 2,717 2,802 2,706 - - - - - - 1,048 2,080 1,583 1,547 3,057 1,766 1,539 1,823 841 973 1,188 1,045 1,397 2,368 4,894 3,893 6,230 4,228 4,390 4,353 5,518 4,464 3,369 3,656 - - 761 2,950 1,312 1,651 135 218 2,151 140 205 (625) (4,020) (3,867) (10,485) (6,192) (10,057) (6,395) (7,053) 1,814 82 61,984 69,702 69,964 73,179 65,131 61,325 52,847 57,325 61,898 71,277 2,577 1,311 954 813 671 494 707 715 938 1,496 360 230 314 336 293 725 856 2,463 69 2,438 317 464 381 484 918 265 374 362 1,260 456 (205) 625 4,020 3,867 10,485 6,192 10,057 6,395 7,053 (1,814) - - - - - - - (82) - (574) - (5,000) 3,049 2,630 5,669 500 12,367 7,676 11,420 9,853 9,320 2,576 $ 65,033 $ 72,332 $ 75,633 $ 73,679 $ 77,498 $ 69,001 $ 64,267 $ 67,178 $ 71,218 $ 73,853 $ 15,572 $ 24,504 $ 22,207 $ 17,949 $ 18,370 $ 10,598 $ 18,603 $ 18,222 $ 23,673 $ 15,620 7,592 10,702 11,953 6,232 45,759 8,687 11,589 12,392 12,394 6,208 HT1 5, 61 06 ,1 9, 5 19 3 ,6 67 I 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 1, 2015. 3 The City of Iowa City reclassified Road Use Tax from General Revenues to Operating Grants effective for the fiscal year ending June 30, 2015. 113 General Fund Nonspendable Restricted Committed Assigned Reserved Unassigned Unreserved Total general fund All other Governmental Funds Nonspendable Restricted Reserved Designated for long-term debt Unassigned Unreserved, reported in: Special revenue funds Capital projects funds Total all other governmental funds CITY OF IOWA CITY, IOWA FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified accrual basis of accounting) (amounts expressed in thousands) 2009 2010 2011 2012 20132 2014 2015 20163 2017 2018 $ $ $ 331 $ 314 $ 69 $ 69 $ 69 $ 69 $ 788 $ 793 16,268 23,779 25,689 26,533 25,291 18,975 9,974 1,942 - - - - - 4,699 5,199 4,962 3,542 5,191 1,744 3,400 - 1,143 1,342 1,437 555 406 - - - - 4,483 - - - - - 15,931 14,273 17,113 17,907 19,286 23,366 24,793 28,516 15,362 26,101 - - - - - - - - $ 15,917 $ 26,507 $-3 -6,07 2 S 43,557 7 44,615 7 47,909 7 49,129 7 48,252 $ 42,096 $ 37,650 $ - $ - $ - S - $ - $ - $ - $ - $ 344 $ 165 - - 34,889 34,853 28,108 31,285 27,897 38,266 63,941 64,033 5,339 3,903 - - - - - - - - 11,759 13,952 - - - - - - (1,741) (366) (5,844) (9) (38) (1,852) (1,674) - - - 10,960 8,043 - - - - - $ 26,206 77-4,224 $ 33,148 $ 34,487 $ 22,264 $ 31,276 7 27,897 7 38,266 $ 64,285 S 64,160 1 The City of Iowa City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental 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. 2 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. 3 The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. 114 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 noncapital expenditures CITY OF IOWA CITY, IOWA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS Last Ten Fiscal Years (modified accrual basis of accounting) 1 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 1, 2015. 115 (amounts expressed in thousands) 2009 2010 2011 2012 2013' 2014 2015 2016' 2017 2018 $ 48,572 $ 59,143 $ 59,387 $ 61,649 $ 62,483 $ 53,797 $ 55,014 $ 55,831 $ 60,452 $ 61,753 1,284 1,211 1,412 1,307 1,784 1,660 1,806 3,056 3,521 2,734 19,521 31,404 29,870 21,952 19,941 17,636 21,086 20,230 24,140 14,944 2,498 2,433 2,515 2,614 1,800 1,819 2,204 3,357 2,355 2,295 - - - - - - - 760 750 695 2,645 1,599 1,479 1,768 782 909 1,080 946 1,235 1,937 5,302 4,784 7,749 5,750 6,325 6,040 7,045 2,913 2,101 2,875 $ 79,822 $ 100,574 $ 102,412 $ 95,040 $ 93,115 $ 81,861 $ 88,235 $ 87,093 $ 94,554 $ 87,233 $ 18,752 $ 19,108 $ 18,717 $ 20,091 $ 20,648 $ 21,370 $ 21,996 $ 21,701 $ 22,513 $ 23,360 12,405 13,311 14,766 15,462 8,503 8,432 12,071 9,466 9,186 10,052 10,849 11,266 12,498 13,075 13,000 13,087 11,821 12,257 13,341 14,208 8,037 10,520 8,878 8,037 8,219 8,196 5,711 5,346 7,695 11,074 7,300 7,191 7,695 7,553 7,286 7,184 7,608 6,007 5,882 6,017 8,418 9,354 10,386 13,294 16,465 13,560 12,564 13,230 13,305 11,895 3,364 3,064 2,889 2,543 2,339 1,903 1,669 1,475 1,597 1,570 17,096 17,690 21,873 16,006 17,861 14,528 14,762 14,848 18,405 28,225 $ 86,221 $ 91,504 $ 97,702 $ 96,061 $ 94,321 $ 88,260 $ 88,202 $ 84,330 $ 91,924 $ 106,401 $ (6,399) $ 9,070 S 4,710 $ (1,021) $ (1,206) $ (6,399) $ 33 $ 2,763 $ 2,630 $ (19,168) $ 30,035 $ - $ 16,165 $ 9,690 $ 2,655 $ 19,730 $ 7,785 $ 9,405 $ 22,570 $ 11,995 - - $ 10,930 - - - - - - - 554 222 845 3,619 1,369 1,684 165 252 2,292 140 - 20 594 53 - - - - - - 552 - 394 165 (42) 385 199 441 120 236 (23,140) - (11,085) - - - - - - - 16,486 16,742 18,658 19,499 25,198 13,040 13,089 25,133 34,675 34,666 (16,386) (17,446) (22,722) (23,181) (35,493) (16,134) (23,430) (28,502) (47,033) (32,440) $ 8,101 $ (462) $ 13,779 $ 9,845 $ (6,313) $ 18,705 $ (2,192) $ 6,729 $ 12,624 $ 14,597 $ 1,702 $ 8,608 $ 18,489 $ 8,824 $(7,519) $ 12,306 $ (2,159) $ 9,492 $ 15,254 $ (4,571) 17.0% 15.3% 16.2% 18.6% 24.0% 20.7% 19.8% 21.2% 19.9% 17.1% 1 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 1, 2015. 115 CITY OF IOWA CITY, IOWA GENERAL GOVERNMENT TAX REVENUES BY SOURCE Last Ten Fiscal Years (Modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year Property Tax Road Use Tax Hotel/Motel Tax 2009 47,861 5,254 713 2010 50,256 5,525 699 2011 48,831 6,068 776 2012 51,374 6,394 811 2013 51,836 6,589 872 2014 51,331 6,745 967 2015 53,056 7,231 1,057 2016 53,878 8,320 1,079 2017 58,375 8,672 1,137 2018 59,730 8,427 1,046 1 1%Local Option Sales Tax went into effect 7/1/09 and was effective through 6/30/13 2 1% Utility Franchise Fee went into effect 4/1/10. 116 Local Option Utility Sales Tax' Franchise Fee 8,141 8,912 8,644 8,858 466 47 868 822 918 1,031 902 874 939 976 Total 53,828 64,668 65,455 68,045 69,073 60,540 62,246 64,151 69,123 70,179 CITY OF IOWA CITY, IOWA ASSESSED AND TAXABLE VALUE OF PROPERTY Last Ten Fiscal Years (amounts expressed in thousands) Collection Commercial, Industrial Incremental Value Gas & Residential Taxable Value Total Year Ended Agricultural & Utilities (excluding Military Net (Debt Service Electric Utilities Total Rollback as a Percentage Direct June 30 Residential (Taxed at Ag Rate) Gas & Electric) Exemptions Valuation Levy Only) (excise tax) Value Percentage of Assessed Value Rate 2009 Assessed 2,991,702 1,565 1,108,123 3,396 $ 4,097,994 111,540 54,081 $ 4,263,615 Taxable 1,307,511 1,410 1,105,109 3,396 $ 2,410,634 111,540 44,597 $ 2,566,771 44.080 60.202 17.717 2010 Assessed 3,065,279 1,499 1,133,818 3,324 $ 4,197,272 117,813 61,066 $ 4,376,151 Taxable 1,384,088 1,407 1,133,818 3,324 $ 2,515,989 117,813 45,157 $ 2,678,959 45.589 61.217 17.853 2011 Assessed 3,122,875 2,315 1,223,304 3,239 $ 4,345,255 25,409 79,196 $ 4,449,860 Taxable 1,464,644 1,534 1,223,304 3,239 $ 2,686,243 25,409 46,333 $ 2,757,985 46.909 61.979 17.757 2012 Assessed 3,182,636 2,264 1,231,756 3,163 $ 4,413,493 25,409 81,240 $ 4,520,142 Taxable 1,544,261 1,562 1,231,756 3,163 $ 2,774,416 25,409 48,338 $ 2,848,163 48.530 63.010 17.842 2013 Assessed 3,284,249 2,516 1,236,609 3,097 $ 4,520,277 11,712 83,538 $ 4,615,527 Taxable 1,666,036 1,448 1,236,609 3,097 $ 2,900,996 11,712 47,404 $ 2,960,112 50.752 64.134 17.269 2014 Assessed 3,367,052 2,656 1,200,457 3,060 $ 4,567,105 14,114 87,100 $ 4,668,319 Taxable 1,776,096 1,592 1,200,457 3,060 $ 2,975,085 14,114 46,813 $ 3,036,012 52.817 65.034 16.805 2015 Assessed 3,488,113 3,681 1,238,018 2,939 $ 4,726,873 21,132 78,643 $ 4,826,648 Taxable 1,894,080 1,598 1,175,921 2,939 $ 3,068,660 21,132 47,005 $ 3,136,797 54.400 64.989 16.705 2016 Assessed 3,603,744 3,554 1,216,054 2,828 $ 4,820,524 42,307 87,728 $ 4,950,559 Taxable 2,008,493 1,588 1,095,272 2,828 $ 3,102,525 33,331 46,785 $ 3,182,641 55.734 64.289 16.651 2017 Assessed 3,882,757 3,721 1,300,840 2,728 $ 5,184,590 72,651 92,987 $ 5,350,228 Taxable 2,155,033 1,707 1,149,736 2,728 $ 3,303,748 72,651 44,987 $ 3,421,386 55.626 63.948 16.583 2018 Assessed 4,001,761 3,426 1,316,765 2,635 $ 5,319,317 80,560 94,582 $ 5,494,459 Taxable 2,274,452 1,618 1,147,155 2,635 $ 3,420,590 80,560 41,702 $ 3,542,852 56.939 64.480 16.333 Sources: Iowa Department of Management Notes: Property is reassessed in the odd numbered years to make adjustments to all property values, according to current market values. Asper the Code of Iowa, all real property subject to taxation shall be valued at its actual value and, except as otherwise provided, shall be reassessed at 100% of its actual value. 117 CITY OF IOWA CITY, IOWA PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS Last Ten Fiscal Years (per $1,000 assessed valuation) Source: "Tax Levies for Johnson County, Iowa," compiled by the Johnson County Auditor. Note: lIncludes Johnson County, City of Iowa City Assessor, and Agricultural Extension levies. Tax rates are per $1,000 of assessed value. 118 Overlapping Rates Total City of Iowa City Iowa City Kirkwood Direct & Collection Operating Debt Service Total City Johnson School Community State of Overlapping Year Millase Millaee Millase CountV1 District Colleue Iowa Rates 2009 13.414 4.303 17.717 7.803 14.192 0.852 0.004 40.568 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 7.077 13.688 1.065 0.003 38.638 2015 12.575 4.130 16.705 7.062 13.700 1.058 0.003 38.528 2016 12.822 3.829 16.651 7.228 13.868 1.061 0.003 38.811 2017 13.005 3.578 16.583 7.093 13.989 1.080 0.003 38.748 2018 12.755 3.578 16.333 7.180 13.959 1.132 0.003 38.607 Source: "Tax Levies for Johnson County, Iowa," compiled by the Johnson County Auditor. Note: lIncludes Johnson County, City of Iowa City Assessor, and Agricultural Extension levies. Tax rates are per $1,000 of assessed value. 118 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. 1 Delinquent tax collection is presented by collection year, rather than levy year, because information is not available from Johnson County Treasurer by levy year. 119 Percent of Total as Collection Total Tax Current Tax Levy Delinquent Tax Total Tax a Percent of Year Levied Collections Collected Collections' Collections Levy 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 8 471,834 100.1 2012 49,595 49,543 99.9 1 491,544 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 2018 56,458 56,434 100.0 0 56,434 100.0 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. 1 Delinquent tax collection is presented by collection year, rather than levy year, because information is not available from Johnson County Treasurer by levy year. 119 CITY OF IOWA CITY, IOWA PRINCIPAL TAXPAYERS Current Year and Nine Years Ago (amounts expressed in thousands) Sources: 'City of Iowa City Assessor's Office 120 2009 2018 % of Total % of Total Taxable Taxable Taxable Taxable Ten largest taxpavers' Type of Business Valuation Rank Valuation Valuation Rank Valuation ACT Inc (Am College Testing Prgrm) Educational Testing Service $ 44,435 2 1.03 % $ 56,145 1 1.64 % BBCS Hawkeye Housing LLC Real Estate Mangment - - N/A 45,357 2 1.33 Mid -American Energy Company Public Gas and Electric Utility 45,048 1 1.02 29,806 3 0.87 Vesper Iowa City LLC Real Estate Developer - - N/A 27,191 4 0.79 Midwestone Bank Finanacial - - N/A 26,245 5 0.77 Ann Gerdin Trust (formerly Russell Gerdin) Warehousing 16,939 4 0.39 25,448 6 0.74 Dealer Properties IC LLC (Billion Auto) Car Dealerships - - N/A 21,465 7 0.63 Michael T McLaughlin Property Management - - N/A 18,740 8 0.55 Proctor & Gamble LLC Manufacturing Company 12,688 9 0.29 18,673 9 0.55 Christian Retirement Services (Oaknoll) Retirement Community - - N/A 18,335 10 0.54 SouthGate Development CO RealEstate Developer 20,265 3 0.46 - - N/A National Computer Systems (Pearson) Information Services 16,430 5 0.38 - - N/A MEHSM LC (Sycamore Mall) Shopping Mall 14,954 6 0.34 - - N/A Plaza Towers LLC Condo/Hotel/Commercial space 14,168 7 0.32 - - N/A United Natural Foods Wholesale Distribution Company 13,095 8 0.30 N/A Alpha Inc. Industrial 11,715 10 0.27 N/A Total $ 209,737 4.80 % $ 287,405 8.41 % Sources: 'City of Iowa City Assessor's Office 120 h 121 CITY OF IOWA CITY, IOWA PRINCIPAL WATER SYSTEM CUSTOMERS Current Year and Nine Years Ago Sources: City of Iowa City Revenue Division 122 2009 2018 Customer Name Charges Rank Percentage Charges Rank Percentage Proctor & Gamble $ 624,483 1 8.33 % $ 787,275 1 7.91 Veterans Administration Medical Center 91,529 2 1.22 120,538 2 1.21 Mercy Hospital 71,622 4 0.96 67,081 3 0.67 Campus Apartments 66,600 5 0.89 66,835 4 0.67 Tailwind Iowa City LLC formerly Dolphin Lake 37,843 9 0.50 55,022 5 0.55 Dominium JIT Sry formerly Mark IV Apts 53,273 7 0.71 55,000 6 0.55 Iowa City School District - - N/A 47,194 7 0.47 Seville Apts 31,885 10 0.43 38,527 8 0.39 Oaknoll - - N/A 37,130 9 0.37 U of I Mayflower 90,330 3 1.20 34,763 10 0.35 Robert's Dairy 63,517 6 0.85 - - N/A Lear Corp - - N/A N/A Sheraton Inn/Holiday Inn 35,806 8 0.48 N/A $ 1,166,888 15.57 % $ 1,309,365 13.14 Total Water System Charges $ 7,497,903 $ 9,953,510 Sources: City of Iowa City Revenue Division 122 CITY OF IOWA CITY, IOWA SALES HISTORY AND TOTAL WATER CHARGES Last Ten Fiscal Years Fiscal Water Sales Water System Year Cubic Feet Sold Charzes 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' 240,423,612 8,161,522 2016 255,524,943 8,758,683 2017 267,511,531 9,156,005 2018 293,046,636 9,953,510 Sources: City of Iowa City Revenue Department Notes: IBeginning in March 2015, Water Sales by Cubic Feet Sold also includes unbilled usage. 123 CITY OF IOWA CITY, IOWA PRINCIPAL SEWER SYSTEM CUSTOMERS Current Year and Nine Years Ago Total Sewer System Charges Sources: City of Iowa City Revenue Department $ 12,499,949 124 $ 12,524,540 2009 2018 Customer Name Charges Rank Percentage Charges Rank Percentage University of Iowa $ 1,953,325 1 15.63 % $ 1,938,618 1 15.48 % Proctor & Gamble 1,443,652 2 11.55 1,355,077 2 10.82 Veterans Administration Medical Center 88,204 8 0.71 162,111 3 1.29 Mercy Hospital 122,737 5 0.98 106,938 4 0.85 Campus Apartments 91,889 7 0.74 78,918 5 0.63 Dominium JIT Sry formerly Mark IV Apts 73,987 9 0.59 68,736 6 0.55 University of Iowa Mayflower 163,776 3 1.31 54,414 7 0.43 Seville Apts - - N/A 52,407 8 0.42 Oaknoll Retirement Residence N/A 52,205 9 0.42 Tailwind Iowa City LLC formerly Dolphin Lake N/A 52,142 10 0.42 Robert's Dairy 155,192 4 1.24 - - N/A Iowa City Landfill 92,318 6 0.74 N/A Sheraton Iowa City Hotel 62,698 10 0.50 N/A $ 4,247,778 33.99 % $ 3,921,566 31.31 % Total Sewer System Charges Sources: City of Iowa City Revenue Department $ 12,499,949 124 $ 12,524,540 CITY OF IOWA CITY, IOWA SALES HISTORY AND TOTAL SEWER CHARGES Last Ten Fiscal Years Fiscal Sewer Sales Sewer System Year Cubic Feet Sold Cbarges 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 12,3 82,031 2015' 266,830,947 12,278,153 2016 270,547,701 12,022,203 2017 277,712,785 12,404,360 2018 283,246,320 12,524,540 Sources: City of Iowa City Revenue Department Notes: IBeginning in March 2015, Sewer Sales by Cubic Feet Sold also includes unbilled usage. 125 Governmental Activities Revenue Bonds' 2,614,644 2,616,768 2,618,892 2,491,016 15,168,140 15,035,264 General Fiscal Obligation Year Bonds' 2009 81,222,533 2010 71,791,737 2011 77,743,957 2012 74,225,654 2013 57,688,803 2014 64,132,510 2015 59,421,203 2016 55,998,392 2017 52,571,254 2018 52,883,524 Revenue Bonds' 2,614,644 2,616,768 2,618,892 2,491,016 15,168,140 15,035,264 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. ' Bonds reported net of related premiums and discounts. 2 Population and personal income information can be found on page 136. 126 Total Primary Government 173,627,175 155,015,792 156,943,112 144,979,434 124,461,500 125,414,952 108,407,998 98,947,069 102,371,308 97,224,850 Percentage of Personal Income2 2.92 2.57 2.38 2.08 1.72 1.65 1.43 1.26 1.25 1.16 Per Capitan 2,513 2,284 2,276 2,103 1,775 1,752 1,477 1,333 1,351 1,256 CITY OF IOWA CITY, IOWA RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Business -Type Activities Capital General Loan Obligation Revenue Note Bonds' Bonds' 211,000 4,317,787 87,875,855 211,000 3,731,167 79,281,888 211,000 3,130,849 75,857,306 211,000 1,483,473 69,059,307 211,000 1,182,315 62,764,738 211,000 886,157 57,568,517 211,000 590,000 45,566,903 211,000 295,000 39,951,661 211,000 - 34,420,914 211,000 - 29,095,062 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. ' Bonds reported net of related premiums and discounts. 2 Population and personal income information can be found on page 136. 126 Total Primary Government 173,627,175 155,015,792 156,943,112 144,979,434 124,461,500 125,414,952 108,407,998 98,947,069 102,371,308 97,224,850 Percentage of Personal Income2 2.92 2.57 2.38 2.08 1.72 1.65 1.43 1.26 1.25 1.16 Per Capitan 2,513 2,284 2,276 2,103 1,775 1,752 1,477 1,333 1,351 1,256 CITY OF IOWA CITY, IOWA RATIOS OF GENERAL OBLIGATION BONDED DEBT] TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA Last Ten Fiscal Years (amounts expressed in thousands, except per capita) 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 Capita3 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 591 2018 5,494,459 52,884 - 52,884 8,609 44,275 8.06:1000 572 Notes: 1 General Obligation bonds, net of related premiums and discounts. 2City of Iowa City Budget Book. 3 Population data can be found on page 136. 127 CITY OF IOWA CITY, IOWA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES' Fiscal Year Ended June 30 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Notes: Principal 8,418 9,354 10,386 13,294 16,465 13,560 12,564 13,230 13,305 11,895 Last Ten Fiscal Years (amounts expressed in thousands) Interest2 3,364 3,064 2,889 2,543 2,339 1,903 1,669 1,475 1,597 1,570 Total Debt Service 11,782 12,418 13,275 15,837 18,804 15,463 14,233 14,705 14,902 13,465 Total General Governmental Expenditures and Transfers 102,607 108,950 120,424 119,242 129,814 104,394 111,632 112,832 138,957 138,841 1 General Fund, Special Revenue Funds, Debt Service Fund and Capital Projects Funds. 2 Beginning in FYI 3, Taxable Urban Renewal Revenue Bonds are also included. 128 Ratio of Debt Service to General Expenditures .11 : 1.00 .11 : 1.00 .11 : 1.00 .13 : 1.00 .14 : 1.00 .15 : 1.00 .13 : 1.00 .13 : 1.00 .11 : 1.00 .10 : 1.00 Name of Governmental Unit City of Iowa City Iowa City Community School District' Johnson County' 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 June 30, 2018 (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 Debt/Actual Outstanding Iowa City Iowa City Market Value 2 Per Capita3 $ 68,130 100.00 % $ 68,130 1.24% $ 879.8145 58,955 56.87 33,528 0.63 442.3336 10,640 42.09 4,478 0.08 59.0781 76,045 0.04 30 0.00 0.3958 90,422 14.11 12,759 0.24 168.3290 236,062 50,795 670.1365 $ 304,192 $ 118,925 1,549.9510 $ 70,954 ' Long term debt outstanding includes only GO debt. 2City Property Assessed Value of 5,494,459 came from the Iowa Department of Management 3 Population for FY 18 of 77,437 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 borne 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 borne 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. 129 Note: Under Iowa code, the city's outstanding general obligation debt should not exceed 5 percent of total assessed property value. 130 CITY OF IOWA CITY, IOWA LEGAL DEBT MARGIN INFORMATION Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Assessed Valuation $ 4,263,615 $ 4,376,151 $ 4,449,860 $ 4,520,142 $ 4,615,527 $ 4,668,319 $ 4,826,648 $ 4,950,559 $ 5,350,228 $ 5,494,459 Debt Limit 213,181 218,808 222,493 226,007 230,776 233,416 241,332 247,528 267,511 274,723 G.O. Bonds 84,995 75,050 80,575 75,320 58,550 64,420 59,340 55,350 51,645 51,880 TIF Rev. Bonds - - - - 2,655 2,655 2,655 2,525 15,200 15,065 Letters of credit - 498 1,616 805 538 1,943 2,005 582 663 475 TIF rebates 2,180 1,223 867 574 307 170 18,206 13,506 17,356 25,012 Total net debt applicable to limit 87,175 76,771 83,058 76,699 62,050 69,188 82,206 71,963 84,864 92,432 Legal debt margin $ 126,006 $ 142,037 $ 139,435 $ 149,308 $ 168,726 $ 164,228 $ 159,126 $ 175,565 $ 182,647 $ 182,291 Total net debt applicable to the limit as a percentage of debt limit 40.89% 35.09% 37.33% 33.94% 26.89% 29.641% 34.06% 29.07% 31.72% 33.65% Note: Under Iowa code, the city's outstanding general obligation debt should not exceed 5 percent of total assessed property value. 130 CITY OF IOWA CITY, IOWA GENERAL OBLIGATION DEBT ANNUAL MATURITY SCHEDULE Payments Funding Source(s) 131 Principal Outstanding at Fiscal Property Tax Tax Increment Beginning of Fiscal Year Principal Interest Total Revenue Financing Year 2018 11,760,000 1,113,386 12,873,386 12,275,274 598,112 51,645,000 2019 9,335,000 1,257,050 10,592,050 9,833,950 758,100 51,880,000 2020 8,400,000 1,036,338 9,436,338 8,680,208 756,130 42,545,000 2021 7,585,000 819,135 8,404,135 7,647,747 756,388 34,145,000 2022 6,395,000 631,263 7,026,263 6,270,783 755,480 26,560,000 2023 5,520,000 492,013 6,012,013 5,313,697 698,316 20,165,000 2024 4,760,000 358,213 5,118,213 4,573,351 544,862 14,645,000 2025 3,830,000 248,913 4,078,913 3,842,203 236,710 9,885,000 2026 3,030,000 160,600 3,190,600 3,027,816 162,784 6,055,000 2027 2,045,000 85,325 2,130,325 1,967,008 163,317 3,025,000 2028 980,000 29,400 1,009,400 1,009,400 - 980,000 Total 69,871,636 $ 63,640,000 $ 6,231,636 $ $ 64,441,437 $ 5,430,199 131 CITY OF IOWA CITY, IOWA SCHEDULE OF REVENUE BOND COVERAGE Last Ten Fiscal Years (amounts expressed in thousands) Fiscal Year Net Revenue Annual Debt Service Ended Available for Ratio of June 30 Revenue Expenses` Debt Service Principal Interest Total Coverage Parking Revenue 2009 5,630 3,024 2,606 370 584 954 2.73 20106 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 20157 5,620 3,828 1,792 540 254 794 2.26 2016 - - - - - - - 2017 2018 - - - - - Wastewater Treatment Revenue 20096 13,462 5,202 8,260 4,260 2,813 7,073 1.17 20106 13,174 5,050 8,124 4,205 2,307 6,512 1.25 20116 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 2018 13,181 6,622 6,559 3,580 756 4,336 1.51 Water Revenues 20096 8,833 5,726 3,107 995 1,171 2,166 1.43 20106 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 20126 8,649 5,653 2,996 1,200 861 2,061 1.45 20136 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 2018 9,838 6,949 2,889 1,455 394 1,849 1.56 Notes: 1 Excludes depreciation and interest. 2Includes principal and interest of revenue bonds only. 3 Parking Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.25. ° Wastewater Treatment Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.10. 5 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. 132 Fiscal Principal CITY OF IOWA CITY, IOWA REVENUE DEBT ANNUAL MATURITY SCHEDULE Payments Funding Source(s) Interest Total Sewer Revenue Water Revenue Tax Increment FinancinE 2018 5,170,000 1,606,970 6,776,970 4,336,332 1,849,143 591,495 2019 5,110,000 1,327,039 6,437,039 4,057,850 1,789,854 589,335 2020 5,525,000 1,137,000 6,662,000 4,267,400 1,802,965 591,635 2021 5,750,000 926,361 6,676,361 4,264,625 1,823,041 588,695 2022 5,460,000 744,165 6,204,165 2,812,500 1,836,190 1,555,475 2023 4,950,000 562,315 5,512,315 2,137,125 1,852,145 1,523,045 2024 2,850,000 436,171 3,286,171 - 1,800,826 1,485,345 2025 2,430,000 373,577 2,803,577 - 1,351,082 1,452,495 2026 1,665,000 320,589 1,985,589 - 561,244 1,424,345 2027 990,000 280,725 1,270,725 - - 1,270,725 2028 895,000 250,365 1,145,365 - - 1,145,365 2029 915,000 222,495 1,137,495 - - 1,137,495 2030 940,000 193,820 1,133,820 - - 1,133,820 2031 965,000 164,325 1,129,325 - - 1,129,325 2032 995,000 133,950 1,128,950 - - 1,128,950 2033 815,000 102,300 917,300 - - 917,300 2034 840,000 77,850 917,850 - - 917,850 2035 865,000 52,650 917,650 - - 917,650 2036 890,000 26,700 916,700 - - 916,700 Total 8,939,367 $ 48,020,000 $ $ 21,875,832 $ 14,666,490 $ 56,959,367 $ 20,417,045 133 Principal Outstanding at Beginning of Fiscal Year 48,020,000 42,850,000 37,740,000 32,215,000 26,465,000 21,005,000 16,055,000 13,205,000 10,775,000 9,110,000 8,120,000 7,225,000 6,310,000 5,370,000 4,405,000 3,410,000 2,595,000 1,755,000 890,000 Fiscal Year ZU16 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Total CITY OF IOWA CITY, IOWA REVENUE DEBT ANNUAL MATURITY BY FUNDING SOURCE Principal 3,580,000 3,465,000 3,820,000 3,980,000 2,660,000 2,085,000 Sewer Interest Total 756,332 592,850 447,400 284,625 152,500 52,125 4,336,332 4,057,850 4,267,400 4,264,625 2,812,500 2,137,125 $ 19,590,000 $ 2,285,832 $ 21,875,832 Principal 1,455,000 1,510,000 1,565,000 1,630,000 1,690,000 1,755,000 1,745,000 1,325,000 555,000 Water Outstanding Interest 394,143 279,854 237,965 193,041 146,190 97,145 55,826 26,082 6,244 Total 1,849,143 1,789,854 1,802,965 1,823,041 1,836,190 1,852,145 1,800,826 1,351,082 561,244 $ 13,230,000 $ 1,436,490 $ 14,666,490 134 CITY OF IOWA CITY, IOWA REVENUE DEBT ANNUAL MATURITY BY FUNDING SOURCE (continued) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Total Taxable Urban Renewal Principal 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 $ 15,200,000 Outstanding Interest 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 $ 5,217,045 135 Total 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 $ 20,417,045 CITY OF IOWA CITY, IOWA DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Calendar Years 136 Per Capita Calendar Personal Personal Average School Unemployment Retail Year Population Income' Income' Increase Enrollment' Rate' Sales° 2009 69,086 5,943;049 39,214 -2.46 13,049 4.3 905,,139,461 2010 67,862 6,039,549 39,477 0.67 13,319 5.0 725,329,723 2011 68,947 6,606,394 42,471 7.58 13,638 4.8 741,407,021 2012 68,947 6,956,611 43,809 3.15 13,862 4.1 767,122,555 2013 70,133 7,217,188 44,608 1.82 14,057 3.8 793,201,342 2014 71,591 7,594,813 46,204 3.58 14,162 3.5 649,794,164 2015 73,415 7,846,426 47,036 1.80 14,495 2.9 838,853,686 2016 74,220 8,031,750 47,574 1.14 15,186 3.2 853,258,347 2017 75,798 8,217,043 48,672 2.31 15,299 3.0 874,928,988 20185 77,437 8,396,022 49,732 2.18 14,285 2.2 854,538,416 Sources and Notes: 'Personal Income and Per Capita Personal Income based on metropolitan Iowa City / Coralville 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 ° Iowa 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 or 2018 are not available. Amounts projected based on average increase over previous 9 years. 6 US Census Bureau Population number is not avaible for 2018. Amounts projected based on an average over previous 9 years 136 Employers University of Iowa Veterans Administration Medical Center Iowa City Community School District Mercy Hospital ACT Inc. (formerly American College Testing Program) Proctor and Gamble Hy Vee City of Iowa City NCS Pearson Johnson County Internaltion Automotive Components formerly Lear Corp Systems Unlimited Total Employees Sources: Iowa City Area Development Group Various Employers CITY OF IOWA CITY, IOWA PRINCIPAL EMPLOYERS Current Year and Nine Years Ago 2009 2018 Employees Rank Percentaee Employees Rank Percentaee 28,781 1 30.7 % 29,705 1 28.7 1,351 5 1.4 2,150 2 2.1 1,700 2 1.8 1,575 3 1.5 1,305 4 1.4 1,325 4 1.3 1,427 3 1.5 1,187 5 1.1 - - N/A 1,084 6 1.0 1,166 6 1.2 1,012 7 1.0 982 8 1.0 931 8 0.9 1,152 7 1.2 775 9 0.7 - - MA 609 10 0.6 805 9 0.9 - - N/A 700 10 0.7 - - N/A o ro 7 ro 93,700 103,400 137 Public Safety Police Animal Shelter' Fire Inspection Services Public Works Public Works Admin Engineerings Flood Recovery Culture and Recreation Parks and Rec Admin Recreation Parks Forestry Cemetery CBD Maintenance Library Senior Center Community and Economic Development General Government City Council City Clerk City Attorney City Manager' Personnel Human Rights Finance Government Buildings Energy Conservation Transit' Special Revenue Employee Benefits CIP / Roads Flood Mitigation Grants Community Development UniverCity Program Traffic Engineering Streets MPOJC (formerly JCCOG) Other Shared Revenues Library Development Capital Projects Administrations Internal Service Funds Information Technology Equipment Central Services Risk Management Business -Type Activities Parking Mass Transit' Wastewater Treatment Water Sanitation Airport Cable Television' Stormwater Housing Authority Total Source: City's Financial Plan 138 CITY OF IOWA CITY, IOWA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION Last Ten Fiscal Years Full -Time Equivalent Employees as of June 30 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 103.25 103.25 98 97 103 105 105 105 105 105 6 6 6 6 57 57 66 65 65 65 64 64 64 64 15.55 15.55 15.55 15.55 15.55 13.55 13.55 12.85 13.5 13.5 2 2 2 2 2 2 2 2 2 2 11.35 11.35 12.1 12.1 12.1 12.1 12.1 12 16 16 - - 0.4 0.4 0.4 0.38 - - - - 2 2 2 2 2 2 2 2 2 2 15.42 15.42 15.42 15.42 15.42 15.42 15.42 14.42 15.42 14.75 13 13 13 13 13 13 13 13 16 16 3 3 3 3 3 3 3 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 43.64 43.63 45.13 45.13 44.77 46.17 46.17 6.31 6.31 6.31 6.5 6.5 6.5 6.5 6.5 7 7 9.05 9.05 9.1 9.1 8.4 8.95 8.95 10.8 12.63 13.13 7 7 7 7 7 7 7 7 7 7 4 4 4 4 4 4 4 4 4 4 6 6 5.6 5.6 5.6 5.6 5.6 5.5 5.5 5.5 3 3 3 3 5 6 6 10.5 10.5 9 4 4 4 4 4 3 3 3 3 3 2.5 2.5 2.5 2.5 2 2 2 2 2 2 26.3 26.3 26.24 27.53 23.47 23.97 22.47 23.07 23.13 22.13 4.96 4.96 4.96 4.83 4.83 4.83 4.83 5.33 4.33 5 0.25 0.25 - - - - - - - - 58.5 58.5 56.25 56.25 - - - - - - 0.29 0.29 0.26 0.55 0.55 0.55 0.55 0.55 0.55 0.55 2 2 - - 1.6 1.6 - - - - 3.88 3.88 3.83 3.83 3.33 2.98 2.98 2.83 - - - - 0.2 - - - - - 4.15 4.15 4.15 4.15 4.15 4.15 4.15 3.9 4.5 3 25.5 25.5 25.5 25.5 25.5 25.5 25.5 25.25 25.5 29 6.6 6.6 6.6 6.6 5.6 5.6 5.6 4.7 4.7 4.7 - - - - 1.6 1.62 - - - - 1- 3 5 6 6 5 4 12.3 12.3 11.3 11.8 10.86 9.86 9.86 9.86 9.8 10.8 11.26 11.26 11.26 11.26 10.75 10.75 10.75 10.75 10.75 10.75 0.75 0.75 0.75 0.75 0.76 0.5 0.5 0.5 0.5 0.5 1.93 1.93 2.01 1.8 1.8 1.8 1.8 1.8 1.8 1.8 33.25 33.25 32.75 32.75 29.25 26.25 26.25 23.13 21.63 21.63 - - - - 51.75 51.25 51.25 51.13 53.63 54.63 25.6 25.6 25.6 25.4 25.4 24.4 24.65 24.65 25.4 26 32.75 32.75 32.75 32.75 32.75 31.75 32 32 31.75 31.75 34.85 35.85 35.85 37.85 37.85 35.85 35.85 33.35 31.5 31.5 1.75 1.75 1.75 1.75 1 1 1 1 1 1 6.44 6.44 6.69 6.63 6.63 6.63 5.63 - - - 1.9 1.9 1.9 2.1 2.1 2.1 2.6 2.6 2.1 1.5 13.25 13.25 13.25 13.25 13.18 12.19 10.19 10.19 9.6 9.6 629.03 630.03 633.37 637.74 623.91 615.16 607.66 598.93 599.89 601.89 r Beginning in FYI 3, Animal Services is reported under Police 2 Beginning in FY 13, Communications Division has been moved from Finance to City Manager 3 Beginning in FYI 3, Transit was moved from the General Fund to an Enterprise Fund Beginning in FYI 6, Cable was moved from an Enterprise Fund to the General Fund s Beginning in FY17, Capital Project Administration was moved to Engineering 138 CITY OF IOWA CITY, IOWA OPERATING INDICATORS BY FUNCTION Last Ten Fiscal Years Sources: Various city divisions. Notes: Numbers are based on a calendar year and 2018 figures are compiled through 10/03/18. 139 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Public Safety Police` Physical arrests 6,486 5,983 6,590 5,911 4,468 6,192 5,595 5,465 4,482 3,373 Traffic Violations 4,460 4,446 3,403 3,761 2,499 3,718 3,356 2,989 2,246 2,061 Fire' Number of calls answered 4,152 4,472 4,635 5,173 4,713 5,828 6,016 6,974 6,749 5,258 Inspections conducted 1,959 2,145 1,806 1,970 1,431 2,032 1,903 2,459 874 864 Parking Parking Violations 126,050 118,717 109,553 96,117 88,909 60,680 65,196 57,549 62,930 50,346 Wastewater Treatment Daily average treatment in million gallons 12.34 12.86 10.37 8.28 9.84 10.02 9.76 10.48 8.32 7.77 Maximum daily capacity of plant in million gallons 41.0 41.1 41.1 41.1 41.1 41.1 43.3 43.3 43.3 43.3 Number of sewer system customers 23,161 23,344 23,527 23,529 24,059 24,389 24,533 25,085 25,485 26,069 Water Daily average consumption in million gallons 5.51 5.48 5.51 5.49 5.54 5.64 5.33 5.32 5.50 5.84 Maximum daily capacity of plant in million gallons 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 Customers by Classification Residential 23,391 23,657 23,875 24,086 24,442 24,790 23,089 23,638 24,025 24,595 Commercial 1,494 1,481 1,498 1,489 1,491 1,491 1,409 1,415 1,425 1,436 Industrial 15 15 15 15 15 15 14 14 14 15 Other 144 153 156 200 204 202 135 131 134 136 Total Customers 25,044 25,306 25,544 25,790 26,152 26,498 24,647 25,198 25,598 26,182 Sanitation Number of Customers 14,700 14,831 14,926 15,030 15,177 15,331 14,811 15,620 15,917 15,960 Tonnage 8,747 8,869 8,969 8,935 8,956 9,160 9,210 9,476 9,623 9,694 Landfill Tonnage 140,810 150,369 147,265 148,953 111,445 115,624 123,692 126,875 137,025 140,658 Sources: Various city divisions. Notes: Numbers are based on a calendar year and 2018 figures are compiled through 10/03/18. 139 140 CITY OF IOWA CITY, IOWA CAPITAL ASSETS BY FUNCTION Last Ten Fiscal Years 2012 2013 2009 2010 2011 2014 2015 2016 2017 2018 Public Safety Police Stations 1 1 1 1 1 1 1 1 1 1 Patrol units 17 18 18 18 18 20 20 20 24 23 Fire Stations 3 3 3 4 4 4 4 4 4 4 Fire apparatus 9 9 9 11 11 11 11 10 10 10 Public Works Streets Miles 270 272 272 275 276 279 281 283 286 288 Streetlights 3,408 3,410 3,412 3,412 3,412 3,412 3,412 3,412 3,412 3,307 Culture and Recreation Library 1 1 1 1 1 I 1 1 1 I Cemetery I 1 1 1 I 1 1 1 1 I Acreage 40 40 40 40 40 40 40 40 40 40 Parks 61 40 41 41 42 43 46 46 49 50 Acreage 1,603 1,335 1,354 1,441 1,506 1,897 1,897 1,902 1,932 1,942 Recreation Recreation centers 2 2 2 2 2 2 2 2 2 2 Swimming pools 3 3 3 3 3 3 3 3 3 3 Ball diamonds 30 30 30 30 27 27 27 27 27 27 Tennis courts 12 12 12 12 12 12 12 12 9 9 Soccer fields 20 20 20 20 20 20 20 20 20 20 Pickle Ball Courts - - - - - - - - 8 8 Futscal Courts - - - - - - - - 2 2 Full Basketball Courts 3 3 Gaga Pits - - - - - - - - - 2 Parking Facilities 5 5 5 5 5 5 5 5 6 6 Spaces 3,086 3,086 3,086 3,086 3,086 3,086 3,086 3,086 3,686 3,686 Wastewater Treatment Miles of sanitary sewer 289 291 292 294 295 298 300 301 304 306 Miles ofstorm sewer 120 122 124 127 128 131 133 136 139 140 Number of treatment plants 2 2 2 2 2 1 1 1 1 1 Number of service connectors 22,875 23,093 23,308 23,529 23,851 24,175 24,533 25,085 25,485 26,069 Water Miles of water mains 263 264 264 266 268 271 273 275 277 279 Number of city owned fire hydrants 2,635 2,662 2,680 2,735 3,330 3,385 3,415 3,447 3,503 3,529 Sanitation Landfills I 1 1 1 1 1 7 1 1 1 Acreage 395 395 395 411 411 411 418 418 418 418 Sources: Various city divisions. 140 Compliance Sect40 ion Tab Ccrtlfled Public AmDuntants 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 City Council City of Iowa City, Iowa Iowa City, Iowa We have audited, in accordance with the 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, as of and for the year ended June 30, 2018, 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, 2018. Our report included an emphasis of matter paragraph for the implementation of Governmental Accounting Standards Board Statement No. 75. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered City of Iowa City, Iowa'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 City of Iowa City, Iowa's internal control. Accordingly, we do not express an opinion on the effectiveness of City of Iowa City, Iowa'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 entity'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. 141 Our consideration of internal control 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. 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Iowa City, Iowa'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, 2018 are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the City. 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 City of Iowa City, Iowa'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 of Iowa City, Iowa's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Moline, Illinois December 11, 2018 142 Bohnsack & Frommelt LLP Certifled Public Accountants Independent Auditor's Report on Compliance For Each Major Federal Program and On Internal Control Over Compliance Required By the Uniform Guidance To the Honorable Mayor and Members of City Council City of Iowa City, Iowa Iowa City, Iowa Report on Compliance for Each Major Federal Program We have audited City of Iowa City, Iowa's compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of City of Iowa City, Iowa's major federal programs for the year ended June 30, 2018. City of Iowa City, Iowa'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 compliance for each of City of Iowa City, Iowa'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 Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of 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 City of Iowa City, Iowa'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. 143 Opinion on Each Major Federal Program In our opinion, 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, 2018. Report on Internal Control Over Compliance Management of City of Iowa City, Iowa is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered City of Iowa City, Iowa'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 City of Iowa City, Iowa'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 combination of deficiencies, in internal control over compliance, such that there is reasonable possibility that material noncompliance with a type of compliance requirement of a federal program 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 over compliance 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. SAn44� f, -X*MML& a p Moline, Illinois December 11, 2018 144 City of Iowa City, Iowa Schedule of Expenditures of Federal Awards Year Ended June 30, 2018 145 Federal Pass -Through Passed Total Federal Grantor/Pass-Through Grantor/ CFDA Entity Identifying Through to Federal Program Title or Cluster Title Number Number Subrecipients Expenditures U.S. Department of Agriculture Indirect: Pass-through Iowa Department of Agriculture Specialty Crop Block Grant Program -Farm Bill 10.170 15SCBGPIA0001 $ 2,553 $ 2,553 U.S. Department of Housing and Urban Development Direct: Community Development Block Grants (CDBG)/ Entitlement Grants Cluster: CDBG/Entitlement Grants 14.218 B -14 -MC -19-0009 971 971 CDBG/Entitlement Grants 14.218 B -15 -MC -19-0009 14,486 35,444 CDBG/Entitlement Grants 14.218 B -16 -MC -19-0009 49,366 245,834 CDBG/Entitlement Grants 14.218 B -17 -MC -19-0009 201,856 310,845 Subtotal CDBG/Entitlement Grants Cluster 266,679 593,094 Home Investment Partnerships Program 14.239 M -14 -MC -190205 180,107 181,202 Home Investment Partnerships Program 14.239 M -15 -MC -190205 67,521 70,134 Home Investment Partnerships Program 14.239 M -16 -MC -190205 206,857 252,396 Home Investment Partnerships Program 14.239 M -17 -MC -190205 49,918 84,380 504,403 588,112 Public and Indian Housing 14.850 IA022-00000116D - 370 Public and Indian Housing 14.850 IA022-00000117D 125,905 Public and Indian Housing 14.850 IA022-00000118D 95,287 221,562 Housing Voucher Program Cluster: Section 8 Housing Choice Vouchers 14.871 IA022VO 8,689,021 Public Housing Capital Fund 14.872 IA05P022501-16 51,790 Public Housing Capital Fund 14.872 IA05P022501-17 102,589 - 154,379 Total U.S. Department of Housing and Urban Development 771,082 10,246,168 U.S. Department of the Interior Direct: Historic Preservation Fund Grants -In -Aid 15.904 P17AP00060 - 8,026 U.S. Department of Justice Direct: Bulletproof Vest Partnership Program 16.607 2016-BUBX16082008 4,279 Edward Byrne Memorial Justice Assistance Grant 16.738 2015 -DJ -BX -0661 1,249 Edward Byrne Memorial Justice Assistance Grant 16.738 2016 -DJ -BX -0589 14,796 16,045 (1) (Continued) 145 City of Iowa City, Iowa Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2018 Federal Grantor/Pass-Through Grantor/ Program Title or Cluster Title Federal CFDA Number Pass -Through Entity Identifying Number Passed Through to Subrecipients Total Federal Expenditures U.S. Department of Justice (Continued) Indirect: Pass-through International Association of Chiefs of Police, Inc. Crime Victim Assistance -Discretionary Grants 16.582 IACP-2018-7586-04 $ 5,363 $ 54,867 Pass-through Iowa Department of Justice Violence Against Women Formula Grants 16.588 VW -18 -04 -CJ - 63,583 Pass-through Iowa Governor's Office of Drug Control Policy Public Safety Partnership and Community Policing Grants 16.710 16 -CAMP -05 16,038 18,266 Edward Byrne Memorial Justice Assistance Grant 16.738 15 -JAG -197460 56,736 88,868 (1) Total U.S. Department of Justice 78,137 245,908 U.S. Department of Transportation Direct: Airport Improvement Program 20.106 3-19-0047-024-2017 - 71,837 Indirect: Pass-through Iowa Department of Transportation Highway Planning and Construction Program Cluster: Highway Planning and Construction Program 20.205 HDP -3715(652)--71-52 117,860 Highway Planning and Construction Program 20.205 BROS-3715(663)--8J-52 - 35,195 Highway Planning and Construction Program 20.205 IA -95-X018-371-14 - 1,696,000 - 1,849,055 Pass-through Iowa Department of Transportation and Metropolitan Planning Organization of Johnson County Highway Planning and Construction Program Cluster: Highway Planning and Construction Program 20.205 18MPO-MPOJC - 157,785 Subtotal Highway Planning and Construction Program Cluster - 2,006,840 Direct: Federal Transit Cluster: Federal Transit -Formula Grants 20.507 IA -2018-008-01-00 - 1,497,897 Indirect: Federal Transit Cluster: Pass-through Iowa Department of Transportation Federal Transit- Capital Investment Grants 20.500 IA -04-0117-371-12 - 325,360 Federal Transit- Capital Investment Grants 20.500 IA -34-0002-371-14 - 206,559 Federal Transit- Capital Investment Grants 20.500 IA -1812-2016-10-371-15 - 740,064 - 1,271,983 Bus and Bus Facilities Formula Program 20.526 IA -34-0002-371-14 - 509,264 Bus and Bus Facilities Formula Program 20.526 IA -2016-019-371-16 - 4,714 - 513,978 Subtotal Federal Transit Cluster - 3,283,858 (Continued) 146 City of Iowa City, Iowa Schedule of Expenditures of Federal Awards (Continued) Year Ended June 30, 2018 Pass-through Iowa Department of Transportation Formula Grants for Rural Areas Transit Services Program Cluster: Enhanced Mobility of Seniors and Individuals with Disabilities Pass-through Iowa Department of Public Safety/ Governor's Traffice Safety Bureau Highway Safety Cluster: National Priority Safety Programs National Priority Safety Programs Subtotal Highway Safety Cluster Total U.S. Department of Transportation 20.509 IA -2016-027-371-16 20.513 IA -2016-026-01-371-18 20.616 PAP 17-405d-M6OT, Task 24 20.616 PAP 18-405d-M6OT, Task 18 349,744 108,764 10,582 31,140 41,722 - 5,904,980 U.S. Department of Homeland Security Indirect: Pass-through Iowa Department of Homeland Security and Emergency Management Division Hazard Mitigation Grant 97.039 DR -4187-0003-01 201,484 Total Expenditures of Federal Awards (1) Total CFDA 16.738 $104,913 See Notes to the Schedule of Expenditures of Federal Awards. 147 $ 851,772 $ 16,609,119 Federal Pass -Through Passed Total Federal Grantor/Pass-Through Grantor/ CFDA Entity Identifying Through to Federal Program Title or Cluster Title Number Number Subrecipients Expenditures U.S. Department of Transportation (Continued) Indirect: Pass-through Iowa Department of Transportation and Metrpolitan Planning Organization of Johnson County Metropolitan Transportation Planning and State and Non -Metropolitan Planning and Research 20.505 18MPO-MPOJC $ - $ 42,215 Pass-through Iowa Department of Transportation Formula Grants for Rural Areas Transit Services Program Cluster: Enhanced Mobility of Seniors and Individuals with Disabilities Pass-through Iowa Department of Public Safety/ Governor's Traffice Safety Bureau Highway Safety Cluster: National Priority Safety Programs National Priority Safety Programs Subtotal Highway Safety Cluster Total U.S. Department of Transportation 20.509 IA -2016-027-371-16 20.513 IA -2016-026-01-371-18 20.616 PAP 17-405d-M6OT, Task 24 20.616 PAP 18-405d-M6OT, Task 18 349,744 108,764 10,582 31,140 41,722 - 5,904,980 U.S. Department of Homeland Security Indirect: Pass-through Iowa Department of Homeland Security and Emergency Management Division Hazard Mitigation Grant 97.039 DR -4187-0003-01 201,484 Total Expenditures of Federal Awards (1) Total CFDA 16.738 $104,913 See Notes to the Schedule of Expenditures of Federal Awards. 147 $ 851,772 $ 16,609,119 City of Iowa City, Iowa Notes to the Schedule of Expenditures of Federal Awards Year Ended June 30, 2018 Note 1. Basis of Presentation The accompanying schedule of expenditures of federal awards (schedule) includes the federal grant activity of the City under programs of the federal government for the year ended June 30, 2018. The information in this schedule is presented in accordance with the 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). Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows of the entity. Note 2. Summary of Significant Accounting Policies Expenditures reported on the schedule are reported on the modified accrual basis of accounting for governmental funds and accrual basis of accounting for proprietary funds. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Expenditures of federal awards are recognized in the accounting period when the liability is incurred and has met the eligibility criteria of the federal grant. Revenue from federal awards is recognized when the City has done everything necessary to establish its right to the revenue. In the governmental funds, revenue from federal grants is recognized when the revenue is both measureable and available. In proprietary funds, revenue from federal grants is recognized when it is earned. Pass-through entity identifying numbers are presented where available. Note 3. Indirect Cost Rate The City has not elected to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance. 148 City of Iowa City, Iowa Schedule of Findings and Questioned Costs Year Ended June 30, 2018 I. Summary of the Independent Auditor's Results Financial Statements Type of auditor's report issued: Internal control over financial reporting: • Material weakness(es) identified? • Significant deficiency identified? • Noncompliance material to financial statements noted? Federal Awards Internal control over major programs: • Material weakness(es) identified? • Significant deficiency identified? Type of auditor's report issued on compliance for major programs • Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? Identification of major programs: CFDA Number Name of Federal Program or Cluster 14.871 Housing Choice Voucher Cluster: Section 8 Housing Choice Vouchers Unmodified ❑ Yes 0 No ❑ Yes 0 None Reported ❑ Yes 0 No ❑ Yes 0 No ❑ Yes 0 None Reported Unmodified ❑ Yes 0 No Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? (Continued) 149 0 Yes ❑ No City of Iowa City, Iowa Schedule of Findings and Questioned Costs (Continued) Year Ended June 30, 2018 11. Findings Relating to the Basic Financial Statements as Required to be Reported in Accordance with Generally Accepted Government Auditing Standards A. Internal Control No matters reported. B. Instances of Noncompliance No matters reported. III. Findings and Questioned Costs for Federal Awards A. Internal Control for Federal Awards No matters reported. B. Instances of Noncompliance No matters reported. IV. Other Findings Related to Required Statutory Reporting IV -A-18 Certified Budget — Expenditures for the year ended June 30, 2018 did not exceed the amounts budgeted. IV -13-18 Questionable Expenditures — No expenditures were noted that we believe may not meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979. IV -C-18 Travel Expenses — No expenditures of City money for travel expenses of spouses of City officials or employees were noted. IV -D-18 Business Transactions — No business transactions between the City and City officials or employees were noted. IV -E-18 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 insure that the coverage is adequate for current operations. IV -F-18 Council Minutes — No transactions requiring Council approval which had not been approved by the Council were noted. IV -G-18 Deposits and Investments — No instances of noncompliance with the deposit and investment provisions of Chapter 12B and Chapter 12C of the Code of Iowa and the City's investment policy were noted. IV -H-18 Revenue Notes — There were no instances of noncompliance with revenue note provisions. IV -1-18 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. IV -J-18 Payment of General Obligation Bonds — The City appears to be in compliance with Chapter 384.4 of the Code of Iowa. 150 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 APPENDIX B DESCRIBING 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 turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 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. 192 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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. IM City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 APPENDIX C DRAFT FORM OF OPINION OF BOND COUNSEL Ahlers & Cooney, P.G. Attorneys of Law A H L E R S C O O N E Y 100 Court Avenue, Suite 600 Al A T T O R N E if S Des Moines, Iowa 50309-2231 Phone: 515-243-7611 Fax: 515-243-2149 www.ahlerslaw.com [draft] We hereby certify that we have examined a certified transcript of the proceedings of the City Council and acts of administrative officers of the City of Iowa City, State of Iowa (the "Issuer"), relating to the issuance of General Obligation Bonds, Series 2019, by said City, dated , 2019, 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. 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 1985, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such Wishard & Baily -1888, Guernsey & Baily -1893, Baily & Stipp -1901, Stipp, Perry, Bannister & Starzinger-1914, Bannister, Carpenter, Ahlers & Cooney -1950, Ahlers, Cooney, Dorweuer, Ali bee, Haynie & Smith -1974, Ahlers, Cooney, Dorweiler, Haynie, Smith & Allhee, PC. -1990 C-1 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 City of Iowa City, State of Iowa $ General Obligation Bonds, Series 2013 Page 2 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. 0159L008-1110714-133 Respectfully submitted, C-2 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 APPENDIX D DRAFT CONTINUING DISCLOSURE CERTIFICATE 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 S General Obligation Bonds, Series 2019 (the "Bonds") dated , 2019. The Bonds are being issued pursuant to a Resolution of the Issuer approved on May 21, 2019 (the "Resolution"). The Issuer covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate; Interpretation, 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). This Disclosure Certificate shall be governed by, construed and interpreted in accordance with the Rule, and, to the extent not in conflict with the Rule, the laws of the State. Nothing herein shall be interpreted to require more than required by the Rule. Section 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Financial Information" shall mean financial information or operating data of the type included in the final Official Statement, provided at least annually by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Business Day" shall mean a day other than a Saturday or a Sunday or a day on which banks in Iowa are authorized or required by law to close. "Dissemination Agent" shall mean the Issuer or any Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation. "Financial Obligation" shall mean a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term Financial Obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with S.E.C. Rule 15c2-12. "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. D-1 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 "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 EIectronic Municipal Market Access website, a/k/a "EMMA" (emma.msrb.org). "Official Statement" shall mean the Issuer's Official Statement for the Bonds, dated .2019. "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 adopted by the Securities and Exchange Commission (S.E.C.) under the Securities Exchange Act of 1934, and any guidance and procedures thereunder published by the S.E.C., 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 tend (210) days after the end of the Issuer's fiscal year (presently June 30th), commencing with information for the 2018/2019 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 FDF" 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. D-2 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 Section 4. Content of Annual Financial Information. The Issuer's Annual Financial Information filing shall contain or incorporate by reference the following: a) The last available audited financial statements of the Issuer for the prior fiscal year, prepared in accordance with generally accepted accounting principles promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by the Governmental Accounting Standards Board or as otherwise provided under State law, as in effect from time to time, or, if and to the extent such financial statements have not been prepared in accordance with generally accepted accounting principles, noting the discrepancies therefrom and the effect thereof. If the Issuer's audited financial statements for the preceding years are not available by the time Annual Financial Information is required to be filed pursuant to Section 3(a), the Annual Financial Information filing shall contain unaudited financial statements of the type included in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Financial Information when they become available. b) A table, schedule or other information prepared as of the end of the preceding fiscal year, of the type contained in the final Official Statement under the captions: ■ Debt Limit. ■ Direct Debt. ■ General Obligation Debt. ■ Statement of Bonded Indebtedness. ■ Other Obligations. ■ Percentages for Taxable Valuation After Rollbacks. ■ Building Permits. ■ Property Valuations and Trend of Valuations -Actual (100%) Valuations for the City. ■ Property Valuations and Trend of Valuations -Taxable ("Rollback") Valuations for the City. ■ Levies and Tax Collections. ■ Larger Taxpayers. ■ Tax Rates. ■ Statement of Net Position -Governmental Activities. ■ Statement of Activities -Governmental Activities. ■ Balance Sheet -General Fund. ■ Statement of Revenues, Expenditures and Changes in Fund Balance -General Fund. ■ Pensions. ■ Other Post -Employment Benefits (OPEB). D-3 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 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 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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; xiv. Appointment of a successor or additional trustee or the change of name of a trustee, if material; xv. Incurrence of a Financial Obligation of the Issuer, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of Financial Obligation of the Issuer, any of which affect security holders, if material; and xvi. Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation of the Issuer, any of which reflect financial difficulties. 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. 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: D-5 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 a) If the amendment or waiver relates to theprovisions of Section 3(a), 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted; b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and c) The amendment or waiver either (i) is approved by the Holders of the Bonds in the same manner as provided in the Resolution for amendments to the Resolution with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Issuer shall describe such amendment in the next Annual Financial Information filing, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Issuer. Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Financial Information filing or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Issuer chooses to include any information in any Annual Financial Information filing or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Issuer shall have no obligation under this Certificate to update such information or include it in any future Annual Financial Information filing or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under this Disclosure Certificate. Direct, indirect, consequential and punitive damages shall not be recoverable by any person for any default hereunder and are hereby waived to the extent permitted by law. A default under this Disclosure Certificate shall not be deemed an event of default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, M City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. Section 13. Rescission Rights. The Issuer hereby reserves the right to rescind this Disclosure Certificate without the consent of the Holders in the event the Rule is repealed by the S.E.C. or is ruled invalid by a federal court and the time to appeal from such decision has expired. In the event of a partial repeal or invalidation of the Rule, the Issuer hereby reserves the right to rescind those provisions of this Disclosure Certificate that were required by those parts of the Rule that are so repealed or invalidated. Date: day of 32019, ATTEST: M. City Clerk CITY OF IOWA CITY, STATE OF IOWA D-7 Mayor City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 EXHIBIT A 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 2019 Dated Date of Issue: , 2019 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 0158]004-1\10714-133 CITY OF IOWA CITY, STATE OF IOWA By: Its: M i OFFICIAL BID FORM City of Iowa City 410 E. Washington Street Iowa City, Iowa 52240 City Council Members: May 7, 2019 Speer Financial, Inc. Facsimile: (319) 291-8628 For the $12,535,000* General Obligation Bonds, Series 2019 (the "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 $12,434,720). The 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. AMOUNTS* AND MATURITIES — JUNE 1 $4,125,000.........2020 % $955,000............2023 $ % $940,000............2027 % 905,000 ......... 2021 % 985,000 ............ 2024 % 960,000 ............ 2028 % 925,000 ......... 2022 % 875,000 ............ 2025 % 960,000 ............ 2029 % 905,000 ............ 2026 % Any consecutive maturities may be aggregated into term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above. Maturities: Term Maturity Maturities: Term Maturity Maturities: Term Maturity Maturities: Term Maturity *Subject to principal adjustment in accordance with the Official Terms of Offering. hi submitting this bid, we represent that (i) this bid constitutes a firm offer to purchase the Bonds, and (ii) we have an established industry reputation for underwriting new issuances of municipal bonds and notes. The 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 Bonds with the CUSIP numbers as entered on the 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 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 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 [ ] Amount: $250,700 Account Mana¢er Information Underwriter/Bank Address Authorized Rep City State/Zip Direct Phone ( FAX Number E -Mail Address Bidders Option Insurance We have purchased insurance from: Name of Insurer (Please fill in) Premium: Maturities: (Check One) L] Years L] All The foregoing bid was accepted and the Bonds sold by resolution of the City on May 7, 2019, 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 -------------- Gross Interest $ Less Premium/Plus Discount $ True Interest Cost $ True Interest Rate % TOTAL BOND YEARS 54,695.54 AVERAGE LIFE 4.363 Years City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 OFFICIAL TERMS OF OFFERING $12,535,000* CITY OF IOWA CITY Johnson County, Iowa General Obligation Bonds, Series 2019 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 $12,535,000* General Obligation Bonds, Series 2019 (the "Bonds"), on an all or none basis between 10:30 A.M. and 11:00 A.M., C.D.T., Tuesday, May 7, 2019. 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 Bonds, on an all or none basis, at the office of the Director of Finance, City Hall, 410 E. Washington, Iowa City, Iowa, before 11:00 A.M., C.D.T., Tuesday, May 7, 2019. The City will also receive facsimile bids at (319) 291-8628 or (319) 341-4008 for the Bonds, on an all or none basis, before 11:00 A.M., C.D.T., Tuesday, May 7, 2019. 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 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 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 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. *ADJUSTMENTS TO PRINCIPAL AMOUNT AFTER DETERMINATION OF BEST BID. The aggregate principal amount of the Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the 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 $12,535, 000. Interest rates specified by the Winning Bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the Winning Bidder will be changed if the aggregate principal amount of the Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Bonds will be made while maintaining, as closely as possible, the 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 the Winning Bidder. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 Bonds) will apply to the initial sale of the 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 Bonds to the bidder who submits a firm offer to purchase the Bonds at the highest price (or lowest true interest cost), as set forth in this Official Terms of Offering. Any bid submitted pursuant to this Official Terms of Offering shall be considered a firm offer for the purchase of the 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 first price at which 10% of a maturity of the 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 Bonds satisfies the 10% test as of the date and time of the award of the 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 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 Bonds will be subject to the 10% test in order to establish the issue price of the Bonds. If the competitive sale requirements are not satisfied, then until the 10% test has been satisfied as to each maturity of the Bonds, the winning bidder agrees to promptly report to the City the prices at which the unsold 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 Bonds of that maturity or until all 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 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 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 Bonds of that maturity or all 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 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 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 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 Bonds of that maturity or all 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. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 Sales of any 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 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 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), (3) a purchaser of any of the 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 Bonds are awarded by the City to the winning bidder. Bond Details The 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 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 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, 2019 and is payable by U.S. Bank, N.A., St. Paul, Minnesota (the "Bond Registrar"). The Bonds are dated the date of delivery (expected to be on or about June 4, 2019). AMOUNTS* AND MATURITIES — JUNE 1 $4,125,000 .....................2020 $955,000 ........................2023 $940,000 ....................... 2027 905,000 .....................2021 985,000 ........................2024 960,000 ....................... 2028 925,000 .....................2022 875,000 ........................2025 960,000 ....................... 2029 905,000 ........................2026 Any consecutive maturities may be aggregated into term bonds at the option of the bidder, in which case the mandatory redemption provisions shall be on the same schedule as above. The Bonds due June 1, 2020 - 2025, inclusive, are non -callable. The Bonds due June 1, 2026 - 2029, inclusive, are callable in whole or in part and on any date on or after June 1, 2025, at a price of par and accrued interest. If less than all the Bonds are called, they shall be redeemed in any order of maturity as determined by the City and within any maturity by lot. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 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 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 Bidding: Bids may be submitted via facsimile at (319) 291-8628 or (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 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 Bonds and must be for not less than $12,434,720. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 Award of the Bonds: The 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 Bonds from the payment dates thereof to the dated date and to the bid price. For the purpose of calculating true interest cost, the 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. The 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 Bonds are changed, maintaining, as close as possible, 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 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 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 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 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 38' Floor Chicago, IL 60602 ABA # 071003405 Credit To: 3281 Speer Bidding Escrow RE: City of Iowa City, Johnson County, Iowa bid for $12,535,000* General Obligation Bonds, Series 2019 City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 If the wire shall arrive in such account prior to the date and time of the sale of the 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 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 Bonds on or before the date of delivery of the 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 Bonds shall be conditioned upon the City delivering the Undertaking on or before the date of delivery of the Bonds. The 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 4, 2019. 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 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 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 Bonds, as that term is defined in the Rule. By awarding the 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 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 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 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 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 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 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 Bonds: (1) the legal opinion of Ahlers & Cooney, P.C., Des Moines, Iowa, that the 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 Bonds is exempt from federal income taxes as and to the extent set forth in the Official Statement for the Bonds; and (3) a no litigation certificate by the City. City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 The City has authorized the printing and distribution of an Official Statement containing pertinent information relative to the City and the Bonds. Copies of such Official Statement or additional information may be obtained from Mr. Dennis Bockenstedt, Director of Finance, 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 Director of Finance CITY OF IOWA CITY Johnson County, Iowa City oflowa City; Johnson County, Iowa $12,535,000* General Obligation Bonds, Series 2019 EXHIBIT A EXAMPLE ISSUE PRICE CERTIFICATE [from bond counsel] USE FOR GENERAL RULE 10%- PUBLIC SALE IOWA CITY, IOWA GENERAL OBLIGATION BONDS, SERIES 2019 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 the City of Iowa City, Iowa. 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 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. 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 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 Ahlers & Cooney, P.C. 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, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. [UNDERWRITER] [REPRESENTATIVE] LOW Name: Dated: [ISSUE DATE] SCHEDULE A SALE PRICES (Attached) USE FOR COMPETITIVE SALES — 3 BIDS RECEIVED EXHIBIT A IOWA CITY, IOWA GENERAL OBLIGATION BONDS, SERIES 2019 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"). 1. 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 ' Treas. Reg. § 1. 148-1 (f)(3)(i)(B) requires that all bidders have an equal opportunity to bid to purchase bonds. If the bidding process affords an equal opportunity for bidders to review other bids prior to submitting their bids, then this representation should be modified to describe the bidding process. 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 Ahlers & Cooney, P.C. 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, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. [UNDERWRITER] LO Name: Dated: [ISSUE DATE] SCHEDULE A EXPECTED OFFERING PRICES (Attached) SCHEDULE B COPY OF UNDERWRITER'S BID (Attached) 1119130 OISR +MESIN +r V ,l CITY O� IOWA CITY www.icgov.org April 25, 2019 Copy of Press Release: Community Police Review Board forum: April 29 ATTACHMENTS: Description Copy of Press Release: Community Police Review Board forum: April 29 Chris Olney From: City of Iowa City <CityofIowaCity@public.govdelivery.com> Sent: Monday, April 22, 2019 8:19 AM To: Chris Olney Subject: Reminder: Public invited to attend Community Police Review Board forum SHARE Having trouble viewing this email? View it as a Web page. °f IOWA CITY FOR IMMEDIATE RELEASE Date: 04/22/2019 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 29, 2019, at the Iowa City Public Library, Meeting Room A, 123 S. Linn St. Police Chief Jody Matherly and Captain Denise Brotherton 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. I ! I nr�inr�� Questions? •na.�1s�- ___ __ Contact Us CITY OF [0WA CITV UMSt0 CIt1r Of WEAIM STAY CONNECTED: in +r p- CITY O� IOWA CITY www.icgov.org April 25, 2019 Invitation from Johnson County Affordable Housing Coalition: Tomorrow the fight for Mobile Homes - April 26 ATTACHMENTS: Description Invitation from Johnson County Affordable Housing Coalition: Tomorrow the fight for Mobile Homes Kellie Fruehling From: Johnson County Affordable Housing Coalition <jcaffordablehousing@gmail.com> Sent: Thursday, April 25, 2019 12:26 PM To: Council Subject: Tomorrow (Friday) I The Fight for Mobile Homes View this email in your browser JOHNSON COUNTY AffomWe FloLdng C—Daftkxl JOIN US TOMORROW for our April Community Meeting The Fight for Mobile Homes Friday, April 26; 11:00 am -Noon (note the change from our normal meeting time) Room 203C, Health and Human Services building 855 S. Dubuque St., Iowa City Hear from residents, a mobile home park owner, and a national organizer for mobile home tenants' rights about what can be done to address the current 1 mobile home crisis. Advocacy Update THANK YOU to the many JCAHC members and friends who sent emails in support of Forest View residents. Although the public hearing is continued to the next formal city council meeting, we saw a significant increase in vocal supporters of the proposal. YOU ARE MAKING A DIFFERENCE. If you haven't yet had a chance to send your email, take a moment now to contact council(cD-iowa-city.org with your support. Copyright © 2019 Johnson County Affordable Housing Coalition, All rights reserved. You are receiving this email because you signed up at an event or meeting. Our mailing address is: Johnson County Affordable Housing Coalition 308 E. Burlington St. PMB 121 Iowa City, IA 52240 Add us to your address book Want to change how you receive these emails? You can update your preferences or unsubscribe from this list. 2 +r P ,l CITY O� IOWA CITY www.icgov.org April 25, 2019 Invitation (Iowa City Free Medical and Dental Clinic Fundraiser): You're Invited to Friday After Clinic - April 26 ATTACHMENTS: Description Invitation: You're Invited to Friday After Clinic -April 26 Kellie Fruehling From: Barbara Vinograde <bvinograde@freemedicalclinic.org> Sent: Monday, April 22, 2019 10:34 AM To: Council Subject: You're Invited to Friday After Clinic! Friday After Clinic with the Free Medical Clinic View this email in your browser Please join us, if you can, to celebrate the work of the Iowa City Free Clinic! Sincerely, Barbara It's almost here! Friday After Clinic with the Free Medical and Dental Clinic! April 26, 2018 from 5:30-7:30 pm College of Public Health Atrium Please join us for a free-will donation event, featuring live music by The New Found Five, beverages, appetizers by Maggie's Farm Wood -Fired Pizza, and a short program starting at 6 pm. From your friends at FMC Can't make it to the event? You can stili make a donation! Click Here to visit our website and make a donation by clicking on the "Make a Paypal Donation" button! 00 Item Number: 6. +r P_ W�rm�M CITY O� IOWA CITY www.icgov.org April 25, 2019 Civil Service Entrance Examination: Maintenance Worker II -Wastewater Treatment ATTACHMENTS: Description Civil Service Entrance Examination: Maintenance Worker I I - Wastewater Treatment APR 2 5 2019 City Clerk Iowa City, Iowa April 24, 2019 TO: The Honorable Mayor and the City Council .—...:.®ter CITY OF IOWA CITY 410 East Washington Street Iowa City, Iowa 52240-1826 (3 19) 356-5000 (319) 356-5009 FAX www icgov.org RE: Civil Service Entrance Examination — Maintenance Worker II — Wastewater Treatment Under the authority of the Civil Service Commission of Iowa City, Iowa, I do hereby certify the following named person(s) as eligible for the position of Maintenance Worker II — Wastewater Treatment. Jesse Kleopfer IOWA CITY CIVIL SERVICE COMMISSION ick W ss, Chair Item Number: 7. CITY OE IOWA CITY www.icgov.org April 25, 2019 Civil Service Entrance Examination: Water Services Clerk ATTACHMENTS: Description Civil Service Entrance Examination: Water Services Clerk APR 2 5 2019 City Clerk Iowa City, Iowa April 24, 2019 TO: The Honorable Mayor and the City Council RE: Civil Service Entrance Examination — Water Services Clerk � r 1 r �► Al CITY OF IOWA CITY 410 East Washington Street Iowa City, Iowa 52240-1 826 (3 19) 356-5000 (319) 356-5009 FAX www.icgov.org Under the authority of the Civil Service Commission of Iowa City, Iowa, I do hereby certify the following named person(s) as eligible for the position of Water Services Clerk. Shannin Zevian IOWA CITY CIVIL SERVICE COMMISSION Rick Wys , Chair