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Home My WebLink About2016-05-05 Info Packet� ? 1 CITY COUNCIL INFORMATION PACKET CITY OF IOWA CITY www.icgov.org May 5, 2016 I131 Council Tentative Meeting Schedule MISCELLANEOUS IP2 Listening Post Summary Report — April 20 IP3 Information from Interim City Manager: Eastern Iowa Airport Strategic Plan IP4 Article from Interim City Manager: Eleven Signs a City Will Succeed I135 Memo from Police Chief: Requested information on "Coffee With A Cop" program IP6 Memo from City Clerk and Equity Dir.: Listening Post Update IP7 Memo from Development Services Coordinator: Near-term potential development areas IP8 Information from Finance Dir.: Published rating report and POS for GO Bonds 2016A -B IP9 Information from Finance Dir.: Published rating report and POS for Sewer and Water Revenue Refunding Capital Loan notes 2016C -D IP10 Copy of letter to Parks and Recreation Commission: Preservation of Woodland Wildflower Area - City Park IP11 Civil Service Entrance Examination —Maintenance Worker I, Parks IP12 Joint Entities Meeting Minutes —April 25 DRAFT MINUTES IP13 Historic Preservation Commission: April 14 IP14 Housing and Community Development Commission: April 21 IP15 Planning and Zoning Commission: April 21 IP16 Public Art Advisory Committee: March 4 is r City Council Tentative Meeting Schedule �p Subject to change ryM®r�� CITY IOWA CITY May 5, 2016 Date Time Meetina Location Tuesday, May 17, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, June 7, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, June 21, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, July 5, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Monday, July 18, 2016 4:00 PM Reception Coralville 4:30 PM Joint Entities Meeting Tuesday, July 19, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, August 2, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, August 16, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, September 6, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, September 20, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, October 4, 2016 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, October 18 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting Tuesday, November 1 5:00 PM Work Session Emma J. Harvat Hall 7:00 PM Formal Meeting IP2 LISTENING POST SUMMARY REPORT Date: 4/20/16 Location: Old Capitol Center Room 2520D Time of Listening Post: 1:00-3:00 PM Council Members Attending: John Thomas and Pauline Taylor Approximate number who attended: 12 people (in and out; total of 16 altogether) Topics discussed (bullet points): • affordable housing • downtown streetscape • bicycle safety • 21 ordinance • 3 unrelated in rental units • bookmobile versus Antelope Public Comments on this location of listening post: " great location here" Public Comment on future locations of the listening post: Senior Center Public Comments on the listening posts: Public seemed thankful to be able to speak on issues Any items/things that would improve future listening posts: Senior Center is good locations because seniors are involved in a lot of issues s:listmingposts/report From Interim City Manager W H a plaw*9 THE EASTERN IOWA AIRPORT N CEDAR RAPIDS PLAN. 7 1*5 THE EASTERN IOWA AIRPORT CEDAR RAPIDS Director's Message THE EASTERN IOWA AIRPORT CEDAR RAPIDS For Additional Information Please Visit Our Website At: www.flycid.com And only innovative and agile organizations will succeed in the highly - competitive and dynamic THE EASTERN air transportation IOWAAIRPORTRT industry. Tha Easternlewarsm"'hasdearce THE mttgml wrt ane as<ra aaatbn antero FUTURE Slrce meAlme year or menu) through the tem ton,me Rn through me yeah aalrrgnsralN=°e�mmragpmesmana mo al noue Isbrwa d-thoung andenni r HERE /' bones¢ foundational confireslnplace.we enrbahetl on[MmrponYbrs[[omprenedi ve negicplan]neo,i,dinsoicallaain o iutbnal rvr ppnaretle most council bremur atm, of theoomla1. es.mhaaremerrules nal tv entrepm000f Crearto Terminal of lonY our mnineenlrepreneuestspiM GeatMCorriaor roourmany Wsads and guesser. dor to The srratogic plan is the dueprintM us m a[nipve mw ruche and Increase our regional emnomk trawl In bwrt Connie ConsulwXh a snared pu',,a [orevaluesantlgoals.Theairp- mlt [ommasinners, tenama and mmmunny parmen-all wro understood me Yor wand ionporon[e of me Eamon Iowa alrport- pameperm.In =ng his plan. wp cannot mora forwand alae. commonly engagement and accon partnerships are cour l to Italy memories our shnN mission of grwiing Immunity class- A., hall ennan[or Derrqual"a nor, Simmons our thouness community and propels local and regional economies. Our full pmenNl[an only berealizedNrougmcon tinuedpartner - smips. immor ea rommun iry engagement, and ua 1padon d am invaluablprryional ttonoml[mse[-wur iirpo� � rt�bals THE EASTERN IOWA AIRPORT CEDAR RAPIDS For Additional Information Please Visit Our Website At: www.flycid.com STRATEGIC PLAN STRATEGIES DEVELOP, MAINTAIN, AND OPERATE SUSTAINABLE FACILMES TO EXCEED CUSTOMER EXPECTATIONS A pouttiv, customer encrenence is critical for success therefore. the Airport will Identify and implement measures to enhance current service ovals and expand me services offered. By reflecting she culture and hospitality arms singer, users will gain an wholly far the Airport. INITIATIVES • MoinminaMopemremealrywtroachkremebighest aandaMsalsakry,sxurrcyandapermkrwlpe?angoras • Achieves unique wal emeelencennierm, Einem sawn whimarndhosplalig, • Lorelei'awastming.'r'n.lovktknknldies • Impkmenlsustalnable OP on schol and wagon budget • rnwmnmmoducwmd:hp SUCCESSTNROUGK TEAMWORK The Airport values me wan orations of every employee, and will implement ars an or undershot strategies that Improve coordination among all areas of me organ Wants. In addition, cross -training efforts and employee empowerment will build trust faster teamwork, and ..Wish a don, path forsuccespon. INITIATIVES • ImpmvepeAamwnreapWolsal rysrembyempbasieng be�aunlabillry.empawenngemployees tosetgoalsand rnmork. /or rocas:, one nanrylrg me roles alma nor ane alrygrc Nagortl ropoNcieaMproatlufex •&dlenrownso nsenrvsmmughmmmunicanon IN NSILA#ollwlth srolnin —darsaurte • Ceekpsaccessionpbn ft THE EASTERN IOWA AIRPORT CEDAR RAPIDS STRATEGIC PLAN PROCESS The Eastern Iowa Airport strategic planning process was Initiated to evaluate Its current status, identify goals far the near, mid and long-term, and dewlap strategies for dedslowmakbg to achieve Mose goals The end result helps direct the alrports FM -recommended planning efforts, and reveals ways the airport can remain competitive while Improving the benefits to employees, tenants, and airport users, Pre -planning efforts Initiated the process, which were fallowed by stakeholder engagement efforts and a Strength, Weakness, Opporturames and Threats (SWOT) exercise. The results of those efforts, coupled with the input from a Strategic Planning Steering Committee helped develop the airports purpose statement, core values and strategic goals. What follows is a thoughtful, stable plan that incamorates input from a diverse group of stakeholders who provided the themes that guided this overall effort. STRATEGIC PLAN PURPOSE AND VALUES ■ To be the &Wn numberone °a choice for air transportation d in eastern Iowa and border C regions of Wisconsin and Illinois. ■ 'The Eastern Iowa Airport is IVA guided by FACES" FISCAL a RESPONSIBILITY 4 ACCOUNTABILITY -) CUSTOMERSERVICE C 4 ENVIRONMENTAL STEWARDSHIP i SAFETY AND SECURITY Our core values are summed up in the acronym "FACES" because The Eastern Iowa Airport has been built around the people that have made it great. STRATEGIC PLAN STRATEGIES MAINTAIN AND ENHANCE FINANCIAL STRENGTH The Fasten Iowa Alport wall seek to preserve and strengthen Its financial position through nonaldine actiedles. By exploring alternate royeueshmve eas, prentise measures Com madon-led op mapoison unders and the timely and appropriate and monitoring offending sounco, are Airports will streaky strengthen Its finanMl portfolio INITIATIVES • Atoeiahenamairlinerrvenue . Optlmlectaboronsandmakmndoce expensathcagheficlen[ymarream • ekdd,a hydklkealrprrcswwka LLC • Eorursonad krkkgk[exialagand knon,"pimllmprosembo,no'ram pro/xn Air costae will continue to be very dynamic The Airport will seek opportunities to add non-stop service, Increase awareness of improved seracaaand regain the passengers currently using other regional airports far services currently not Eeilg provided Throughthese inHiafives, one Airport sell seek opparturdties to add nonstop service where feetAge, Increase awareness of improved servlces and regain the passengers currently using other regional airports far novices camntly trot being provided. INITIATIVES • Rovideandsupporcairservice and rirxrgodewlopmemanlvlfks ro expandandretain wake • Maintain asn'tinre mm • oea<ropaobronelrypogamroin[reareawarcnereoftneakporc FOSTER ECONOMK DEVELOPMENT FORTHE REGN)N The Airport Is attra[tketo companies containing dmelopmemwithin the region. As such, Ne AirportwllI meataln the services and sets moo appealing to proscective buBnesser whlla alm working with public and pMate stakeholders to carefully advocate far desirable and approlsrlate economic devaapmen[ INITIATIVES • ImmgeTheEraemloweuapw[[omonea[cape.vw[rwe[onomkae[.mvmem • CWbbaarcarkpattrcr wkh adprentkMowmrs aMregiwal a[anami[derelopmentagerrcks • Helprouni/yandstrengshen Mereglormlxmomkdevelopmmtmessagebyamwlaacg rhebuskeu cue wirhlomlrgericies From Interim City Manager Fruin IP4 Eleven Signs a City Will Succeed This article appears in the March print edition alongside the cover story, "Can America Put Itself Back Together?"—a summation of James and Deb Fallows's 54,000 -mile journey around America in a single-engine plane. More dispatches from their ongoing reporting trip can be found here. BY THE TIME we had been to half a dozen cities, we had developed an informal checklist of the traits that distinguished a place where things seemed to work. These items are obviously different in nature, most of them are subjective, and some of them overlap. But if you tell us how a town measures up based on these standards, we can guess a lot of other things about it. In our experiences, these things were true of the cities, large or small, that were working best: 1. Divisive national politics seem a distant concern. We first traveled during the run-up to the bitter midterm elections of 2014, then while the Supreme Court was ruling on same- sex marriage and Obamacare, and then as the 2016 presidential campaign was gathering steam. Given the places we were visiting, I imagine that many of the people we interviewed were Donald Trump supporters. But the presidential race just didn't come up. Cable TV was often playing in the background, most frequently Fox News; if people had stopped to talk about what was on, they might have disagreed with one another and with us. But overwhelmingly the focus in successful towns was not on national divisions but on practical problems that a community could address. The more often national politics came into local discussions, the worse shape the town was in. 2. You can pick out the local patriots. A standard question we'd ask soon after arrival was "Who makes this town go?" The answers varied widely. Sometimes it was a mayor or a city -council member. Sometimes it was a local business titan or real-estate developer. Sometimes a university president or professor, a civic activist, an artist, a saloon -keeper, a historian, or a radio personality. In one city in West Virginia, we asked a newspaper editor this question, and the answer turned out to be a folk musician who was also a civic organizer. What mattered was that the question had an answer. And the more quickly it was provided, the better shape the town was in. 3. "Public-private partnerships" are real. Through the years I had assumed this term was just another slogan, or a euphemism for sweetheart deals between Big Government and Big Business. But in successful towns, people can point to something specific and say, This is what a partnership means. In Greenville, South Carolina, the public -school system includes an elementary school for engineering in a poor neighborhood. The city runs the school; local companies like GE send in engineers to teach and supervise science fairs, at their own expense. In Holland, Michigan, the family-owned Padnos scrap -recycling company works with a local ministry called 70x7 Life Recovery to hire ex -prisoners who would otherwise have trouble reentering the workforce. In Fresno, California, a collaboration among the city, county, and state governments; local universities; and several tech start-ups trains high-school dropouts and other unemployed people in computer skills. The more specifically a community can explain what their public-private partnerships mean, the better off the city is. 4. People know the civic story. America has a "story," which everyone understands even if only to say it's a myth or a lie. A few states have their guiding stories—California as either the ever -promising or the sadly spoiled frontier, Vermont as its own separate Eden. Successful cities have their stories too. For Sioux Falls, South Dakota, that it's just the right size: big enough so that people who have come from the smaller -town prairie can find challenge, stimulation, opportunity; small enough to be livable and comfortable. For Columbus, Ohio, which is several times larger than Sioux Falls, that it's big enough to make anything possible; small enough to actually get things done. For Bend, Oregon; or Duluth, Minnesota; or Winters, California, that they are in uniquely attractive locations. For Pittsburgh, that it has set an example of successful turnaround. For Eastport, Maine, or Allentown or Fresno or Detroit, that they are in the process of turning around. As with guiding national myths, the question is not whether these assessments seem precisely accurate to outsiders. Their value is in giving citizens a sense of how today's efforts are connected to what happened yesterday and what they hope for tomorrow. 5. They have a downtown. This seems obvious, but it is probably the quickest single marker of the condition of a town. For a "young" country like the United States, surprisingly many cities still have "good bones," the classic Main Street—style structures built from the late 1800s through World War H. In the mall -and -freeway decades after the war, some of these buildings were razed and many more were abandoned or disfigured with cheap aluminum fronts. Most of the cities we visited were pouring attention, resources, and creativity into their downtown. The Main Street America project, from the National Trust for Historic Preservation, has coordinated downtown -revival projects in some 2,000 communities. Of `A the downtowns we saw, Greenville's and Burlington's were the most advanced, studied by planners around the world. But downtown ambitions of any sort are a positive sign, and second- and third -floor apartments and condos over restaurants and stores with lights on at night suggest that the downtown has crossed a decisive threshold and will survive. 6. They are near a research university. Research universities have become the modern counterparts to a natural harbor or a river confluence. In the short term, they lift the economy by bringing in a student population. Over the longer term, they transform a town through the researchers and professors they attract: When you find a Chinese or German physicist in the Dakotas, or a Yale literature Ph.D. in California's Central Valley, that person probably works for a university. Research universities have become powerful start- up incubators. For instance: Clemson and the array of automotive -tech firms that have grown up around it in South Carolina, or UC Davis and associated agro-tech ventures. Riverside and San Bernardino were similar -size cities with similar economic prospects at the end of World War II. Their paths have diverged, in part because in the 1950s Riverside was chosen as the site of a new University of California campus. 7. They have, and care about, a community college. Not every city can have a research university. Any ambitious one can have a community college. Just about every world -historical trend is pushing the United States (and other countries) toward a less equal, more polarized existence: labor -replacing technology, globalized trade, self -segregated residential -housing patterns, the American practice of unequal district -based funding for public schools. Community colleges are the main exception, potentially offering a connection to high -wage technical jobs for people who might otherwise be left with no job or one at minimum wage. East Mississippi Community College has taken people who were jobless or on welfare and prepared them for work in nearby factories that pay much more than the local median household income (for instance, some $80,000 in the steel factory, versus a local median income of about $35,000). Fresno City College works with local tech firms and the city's Cal State campus to train the children of farm workers (among others) for high-tech agribusiness jobs. Obviously, this does not end inequality, and badly run community colleges can make things worse by loading students with debt without improving their circumstances. Nationwide, only about 40 percent of those who start at a public community college finish within six years. But we saw a number of schools that were clearly forces in the right direction. The more often and more specifically we heard people talk about their community college, the better we ended up feeling about the direction of that town. 8. They have unusual schools. Early in our stay, we would ask what was the most distinctive school to visit at the K-12 level. If four or five answers came quickly to mind, that was a good sign. 3 The examples people suggested ranged widely. Some were "normal" public schools. Some were charters. Some emphasized career and technical training, like Camden County High School, in Georgia. Some were statewide public boarding schools, like the South Carolina Governor's School for the Arts and Humanities, and the Mississippi School for Mathematics and Sciences. Some were religious or private schools. The common theme was intensity of experimentation. 9. They make themselves open. The anti -immigrant passion that has inflamed this election cycle was not something people expressed in most of the cities we visited. On the contrary. Politicians, educators, businesspeople, students, and retirees frequently stressed the ways their communities were trying to attract and include new people. Cities as different as Sioux Falls, Burlington, and Fresno have gone to extraordinary lengths to assimilate refugees from recent wars. The mayor of Greenville, South Carolina, asked us to listen for how many different languages we heard spoken on the street by business visitors. Every small town in America has thought about how to offset the natural brain drain that has historically sent its brightest young people elsewhere. The same emphasis on inclusion that makes a town attractive to talented outsiders increases its draw to its own natives. 10. They have big plans. If I see a national politician with a blueprint for how things will be better 20 years from now, I think: "Good luck!" In fact, few national politicians even pretend to offer a long-term vision anymore. When a mayor or city -council member shows me a map of how new downtown residences will look when completed, or where the new greenway will go, I think: "I'd like to come back." Cities still make plans, because they can do things. 11. They have craft breweries. One final marker, perhaps the most reliable: A city on the way back will have one or more craft breweries, and probably some small distilleries too. Until 2012, that would have been an unfair test for Mississippi, which effectively outlawed craft beers by setting maximum alcohol levels at 5 percent. Now that law has changed, and Mississippi has 10 craft breweries. Once -restrictive Utah has even more. A town that has craft breweries also has a certain kind of entrepreneur, and a critical mass of mainly young (except for me) customers. You may think I'm joking, but just try to find an exception. 10 r ®, CITY OF IOWA CITY IP5 �� MEMORANDUM Date: May 2, 2016 To: Mr. Geoff Fruin, Interim City Manager From: Chief Sam Hargadine Re: Requested information on "Coffee With A Cop" program. Mayor Pro tem Botchway recently asked for information regarding the department's outreach program "Coffee With A Cop". This data was compiled by Officer Schwindt and includes a map indicating the geographic locations and our attempt to reach as many different groups as possible. If you have any questions or comments, please do not hesitate to ask. 02/2015 Panera Bread 8 03/2015 The Java House, 211 E. Washington St. 7 04/2015 Broadway Neighborhood Center 30 05/2015 McDonald's, 804 S. Riverside Dr. 40 06/2015 Ped Mall 35 07/2015 Pheasant Ridge Neighborhood Center 20 08/2015 T.Spoons, 201 S. Clinton St. 35 09/2015 HyVee, 812 S. 1"Avenue 30 10/2015 Center for Worker Justice 7 11/2015 High Ground Cafe 15 12/2015 Daylight Donuts 30 01/2016 Bread Garden Market 17 02/2016 The Java House, 713 Mormon Trek Blvd. 29 03/2016 Oaknoll Retirement Community 42 04/2016 HyVee, 1720 Waterfront Dr. 15 T 9 `- ...., rt r r =^I�� p°I CITY OF IOWA CITY IP6 MEMORANDUM Date: May 2, 2016 To: Mayor and City Council Members From: Marian K. Karr, City Clerk Stefanie Bowers, Equity Director Re: Listening Post Update In April Council held two listening posts: • Friday, April 1, 6 7:30 p.m. Pheasant Ridge Neighborhood Center, 2651 Roberts Road • Wednesday, April 20, 1-3:00 PM, Old Capitol Center, room 2520D (second floor) No additional dates and sites are currently scheduled. Future listening posts suggested sites include: o Forest View Trailer Court o Baculis Mobile Home Park o Senior Center o Kirkwood Community College, Iowa City Campus S:Iisteningpost9ocationmem o.doc r I -4 CITY OF IOWA CITY MEMORANDUM Date: April 27, 2016 To: Geoff Fruin, Interim City Manager From: John Yapp, Development Services Coordinator Tyr Re: Near-term potential development areas Introduction: The City Council had requested maps of potential infill development properties, and a map of properties on the perimeter of the City which may be able to be developed in the near term. Two maps are attached: a Developable Properties Greater Than % Acre map and a Potential Development Areas: Perimeter of City map. Potential Infill Sites: Regarding potential infill sites, staff focused on vacant or underdeveloped properties in existing neighborhoods with existing infrastructure, of at least '/z acre in size. Using Geographic Information System (GIS) mapping, staff reviewed the topography and ownership to determine if they could logically be shown as potential infill development parcels (properties that have conservation easements, have significant topographic constraints, and/or have significant floodplain issues, for example, are not included). For infill sites, we identified 11 potential sites — all 11 are privately owned. Staff has not spoken to the owners of these properties in developing these maps. Properties that are planned and/or zoned for commercial or industrial development are not included. Property Vacant? Size Zoning Description Label A Yes 3.92 acres RS -5 Property is owned by adjacent property owner. South portion of property has steep topography. B Vacant 1.15 acres RS -12 Old Johnson County DHS office property office building C Yes 2.02 acres RS -5 The lot surround the owner's parcel and dwelling, and has relatively steep topography D No 2.38 acres RS -8 There is a duplex on the southwest comer of the property E Vacant 6.38 acres CN -1 Old Hy Vee property and parking lot commercial building F Yes 2.71 acres RS -5 Large single family lot — includes protected slopes and woodlands on the rear portion of the lot G Yes 1.81 acres RS -8 Access to Dodge St Court — steep topography on north portion of the lot H No 3.75 acres RS -5 Single family house on south portion of property. North of lot borders the cemetery. House qualifies as a historic landmark. Yes 0.65 acres RS -5 Single Family lot owned by adjacent owner. Driveway extended onto property from adjacent lot. J Yes 0.6 acres RS -5 Single family lot K Yes 1.2 acres RS -8 Vacant property is in the Brown Street Historic District May 4, 2016 Page 2 Development on the perimeter of the City The City Council also requested a map of potential development areas on the perimeter of the City. On this map, staff identified whether or not a property is within City limits, whether the property is near existing infrastructure, or if significant infrastructure (streets, water main and sewer main) extensions would be required. Staff also estimated how 'ripe' a property is for annexation based on existing and planned infrastructure extensions. The map has three categories: 1. Properties that are in the City and have nearby infrastructure; may require rezoning 2. Properties that are in the City, will require infrastructure extensions and rezoning 3. Properties that are not in the City but are ripe for annexation; will require rezoning and infrastructure to be developable The Iowa City growth boundary is also shown on the map — the growth boundary is the anticipated area to which the City can provide sanitary sewer service in the 20-30 year timeframe. Properties for which we have current or pending development applications are not included on the map. Staff also notes that for some properties, such as in the northeast part of the City, there are properties shown on the map that are within City limits and could be developable with rezoning actions and infrastructure extensions, but property owners to date have not had an interest in developing. Two examples are properties owned by ACT around the ACT campus, and properties owned by Harvest Preserve Foundation Inc. and Monument Farms LLC on both sides of Scott Blvd, north of Rochester Ave. Two areas of the community that have been identified as redevelopment areas, the Riverfront Crossings and the Towncrest Districts, are shown on this map. Staff notes that this is a broad -brushed map; and the maps do not reflect the desires of individual property owners. There may be other properties which could be considered developable if the property owner commits to necessary infrastructure extensions. Proposed annexations and development applications are assessed in more detail as applications are received and proposals for infrastructure extensions are evaluated. Developable Properties Greater Than 1/2 Acre City of Iowa City • t � .�� ' - � _ �.``f 1, .+ - � • �9 , ' � r �, , 1; �_.�., �`+� 1ST �� Y '�t'?G,� � • �� i"s� "' �� iF 4 1 or '�7 y vim Riverfront - F4 `rf. Crossings Towncrest 01 r : • LegendNear Infrastructure, May Requireng In City, Requires 1 1 1 � Ripe for Annexation, Will Require Rezoning and Infrastructure Iowa City Growth Boundary 1k, dl CREDIT OPINION Iowa City, IA 3 May 2016 New Issue - Moody's Assigns Aaa to Iowa City, IA's GO Bonds, New Issue Series 2016A -B Summary Rating Rationale MOody's Investors Service has assigned a Aaa rating to Iowa City, IA's $8.8 million General Obligation Bonds, Series 2016A and $620,000 Taxable General Obligation Bonds, Series 20168. Concurrently, Moody's has affirmed the Aaa rating on the city's outstanding general obligation unlimited tax (GOULT) debt. Post -sale, the city will have $55.4 million in GOULT debt outstanding. The outlook is stable. Contacts Coley J Anderson 312-706-9961 The Aaa rating reflects the city's growing and diverse tax base that benefits from the Analyst coley.anderson@moodys.com institutional presence of the State University of Iowa (Aa1 stable); very healthy financial Cora Bruemmer 312-706-9971 profile encompassing the city's sizeable reserves and prudent management; average debt Analyst burden with rapid principal amortization; and moderate exposure to unfunded pension cora.bruemmer@moodys corn liabilities. Credit Strengths Healthy economy that benefits from the presence of the State University of Iowa o Significant unrestricted liquidity and available reserves v Strong financial management Credit Challenges D Smaller tax base and weaker socioeconomic indicators relative to similarly rated entities Rating Outlook The stable outlook reflects our belief that the city's tax base will remain sound given ongoing economic development and the institutional stability provided by the University of Iowa. The outlook also reflects our expectation that the city's financial profile will remain solid given healthy reserve levels and prudent financial management. THIS REPORT WAS REPUBLISHED ON 3 MAY 2016: THE PREVIOUS REPORT NOTED A SPECIAL CENSUS POPULATION FIGURE IN THE OBLIGOR PROFILE. THE REPORT WAS CORRECTED TO NOTE THAT THE 2015 POPULATION FIGURE WAS NOT A SPECIAL CENSUS FIGURE. THIS REPORT WAS REPUBLISHED ON 4 MAY 2016: THE PREVIOUS REPORT NOTED INCORRECT FULL VALUE PER CAPITA AND HISTORICAL FUND BALANCE FIGURES WITHIN THE KEY INDICATORS TABLE. THE KEY INDICATORS TABLE WAS UPDATED WITH THE CORRECTED FULL VALUE PER CAPITA AND HISTORICAL FUND BALANCE FIGURES. Factors that Could Lead to a Downgrade » Weakening of the city's tax base or socioeconomic indices » Material reductions of operating reserves or available liquidity » Growth of the city's debt burden Key Indicators Exhibit 1 Iowa Oty(Clty of) IA 2011 2012 2013 2014 2015 Economy/Tax Base Total Full Value ($000) $ 4,615,528 $ 4,668,319 $ 4,826,647 $ 4,950,558 $ 5,350,244 Full Value Per Capita $ 68,372 S 68,286 $ 69,634 S 70,124 $ 72,876 Median Family Income I% of U5 Median) 113.6% 114.2% 111.0% 1113% 111.3% Finances Operating Revenue ($000) $ 73,356 $ 76,197 $ 74,499 S 66,287 $ 68,881 Fund Balance as a %of Revenues 74.0% 70.1% 68.6% 82.1% 83.1% Cash Balance as a % of Revenues 99.7% 107.1% 103.2% 128.0% 124.8% Debt/Pensions Net Direct Debt ($000) $ 89,476 $ 83,721 $ 69,091 $ 74,431 $ 62,206 Net Direct Debt / Operating Revenues (x) 1.2x 1.1x 0.9x 1.lx 0.9x Net Direct Debt / Full Value (%) 1.9% 1.8% 1.4% 1.5% 1.2% Moody's - adjusted Net Pension Liability (3 -yr average) to Revenues (x) N/A 1.3x 1.5x 1.9x 1.7x Moody's- adjusted Net Pension Liability (3 -yr average) to Full Value (%) N/A 2.1% 2.4% 2.5% 2.2% Post -sale, the city's net direct debt will total $57.8 million and 11% of full valuation. Full Value is displayed on an assessment year basis. Fund balance figures include available reserves within the General, Debt Service, Employee Benefits and Internal Service Funds. Debt figures are inclusive of the city's GO, tax increment and nonessential enterprise revenue debt. Source: Moody's Investors Service, Audited Financial Results, US Census Bureau Recent Developments Since the city's last rating report on April 28, 2015, the city closed fiscal 2015 with a General Fund surplus of $1.2 million. Tax base growth of 8% increased the city's full valuation to $5.4 billion in assessment year 2015. Detailed Rating Considerations Economy and Tax Base: Large and Growing Tax Base Benefits From Significant Institutional Presence The city's tax base will likely experience long-term growth given ongoing economic development activity and the institutional stability provided by the University of Iowa. Located approximately 115 miles east of Des Moines (Aa2 stable) and 32 miles southeast of Cedar Rapids, Iowa City serves as a regional economic center for portions of eastern Iowa as well as a health care and higher education hub. Inclusive of an 8% increase in assessment year 2015, the city's tax base has grown at an annual average rate of 3.4% over the last five years. The city has also realized steady growth in population, growing by 9.1% to 67,682 from 2000 to 2010. The city's population grew by an additional 8% from 2010 to 2015 to 73,415. The University of Iowa is the city's largest employer with over 18,600 employees, and the university's hospital system employs an additional 8,700 people. Several of the city's other major employers are also in the education sector, including Pearson Educational Measurement (1,200 employees) and ACT, Inc. (1,100 employees). Since 2012 the city has issued an average of 695 building permits per year with an average valuation of $161 million. As of the end of March 2016, the city had issued 171 permits, valued at $92 million. At 2.7% as of February 2016, the city's unemployment rate remains well below state and national figures of 4.5% and 5.2%, respectively. Median family income within the city is above average estimated at 111.3% of the nation and is likely somewhat depressed by a large student population. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www, moodys corn for the most updated credit rating action information and rating history. 2 3 May 2016 Iowa City, IA: New Issue - Moody's Assigns Aaa to Iowa City, IA's GO Bonds, Series 2016A -B Financial Operations and Reserves: Healthy Financial Profile Supported By Strong Management and Sizeable Reserves The city's financial operations are expected to remain healthy, given strong financial management, significant operating fund reserves and sufficient revenue raising flexibility. Inclusive of a $1.2 million surplus in fiscal 2015, the city has posted General Fund operating surpluses in each of the last six fiscal years. Notably, surpluses in fiscal years 2010 through 2013 were inflated by the collection of sales tax revenue that is committed to flood remediation efforts (Gateway Project). In May 2009, voters approved a 1% local option sales tax that expired at the end of fiscal 2013. As of fiscal 2015, restricted sales tax reserves within the General Fund totaled $24.3 million. The city's fiscal 2015 unrestricted General Fund reserves totaled $23.8 million, or a still very strong 43.8% of General Fund revenues. The city also maintains substantial reserves within its Internal Service Fund. As of fiscal 2015, the city's Internal Service Fund had an unrestricted net position of $24.8 million. Across the city's operating funds (combined General, Debt Service, Employee Benefits and Internal Service Funds) available reserves totaled $57.2 million, or 83.1% of operating fund revenues. The city's re -estimated fiscal 2016 budget reflects a $1.3 million increase in unrestricted General Fund reserves to $25.1 million. Restricted General Fund reserves are expected to decline to $8.6 million by the close of fiscal 2016 due to flood remediation related sales tax proceed transfers. The city's fiscal 2017 budget reflects an increase in unrestricted General Fund reserves of $493,000. At 79% in fiscal 2015, property taxes account for a majority of operating fund revenues. The city currently levies the maximum $8.10 per $1,000 of assessed valuation within the General Fund, but maintains additional revenue raising flexibility within its Emergency and Employee Benefits levies. As of fiscal 2016, the city's revenue raising flexibility within the two levies totaled an estimated S2.2 million. The city has had a 1% franchise fee in place since 2010, but could increase this fee as high as 5%, which would generate an estimated $4.0 million. LIQUIDITY The city's cash position is strong. At the close of fiscal 2015, cash across the city's operating funds totaled $68.8 million and 124.8% of operating revenues. Debt and Pensions: Average Debt Burden With Rapid Principal Amortization The city's debt profile will likely remain manageable over the near-term despite planned future borrowings, given rapid principal amortization and continued tax base growth. At 1.1% and 1.6% of full valuation, the city's direct and overall debt burdens are average. Debt service expenditures accounted for 22.3% of operating fund revenues in fiscal 2015. When combining debt service, pension and other post employment benefit expenditures, the city's fixed costs totaled $19.5 million, or an elevated 30% of operating fund revenues. The city's high fixed costs are partially related to its aggressive approach for retiring existing debt. Over the next ten years, 98% of principal on existing general obligation debt is set to be retired. Over the next three years, the city's debt plans include approximately $12.6 million in tax increment financing revenue debt and $37.2 million in GOULT debt. Additionally, the city has entered into a lease purchase agreement in connection with the construction of a parking garage anticipated to be completed in August 2017. The amount of the agreement is $15.3 million and the commencement date of the Lease Purchase Agreement is anticipated in August 2017. DEBTSTRUCTURE All of the city's debt is fixed rate and set to be retired by 2026. Post -sale, the city's outstanding GOULT debt will total $55.4 million. The also has $2.5 million, $14.9 million and $24.8 million in tax increment, water and sewer revenue debt, respectively. The city defeased $6.6 million of outstanding Parking Revenue Bonds on November 12, 2014 by prepaying all remaining outstanding bonds and interest from cash on hand within Parking and Landfill Funds. The funds were placed in escrow until the call date of July 1, 2017. DEBT -RELATED DERIVATIVES The city has no derivative exposure. PENSIONS AND OPER Iowa City's three year average Moody's adjusted net pension liability (ANPL), net of self-supporting enterprises, through fiscal 2015 is $117 million, equivalent to 2.2% of full valuation and 1.7 times operating revenue. Through fiscal 2014, the ANPL is based upon our allocation of the reported unfunded liabilities of the Iowa Public Employees Retirement System (IPERS) and Municipal Fire and Police Retirement System of Iowa (MFPRSI), two multi-employer cost-sharing pension plans, in proportion to the district's respective contribution to the plans. The plans allocated 2015 shares based on GASB 68 accounting requirements. Issuer contributions net of self- supporting enterprise contributions totaled $5.0 million and 7.3% of operating revenues in fiscal 2015. 3 May 2016 Iowa City, IA: New Issue - Moody's Assigns Aaa to Iowa City, IA's GO Bonds, Series 2016A.B The city operates a self-funded medical and dental plan for all employees, which is also offered to current and retired employees and their dependents, which results in an implicit rate subsidy and an OPER liability. The plan is funded on a pay-as-you-go basis. As of July 1, 2014, the most recent actuarial valuation date, the plan had an unfunded actuarial accrued liability (UAAL) of $5.2 million. The city's fiscal 2015 contribution to the plan was $218,000. Management and Governance: Very Strong Institutional Framework and Prudent Management Iowa cities have an institutional framework score of "Aaa," or very strong. Property taxes, which are the primary revenue stream, are highly predictable despite recent property tax reform. Even with property tax caps on general and emergency levies, cities have strong revenue -raising flexibility due to various additional levies, include ing an unlimited levy for employee benefits. Expenditures mostly consist of personnel costs, which are highly predictable. Cities have a moderate ability to reduce expenditures due to the presence of employee unions. Many cities have elevated debt and pension burdens, but these liabilities are generally funded with unlimited tax levies. Iowa City's management team is strong, as indicated by its sound operating performance and history of positive budget to actual variances. The city's reserve policy states that the unassigned fund balance in the General Fund will not go below 20% of total revenues and transfers in, with a ceiling of 30%. Fund balances in excess of 30% will be transferred to the City's Emergency fund, used to retire outstanding debt, and/or be used to provide property tax relief. Legal Security Debt Service on the city's GOULT debt, including the Series 2016A and 20168 Bonds is ultimately secured by a dedicated property tax levy, unlimited as to rate and amount. Use of Proceeds Proceeds from the Series 2016A Bonds will be used to provide funds for various capital improvements including street construction and reconstruction and park improvements. Proceeds from the Series 2016B Bonds will be used to provide funds for improvements within the city's Towncrest Urban Renewal Area. Obligor Profile Iowa City is a growing municipality located in eastern Iowa. As of 2015, the city had an estimated population of 73,415. Methodology The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology. Ratings Eshibit 2 3 May 201E Iowa City, IA: New Issue. 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REPORT NUMBER 1024427 MOODY'S INVESTORS SERVICE 5 3 May 2016 Iowa City, IA: New Issue - Moody's Assigns Aaa to Iowa City, JA's GO Bonds, Series 2016A -B PRELIMINARY OFFICIAL STATEMENT DATED APRIL 19, 2016 New Issue Rating: Application Made to Moody's Investor Service Assuming compliance with certain covenants, in the opinion of Ahlers & Cooney, P.C., Bond Counsel, under present law and assuming continued compliance with the requirements ofthe Internal Revenue Code of 1984 as amended (the "Code) (i) interest on the Series 1016.4 Bonds it excludable from gross income ofthe owners thermffor federal income tax purposes; and (it) is not included as an item oftax preference in computing the federal alternative minimum tax imposed on individuals and corporations; however, interest is taken into amount in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Interest on the Series 2016B Bonds is anc(tded as gross income to the holders thermffor federal income taxpurposes. Finally, interest on the Bonds paid to the holders thereof is included in gross income for purposes of Iowa income taxes. The Bonds will NOT be designated as "qualified tax-exempt obligations ". See "TAX MATTERS" herein for a more detailed discussion. CITY OF IOWA CITY, IOWA $8,795,000* General Obligation Bonds, Series 2016A $620,000* Taxable General Obligation Bonds, Series 2016B BIDS RECEIVED: Tuesday, May 17, 2016, 10:00 o'clock A.M., Central Time AWARD: Tuesday, May 17, 2016, 7:00 o'clock P.M., Central Time Dated: Date of Delivery (June 16, 2016) Principal Due: June 1 as shown inside front cover The $8,795,000* General Obligation Bonds, Series 2016A (the "Series 2016A Bonds") and $620,000* Taxable General Obligation Bonds, Series 2016B (the "Series 2016B Bonds") are being issued pursuant to Division III of Chapter 384 of the Code of Iowa, and resolutions to be adopted by the City Council of the City of Iowa City, Iowa (the "City"). The Bonds are being issued to pay costs of aiding in the planning, undertaking and carrying out of various projects. (See "AUTHORITY AND PURPOSE" section herein for more detailed project descriptions.) The Bonds will be general obligations of the City for which the City will pledge its power to levy direct ad valorem taxes for the repayment of the Bonds. The Bonds will be issued as fully registered bonds without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). DTC will act as securities depository for the Bonds. Individual purchases may be made in book -entry form only, in the principal amount of $5,000 and integral multiples thereof. Purchaser(s) will not receive certificates representing their interest in the Bonds purchased. Principal of the Bonds, payable annually on each June 1, beginning June 1, 2017, and interest on the Bonds, payable initially on December 1, 2016 and thereafter on each June 1 and December 1, will be paid to DTC by the City's Registrar/Paying Agent, U.S. Bank, St. Paul, Minnesota (the "Registrar"). DTC will in tum remit such principal and interest to its participants for subsequent disbursements to the beneficial owners of the Bonds as described herein. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of close of business on the 15th day of the month (whether or not a business day) of the immediately preceding such interest payment date (the "Record Date"). THE BONDS WILL MATURE AS LISTED ON THE INSIDE FRONT COVER MINIMUM BID: GOOD FAITH DEPOSIT: TAX MATTERS: SERIES 2016A BONDS $8,751,025 Required of Purchaser Only Federal: Tax -Exempt State: Taxable See "TAXMATTERS" for more information. SERIES 2016B BONDS $618,140 Required of Purchaser Only Federal: Taxable State: Taxable See "TAX MATTERS" for more information. The Bonds are offered, subject to prior sale, withdrawal or modification, when, and if issued and subject to the legal opinion of Ahlers & Cooney, P.C., Bond Counsel, of Des Moines, Iowa, to be furnished upon delivery of the Bonds. It is expected that the Bonds will be available for delivery through the facilities of DTC on or about June 16, 2016. This Preliminary Official Statement will be further supplemented by offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date and underwriter, together with any other information required by law, and shall constitute a "Final Official Statement" of the City with respect to the Bonds, as defined in Rule 15c2-12. * Preliminary; subject to change. CITY OF IOWA CITY, IOWA $8,795,000* General Obli¢atlon Bonds, Series 2016A MATURITY: The Series 2016A Bonds will mature June 1 in the years and amounts as follows: Year Amount* 2017 $240,000 2018 875,000 2019 895,000 2020 910,000 2021 930,000 2022 950,000 2023 965,000 2024 985,000 2025 1,010,000 2026 1,035,000 *PRINCIPAL ADJUSTMENT: * Preliminary; subject to change. The aggregate principal amount of the Series 2016A Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $9,000,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016A Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016A Bonds may be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. REDEMPTION: The Series 2016A Bonds due after June 1, 2024 will be subject to call prior to maturity in whole, or from time to time in part, in any order of maturity and within a maturity by lot on said date or on any date thereafter at the option of the City, upon terms of par plus accrued interest to date of call. Written notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Series 2016A Bonds to be redeemed at the address shown on the registration books. INTEREST: Interest on the Series 2016A Bonds will be payable on December 1, 2016 and semiannually thereafter. CITY OF IOWA CITY, IOWA $620,000* Taxable General Oblisation Bonds, Series 2016B MATURITY: The Series 2016B Bonds will mature June 1 in the years and amounts as follows: Year Amount* 2017 $620,000 *PRINCIPAL ADJUSTMENT: * Preliminary; subject to change. The aggregate principal amount of the Series 2016B Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $700,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016B Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016B Bonds will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of note principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. REDEMPTION: The Series 2016B Bonds will not be subject to redemption prior to the stated maturity. INTEREST: Interest on the Series 2016B Bonds will be payable on December 1, 2016 and semiannually thereafter. COMPLIANCE WITH S.E.C. RULE 15c2-12 Municipal obligations (issued in an aggregate amount over $1,000,000) are subject to General Rules and Regulations, Securities Exchange Act of 1934, Rule 15c2-12 Municipal Securities Disclosure. Preliminary Official Statement: This Preliminary Official Statement was prepared for the City for dissemination to prospective bidders. Its primary purpose is to disclose information regarding the Bonds to prospective bidders in the interest of receiving competitive bids in accordance with the NOTICE OF BOND SALE and TERMS OF OFFERING contained herein. Unless an addendum is received prior to the sale, this document shall be deemed the "Near Final Official Statement'. Review Period: This Preliminary Official Statement has been distributed to City staff as well as to prospective bidders for an objective review of its disclosure. Comments or omissions or inaccuracies must be submitted to Public Financial Management, Inc. (the "Municipal Advisor") at least two business days prior to the sale. Requests for additional information or corrections in the Preliminary Official Statement received on or before this date will not be considered a qualification of a bid received. If there are any changes, corrections or additions to the Preliminary Official Statement, prospective bidders will be informed by an addendum at least one business day prior to the sale. Final Official Statement: Upon award of sale of the Bonds, the legislative body will authorize the preparation of a Final Official Statement that includes the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date and other information required by law and the identity of the underwriter (the "Syndicate Manager") and syndicate members. Copies of the Final Official Statement will be delivered to the Syndicate Manager within seven business days following the bid acceptance. REPRESENTATIONS No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations, other than those contained in the Preliminary Official Statement. This Preliminary Official Statement does not constitute any offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information, estimates and expressions of opinion herein are subject to change without notice and neither the delivery of this Preliminary Official Statement nor any sale made hereunder, shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. This Preliminary Official Statement is submitted in connection with the sale of the securities referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Preliminary Official Statement and any addenda thereto were prepared relying on information from the City and other sources, which are believed to be reliable. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and is not expressing any opinion as to the completeness or accuracy of the information contained therein. Compensation of the Municipal Advisor, payable entirely by the City, is contingent upon the sale of the issues TABLE OF CONTENTS NOTICE OF BOND TERMSOF OFFERING......................................................................................................................................................ii SCHEDULEOF BOND YEARS......................................................................................................................................viii INTRODUCTION....................................................................... Authority and Purpose............................................................... Optional Redemption - Series 2016A Bonds ............................ Optional Redemption - Series 2016B Bonds ............................. Intent on the Bonds.................................................................. Payment of and Security for the Bonds ..................................... Book -Entry -Only Issuance........................................................ Future Financing....................................................................... Litigation; Debt Payment History ............................................. Legality..................................................................................... TaxMatters............................................................................... Rating........................................................................................ MunicipalAdvisor.................................................................... Continuting Disclosure.............................................................. Certification.............................................................................. 1 1 2 2 2 2 2 4 4 4 5 CITYPROPERTY VALUES..............................................................................................................................................9 IowaProperty Valuations...................................................................................................................................................9 20 Property Valuations (1/1/2014 Valuations for Taxes Payable July 1, 2015 to June 30, 2016) ...........................................9 20 2014 Gross Taxable Valuations By Class of Property ....................................................................................................... 9 Trendof Valuations.......................................................................................................................................................... 10 LargerTaxpayers............................................................................................................................................................. 10 PropertyTax Legislation.................................................................................................................................................. I1 CITYINDEBTEDNESS.....................................................................................................................................................12 21 DebtLimit........................................................................................................................................................................12 22 DirectDebt.......................................................................................................................................................................12 OtherDebt........................................................................................................................................................................13 Indirect General Obligation Debt; Debt Ratios................................................................................................................15 Levisand Tax Collections................................................................................................................................................15 TaxRates..........................................................................................................................................................................16 Levy Limits; City Funds on Hand (Cash and Investments as of February 29, 2016).......................................................16 THECITY.................................................................... City Government....................................................... Employees and Pensions ........................................... Other Post -Employment Benefits .............................. Union Contracts........................................................ 17 17 18 19 19 GENERALINFORMATION............................................................................................................................................20 Locationand Transportation............................................................................................................................................ 20 LargerEmployers............................................................................................................................................................. 20 BuildingPermits.............................................................................................................................................................. 20 U.S. Census Data..............................................................................................................................................................21 UnemploymentRates....................................................................................................................................................... 21 Education......................................................................................................................................................................... 21 EffectiveBuying Income................................................................................................................................................. 21 FinancialServices............................................................................................................................................................ 22 FinancialStatements........................................................................................................................................................22 APPENDIX A - FORMS OF LEGAL OPINIONS APPENDIX B - JUNE 30, 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT APPENDIX C - FORMS OF CONTINUING DISCLOSURE CERTIFICATE OFFICIAL BID FORM City of Iowa City, Iowa MUor/City Council Jim Throgmorton At -Large, Mayor Kingsley Botchway II At -Large, Mayor Pro Tem Rockne Cole Council Member At Large Susan Mims Council Member, At Large Pauline Taylor Council Member, District A Terry Dickens Council Member, District B John Thomas Council Member, District C Administration Geoff Fruin, Interim City Manager Dennis Bockenstedt, Finance Director Marian Karr, City Clerk City Attorney Eleanor M. Dilkes Iowa City, Iowa Bond Counsel Ahlers & Cooney, P.C. Des Moines, Iowa Municipal Advisor Public Financial Management, Inc. Des Moines, Iowa Term Expires January, 2020 Term Expires January, 2018 Term Expires January, 2020 Term Expires January, 2018 Term Expires January, 2020 Term Expires January, 2018 Term Expires January, 2020 NOTICE OF BOND SALE Time and Place of Sealed Bids: Bids for the sale of Bonds of the City of Iowa City, State of Iowa, hereafter described, must be received at the office of the Finance Director, City Hall, 410 E. Washington, Iowa City, Iowa 52440 (the "Issuer") before 10:00 A.M., on the 17th day of May, 2016. The bids will then be publicly opened and referred for action to the meeting of the City Council in conformity with the TERMS OF OFFERING. The Bonds: The Bonds to be offered are the following: GENERAL OBLIGATION BONDS, SERIES 2016A, in the amount of $8,795,000 *, to be dated June 16, 2016; and TAXABLE GENERAL OBLIGATION BONDS, SERIES 2016B, in the amount of $620,000*, to be dated June 16, 2016 (the "Bonds") *Subject to principal adjustment pursuant to official Terms of Offering. Manner of Bidding: Open bids will not be received. Bids will be received in any of the following methods: • Sealed Bidding: Sealed bids may be submitted and will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa 52440. • Electronic Internet Bidding: Electronic internet bids will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa 52440. The bids must be submitted through the PARITY® competitive bidding system. • Electronic Facsimile Bidding: Electronic facsimile bids will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa 52440 (facsimile number: 319-341-4008). Electronic facsimile bids will be treated as sealed bids. Consideration of Bids: After the time for receipt of bids has passed, the close of sealed bids will be announced. Sealed bids will then be publicly opened and announced. Finally, electronic internet bids will be accessed and announced. Sale and Award: The sale and award of the Bonds will be held at the Emma J. Harvat Hall, City Hall, 410 E. Washington, Iowa City, Iowa at a meeting of the City Council on the above date at 7:00 P.M. Official Statement: The Issuer has issued an Official Statement of information pertaining to the Bonds to be offered, including a statement of the Terms of Offering and an Official Bid Form, which is incorporated by reference as a part of this notice. The Official Statement may be obtained by request addressed to the City Clerk, City Hall, 410 E. Washington, Iowa City, Iowa 52440; Telephone: (319)356-5053 or the Issuer's Municipal Advisor, Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa, 50309; Telephone: (515)243-2600. Terms of Offering: All bids shall be in conformity with and the sale shall be in accord with the Terms of Offering as set forth in the Official Statement. Legal Opinion: The Bonds will be sold subject to the opinion of Ahlers & Cooney, P.C., Attorneys of Des Moines, Iowa, as to the legality and their opinion will be furnished together with the printed Bonds without cost to the purchaser and all bids will be so conditioned. Except to the extent necessary to issue their opinion as to the legality of the Bonds, the attorneys will not examine or review or express any opinion with respect to the accuracy or completeness of documents, materials or statements made or furnished in connection with the sale, issuance or marketing of the Bonds. Rights Reserved: The right is reserved to reject any or all bids, and to waive any irregularities as deemed to be in the best interests of the public. By order of the City Council of the City of Iowa City, State of Iowa. City Clerk, City of Iowa City, State of Iowa TERMS OF OFFERING CITY OF IOWA CITY, IOWA Bids for the purchase of the City of Iowa City, Iowa's (the "City") $8,795,000* General Obligation Bonds, Series 2016A (the "Series 2016A Bonds") and the $620,000* Taxable General Obligation Bonds, Series 2016B (the "Series 2016B Bonds") will be received on Tuesday, May 17, 2016 before 10:00 o'clock A.M. Central Time after which time they will be tabulated. The City Council will consider award of the Bonds at 7:00 o'clock P.M. Central Time, on the same day. Questions regarding the sale of the Bonds should be directed to the City's Municipal Advisor, Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa 50309, or by telephoning 515-243- 2600. Information can also be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 East Washington Street, Iowa City, Iowa 52240, or by telephoning 319-356-5053. In addition to the provisions in the NOTICE OF BOND SALE, the following section sets forth the description of certain terms of the Bonds as well as the TERMS OF OFFERING with which all bidders and bid proposals are required to comply, as follows: DETAILS OF THE SERIES 2016A BONDS GENERAL OBLIGATION BONDS, SERIES 2016A in the principal amount of $8,795,000* to be dated the date of delivery (anticipated to be June 16, 2016) will be in the denomination of $5,000 or multiples thereof and will mature June 1, as follows: *Preliminary; subject to change. Year Amount* Year Amount* 2017 $240,000 2022 $950,000 2018 875,000 2023 965,000 2019 895,000 2024 985,000 2020 910,000 2025 1,010,000 2021 930,000 2026 1,035,000 ADJUSTMENT TO THE MATURITY AMOUN'T'S The aggregate principal amount of the Series 2016A Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $9,000,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016A Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016A Bonds will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. DETAILS OF THE SERIES 2016B BONDS TAXABLE GENERAL OBLIGATION BONDS, SERIES 2016B in the principal amount of $620,000* to be dated the date of delivery (anticipated to be June 16, 2016) will be in the denomination of $5,000 or multiples thereof and will mature June 1, as follows: *Preliminary; subject to change. Year Amount* 2017 $620,000 ADJUSTMENT TO THE MATURITY AMOUNTS The aggregate principal amount of the Series 2016B Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $700,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016B Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016B Bonds will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. TERM -BOND OPTION Bidders shall have the option of designating the Bonds as serial bonds or term bonds, or both. The bid must designate whether each of the principal amounts shown above represent a serial maturity or a mandatory redemption requirement for a term bond maturity. (See the OFFICIAL BID FORM for more information.) In any event, the above principal amount scheduled shall be represented by either serial bond maturities or mandatory redemption requirements, or a combination of both. OPTIONAL REDEMPTION FOR SERIES 2016A BONDS The Series 2016A Bonds due after June 1, 2024 will be subject to call prior to maturity in whole, or from time to time in part, in any order of maturity and within a maturity by lot on said date or on any date thereafter at the option of the City, upon terms of par plus accrued interest to date of call. Written notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Series 2016A Bonds to be redeemed at the address shown on the registration books. OPTIONAL REDEMPTION FOR SERIES 2016B BONDS The Series 2016B Bonds will NOT be subject to early redemption. INTEREST ON THE BONDS Interest on the Bonds will be payable on December 1, 2016 and semiannually on the I" day of June and December thereafter. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of the 15a' day of the month preceding such interest payment date (the "Record Date"). Interest will be computed on the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. iii Kole) 00 ArsMDIM acl0161 Good faith deposits in the amount of $87,950 for the Series 2016A Bonds (the "Series 2016A Deposit") and $6,200 for the Series 2016B Bonds (the "Series 2016B Deposit") are required from the lowest bidder(s) only of each series of the bond issue. The lowest bidders are required to submit such Deposits payable to the order of the City in the form of either (i) a cashier's check provided to the City or its Municipal Advisor or (ii) a wire transfer as instructed by the City's Municipal Advisor no later than 12:00 o'clock P.M. (noon) Central Time on the day of sale of the Bonds. If not so received, the bid of the lowest bidders may be rejected and the City may direct the second lowest bidder to submit a Deposit and thereafter may award the sale of the Bonds to the same. No interest on the Deposits will accrue to the successful bidder(s) ("Purchaser(s)"). The Deposits will be applied to the purchase price of the respective series of Bonds. In the event a Purchaser(s) fails to honor its accepted bid proposal, any Deposit will be retained by the City. FORM OF BIDS AND AWARD All bids shall be unconditional for each series of the Bonds for a price not less than $8,751,025 for the Series 2016A Bonds, and $618,140 for the Series 2016B Bonds, plus accrued interest, and shall specify the rate or rates of interest in conformity to the limitations set forth under the "BIDDING PARAMETERS" section. Bids must be submitted on or in substantial compliance with the NOTICE OF SALE and OFFICIAL BID FORMS provided by the City. The Bonds will be awarded to the bidder offering the lowest interest rate to be determined on a true interest cost (the "TIC") basis assuming compliance with the "GOOD FAITH DEPOSITS" section. The TIC shall be determined by the present value method, i.e., by ascertaining the semiannual rate, compounded semiannually, necessary to discount to present value as of the dated date of the Bonds, the amount payable on each interest payment date and on each stated maturity date or earlier mandatory redemption, so that the aggregate of such amounts will equal the aggregate purchase price offered therefore. The TIC shall be stated in terms of an annual percentage rate and shall be that rate of interest, which is twice the semiannual rate so ascertained (also known as the Canadian Method). The TIC shall be as determined by the Municipal Advisor based on the TERMS OF OFFERING and all amendments, and on the bids as submitted. The Municipal Advisor's computation of the TIC of each bid shall be controlling. In the event of tie bids for the lowest TIC, the Bonds will be awarded by lot. The City will reserve the right to: (i) waive non -substantive informalities of any bid or of matters relating to the receipt of bids and award of the Bonds, (ii) reject all bids without cause and (iii) reject any bid which the City determines to have failed to comply with the terms herein. BIDDING PARAMETERS For each respective series, the rates of interest specified in the bidder's proposal must conform to the following limitations: 1. For each respective series, each annual maturity must bear a single rate of interest from the dated date of the Bonds to the date of maturity. 2. For each respective series, rates of interest bid must be in multiples of one-eighth or one -twentieth of one percent. 3. The initial price to the public for each maturity must be 98% or greater. RECEIPT OF BIDS Forms of Bids: Bids must be submitted on or in substantial compliance with the NOTICE OF BOND SALE and OFFICIAL BID FORMS provided by the City or through PARITY® competitive bidding system (the "Internet Bid System"). Neither the City nor its agents shall be responsible for malfunction or mistake made by any person, or as a result of the use of the electronic bid or any other means used to deliver or complete a bid. The use of such means is at the sole risk of the prospective bidder who shall be bound by the terms of the bid as received. No bid will be accepted after the time specified in the NOTICE OF BOND SALE. The time as maintained by the Internet Bid System shall constitute the official time with respect to all bids submitted. A bid may be withdrawn before iv the bid deadline using the same method used to submit the bid. If more than one bid is received from a bidder, the last bid received shall be considered. Sealed Bidding: Sealed bids may be submitted and will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440. Electronic Internet Bidding: Electronic internet bids will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440. Internet bids must be submitted through the Internet Bid System. Information about the Intemet Bid System may be obtained by calling 212-849-5021. Each prospective bidder shall be solely responsible for making necessary arrangements to access the Intemet Bid System for purposes of submitting its internet bid in a timely manner and in compliance with the requirements of the NOTICE OF BOND SALE and OFFICIAL BID FORMS, The City is permitting prospective bidders to use the services of Intemet Bid System solely as a communication mechanism to conduct the Intemet bidding and the Internet Bid System is not an agent of the City. Provisions of the TERMS OF OFFERING and OFFICIAL BID FORMS shall control in the event of conflict with information provided by the Internet Bid System. Electronic Facsimile Bidding: Electronic facsimile bids will be received at the Office of the Finance Director, Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440 (facsimile number: 319-341-4008). Electronic facsimile bids will be sealed and treated as sealed bids. Electronic facsimile bids received after the deadline will be rejected. Bidders electing to submit bids via facsimile transmission bear full responsibility for the transmission of such bid. Neither the City nor its agents will assume liability for the inability of the bidder to reach the above named facsimile numbers prior to the time of sale specified above. Time of receipt shall be the time recorded by the facsimile operator receiving the bids. BOOK -ENTRY -ONLY ISSUANCE The Bonds will be issued by means of a book -entry -only issuance with no physical distribution of bond or note certificates made to the public. The Bonds will be issued in fully registered form and one bond or note certificates, representing the aggregate principal amount of the Bonds maturing in each year will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, NY, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the Registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The Purchaser, as a condition of delivery of the Bonds, will be required to deposit the bond or note certificates with DTC. MUNICIPAL BOND INSURANCE AT PURCHASER'S OPTION If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefore at the option of the bidder, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the Purchaser(s). Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the Purchaser(s), except that, if the City has requested and received a raring on the Bonds from a rating agency, the City will pay that initial rating fee. Any other raring agency fees shall be the responsibility of the Purchaser(s). Failure of the municipal bond insurer to issue the policy after the Bonds have been awarded to the Purchasers) shall not constitute cause for failure or refusal by the Purchaser(s) to accept delivery on the Bonds. The City reserves the right in its sole discretion to accept or deny changes to the financing documents requested by the insurer selected by the Purchaser(s). DELIVERY The Bonds will be delivered to the Purchaser(s) via Fast Automated Securities Transfer ("FAST") delivery with the Registrar holding the Bonds on behalf of DTC, against fall payment in immediately available cash or federal funds. v The Bonds are expected to be delivered within forty-five days after the sale. Should delivery be delayed beyond sixty days from the date of sale for any reason except failure of performance by the Purchaser(s), the Purchaser(s) may withdraw their bid and thereafter their interest in and liability for the Bonds will cease. When the Bonds are ready for delivery, the City will give the Purchaser(s) five working days notice of the delivery date and the City will expect payment in full on that date; otherwise, reserving the right at its option to determine that the Purchaser(s) failed to comply with the offer of purchase. INFORMATION FROM PURCHASER The Purchaser(s) will be required to certify to the City immediately after the opening of bids: (i) the initial public offering price of each maturity of the Bonds (not including sales to bond houses and brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds (not less than 10% of each maturity) were sold to the public; or (ii) if less than 10% of any maturity has been sold, the price for that maturity determined as of the time of the sale based upon the reasonably expected initial offering price to the public; and (iii) that the initial public offering price does not exceed their fair market value of the Bonds on the sale date. The Purchaser(s) will also be required to provide a certificate at closing confirming the information required by this paragraph. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Bonds. The Official Statement will be further supplemented with offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date and the identity of the underwriters, together with any other information required by law or deemed appropriate by the City, shall constitute a Final Official Statement of the City with respect to the Bonds, as that term is defined in Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, (the "Rule"). By awarding the Bonds to any underwriter or underwriting syndicate submitting an OFFICIAL BID FORM therefore, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which each series of the Bonds are awarded up to 15 copies of the Final Official Statement to permit each "Participating Underwriter" (as that term is defined in the Rule) to comply with the provisions of such Rule. The City shall treat the senior managing underwriter of the syndicate to which the Bonds are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to the Participating Underwriter. Any underwriter executing and delivering an OFFICIAL BID FORM with respect to the Bonds agrees thereby that if its bid is accepted by the City, (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. CONTINUING DISCLOSURE In order to permit bidders for the Bonds and other Participating Underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of 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, in the resolutions for the Bonds and the Continuing Disclosure Certificate, to provide annual reports of specified information and notice of the occurrence of certain material events as hereinafter described (the "Undertakings"). The information to be provided on an annual basis, the events as to which notice is to be given, and a summary of other provisions of the Undertakings, including termination, amendment and remedies, are set forth as APPENDIX C to this Preliminary Official Statement. Within the past five years, the City failed to timely file annual reports for Fiscal Year ended June 30, 2011. Breach of the Undertakings will not constitute a default or an "Event of Default" under the Bonds or the resolutions for the Bonds. A broker or dealer is to consider a known breach of the Undertakings, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the Undertakings may adversely affect the transferability and liquidity of the Bonds and their market price. vi CUSIP NUMBERS It is anticipated that Committee on Uniform Security Identification Procedures ("CUSIP") numbers will be printed on the Bonds and the Purchaser(s) must agree in the bid proposal to pay the cost thereof. In no event will the City, Bond Counsel or Municipal Advisor be responsible for the review of, or express any opinion that the CUSIP numbers are correct. Incorrect CUSIP numbers on said Bonds shall not be cause for the Purchaser to refuse to accept delivery of said Bonds. BY ORDER OF THE CITY COUNCIL Dennis Bockenstedt, Finance Director City of Iowa City, Iowa 410 East Washington Street Iowa City, Iowa 52240 vii SCHEDULE OF BOND YEARS $8,795,000* CITY OF IOWA CITY, IOWA General Obligation Bonds, Series 2016A Bonds Dated: June 16, 2016 Interest Due: December 1, 2016 and each June 1 and December 1 to maturity Principal Due: June 1, 2017-2026 * Prelinunary; subject to change. viii Cumulative Year Principal* Bond Years Bond Years 2017 $240,000 230.00 230.00 2018 875,000 1,713.54 1,943.54 2019 895,000 2,647.71 4,591.25 2020 910,000 3,602.08 8,193.33 2021 930,000 4,611.25 12,804.58 2022 950,000 5,660.42 18,465.00 2023 965,000 6,714.79 25,179.79 2024 985,000 7,838.96 33,018.75 2025 1,010,000 9,047.92 42,066.67 2026 1,035,000 10,306.88 52,373.54 Average Maturity (dated date): 5.955 Years * Prelinunary; subject to change. viii SCHEDULE OF BOND YEARS $620,000* CITY OF IOWA CITY, IOWA Taxable General Obligation Bonds, Series 2016B Bonds Dated: June 16, 2016 Interest Due: December 1, 2016 and each June 1 and December 1 to maturity Principal Due: June 1, 2017 Cumulative Year Principal* Bond Years Bond Years 2017 $620,000 594.17 594.17 Average Maturity (dated date): 0.958 Years * PreUrrinary; subject to change. ix PRELIMINARY OFFICIAL STATEMENT CITY OF IOWA CITY, IOWA $8,795,000* General Obligation Bonds, Series 2016A $620,000* Taxable General Obligation Bonds, Series 2016B INTRODUCTION This Preliminary Official Statement contains information relating to the City of Iowa City, Iowa (the "City") and its issuance of $8,795,000* General Obligation Bonds, Series 2016A (the "Series 2016A Bonds") and $620,000* Taxable General Obligation Bonds, Series 2016B (the Series 2016B Bonds"). This Preliminary Official Statement has been authorized on behalf of the City and its Finance Director and may be distributed in connection with the sale of the Bonds authorized therein. Inquiries may be made to the City's Municipal Advisor, Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa 50309, or by telephoning 515-243-2600. Information can also be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 East Washington Street, Iowa City, Iowa 52240, or by telephoning 319-356-5053. AUTHORITY AND PURPOSE The Series 2016A Bonds are issued pursuant to Division III of Sections 384.25, 384.26 and 403.12 of the Code of Iowa, and a resolution to be adopted by the City Council of the City. The Series 2016A Bonds proceeds will be used to pay the costs of acquisition, construction, reconstruction, enlargement, improvement, and repair of bridges, culverts, retaining walls, viaducts, underpasses, grade crossing separations, and approaches thereto; opening, widening, extending, grading, and draining of the right-of-way of streets, highways, avenues, alleys and public grounds; the construction, reconstruction, and repairing of any street improvements; the acquisition, installation, and repair of sidewalks, storm sewers, sanitary sewers, water service lines, street lighting, and traffic control devices; and the acquisition of any real estate needed for any of the foregoing purposes; rehabilitation and improvement of parks already owned, including the removal, replacement and planting of trees in the parks, and facilities, equipment, and improvements commonly found in city parks; 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; remediation, restoration, repair, cleanup, replacement, and improvement of property, buildings, equipment, and public facilities that have been damaged by a disaster as defined in section 29C.2 and that are located in an area that the governor has proclaimed a disaster emergency or the president of the United States has declared a major disaster. Bonds issued pursuant to section 384.25 for the purposes specified in this paragraph shall be issued not later than ten years after the governor has proclaimed a disaster emergency or the president of the United States has declared a major disaster, whichever is later; aiding in the planning, undertaking, and carrying out of urban renewal projects under the authority of chapter 403, including improvements to the Riverfront Crossings District of the City -University Urban Renewal Area and acquisition, construction, reconstruction, enlargement, improvement, and equipping of recreation grounds, including trails, recreation buildings, juvenile playgrounds, swimming pools, recreation centers, and parks and the acquisition of any real estate therefor, and acquisition, construction, reconstruction, enlargement, improvement, and equipping of city hall. The Series 2016B Bonds are issued pursuant to Division III of Sections 384.25, 384.26 and 403.12 of the Code of Iowa, and a resolution to be adopted by the City Council of the City. The Series 2016B Bonds proceeds will be used to pay the costs of funding of programs to provide for or assist in providing for the acquisition and restoration of housing as part of a municipal housing project, including funds to assist the Towncrest Senior Housing Project. The estimated Sources and Uses of the Bonds are as follows: Sources of Funds Par Amount of Bonds Uses of Funds Series 2016A Bonds $8,795,000.00* Deposit to Project Fund $8,695,888.00 Underwriter's Discount 43,975.00 Cost of Issuance & Contingency 55,137.00 Total Uses $8,795,000.00* * Preliminary, subject to change. OPTIONAL REDEMPTION FOR SERIES 2016A BONDS Series 2016B Bonds $620,000.00* $600,000.00 1,860.00 18,140.00 $620,000.00* The Series 2016A Bonds due after June 1, 2024 will be subject to call prior to maturity in whole, or from time to time in part, in any order of maturity and within a maturity by lot on said date or on any date thereafter at the option of the City, upon terms of par plus accrued interest to date of call. Written notice of such call shall be given at least thirty (30) days prior to the date fixed for redemption to the registered owners of the Series 2016A Bonds to be redeemed at the address shown on the registration books. OPTIONAL REDEMPTION FOR SERIES 2016B BONDS The Series 2016B Bonds will NOT be subject to early redemption. INTEREST ON THE BONDS Interest on the Bonds will be payable on December 1, 2016 and semiannually on the I' day of June and December thereafter. Interest and principal shall be paid to the registered holder of a bond as shown on the records of ownership maintained by the Registrar as of the 15a' day of the month preceding such interest payment date (the "Record Date"). Interest will be computed on the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. PAYMENT OF AND SECURITY FOR THE BONDS The Bonds are general obligations of the City and the unlimited taxing powers of the City are irrevocably pledged for their payment. Upon issuance of the Bonds, the City will levy taxes for the years and in amounts sufficient to provide 100% of annual principal and interest due on all Bonds. If, however, the amount credited to the debt service fund for payment of the Bonds is insufficient to pay principal and interest, whether from transfers or from original levies, the City must use funds in its treasury and is required to levy ad valorem taxes upon all taxable property in the City without limit as to rate or amount sufficient to pay the debt service deficiency. BOOK -ENTRY -ONLY ISSUANCE The information contained in the following paragraphs of this subsection "Book -Entry -Only Issuance" has been extracted from a schedule prepared by Depository Trust Company ("DTC') entitled "SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING DTC AND BOOK -ENTRY -ONLY ISSUANCE." The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibilityfor the accuracy thereof. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully - registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 2 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants (the "Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has Standard & Poor's rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security (the "Beneficial Owner') is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co., nor any other DTC nominee, will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date identified in a listing attached to the Omnibus Proxy. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, is the responsibility of the City or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book -entry credit of tendered Securities to Tender/Remarketing Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. FUTURE FINANCING hi conjunction with the sale of the Bonds, the City is also issuing approximately $10,215,000 Sewer Revenue Refunding Capital Loan Notes, Series 2016C and approximately $4,025,000 Water Revenue Refunding Capital Loan Notes, Series 2016D. In addition, the City anticipates issuing approximately $12,635,000 Urban Renewal Revenue Capital Loan Notes later in calendar year 2016. LITIGATION The City is not aware of any threatened or pending litigation affecting the validity of the Bonds or the City's ability to meet its financial obligations. DEBT PAYMENT HISTORY The City knows of no instance in which it has defaulted in the payment of principal or interest on its debt. LEGALITY The Bonds are subject to approval as to certain matters by Ahlers & Cooney, P.C. of Des Moines, Iowa as Bond Counsel. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and will not pass upon its accuracy, completeness or sufficiency. Bond Counsel has not examined, nor attempted to examine or verify, any of the financial or statistical statements or data contained in this Preliminary Official Statement, and will express no opinion with respect thereto. The "FORMS OF LEGAL OPINIONS" as set out in APPENDIX A to this Preliminary 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. There is no bond trustee or similar person to monitor or enforce the provisions of the resolutions for the Bonds. The owners of the Bonds should, therefore, be prepared to enforce such provisions themselves if the need to do so arises. 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 resolutions for the Bonds) may have to be enforced from 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 City or sell such property in order to pay the debt service on the Bonds. See "LEVIES AND TAX COLLECTIONS" herein, for a description of property tax collection and enforcement. 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, to the exercise of judicial discretion in appropriate cases and to the exercise by the State and its governmental bodies of the police power inherent in the sovereignty of the State and to the exercise by the United States of America of the powers delegated to it by the Constitution of the United States of America. TAX MATTERS With Respect to Series 2016A Bonds Federal Income Tax Exem tion and State Taxability: Federal tax law contains a number of requirements and restrictions that apply to the Series 2016A Bonds. These include investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and facilities financed with bond proceeds, and certain other matters. The City has covenanted to comply with all requirements that must be satisfied in order for the interest on the Series 2016A 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 Series 2016A Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2016A Bonds. Subject to the City's compliance with the above referenced covenants, under present law, in the opinion of Bond Counsel, the interest on the Series 2016A Bonds is excludable from gross income for federal income tax purposes and the interest on the Series 2016A Bonds is not an item of tax preference for purpose of the federal alternative minimum tax imposed on individuals and corporations. However, with respect to corporations (as defined for federal income tax purposes), such interest is included in adjusted current earnings for the purpose of determining the federal alternative minimum tax imposed on certain corporations. Prospective purchasers of the Series 2016A Bonds should be aware that ownership of the Series 2016A 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 Series 2016A Bonds should consult their tax advisors as to collateral federal income tax consequences. Interest on the Series 2016A Bonds is not exempt from present Iowa income taxes. Ownership of the Series 2016A 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 Series 2016A Bonds. Prospective purchasers of the Series 2016A 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 Series 2016A Bonds as "qualified tax-exempt obligations" under the exception provided in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Tax Accounting Treatment of Discount and Premium on Certain Series 2016A Bonds: The initial public offering price of certain Series 2016A Bonds ("Series 2016A Discount Bonds") may be less than the amount payable on such Series 2016A Discount Bonds at maturity. An amount equal to the difference between the initial public offering price of Series 2016A Discount Bonds (assuming that a substantial amount of the Series 2016A Discount Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Series 2016A Discount Bonds. Owners of Series 2016A Discount Bonds should consult with their own tax advisors with respect to the determination of accrued original issue discount on Series 2016A Discount Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Series 2016A Discount Bonds. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Series 2016A 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 Series 2016A Bonds ("Series 2016A Premium Bonds") may be greater than the amount of such Series 2016A Bonds at maturity. An amount equal to the difference between the initial public offering price of Series 2016A Premium Bonds (assuming that a substantial amount of the Series 2016A 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 Series 2016A Premium Bonds. Purchasers of the Series 2016A Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium on Series 2016A Premium Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Series 2016A Premium Bonds. Related Tax Matters: The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Series 2016A 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 Series 2016A Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Series 2016A Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Series 2016A 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 Series 2016A 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. From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Series 2016A Bonds or otherwise prevent holders of the Series 2016A Bonds from realizing the full benefit of the tax exemption of interest on the Series 2016A Bonds. Further, such proposals may impact the marketability or market value of the Series 2016A Bonds simply by being proposed. No prediction is made whether such provisions will be enacted as proposed or concerning other future legislation affecting the tax treatment of interest on the Series 2016A Bonds. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Series 2016A 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 Series 2016A Bonds would be impacted thereby. The enforceability of the rights and remedies of owners of the Series 2016A Bonds may be subject to limitation as set forth in Bond Counsel's opinion. The opinion will state, in part, that the obligations of the City with respect to the Series 2016A 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. With Respect to the Series 2016B Bonds Federal and State Taxability: In the opinion of Bond Counsel, under existing law, interest on the Series 2016B Bonds will be included in gross income of the owners thereof for federal income tax purposes. Interest on the Series 2016B Bonds is includible in gross income for State of Iowa income tax purposes. Ownership of the Series 2016B 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 Series 2016B Bonds. Prospective purchasers of the Series 2016B Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. Tax Accounting Treatment of Discount and Premium on Certain Series 2016B Bonds: The initial public offering price of certain Series 2016B Bonds ("Series 2016B Discount Bonds") may be less than the amount payable on such Series 2016B Discount Bonds at maturity. An amount equal to the difference between the initial public offering price of the Series 2016B Discount Bonds (assuming that a substantial amount of the Series 2016B Discount Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Discount Bonds. Owners of Series 2016B Discount Bonds should consult with their own tax advisors with respect to the determination of accrued original issue discount on Series 2016B Discount Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Series 2016B Discount Bonds. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Series 2016B 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 Series 2016B Bonds ("Series 2016B Premium Bonds") may be greater than the amount of such Series 2016B Premium Bonds at maturity. Except in the case of dealers, which are subject to special rules, bondholders who acquire Series 2016B Premium Bonds at a premium must, from time to time, reduce their federal tax bases for the Series 2016B Premium Bonds for purposes of determining gain or loss on the sale or payment of such Series 2016B Premium Bonds. The premium generally is amortized for federal income tax purposes on the basis of a bondholder's constant yield to maturity or to certain call dates with semiannual compounding. Bondholders who acquire any Series 2016B Premium Bonds a premium might recognize taxable gain upon sale of the Series 2016B Premium Bonds even if Series 2016B Premium Bonds are sold for an amount equal to or less than their any original cost. Amortized premium is not deductible for federal income tax purposes. Bondholders who acquire any Series 2016B Premium Bonds at a premium should consult their tax advisors concerning the calculation of bond premium and the timing and rate of premium amortization, as well as the state and local tax consequences of owning and selling the Series 2016B Premium Bonds acquired at a premium. The City has requested ratings on the Bonds from Moody's Investors Service, Inc. ("Moody's"). Moody's currently maintains a rating of `Aaa' on the City's outstanding general obligation long-term debt. The existing ratings on long- term debt reflect only the view of the rating agency and any explanation of the significance of such rating may only be obtained from Moody's. There is no assurance that such rating will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of the rating may have an effect on the market price of the Bonds. MUNICIPAL ADVISOR The City has retained Public Financial Management, Inc., Des Moines, Iowa as Municipal Advisor (the "Municipal Advisor") in connection with the preparation of the City's issuance of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness, or fairness of the information contained in the Preliminary Official Statement. Public Financial Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. CONTINUING DISCLOSURE In order to permit bidders for the Bonds and other Participating Underwriters in the primary offering of the Bonds to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended (the "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, in the resolutions for the Bonds and the Continuing Disclosure Certificate, to provide annual reports of specified information and notice of the occurrence of certain material events as hereinafter described (the "Undertakings"). The information to be provided on an annual basis, the events as to which notice is to be given, and a summary of other provisions of the Undertakings, including termination, amendment and remedies, are set forth as APPENDIX C to this Preliminary Official Statement. Within the past five years, the City failed to timely file annual reports for Fiscal Year ended June 30, 2011. Breach of the Undertakings will not constitute a default or an "Event of Default" under the Bonds or the resolutions for the Bonds. A broker or dealer is to consider a known breach of the Undertakings, however, before recommending the purchase or sale of the Bonds in the secondary market. Thus, a failure on the part of the City to observe the Undertakings may adversely affect the transferability and liquidity of the Bonds and their market price. CERTIFICATION The City has authorized the distribution of this Preliminary Official Statement for use in connection with the initial sale of the Bonds. I have reviewed the information contained within the Preliminary Official Statement prepared on behalf of the City by Public Financial Management, Inc., Des Moines, Iowa, and to the best of my knowledge, said Preliminary Official Statement does not contain any material misstatements of fact nor omission of any material fact regarding the issuance of $8,795,000* General Obligation Bonds, Series 2016A and $620,000* Taxable General Obligation Bonds, Series 2016B. CITY OF IOWA CITY, IOWA /s/ Dennis Bockenstedt, Finance Director * Preliminary, subject to change. CITY PROPERTY VALUES IOWA PROPERTY VALUATIONS In compliance with Section 441.21 of the Code of Iowa, the State Director of Revenue annually directs the county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The Johnson County Auditors adjusted the final Actual Values for 2014. The reduced values, determined after the application of rollback percentages, are the taxable values subject to tax levy. For assessment year 2014, the taxable value rollback rate was 55.7335% of actual value for residential property; 44.7021% of actual value for agricultural property; and 90% of actual value for commercial, industrial, and railroad property. No adjustment was ordered for utility property because its assessed value did not increase enough to qualify for reduction. Utility property is limited to an 8% annual growth. The Legislature's intent has been to limit the growth of statewide taxable valuations for the specific classes of property to 3% annually. Political subdivisions whose taxable values are thus reduced or are unusually low in growth are allowed to appeal the valuations to the State Appeal Board, in order to continue to fund present services. PROPERTY VALUATIONS (1/1/2014 Valuation Taxes payable July 1, 2015 to June 30, 2016) Taxable Value 100% Actual Value (With Rollback) Residential $3,603,743,609 $2,008,493,138 Commercial 1,129,397,979 1,016,458,199 Industrial 74,399,739 66,959,765 Railroads 4,015,580 3,614,022 Utilities w/o Gas & Electric 8,239,789 8,239,789 Gross valuation $4,819,796,696 $3,103,764,913 Less military exemption (2.828,002) (2,828.0021 Net valuation $4,816,968,694 $3,100,936,911 TIF increment (used to compute debt service levies and constitutional debt limit) $42,307,287 $33,331,128 Taxed separately Ag. Land & Buildings $3,553,520 $1,588,496 Gas & Electric Utilities $87,728,294 $46,785,426 2014 GROSS TAXABLE VALUATION BY CLASS OF PROPERTY tl Taxable Valuation Percent Total Residential $2,008,493,138 63.75% Commercial, Industrial and Utility 1,091,657,753 34.65% Gas & Electric Utilities 46,785,426 1.48% Railroads 3.614,022 0.12% Total Gross Taxable Valuation $3,150,550,339 100.00% 1) Excludes Taxable TIF Increment and Ag. Land & Buildings. TREND OF VALUATIONS Assessment Payable Tvoe of Property/Business Taxable Valuation Taxable TIF Year Fiscal Year 100% Actual Valuation (With Rollback) Increment 2011 2012-13 $4,615,527,744 $2,946,951,863 $11,712,327 2012 2013-14 4,668,318,992 3,020,306,824 14,113,908 2013 2014-15 4,826,647,177 3,114,066,554 21,131,574 2014 2015-16 4,950,557,795 3,147,722,337 33,331,128 2015 11 2016-17 5,350,243,693 3,347,028,340 72,650,838 1) The City's 1/1/2015 valuations are now available from the State of Iowa and become effective July 1, 2016. The 100% Actual Valuations, before rollback and after the reduction of military exemption, include Ag. Land & Buildings, Taxable TIF Increment and Gas & Electric Utilities. The Taxable Valuations, with the rollback and after the reduction of military exemption, include Gas & Electric Utilities and exclude Ag. Land & Buildings and Taxable TIF Increment. Iowa cities certify operating levies against Taxable Valuation excluding Taxable TIF Increment and debt service levies are certified against Taxable Valuation including the Taxable TIF Increment. With the exception of the electric and natural gas providers (which is subject to an excise tax in accordance with Iowa Code chapter 437A), the City's mill levy is uniformly applicable to all of the properties included in the table, and thus taxes expected to be received by the City from such taxpayers will be in proportion to the taxable valuations of the properties. LARGER TAXPAYERS Set forth in the following table are the persons or entities which represent larger taxpayers within the boundaries of the City, as provided by the Johnson County Auditor's Office. No independent investigation has been made of and no representation is made herein as to the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the City. With the exception of the electric and natural gas provider noted below (which is subject to an excise tax in accordance with Iowa Code chapter 437A), the City's mill levy is uniformly applicable to all of the properties included in the table, and thus taxes expected to be received by the City from such taxpayers will be in proportion to the taxable valuations of the properties. The total tax bill for each of the properties is dependent upon the mill levies of the other taxing entities which overlap the properties. Taxnaver Mid American Energy Co. American College Testing, Inc. ("ACT") Ann S. Gerdin Revocable Trust Dealer Properties IC LLC Procter & Gamble Hair Care LLC Alpla, Inc. CCAL 100 Hawk Ridge Drive LLC National Computer Systems Inc. Wal-Mart Real Estate Business Trust Kobrin Development Company Inc. 1) This list represents some of the top taxpayers in the City, not necessarily the top 10 taxpayers. Source: Johnson County Auditor's Office 10 1/1/2014 Tvoe of Property/Business Taxable Valuations Utility $44,301,833 Commercial 44,150,558 Commercial 21,232,925 Commercial 18,675,864 Industrial 15,418,708 Industrial 14,615,928 Residential 13,171,260 Commercial 12,428,352 Commercial 12,078,378 Commercial & Residential 11,711,744 1) This list represents some of the top taxpayers in the City, not necessarily the top 10 taxpayers. Source: Johnson County Auditor's Office 10 PROPERTY TAX LEGISLATION During the 2013 legislative session, the Iowa General Assembly enacted Senate File 295 (the "Act"), which the Governor signed into law on June 12, 2013. Among other things, the Act (i) reduced the maximum annual taxable value growth percent, due to revaluation of existing residential and agricultural property, from the 4% 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 95% for the 2013 assessment year and 90% for the 2014 assessment year and all years thereafter, (iii) created a new property tax classification for multi -residential properties (mobile home parks, manufactured home communities, land -lease communities, assisted living facilities and property primarily used or intended for human habitation containing three or more separate dwelling units) ("Multi -residential Property") that began in the 2015 assessment year, and assigned a declining rollback percentage of 3.75% to such properties for each subsequent year until the 2021 assessment year (the rollback percentage for Multi -residential Properties is equal to the residential rollback percentage in the 2022 assessment year and thereafter) and (iv) exempted a specified portion of the assessed value of telecommunication properties. The Act included a standing appropriation to replace some of the tax revenues lost by local governments, including tax increment districts, resulting from the new rollback for commercial and industrial property. Prior to Fiscal Year 2017- 18, the appropriation is a standing unlimited appropriation, but beginning in Fiscal Year 2017-18 the standing appropriation cannot exceed the actual Fiscal Year 2016-17 appropriation amount. The appropriation does not replace losses to local governments resulting from the Act's provisions that reduce the annual revaluation growth limit for residential and agricultural properties from 4% to 3%, the gradual transition for Multi -residential Property from the commercial rollback percentage (100% of Actual Value) to the residential rollback percentage (currently 55.7335% of Actual Valuation), or the reduction in the percentage of telecommunications property that is subject to taxation. Given the wide scope of the statutory changes, and the State of Iowa's discretion in establishing the annual replacement amount that is appropriated each year commencing in Fiscal Year 2017-18, the impact of the Act on the City's future property tax collections is uncertain and the City is unable to estimate the financial impact of the Act's provisions on the City's future operations. In Moody's Investor Service US Public Finance Weekly Credit Outlook, dated May 30, 2013, Moody's Investor Service ("Moody's") projected that local governments in the State of Iowa are likely to experience modest reductions in property tax revenues starting in Fiscal Year 2014-15 as a result of the Act, with sizeable reductions possible starting in Fiscal Year 2017-18. According to Moody's, local governments that may experience disproportionately higher revenue losses include regions that have a substantial commercial base, a large share of Multi -residential Property (such as college towns), or significant amounts of telecommunications property. Notwithstanding any decrease in property tax revenues that may result from the Act, Iowa Code section 76.2 provides that when an Iowa political subdivision issues general obligation bonds, "the governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding twenty years. A certified copy of this resolution shall be filed with the county auditor or the auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditors to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full." From time to time, other legislative proposals may be considered by the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described in this Preliminary Official Statement. It cannot be predicted whether or in what forms any of such proposals may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for the levy of taxes by the City. I1 CITY INDEBTEDNESS DEBT LIMIT Article XI, Section 3 of the State of Iowa Constitution limits the amount of debt outstanding at any time of any county, municipality or other political subdivision to no more than 5% of the actual value of all taxable property within the corporate limits, as taken from the last state and county tax list. The debt limit for the City, based on its 2014 valuation currently applicable to the Fiscal Year 2015-16 is as follows: 2014 Actual Valuation of Property $4,950,557,795 Legal Debt Limit of 5% 0.05 Legal Debt Limit $247,527,890 Less: TIF Revenue Debt Subject to Debt Limit (2,525,000) Less: Total G.O. Debt Subject to Debt Limit (55,360,000) Less: Lines of Credit (412,000) Less: TIF Rebate Agreements (13,506,152) Net Debt Limit $175,724,738 1) Actual Valuation of Property as reported on the Fiscal Year 2015-16 county tax roll. DIRECT DEBT General Obligation Debt Supported by Property Taxes and Tax Increment (Includes the Bonds) Total General Obligation Debt Subject to Debt Limit: * Preliminary; subject to change. 12 $55,360,000 Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 10/08B $17,005,000 Refunding 6/18 $3,055,000 6/09C 6,685,000 City Improvements 6/19 2,210,000 8/1013 7,420,000 City Improvements 6/20 3,115,000 6/11A 7,925,000 City Improvements 6/21 3,940,000 6/11C 10,930,000 Refunding 6/21 6,235,000 6/12A 9,070,000 City Improvements 6/22 5,680,000 7/13A 7,230,000 City Improvements 6/23 5,750,000 6/14 11,390,000 City Improvements 6/24 8,575,000 6/15 7,785,000 City Improvements 6/25 7,090,000 6/16A 8,795,000* City Improvements 6/26 8,795,000 6/16B 620,000* City Improvements 6/17 620,000 Subtotal $55,065,000 General Obligation Debt Supported by Enterprise Funds Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 6/14 $590,000 Refunding 6/17 $295,000 Total General Obligation Debt Subject to Debt Limit: * Preliminary; subject to change. 12 $55,360,000 Annual Fiscal Year General Obligation Debt Service Payments (Includes the Bonds) - Preliminary; subject to change. 13 Series 2016B Bonds Total Outstandin Principal & Current Outstanding Series 2016A Bonds Primo' Interest. Principal Principal & 620 000• $643,767 Principal & Fiscal Year Principal Interest Principal Interest' 2016-17 $9,575,000 $10,726,219 $240,000 $423,409 2017-18 8,465,000 9,390,631 875,000 1,061,584 2018-19 7,090,000 7,789,681 895,000 1,064,084 2019-20 6,500,000 7,008,694 910,000 1,061,184 2020-21 5,220,000 5,552,629 930,000 1,062,984 2021-22 3,635,000 3,829,850 950,000 1,064,384 2022-23 2,700,000 2,819,350 965,000 1,060,384 2023-24 1,880,000 1,940,350 985,000 1,060,022 2024-25 880.000 897,600 1,010,000 1,062,367 2025-26 1,035,000 1,062,117 Total $45,945,000 $8,795,000- - Preliminary; subject to change. 13 Series 2016B Bonds Total Outstandin Principal & Principal & Primo' Interest. Principal Interest* 620 000• $643,767 $10,435,000 $11,793,395 9,340,000 10,452,215 7,985,000 8,853,765 7,410,000 8,069,877 6,150,000 6,615,612 4,585,000 4,894,234 3,665,000 3,879,734 2,865,000 3,000,372 1,890,000 1,959,967 1.035.000 1,062,117 $620,000' $55,360,000' [0 0.1 Dl:1117 DO" The City has revenue debt payable solely from the net revenues of the City's Urban Renewal Areas as follows: Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 11/12D $2,655,000 Developer Grant 6/32 $2,525,000 The City has revenue debt payable solely from the net revenues of the Municipal Parking System as follows: 1) The City has defeased $6,045,000 of the Series 2009F Bonds maturing 2016 through 2024. Funds are being held in escrow until the July 1, 2017 call date. 2) The City has entered into a Lease Purchase Agreement in connection with the construction of a parking garage anticipated to be completed in August 2017. The commencement date of the Lease Purchase Agreement is anticipated in August 2017. The City has revenue debt payable solely from the net revenues of the Municipal Water System as follows Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 11/09F $9,110,000 Parking 7/17 $011 8/17 $15,300,000 Parking 6/37 15,300,0002) Total 4,950,000 Water Refunding 7/22 $15,300,000 1) The City has defeased $6,045,000 of the Series 2009F Bonds maturing 2016 through 2024. Funds are being held in escrow until the July 1, 2017 call date. 2) The City has entered into a Lease Purchase Agreement in connection with the construction of a parking garage anticipated to be completed in August 2017. The commencement date of the Lease Purchase Agreement is anticipated in August 2017. The City has revenue debt payable solely from the net revenues of the Municipal Water System as follows 1) The 2017 through 2024 maturities in the amount of $4,085,000 will be current refunded by the Water Revenue Refunding Capital Loan Notes, Series 2016D on July 1, 2016. 2) The Water Revenue Refunding Capital Loan Notes, Series 2016D are being sold in conjunction with the Bonds. * Preliminary; subject to change. 14 Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 10/08D $7,115,000 Water Refunding 7/16 $425,000'1 5/09B 9,750,000 Water Refunding 7/25 6,870,000 6/12C 4,950,000 Water Refunding 7/22 3,565,000 6/16D 4,025,000* Water Refunding 7/24 4,025,00021* Total $14,885,000* 1) The 2017 through 2024 maturities in the amount of $4,085,000 will be current refunded by the Water Revenue Refunding Capital Loan Notes, Series 2016D on July 1, 2016. 2) The Water Revenue Refunding Capital Loan Notes, Series 2016D are being sold in conjunction with the Bonds. * Preliminary; subject to change. 14 The City has revenue debt payable solely from the net revenues of the Municipal Sewer System as follows 1) The 2017 through 2022 maturities in the amount of $10,515,000 will be current refunded by the Sewer Revenue Refunding Capital Loan Notes, Series 2016C on July 1, 2016. 2) The Sewer Revenue Refunding Capital Loan Notes, Series 2016C are being sold in conjunction with the Bonds. * Preliminary; subject to change. 15 Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 10/08C $24,280,000 Sewer Refunding 7/16 $1,945,000 n 5/09A 8,660,000 Sewer Refunding 7/25 6,275,000 4/10A 15,080,000 Sewer Refunding 7/20 6,330,000 6/16C 10,215,000* Sewer Refunding 7/21 10,215,0002)* Total $24,765,000* 1) The 2017 through 2022 maturities in the amount of $10,515,000 will be current refunded by the Sewer Revenue Refunding Capital Loan Notes, Series 2016C on July 1, 2016. 2) The Sewer Revenue Refunding Capital Loan Notes, Series 2016C are being sold in conjunction with the Bonds. * Preliminary; subject to change. 15 INDIRECT GENERAL OBLIGATION DEBT Taxing District Johnson County Iowa City CSD Clear Creek-Amana CSD Kirkwood Comm. College 1/1/2015 Taxable Valuation �1 $8,042,302,645 5,978,490,538 129,160,108 24,144,197,855 City's Share of Total Overlapping Debt Percent In Cit 42.54%') 57.23%') 0.04% 14.17%3) G.O. Debt 2) $8,490,000 14,150,000 55,520,000 125,321,492 City's Proportionate Share $3,611,646 8,098,045 22,208 17,758,055 $29,489,954 1) Taxable Valuation excludes military exemption and includes Ag. Land & Buildings, Taxable TIF Increment and all Utilities. 2) Includes general obligation bonds, PPEL notes, certificates of participation and newjobs training certificates. 3) Includes city -exempt Ag TIF Increment valuation in the amount of $15,839. DEBT RATIOS Total General Obligation Debt Less G.O. Debt Service Paid by Enterprise Funds 3) Net G.O. Debt Paid by Taxes and Tax Increment TIF Revenue Debt City's share of total overlapping debt 1) Based on the City's 1/1/2015 100% Actual Valuation; includes Ag Land, Ag Buildings, all Utilities and TIF Increment. 2) Population based on the City's 2010 Census. 3) G.O. debt abated by Water Revenues. * Preliminary; subject to change. LEVIES AND TAX COLLECTIONS Fiscal Year Levv 2011-12 Debt/Actual 2012-13 50,407,375 Market Value Debt/67,862 G.O. Debt ($5,350,243,693) 1 Population 2) $55,360,000 * 1.03% * $815.77 * (295,000) $55,065,000 * 1.03% * $811.42 * $2,525,000 0.05% $37.21 $29,489,954 0.55% $434.56 1) Based on the City's 1/1/2015 100% Actual Valuation; includes Ag Land, Ag Buildings, all Utilities and TIF Increment. 2) Population based on the City's 2010 Census. 3) G.O. debt abated by Water Revenues. * Preliminary; subject to change. LEVIES AND TAX COLLECTIONS Fiscal Year Levv 2011-12 $49,589,988 2012-13 50,407,375 2013-14 50,307,189 2014-15 51,608,730 2015-16 52,033,986 Collected During Collection Year Percent Collected $49,543,860 99.9% 50,419,618 100.8% 49,835,540 99.1% 51,295,491 99.4% -------In Process of Collection ------- Collections include delinquent taxes from all prior years. Taxes in Iowa are delinquent each October 1 and April 1 and a late payment penalty of I% per month of delinquency is enforced as of those dates. If delinquent taxes are not paid, the property may be offered at the regular tax sale on the third Monday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property and funds so received are applied to taxes. A property owner may redeem from the regular tax sale but, failing redemption within three years, the tax sale purchaser is entitled to a deed, which in general conveys the title free and clear of all liens except future tax installments. 16 TAX RATES FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 LEVY LIMITS A city's general fund tax levy is limited to $8.10 per $1,000 of taxable value, with provision for an additional $0.27 per $1,000 levy for an emergency fund which can be used for general fund purposes (Code of Iowa, Chapter 384, Division I). Cities may exceed the $8.10 limitation upon authorization by a special levy election. Further, there are limited special purpose levies which may be certified outside of the above described levy limits (Code of Iowa, Section 384.12). The amount of the City general fund levy subject to the $8.10 limitation is $8.10 for fiscal year 2015-16. The City does levy costs for operation and maintenance of publicly owned Transit, tort liability and other insurance, support of the public library, police and fire retirement, FICA and IPERS and other employee benefits expenses in addition to the $8.10 general fund limit as authorized bylaw. In addition, the City has not established an emergency fund levy for fiscal year 2015-16. Debt service levies are not limited. CITY FUNDS ON HAND (Cash and Investments as of February 29, 2016) City Operating Funds $136,030,184 City Restricted Funds 56,637,371 Total $192,667,555 17 01,000 01,000 000 / 1 000 $/$1,000 $/$1,000 Johnson County 6.98984 6.74909 6.73712 6.74168 6.90337 City of Iowa City 17.84150 17.26864 16.80522 16.70520 16.65096 Iowa City CSD 14.59055 14.07327 13.68792 13.69999 13.86773 Clear Creek -Aman CSD (Clear Creek) 15.54876 15.31063 15.31055 15.06516 15.62084 Kirkwood Comm. College 0.99870 1.07888 1.06473 1.05754 1.06125 City Assessor 0.24632 0.24453 0.25873 0.23866 0.24325 County Ag. Extension 0.08358 0.08146 0.08160 0.08119 0.08129 State of Iowa 0.00320 0.00320 0.00330 0.00330 0.00330 Total Tax Rate - City Resident: Iowa City CSD 40.75369 39.49917 38.63862 38.52756 38.81115 Clear Creek-Amana CSD (Clear Creek) 41.71190 40.73653 40.26125 39.89273 40.56426 LEVY LIMITS A city's general fund tax levy is limited to $8.10 per $1,000 of taxable value, with provision for an additional $0.27 per $1,000 levy for an emergency fund which can be used for general fund purposes (Code of Iowa, Chapter 384, Division I). Cities may exceed the $8.10 limitation upon authorization by a special levy election. Further, there are limited special purpose levies which may be certified outside of the above described levy limits (Code of Iowa, Section 384.12). The amount of the City general fund levy subject to the $8.10 limitation is $8.10 for fiscal year 2015-16. The City does levy costs for operation and maintenance of publicly owned Transit, tort liability and other insurance, support of the public library, police and fire retirement, FICA and IPERS and other employee benefits expenses in addition to the $8.10 general fund limit as authorized bylaw. In addition, the City has not established an emergency fund levy for fiscal year 2015-16. Debt service levies are not limited. CITY FUNDS ON HAND (Cash and Investments as of February 29, 2016) City Operating Funds $136,030,184 City Restricted Funds 56,637,371 Total $192,667,555 17 THE CITY CITY GOVERNMENT The City is governed by a seven member Council; each member serves a four-year term. Elections are held every two years allowing for continuation in office of at least three members in each biennial election. The Council members are elected at large, but three members are nominated from specific districts and the other four are nominated at large. The Mayor is elected by the Council from its own members. EMPLOYEES AND PENSIONS The City participates in two statewide employee retirement systems, the Iowa Public Employees Retirement System ("IPERS") and the Municipal Fire and Police Retirement System of Iowa ("MFPRSI"). The State of Iowa administers IPERS and a nine -member board of trustees governs the MFPRSI. Though separate and apart from state government, the MFPRSI board is authorized by state legislature, which also establishes by statute the pension and disability benefits and the system's funding mechanism. All full-time employees must participate in either IPERS or MFPRSI. The City has 540 full-time, 60 permanent part-time and 377 temporary employees, including a police force of 82 sworn personnel and a fire department of 64 fire fighters. Of the City's 977 employees, 622 are enrolled in IPERS pension plan administered by the State of Iowa. The City's contributions to IPERS for the years ended June 30, 2013, 2014 and 2015 as shown below equal the required contributions for each year. FY 2012-13 FY 2013-14 FY 2014-15 IPERS City Contribution $2,423,438 $2,552,602 $2,544,577 The IPERS Comprehensive Annual Financial Report ("CAFR") is available on the IPERS website, https://www.ii)ers.org/financial-and-investment, or by contacting IPERS at 7401 Register Drive P.O. Box 9117, Des Moines, IA 50321. Pursuant to Governmental Accounting Standards Board ("GASB") Statement No. 68, the City reported a liability of $17,366,321 within its CAFR at June 30, 2015 for its proportionate share of the net pension liability. The net pension liability is the amount by which the total actuarial liability exceeds the pension plan's net assets or fiduciary net position (essentially the market value) available for paying benefits. The net pension liability was measured as of June 30, 2014, 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, 2014, the City's proportion was 0.4378904% which was an increase of 0.008867% from its proportion measured as of June 30, 2013. For additional information, refer to Note 6 on page 69 of the City's June 30, 2015 CAFR contained as APPENDIX B of this Preliminary Official Statement. In addition to IPERS, the City is a participating employer in the MFPRSI and is current in its contributions. Of the City's 977 employees, 145 are enrolled in the MFPRSI. The City's contributions to MFPRSI for the years ended June 30, 2013, 2014 and 2015 as shown below equal the required contributions for each year. FY 2012-13 FY 2013-14 FY 2014-15 MFPRSI City Contribution $2,428,631 $2,920,967 $2,954,676 The MFPRSI Independent Auditors Report is available on the MFPRSI website, http://www.mfprsi.ora/about- mfprsi/publications/, or by contacting MFPRSI at 7155 Lake Drive, Suite 201, West Des Moines, IA 50266. Pursuant to GASB Statement No. 68, the City reported a liability of $13,695,681 with its CAFR at June 30, 2015 for its proportionate share of the net pension liability. The net pension liability is the amount by which the total actuarial liability exceeds the pension plan's net assets or fiduciary net position (essentially the market value) available for paying 18 benefits. The net pension liability was measured as of June 30, 2014, 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, 2014, the City's collective proportion was 3.778137% which was an increase of 0.130838% from its proportion measured as of June 30, 2013. 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 IPERS and MFPRSI discussed above or included on the IPERS and MFPRSI websites, including, but not limited to, updates of such information on the State Auditor's website or links to other Internet sites accessed through the IPERS and MFPRSI websites. For additional information, refer to Note 6 on page 65 of the City's June 30, 2015 CAFR contained as APPENDIX B of this Preliminary Official Statement. OTHER POST -EMPLOYMENT BENEFITS (OPEB) In addition to providing pension benefits, the City offers certain health care insurance benefits to its retirees. All full- time employees who retire or terminate/resign are offered the following post -employment benefit options: • Health insurance and dental insurance: The option of continuing with the City's health insurance plan at the individual's expense. • Life insurance: The option of converting the employee's City -paid policy to an individual policy at the individual's expense with the City's life insurance carrier. • Long-term disability: For employees who terminate/resign and have been on the plan for a minimum of one year, the option of converting the employee's City -paid group policy to a personal policy at the individual's expense with the City's long-term disability insurance carrier. The above options, while at the individual's own expense, are included within the City's overall insurance package. Therefore, a portion of the above coverage is being subsidized by the City and its current employees. The City currently finances the benefit plan on a pay-as-you-go basis. Funding Policy: The plan member's contribution requirements are established and may be amended by the City. The City currently finances the benefit plans on a pay-as-you-go basis. Annual OPEB Cost and Net OPEB Obligation: The City's annual OPEB cost is calculated based on the annual required contribution ("ARC") of the City, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year ended June 30, 2015, the amount actually contributed to the plans, and changes in the City's net OPEB obligation: Annual required contribution $571,531 Interest on net OPEB obligation 126,506 Adjustment to annual required contribution (124,699) Annual OPEB costs 573,338 Contributions made21( 8,146) Increase in net OPEB obligation 355,192 Net OPEB obligation beginning of year 3,614,449 Net OPEB obligation end of year 19 For calculation of the net OPEB obligation, the actuary has set the transition day as July 1, 2008. The end of year net OPEB obligation was calculated by the actuary as the cumulative difference between the actuarially determined funding requirements and the actual contributions for the year ended June 30, 2015, The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plans and the net OPEB obligation as of June 30, 2015 are summarized as follows: Year Annual Percentage of Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed from City Obligation June 30, 2013 $648,466 4.6% $3,305,626 June 30, 2014 649,497 52.5% 3,614,449 June 30, 2015 573,338 38.0% 3,969,641 Funded Status and Funding Progress: As of July 1, 2014, the most recent actuarial valuation date for the period July 1, 2014 through June 30, 2015, the actuarial accrued liability was $5,150,697, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability ("UAAL") of $5,150,697. The covered payroll (annual payroll of active employees covered by the plans) was $35,972,442 and the ratio of the UAAL to covered payroll was 14.3%. As of June 30, 2015 there were no trust fund assets. UNION CONTRACTS The City currently maintains labor agreements with the American Federation of State, County, and Municipal Employees ("AFSCME") and with Police ("PLRO") and Fire ("IAFF") bargaining units. Contracts have been negotiated as follows below. 1) Contract re -opens in FY 2018-19 and FY 2019-20 for wages and insurance. 2) One new step was added to the end of the pay plan. Wage Increases FY2017 FY2018 FY2019 Contract Expiration AFSCME 2.40% 2.40% N/A 1) June 30, 2020 PLRO 2.40% 2.40% 2.60% June 30, 2019 IAFF 0.00%2) 2.40% 2.60% June 30, 2019 1) Contract re -opens in FY 2018-19 and FY 2019-20 for wages and insurance. 2) One new step was added to the end of the pay plan. I QKI";7\NN 0 The City's insurance coverage is as follows: Type of Insurance General Liability Automobile Liability Wrongful Acts — Public Officials Law Enforcement Liability Boiler & Machinery Blanket Extra Expense and Loss of use Property Blanket Workers Compensation Employers Liability Airport Commission Each Person Accident Policy Limit Disease Each Person Disease General Liability Each Occurrence Hangar Keepers Legal Liability Each Aircraft Each Loss 21 Limit $20,000,000 $20,000,000 $20,000,000 $20,000,000 $25,000,000 $500,000 $332,264,467 Statutory $2,000,000 $2,000,000 $2,000,000 $5,000,000 $1,000,000 $1,000,000 GENERAL INFORMATION LOCATION AND TRANSPORTATION The City, with a 2010 Census population of 67,862, serves as the County seat for Johnson County. The City lies at the intersection of Highways 80 and 380. The City is approximately 115 miles east of the City of Des Moines, 20 miles south of the City of Cedar Rapids and 55 miles west of the City of Davenport. The Cedar Rapids Airport, located 20 miles from downtown Iowa City is served by a number of national and regional air carriers. Rail service is provided by the mainline of the Iowa Interstate Railway. LARGER EMPLOYERS A representative list of larger employers in the City is as follows: Employer University of Iowa University of Iowa Hospitals Iowa City Comm. School District Veteran's Affairs Medical Center Mercy Hospital Pearson Educational Measurement Hy -Vee 2) ACT, Inc. City of Iowa City Systems Unlimited International Automotive Components Procter & Gamble Oral B Laboratories Johnson County Administration Alpla of Iowa United Natural Foods Type of Business Number of Employees tl Education 18,650 Healthcare 8,704 Education 2,346 Health Services 1,562 Health Services 1,559 Educational Testing Services 1,200 3) Grocery 1,166 Education Programs 1,089 Government 977 Assisted Living 890 Auto Interior Components 785 Health & Beauty Products 588 Toothbrush Manufacturing 462 Government 435 Plastic Bottle Manufacturer 360 Organic Food Distribution 342 1) Includes full and part-time as well as seasonal employees. 2) Includes locations in Iowa City and Coralville. 3) News reports state Pearson Educational Measurement plans to cut 57 jobs within the City next month. Source: The Iowa City Area Development Group website. 22 BUILDING PERMITS City officials report the following construction activity as of February 29, 2016. Building permits are reported on a calendar year basis. Source: The City as of March, 2016. U.S. CENSUS DATA Population Trend 1980 U.S. 2012 2013 2014 2015 2016 New Construction: Census 62,220 2002 Special City Census 62,380 2010 U.S. No. of new permits: 225 248 250 184 21 Valuation: $95,292,497 $151,138,166 $124,416,182 $106,350,572 $42,194,158 Remodeling Repair 2.7% 3.0% 4.5% and Additions: No. of new permits: 491 467 453 461 69 Valuation: $73,944,194 $33,738,686 $28,163,030 $31,960,941 $16,101,290 Total Permits 716 715 703 645 90 Total Valuations $169,236,691 $184,876,852 $152,579,212 $138,311,513 $58,295,448 Source: The City as of March, 2016. U.S. CENSUS DATA Population Trend 1980 U.S. Census 50,508 1990 U.S. Census 59,738 2000 U.S. Census 62,220 2002 Special City Census 62,380 2010 U.S. Census 67,862 Source: U.S. Census Bureau website. UNEMPLOYMENT RATES Source: Iowa Workforce Development website EDUCATION Public education to the City is provided by the Iowa City Community School District, with certified enrollment of 13,328 for fiscal year 2016-17. There are approximately 2,346 full and part time employees of the district. The district owns and operates several pre-school sites, twenty elementary schools, three middle schools, two senior high schools, and one alternative school for ninth through twelfth graders. Education is also provided through the Clear Creek — Amana Community School District, with certified enrollment of 1,895.1 for fiscal year 2015-16. Four year college programs and vocational training are available throughout the area including University of Iowa and Kirkwood Community College. Source: Iowa Department of Education website. 23 Johnson State of Iowa City County Iowa Annual Averages: 2012 3.5% 3.7% 5.1% 2013 3.3% 3.4% 4.7% 2014 3.0% 3.0% 4.2% 2015 2.5% 2.6% 3.7% 2016 (Jan -Feb) 2.7% 3.0% 4.5% Source: Iowa Workforce Development website EDUCATION Public education to the City is provided by the Iowa City Community School District, with certified enrollment of 13,328 for fiscal year 2016-17. There are approximately 2,346 full and part time employees of the district. The district owns and operates several pre-school sites, twenty elementary schools, three middle schools, two senior high schools, and one alternative school for ninth through twelfth graders. Education is also provided through the Clear Creek — Amana Community School District, with certified enrollment of 1,895.1 for fiscal year 2015-16. Four year college programs and vocational training are available throughout the area including University of Iowa and Kirkwood Community College. Source: Iowa Department of Education website. 23 EFFECTIVE BUYING INCOME Effective Buying Income and Retail Sales as reported for 2015 are as follows: Iowa City Johnson County State of Iowa Source: Claritas, Inc. FINANCIAL SERVICES Total EBI $1,516,477,500 3,532,367,500 70,849,182,500 Median Household EBI $36,577 46,354 45,457 Total Retail Sales $1,593,605,683 3,070,358,841 54,757,355,015 Retail Sales Per Household $53,960 53,046 43,682 Commercial banking services are provided to residents of the City by Farmers & Merchants Savings Bank and MidWestOne Bank and branch offices of American Bank and Trust Company, N.A., Bank of the West, Corridor State Bank, First American Bank, Hills Bank and Trust Company, Liberty Bank, FSB, U.S. Bank, N.A., Wells Fargo Bank, N.A. and West Bank. Farmers & Merchants Savings Bank and MidWestOne Bank report the following annual deposits as of June 30 of each year: Year 2011 2012 2013 2014 2015 Source: FDIC official website. FINANCIAL STATEMENTS Farmers & Merchants Savinas Bank $115,525,000 114,443,000 105,684,000 109,633,000 96,829,000 MidWestOne Bank') $1,626,034,000 1,690,759,000 1,730,010,000 1,719,699,000 1,682,024,000 The City's June 30, 2015 COMPRENSIVE ANNUAL FINANCIAL REPORT is reproduced as APPENDIX B. The City's certified public accountant has not consented to distribution of the audited financial statements and has not undertaken added review of their presentation. Further information regarding financial performance and copies of the City's prior Comprehensive Annual Financial Reports may be obtained from the City's Municipal Advisor, Public Financial Management, Inc. 24 (This page has been left blank intentionally.) FORMS OF LEGAL OPINIONS (This page has been left blank intentionally.) APPENDIX B JUNE 30, 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT (This page has been left blank intentionally.) APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE (This page has been left blank intentionally.) OFFICIAL BID FORM TO: City Council of Sale Date: May 17, 2016 City of Iowa City, Iowa 10:00 o'clock A.M. Central Time RE: $8,795,000* General Obligation Bonds, Series 2016A (the Series 2016A "Bonds") For all or none of the above Series 2016A Bonds, in accordance with the NOTICE OF BOND SALE and TERMS OF OFFERING, we will pay you $ (not less than $8,751,025) plus accrued interest to date of delivery for fully registered Series 2016A Bonds bearing interest rates and maturing in the stated years as follows: Coupon Maturity 2017 2018 2019 2020 2021 Coupon Maturity 2022 2023 2024 2025 2026 * Preliminary; subject to change. The aggregate principal amount of the Series 2016A Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $9,000,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016A Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016A Bonds may be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. We hereby designate that the following Series 2016A Bonds to be aggregated into term bonds maturing on June 1 of the following years and in the following amounts (leave blank if no term bonds are specified): Years Aggregated Maturity Year Aggregate Amount _ through through through through In making this offer we accept all of the terms and conditions of the NOTICE OF BOND SALE and TERMS OF OFFERING published in the Preliminary Official Statement dated April 19, 2016. In the event of failure to deliver these Series 2016A Bonds in accordance with the NOTICE OF BOND SALE and TERMS OF OFFERING as printed in the Preliminary Official Statement and made a part hereof, we reserve the right to withdraw our offer. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: TRUE INTEREST COST: % (Calculated to the dated date of June 16, 2016) Account Manager: Account Members: The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Iowa City, Iowa this 17th day of May 2016. Attest: By: _ Title: Title: (This page has been left blank intentionally.) OFFICIAL BID FORM TO: City Council of City of Iowa City, Iowa Sale Date: May 17, 2016 10:00 o'clock A.M. Central Time RE: $620,000* Taxable General Obligation Bonds, Series 2016B (the Series 2016B "Bonds") For all or none of the above Series 2016B Bonds, in accordance with the NOTICE OF BOND SALE and TERMS OF OFFERING, we will pay you $ (not less than $618,140) plus accrued interest to date of delivery for fully registered Series 2016B Bonds bearing interest rates and maturing in the stated years as follows: Coupon Maturi 2017 * Preliminary; subject to change. The aggregate principal amount of the Series 2016B Bonds, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $700,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016B Bonds is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016B Bonds may be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of bond principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. We hereby designate that the following Series 2016B Bonds to be aggregated into term bonds maturing on June 1 of the following years and in the following amounts (leave blank if no term bonds are specified): Years Aggregated Maturity Year Aggregate Amount through In making this offer we accept all of the terms and conditions of the NOTICE OF BOND SALE and TERMS OF OFFERING published in the Preliminary Official Statement dated April 19, 2016. In the event of failure to deliver these Series 2016B Bonds in accordance with the NOTICE OF BOND SALE and TERMS OF OFFERING as printed in the Preliminary Official Statement and made a part hereof, we reserve the right to withdraw our offer. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: TRUE INTEREST COST: % (Calculated to the dated date of June 16, 2016) Account Manager: Account Members: The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Iowa City, Iowa this 17th day of May 2016. Attest: Title: Un Title: City of Iowa City 2016 Building Statistics e ypeof onstructwn Single Fami-E - - y Number of Permits Dupla-S January, 2,6February arc 1,085,60031,225 4534,025. 4''. 61 20'x. 1,349,870 April y 4,285,494 16 June July august September October November December _ - - 12.536,344 48 �_-- - 1,348,870 _ L - Number of Permits 2 2 rikasaFralemities-E _ Numberof Permit Multiple Units Number of Pamie Number of Number of Duelling this Mix - CommeroalfReutlenbal _—Number of Pamir 3,863,333 3 3 27 1,564,850 4 4 17 4,060,000 2 2 28 _ _ 9 9 - - _ _ 72 - -. _.. - Number of Buildings _ Number of Dwelling units Motels, Hotels - S 23,500,000 Number of Permits, 1 hurches- E 8,000,000 8,000,000 Numberof Pemtlb 1 E In_dustial - E 10,700,000 470,000 Number of Permit 1 1 ---� rvice Slatiens - E —._ Number of Permit Hospitals d Institutions - E Numberof Permit Dkea,Bame,Prof.-E 188,000 — 9,500,000 1,500,000 — 11,188,000 Numberof Permit 1 foundabonj 11 1 3 Public Works 8UtilNes - E Number of Ranges School - S 14,000,000 14,000,000 14,OOD,000 Number of Permits 1 1 Ives a Customer Svc. - $ Number of Permit iw. StructureslFences - S Number of Permit Remodel, Residential - S 414,212 895,842 928,851 888,030 2,928,035 Numberof Permit 23 23 39 41 1 1 126 Reny 1, Commerdal - S 1,295,544 13,495,592 1,716,550 4,467,960 20,977,646 5,319,600 Numberof Perblt 15 8 13'. 7 43 Rerm". Works -S --. Number of Perth _ Acomeory Structures 4,000 222,000 1 25,000 1 251,000 Number of Permit 1 4 7 6 TOTAL VALUE 13,687,356 44,608,092 34087,146 23,026,484 115,389,078 27.319,600 TOTAL PERLV75 45 45 81 69 240 CREDIT OPINION Iowa City Sewer Enterprise, IA 3 May 2016 New Issue - Moody's Assigns Aa2 to Iowa City, IA's Sewer New Issue Revenue Notes, Series 2016C Summary Rating Rationale Moody's Investors Service has assigned a Aa2 rating to Iowa City, IA's $10.2 million Sewer Revenue Refunding Capital Loan Notes, Series 2016C. Concurrently, Moody's has affirmed the Aa2 on the city's outstanding sewer revenue debt. Post -sale, the city will have $24.8 million in senior -lien sewer revenue debt. Contacts The Aa2 rating is indicative of the system's moderately sized and stable service area; Coley) Anderson 312-706-9961 satisfactory debt service coverage supported by a strong unrestricted cash position; unlimited Analyst coley.anderson@moodys.com rate setting authority; modest debt profile and satisfactory legal provisions. Matthew Butler 312-706-9970 Credit Strengths Vice President matthew.butler@moodys.com >, Stable service area that benefits from the institutional presence of the University of Iowa » Unlimited rate setting authority >> Strong system liquidity D Modest debt profile Credit Challenges A While historically stable, debt service coverage is more narrow than similarly rated entities Rating Outlook Outlooks are generally not assigned to local government credits with this amount of debt. Factors that Could Lead to an Upgrade u Material expansion of the customer base N Improvement of debt service coverage levels Factors that Could Lead to a Downgrade » Weakening of annual debt service coverage levels >> Contraction of the system's customer base MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Key Indicators Exhibit 1 Iowa City, IA Sawar Enterprise System Characteristics Asset Condition (Net Fixed Assets / Annual 30 years Depredation) System Size - O&M (in $000s) 6,574 Service Area Wealth: MFI % of US median 1113% Debt Service Reserve Requirement DSRF funded at lesser of standard 3 -prong test Critical data points such as port -sale debt burden are discussed in the report below. Source: Audrted7lnancial Statements Detailed Rating Considerations Service Area and System Characteristics: Stable Service Area with Significant Institutional Presence The system's service area is expected to remain stable due to Iowa City's diverse economy and the institutional presence provided by the state's flagship public university, the State University of Iowa (Aal stable) and the University of Iowa Hospitals and Clinics (Aa2 stable). The enterprise provides wastewater collection and treatment services to a service area largely coterminous with the city. The system benefits from the institutional presence provided by the University of Iowa and University of Iowa Hospitals and Clinics, which employ approximately 27,000 local residents combined. At 2.7% as of February 2016, the city's unemployment rate remains well below state and national figures of 4.5% and 5.2%, respectively. Median family income within the city is estimated at 111.3% of the national figure and is likely impacted by the large number of university students living within the city. The sewer system is comprised of 300 miles of sanitary sewers, 18 lift stations and one wastewater treatment plant. As of fiscal 2015, the utility had 24,533 customers, up 4% from fiscal 2011. While system customers are up, cubic feet of wastewater treated declined by 4% over that same period. The University is the system's largest user, accounting for 15% of charges in fiscal 2015. The system's ten largest customers accounted for an above average 30% of fiscal 2015 charges. While above average, the risk associated with the system's customer concentration is mitigated by the stability of its largest user. At the current rate of growth, management anticipates having sufficient capacity through 2040. The system's remaining useful life as calculated by Moody's is 30 years, demonstrating a lack of deferred system maintenance. The utility has no outstanding regulatory compliance issues. Debt Service Coverage and Liquidity: Satisfactory Debt Service Coverage; Strong Unrestricted Cash Position We expect the system's financial position to remain stable due to satisfactory debt service coverage levels; unlimited rate setting authority and a strong unrestricted cash position. At the close of fiscal 2015, debt service coverage on the system's outstanding revenue debt was 1.30 times. Favorably, preliminary estimates for fiscal 2016 depict an improvement of debt service coverage to 1.50 times. Maximum annual debt service (MADS) on the system's revenue debt is $4.5 million and occurs in fiscal 2017. Fiscal 2015 net revenues provide MADS coverage of 1.34 times. This publication does not announce a credit rating action. for any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. 2 3 May 2016 Iowa City Sewer Enterprise, IA: New Issue - Moody's Assigns Aa? to Iowa City, IA's Sewer Revenue Notes, Series 2016C 2011 2012 2013 2014 2015 Operating Revenue ($000) 12,899 12,815 12,934 12,634 12,315 O&M ($000) 5,477 5,663 5,340 5,708 6,574 Long -Term Debt ($000) 45,602 40,928 35,992 32,660 29,208 Annual Debt Service Coverage (Senior) (x) 1.15 1.19 1.24 1.54 1.30 Cash on Hand 858 days 938 days 1070 days 1114 days 924 days Debt to Operating Revenues (4 3.Sx 3.2x 2.81, ZEN: 2.4x Critical data points such as port -sale debt burden are discussed in the report below. Source: Audrted7lnancial Statements Detailed Rating Considerations Service Area and System Characteristics: Stable Service Area with Significant Institutional Presence The system's service area is expected to remain stable due to Iowa City's diverse economy and the institutional presence provided by the state's flagship public university, the State University of Iowa (Aal stable) and the University of Iowa Hospitals and Clinics (Aa2 stable). The enterprise provides wastewater collection and treatment services to a service area largely coterminous with the city. The system benefits from the institutional presence provided by the University of Iowa and University of Iowa Hospitals and Clinics, which employ approximately 27,000 local residents combined. At 2.7% as of February 2016, the city's unemployment rate remains well below state and national figures of 4.5% and 5.2%, respectively. Median family income within the city is estimated at 111.3% of the national figure and is likely impacted by the large number of university students living within the city. The sewer system is comprised of 300 miles of sanitary sewers, 18 lift stations and one wastewater treatment plant. As of fiscal 2015, the utility had 24,533 customers, up 4% from fiscal 2011. While system customers are up, cubic feet of wastewater treated declined by 4% over that same period. The University is the system's largest user, accounting for 15% of charges in fiscal 2015. The system's ten largest customers accounted for an above average 30% of fiscal 2015 charges. While above average, the risk associated with the system's customer concentration is mitigated by the stability of its largest user. At the current rate of growth, management anticipates having sufficient capacity through 2040. The system's remaining useful life as calculated by Moody's is 30 years, demonstrating a lack of deferred system maintenance. The utility has no outstanding regulatory compliance issues. Debt Service Coverage and Liquidity: Satisfactory Debt Service Coverage; Strong Unrestricted Cash Position We expect the system's financial position to remain stable due to satisfactory debt service coverage levels; unlimited rate setting authority and a strong unrestricted cash position. At the close of fiscal 2015, debt service coverage on the system's outstanding revenue debt was 1.30 times. Favorably, preliminary estimates for fiscal 2016 depict an improvement of debt service coverage to 1.50 times. Maximum annual debt service (MADS) on the system's revenue debt is $4.5 million and occurs in fiscal 2017. Fiscal 2015 net revenues provide MADS coverage of 1.34 times. This publication does not announce a credit rating action. for any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. 2 3 May 2016 Iowa City Sewer Enterprise, IA: New Issue - Moody's Assigns Aa? to Iowa City, IA's Sewer Revenue Notes, Series 2016C MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE LIQUIDITY As of fiscal 2015, the system's unrestricted cash reserves totaled $16.6 million and a very strong 938 days cash on hand. The utility maintains additional $6.1 million in other restricted cash and a debt service reserve cash funded at $3.7 million. The city has a formal policy of maintaining minimum reserve levels to cover 30% of average annual operating revenues, a level it significantly exceeds. Debt and Legal Covenants: Modest Debt Ratio and Satisfactory Legal Covenants We expect the system's debt burden will remain modest based on limited future borrowing plans. Inclusive of the current refunding, the system's debt burden is a modest 2.0 times system revenues. Future debt plans include approximately $2.0 million in fiscal 2017 for the Scott Boulevard Trunk Sewer Project. Legal provisions for the notes include a satisfactory rate covenant of 1.10 times. The additional bonds test is set at 1.25 times of maximum annual debt service (MADS) on all senior lien revenue bonds. The bond resolution also requires a debt service reserve fund fully funded to meet the lesser of 10% of principal on senior lien bonds, MADS on all outstanding parity bonds, and 125% of average annual debt service on outstanding bonds. DEBT STRUCTURE All of the system's debt is fixed rate. DEBT -RELATED DERIVATIVES The system is not a parry to any derivative agreements. PENSIONS AND OPEB Pension costs associated with the employees of the system were $145,000 in fiscal 2015 or 1.2% of system operating revenues. For more information on the City of Iowa City's pension obligations, please see our most recent rating report on the city's general obligation rating. Management and Governance: Full Rate Setting Authority; Strong Financial Management The Iowa City Sewer System is an enterprise of the City of Iowa City. City Council has complete authority to set rates and charges. The city's rate setting history is somewhat limited as the most recent rate adjustment was an 5% increase effective July 1, 2008. While rates are not regularly adjusted, management closely monitors cash flows and reviews rate sufficiency on a regular basis. Management has maintained stable debt service coverage and cash reserves that exceed the city's policy of 30% of average annual operating revenues. Legal Security Debt service on the system's revenue debt, including the Series 2016C bonds, is secured by a senior lien on the net revenues of the sewer utility. Use of Proceeds Proceeds from the Series 2016C Notes will be used to refinance the Series 2008C Notes for an expected net present value savings of 8%. Obligor Profile The sewer system provides wastewater collection and treatment services for the City of Iowa City. As of fiscal 2015, the utility had approximately 24,500 accounts. Methodology The principal methodology used in this rating was US Municipal Utility Revenue Debt published in December 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology. 3 May 2016 Iowa City Sewer Enterprise, IA, New Issue - Moody's Assigns Aa2 to Iowa City, IA's Sewer Revenue Notes, Series 2D16C Ratings Exhibit 2 Iowa City (City of) IA Sewer Enterprise Issue Rating Sewer Revenue Refunding Capital Loan Notes, Aa2 Series 2016C Rating Type Underlying LT Sale Amount $10,215,000 Expected Sale Date 05/172016 Rating Description Revenue: Government Enterprise Source: Moody's Investors Serrate 3 May 2016 Iowa City Sewer Enterprise, IA: New Issue - Moody's Assigns Aa2 to Iowa City, IA's Sewer Revenue Notes, Series 2016C MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE G 2016 Moody's Corporation, Moody's Invertors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODYS"). All rights reserved CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. 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REPORT NUMBER 1024594 5 3 May 2016 Iowa City Sewer Enterprise, IA: New Issue - Moody's Assigns Aa2 to Iowa City, We Sewer Revenue Notes, Series 2016C MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Contacts Coley J Anderson Analyst coteyanderson@moodys.com MOODY'S INVESTORS SERVICE CLIENT SERVICES 312-706-9961 Matthew Butler 312-706-9970 Americas Vice President matthew.butler@moodys.com Asia Pacific Japan EMEA 1-212-553-1653 852.3551-3077 81-3-5408.4100 44-20-7772-5454 6 3 May 2016 Iowa City Sewer Enterprise, IA: New Issue - Moody's Assigns Aa2 to Iowa City, IA's Sewer Revenue Notes, Series 2016C CREDIT OPINION Iowa City Water Enterprise, IA 3 May 2016 New Issue - Moody's Assigns Aa2 to Iowa City, IA's Series New Issue 2016D Water Revenue Notes Summary Rating Rationale Moody's Investors Service has assigned a Aa2 rating to Iowa City, IA's $4.0 million Water Revenue Refunding Capital Loan Notes, Series 2016D. Concurrently, Moody's has affirmed the Aa2 rating on the city's outstanding water revenue debt. Post -sale, the city will have $14.9 million in water revenue debt. Contacts The Aa2 rating is indicative of the system's moderately sized and stable service area; Coley J Anderson 312-706-9961 satisfactory debt service coverage supported by a strong unrestricted cash position; unlimited Analyst coleyanderson@moodys.com rate setting authority; modest debt profile and adequate legal provisions. Matthew Butler 312-706-9970 Credit Strengths Vice President matthew.butter@moodys.com » Stable service area that benefits from the institutional presence of the University of Iowa » Unlimited rate setting authority » Strong system liquidity » Modest debt profile Credit Challenges » While historically stable, debt service coverage is more narrow than similarly rated entities Rating Outlook outlooks are generally not assigned to local government credits with this amount of debt. Factors that Could Lead to an Upgrade » Material expansion of the customer base » Improvement of debt service coverage levels Factors that Could Lead to a Downgrade » Weakening of annual debt service coverage levels » Contraction of the system's customer base Key Indicators Exhib t 1 lesson City. IA Water Enterprise System Characteristics Asset Condition (Net Fixed Assets / Annual Depreciation) 31 years System Size - O&M (in $000s) 5,632 Service Area Wealth: MFI %of US median 111.3% Legal Provisions Rate Covenant (x) 1.10 Debt Service Reserve Requirement DSRF funded at lesser of standard 3 -prong test Financial Strength 2011 2012 2013 2014 2015 Operating Revenue ($000) 8,096 8,445 8,757 8,459 8,540 O&M ($ODO) 5,464 5,653 6,348 5,818 5,632 long -Term Debt (S000) 24,662 21,393 20,250 18,622 16,949 Annual Debt Service Coverage (Senior) (x) 1.44 1.45 1.27 1.41 1.55 Cash on Hand 642 days 535 days 426 days 561 days 562 days Debt to Operating Revenues (x) 3.Ox 2.5x 2.3x 2.2x 2.Ox Critical data points such as post -sale debt burden are discussed in the report below. Source: Audited Financial Statements Detailed Rating Considerations Service Area and System Characteristics: Stable Service Area with Significant Institutional Presence The system's service area is expected to remain stable due to Iowa City's diverse economy and the institutional presence provided by the states flagship public university, the State University of Iowa (Aat stable) and the University of Iowa Hospitals and Clinics (Aa2 stable). The enterprise provides water treatment and distribution services to a service area largely coterminous with the city. Unlike the city's sewer system, the University of Iowa and hospitals are not customers of the city's water system, although the water utility still benefits from their presence, which lends substantial institutional stability to the service area. At 2.7% as of February 2016, the city's unemployment rate remains well below state and national figures of 4.5% and 5.2%, respectively. Median family income within the city is estimated at 111.3% of the national figure and is likely impacted by the large number of university students living within the city. The water system is comprised of nine vertical wells, one sand pit, one river intake, one water treatment facility, 7.8 million gallons of water storage and 273 miles of water distribution lines. As of fiscal 2015, the utility had 24,647 customers, down 3.5% from fiscal 2011. The decline is largely attributable to the implementation of a new utility billing system in 2015, which consolidated customers with multiple meters. As an additional reference, the city sold 240 million cubic feet of water in fiscal 2015, up 1.5% from fiscal 2011. The system's ten largest customers accounted for 13.7% of total water consumption in fiscal 2015. The system's largest user, Procter & Gamble Company (The) (Aa3 stable) accounted for 7.5% of total water usage in fiscal 2015, and reportedly maintains stable operations. At the current rate of growth, management anticipates having sufficient capacity for its customer base for at least the next 20 years. The system's remaining useful life as calculated by Moody's is 31 years, demonstrating a lack of deferred system maintenance. The utility has no outstanding regulatory compliance issues. Debt Service Coverage and Liquidity: Satisfactory Debt Service Coverage; Strong Unrestricted Cash Position We expect the system's financial position to remain stable given satisfactory debt service coverage levels, unlimited rate setting authority and a strong unrestricted cash position. At the close of fiscal 2015, debt service coverage on the system's senior lien revenue This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuerlentity page on www.moneys.com for the most updated credit rating action information and rating history. 2 3 May 2016 Iowa City Water Enterprise, IA: New Issue - Moody's Assigns Aa2 to Iowa City, IA's Series 2016D Water Revenue Notes MOODY'$ INVESTORS SERVICE U.S. PUBLIC FINANCE debt was a satisfactory 1.55 times. Total debt service coverage, which includes the utility's senior lien revenue debt and certain general obligation (GO) debt abated by water system revenues was 1.34 times in fiscal 2015. Preliminary estimates for fiscal 2016 show senior lien debt service coverage of 1.41 times. Maximum annual debt service (MADS) on the system's senior lien revenue debt is $1.9 million and occurs in fiscal 2017. Fiscal 2015 net revenues provide MADS coverage of 1.59 times. LIQUIDITY The system's unrestricted cash totaled $8.7 million and a substantial 562 days cash on hand in fiscal 2015. The utility maintains an additional $2.9 million in other restricted cash and a debt service reserve cash funded at $2.0 million. The city has a formal policy of maintaining minimum reserve levels to cover 30% of average annual operating revenues, a level it significantly exceeds. Debt and Legal Covenants: Modest Debt Ratio and Satisfactory Legal Covenants We expect the system's debt burden will remain modest based on limited future borrowing plans. Inclusive of the current refunding, the system's debt burden is a modest 1.7 times system revenues. Future debt plans include approximately $1.0 million in fiscal 2020 for the Herbert Hoover Water Booster Pump Station Project. Legal provisions for the notes include a satisfactory rate covenant of 1.10 times. The additional bonds test is set at 1.25 times of maximum annual debt service (MADS) on all senior lien revenue bonds. The bond resolution also requires a debt service reserve fund fully funded to meet the lesser of 10% of principal on senior lien bonds, MADS on all outstanding parity bonds, and 125% of average annual debt service on outstanding bonds. DEBT STRUCTURE All of the system's debt is fixed rate. DEBT -RELATED DERIVATIVES The system is not a part to any derivative agreements. PENSIONS AND OPEB Pension costs associated with the employees of the system were $170,000 in fiscal 2015 or 2.0% of system operating revenues. For more information on the City of Iowa City's pension obligations, please see our most recent rating report on the city's general obligation rating. Management and Governance: Full Rate Setting Authority; Strong Financial Management The Iowa City Water System is an enterprise of the City of Iowa City. City Council has complete authority to set rates and charges. In fiscal years 2014 and 2015, City Council increased rates by 5% each year. Prior to the 2014, the most recent rate increase was implemented in 2000. While rates are not regularly adjusted, management closely monitors cash flows and reviews rate sufficiency on a regular basis. Management has consistently maintained stable debt service coverage and cash reserves that exceed the city's policy of 30% of average annual operating revenues. Legal Security Debt service on the system's revenue debt, including the Series 2016D Notes, is secured by a senior lien on net revenues of the water utility. Use of Proceeds Proceeds from the Series 2016D Notes will be used to refund the system's Series 2008D Notes for an expected net present value savings of 7.6%. Obligor Profile The water system provides water treatment and distribution services for the City of Iowa City. As of fiscal 2015, the utility had approximately 24,600 accounts. Methodology The principal methodology used in this rating was US Municipal Utility Revenue Debt published in December 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology. 3 3 May 2016 Iowa City Water Enterprise, IA: New Issue - Moody's Assigns Aa2 to Iowa City, IA's Series 2016D Water Revenue Notes Ratings Exhibit 2 Iowa City (City of) IA Water Enterprise Issue Rating Water Revenue Refunding Capital Loan Notes, Aa2 Series 2016D Rating Type Underlying LT Sale Amount $4,025,000 Expected Sale Date OS/17/2016 Rating Description Revenue: Government Enterprise Source: Moody's Investors Service 3 May 2016 Iowa City Water Enterprise, IA: New Issue - Moody's Assigns Aa2 to Iowa City, IA's Series 20160 Water Revenue Notes MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE C 2016 Moody's Corporation, Moody's Investors Service, Inc, Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. 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MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements REPORTNUMBER 1024482 5 3 May 2016 Iowa City Water Enterprise, IA: New Issue - Moody's Assigns AaI to Iowa City, IA's Series 2016D Water Revenue Notes MOODY'S INVESTORS SERVICE U.S. PUBLIC FINANCE Contacts Coley J Anderson Analyst coley anderson@moodys.com MOODY'S INVESTORS SERVICE CLIENT SERVICES 312-706-9961 Matthew Butter 312.706-9970 Americas Vice President matthew.butler@moodys.cam Asia Pacific Japan EMEA 1-212-553-1653 852-3551-3077 81.3-5408-4100 44-20-7772-5454 6 3 May 2016 Iowa City Water Enterprise, IA: New Issue - Moody's Assigns Aa2 to Iowa City, We Series 20160 Water Revenue Notts PRELIMINARY OFFICIAL STATEMENT DATED APRIL 19, 2016 Refunding Issues Rating: Application Made to Moody's Investors Service Assuming compliance with certain covenants, in the opinion of Ahlers & Cooney, P.C., Bond Counsel, under present law and assuming continued compliance with the requirements of the Internal Revenue Code of 1986, as amended (the "Code'), the interest on the Notes is excludable from gross income for federal income tax purposes and interest on the Notes is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations: however, with respect to corporations (as defined for federal income tax purpates). such interest is included in adjusted current earnings for the purpose of determining the alternative minimum fax imposed on such corporations. The Notes will NOT be designated as "qualified tax-exempt obligations ". See "TAX MATTERS" herein for a more detailed discussion. CITY OF IOWA CITY, IOWA $10,215,000* Sewer Revenue Refunding Capital Loan Notes, Series 2016C $4,025,000* Water Revenue Refunding Capital Loan Notes, Series 2016D BIDS RECEIVED: Tuesday, May 17, 2015, 10:00 o'clock A.M., Central Time AWARD: Tuesday, May 17, 2016, 7:00 o'clock P.M., Central Time Dated: Date of Delivery (June 16, 2016) Principal Due: July 1 as shown inside front cover The $10,215,000* Sewer Revenue Refunding Capital Loan Notes, Series 2016C Notes (the "Series 2016C Notes"), and the $4,025,000 Water Revenue Refunding Capital Loan Notes, Series 2016D (the "Series 2016D Notes'), (collectively, the "Notes") are being issued pursuant to Division V of Chapter 384 of the Code of Iowa and resolutions to be adopted by the City Council of the City of Iowa City, Iowa (the "City"). The Series 2016C Notes are being issued to current refund, on July 11 2016, $10,515,000 of the Sewer Revenue Refunding Capital Loan Notes, Series 2008C, dated October 15, 2008, maturing 2017 through 2022 (the "Series 2008C Notes"). The Series 2016D Notes are being issued to pay costs to current refund, on July 1, 2016, $4,085,000 of the Water Revenue Refunding Capital Loan Notes, Series 2008D, dated October 15, 2008, maturing 2017 through 2024 (the "Series 2008D Notes"). THE 2016C NOTES ARE NOT GENERAL OBLIGATIONS OF THE CITY, but are payable solely and only from net revenues of the City's Municipal Sewer System. THE 2016D NOTES ARE NOT GENERAL OBLIGATIONS OF THE CITY, but are payable solely and only from net revenues of the City's Municipal Water System. The Notes will be issued as fully registered notes without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). DTC will act as securities depository for the Notes. Individual purchases may be made in book -entry form only, in the principal amount of $5,000 and integral multiples thereof. Purchasers will not receive certificates representing their interest in the Notes purchased. Principal of the Notes, payable annually on each July 1, beginning July 1, 2017, and interest on the Notes, payable initially on January 1, 2017 and thereafter on each July 1 and January 1, will be paid to DTC by the City's Registrar/Paying Agent, U.S. Bank, St. Paul, Minnesota (the "Registrar"). DTC will in tum remit such principal and interest to its participants for subsequent disbursements to the beneficial owners of the Notes as described herein. Interest and principal shall be paid to the registered holder of a note as shown on the records of ownership maintained by the Registrar as of close of business on the 15'h day of the month (whether or not a business day) of the immediately preceding such interest payment date (the "Record Date"). THE NOTES WILL MATURE AS LISTED ON THE INSIDE FRONT COVER MINIMUM BID: GOOD FAITH DEPOSIT: TAX MATTERS: SERIES 2016C NOTES $10,163,925 Required of Purchaser Only Federal: Tax -Exempt State: Taxable See "TAX MATTERS" for more information. SERIES 2016D NOTES $3,996,825 Required of Purchaser Only Federal: Tax -Exempt State: Taxable See "TAX MATTERS" for more information. The Notes are offered, subject to prior sale, withdrawal or modification, when, as and if issued subject to the legal opinion of Ahlers & Cooney, P.C., Bond Counsel, of Des Moines, Iowa, to be furnished upon delivery of the Notes. It is expected the Notes will be available for delivery on or about June 16, 2016. This Preliminary Official Statement will be further supplemented by offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date, and underwriter, together with any other information required by law, and shall constitute a "Final Official Statement" of the City with respect to the Notes, as defined in Rule ISc2-12. * Preliminary; subject to change. CITY OF IOWA CITY, IOWA $10,215,000* Sewer Revenue Refunding Capital Loan Notes, Series 2016C MATURITY: July 1, as follows: Year Amount* 2017 $2,065,000 2018 2,100,000 2019 2,130,000 2020 1,960,000 2021 1,960,000 *PRINCIPAL ADJUSTMENT: Preliminary; subject to change. The City reserves the right to decrease the aggregate principal amount of the Series 2016C Notes and to increase or reduce each scheduled maturity thereof after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but, the total amount to be issued will not exceed $10,500,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016C Notes is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016C Notes will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of note principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. REDEMPTION: The Series 2016C Notes will NOT be subject to early redemption. INTEREST: January 1, 2017 and semiannually thereafter. CITY OF IOWA CITY, IOWA $4,025,000* Water Revenue Refundine Capital Loan Nates, Series 2016D MATURITY: July 1, as follows: Year Amount* 2017 $475,000 2018 480,000 2019 485,000 2020 495,000 2021 505,000 2022 515,000 2023 530,000 2024 540,000 *PRINCIPAL ADJUSTMENT: Preliminary; subject to change. The City reserves the right to decrease the aggregate principal amount of the Series 2016D Notes and to increase or reduce each scheduled maturity thereof after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $4,415,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016D Notes is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016D Notes will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of note principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. REDEMPTION: The Series 2016D Notes will NOT be subject to early redemption. INTEREST: January 1, 2017, and semiannually thereafter. COMPLIANCE WITH S.E.C. RULE 15c2-12 Municipal obligations (issued in an aggregate amount over $1,000,000) are subject to General Rules and Regulations, Securities Exchange Act of 1934, Rule 15c2-12 Municipal Securities Disclosure. Preliminary Official Statement: This Preliminary Official Statement was prepared for the City for dissemination to prospective bidders. Its primary purpose is to disclose information regarding the Notes to prospective bidders in the interest of receiving competitive bids in accordance with the TERMS OF OFFERING contained herein. Unless an addendum is received prior to the sale, this document shall be deemed the "Near Final Official Statement'. Review Period: This Preliminary Official Statement has been distributed to City staff as well as to prospective bidders for an objective review of its disclosure. Comments, omissions or inaccuracies must be submitted to Public Financial Management, Inc. (the "Municipal Advisor") at least two business days prior to the sale. Requests for additional information or corrections in the Preliminary Official Statement received on or before this date will not be considered a qualification of a bid received. If there are any changes, corrections or additions to the Preliminary Official Statement, prospective bidders will be informed by an addendum at least one business day prior to the sale. Final Official Statement: Upon award of sale of the Notes, the legislative body will authorize the preparation of a Final Official Statement that includes the offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date and other information required by law and the identity of the underwriter (the "Syndicate Manager") and syndicate members. Copies of the Final Official Statement will be delivered to the Syndicate Manager within seven business days following the bid acceptance. REPRESENTATIONS No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations, other than those contained in the Preliminary Official Statement. This Preliminary Official Statement does not constitute any offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Notes by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information, estimates and expressions of opinion herein are subject to change without notice and neither the delivery of this Preliminary Official Statement nor any sale made hereunder, shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. This Preliminary Official Statement is submitted in connection with the sale of the securities referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Preliminary Official Statement and any addenda thereto were prepared relying on information from the City and other sources, which are believed to be reliable. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and is not expressing any opinion as to the completeness or accuracy of the information contained therein. Compensation of the Municipal Advisor, payable entirely by the City is contingent upon the sale of the issues TABLE OF CONTENTS TERMS OF OFFERING SCHEDULE OF BOND YEARS vii INTRODUCTION................................................................................................................................................................................. 1 Authorityand Purpose.............................................................................................................................................................. 1 OptionalRedemption of the Notes........................................................................................................................................... 2 Intereston the Notes................................................................................................................................................................. 2 Payment of and Security for the Series 2016C Notes............................................................................................................... 2 Payment of and Security for the Series 2016D Notes............................................................................................................... 3 Book -Entry -Only Issuance....................................................................................................................................................... 5 FutureFinancing....................................................................................................................................................................... 6 Litigation.................................................................................................................................................................................. 7 DebtPayment History .............................................................................................................................................................. 7 Legality..................................................................................................................................................................................... 7 TaxMatters............................................................................................................................................................................... 7 Rating....................................................................................................................................................................................... 9 MunicipalAdvisor.................................................................................................................................................................... 9 ContinuingDisclosure.............................................................................................................................................................. 9 Certification.............................................................................................................................................................................. 10 DESCRIPTION OF THE MUNICIPAL SEWER SYSTEM.............................................................................................................11 Managementand Administration.............................................................................................................................................. 11 Sewer System Rates and Charges............................................................................................................................................. I 1 Sewer System Sales History and Total Charges....................................................................................................................... 11 Number of Sewer System Customers; Larger Sewer System Customers (FY 2014 -15) ......................................................... 12 Sewer System Funds on Hand (As of February 29, 2016); Sewer System Employees; Pensions ............................................ 12 Sewer System Revenue Debt (Includes the Series 2016C Notes)............................................................................................. 13 Historical Sewer System Cashflow and Anticipated Debt Coverage........................................................................................ 14 DESCRIPTION OF THE MUNICIPAL WATER SYSTEM ....................................... Management and Administration......................................................................... Water System Rates and Charges........................................................................ Water System Sales History and Total Charges .................................................. Number of Water System Customers.................................................................. Water System Customers by Classification......................................................... Larger Water System Customers (FY 2014-15) .................................................. Water System Funds on Hand (As of February 29, 2016) ................................... Water System Employees; Pensions.................................................................... Water System Revenue Debt (Includes the Series 2016D Notes) ........................ Historical Water System Cashflow and Anticipated Debt Coverage ................... APPENDIX A - GENERAL INFORMATION ABOUT THE CITY OF IOWA CITY, IOWA APPENDIX B - FORMS OF LEGAL OPINIONS APPENDIX C - JUNE 30, 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT APPENDIX D - FORMS OF CONTINUING DISCLOSURE CERTIFICATES OFFICIAL BID FORMS 15 15 16 16 16 16 17 17 17 17 19 Jim Throgmorton Kingsley Botchway II Rockne Cole Susan Mims Pauline Taylor Terry Dickens John Thomas City of Iowa City, Iowa Mayor/City Council At -Large, Mayor At -Large, Mayor Pro Tem Council Member At Large Council Member, At Large Council Member, District A Council Member, District B Council Member, District C Administration Geoff Fruin, Interim City Manager Dennis Bockenstedt, Finance Director Marian Karr, City Clerk City Attorney Eleanor M. Dilkes Iowa City, Iowa Bond Counsel Ahlers & Cooney, P.C. Des Moines, Iowa Municipal Advisor Public Financial Management, Inc. Des Moines, Iowa Term Expires January, 2020 Term Expires January, 2018 Term Expires January, 2020 Term Expires January, 2018 Term Expires January, 2020 Term Expires January, 2018 Term Expires January, 2020 TERMS OF OFFERING CITY OF IOWA CITY, IOWA Bids for the purchase of the City of Iowa City, Iowa's (the "City") $10,215,000* Sewer Revenue Refunding Capital Loan Notes, Series 2016C (the "Series 2016C Notes"), and the $4,025,000* Water Revenue Refunding Capital Loan Notes, 2016D (the "Series 2016D Notes") (collectively the "Notes"), will be received on Tuesday, May 17, 2016, before 10:00 o'clock A.M. Central Time after which time they will be tabulated. The City's Council will consider award of the Notes at 7:00 o'clock P.M. Central Time, on the same day. Questions regarding the sale of the Notes should be directed to the City's Municipal Advisor, Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa, 50309 or by telephoning 515-243-2600. Information can also be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 East Washington Street, Iowa City, Iowa 52240, or by telephoning 319-356-5053. DETAILS OF THE SERIES 2016C NOTES SEWER REVENUE REFUNDING CAPITAL LOAN NOTES, SERIES 2016C, in the principal amount of $10,215,000*, will be dated the date of delivery (June 16, 2016), will be in the denomination of $5,000 or multiples thereof, and will mature July 1, as follows: Year Amount* 2017 $2,065,000 2018 2,100,000 2019 2,130,000 2020 1,960,000 2021 1,960,000 ADJUSTMENT TO SERIES 2016C NOTES MATURITY AMOUNTS The City reserves the right to decrease the aggregate principal amount of the Series 2016C Notes and to increase or reduce each scheduled maturity thereof after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $10,500,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016C Notes is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016C Notes will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of note principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. LIEN — SERIES 2016C NOTES The Series 2016C Notes and the $24,280,000 Sewer Revenue Refunding Capital Loan Notes, Series 2008C dated October 15, 2008 of which $1,945,000 will be outstanding after the refunding; $8,660,000 Sewer Revenue Refunding Capital Loan Notes, Series 2009A dated May 18, 2009 of which $6,275,000 is outstanding; the $15,080,000 Sewer Revenue Refunding Capital Loan Notes, Series 2010A dated April 15, 2010 of which $6,330,000 is outstanding; (collectively the "Sewer Parity Obligations") will constitute a lien on the net revenues of the City's Municipal Sewer Utility System (the "Sewer System"). PARITY NOTES - SERIES 2016C NOTES The City reserves the right and privilege to issue additional revenue bonds payable from the same source and ranking on a parity with the Series 2016C Notes and the Sewer Parity Obligations as defined herein for the purpose of refunding any outstanding Notes, Sewer Parity Obligations or general obligation notes outstanding, or to make extensions, additions, improvements or replacements to the Sewer System payable from the net revenues of the Sewer System, but only if there will have been procured and filed with the City Clerk, a statement from an independent auditor, independent financial consultant or a consulting engineer, not a regular employee of the City, reciting the opinion based upon necessary investigations that the net revenues of the Sewer System for the preceding fiscal year (with adjustments as provided for in the resolution for the Series 2016C Notes) were equal to at least 1.25 times the maximum amount that will be required in any fiscal year prior to the longest maturity of any of the Series 2016C Notes or Sewer Parity Obligations for both principal of and interest on all Series 2016C Notes or Sewer Parity Obligations then outstanding which are payable from the net earnings of the Sewer System and the additional obligations then proposed to be issued. DETAILS OF THE SERIES 2016D NOTES WATER REVENUE REFUNDING CAPITAL LOAN NOTES, SERIES 2016D, in the principal amount of $4,025,000*, will be dated the date of delivery (June 16, 2016), will be in the denomination of $5,000 or multiples thereof, and will mature July 1, as follows: Year Amount* 2017 $475,000 2018 480,000 2019 485,000 2020 495,000 2021 505,000 2022 515,000 2023 530,000 2024 540,000 * Preliminary; subject to change. ADJUSTMENT TO SERIES 2016D NOTES MATURITY AMOUNTS The City reserves the right to decrease the aggregate principal amount of the Series 2016D Notes and to increase or reduce each scheduled maturity thereof after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $4,415,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016D Notes is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016D Notes will be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of note principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. LIEN — SERIES 2016D NOTES The Series 2016D Notes and the $7,115,000 Water Revenue Refunding Capital Loan Notes, Series 2008D dated October 15, 2008 of which $425,000 will be outstanding after the refunding; the $9,750,000 Water Revenue Refunding Capital Loan Notes, Series 2009B dated May 18, 2009 of which $6,870,000 is outstanding; and the $4,950,000 Water Revenue Refunding Bonds, Series 2012C dated June 20, 2012 of which $3,565,000 is outstanding (collectively the "Water Parity Obligations") will constitute a lien on the net revenues of the City's Municipal Waterworks Utility System (the "Water System"). ii PARITY NOTES — SERIES 2016D NOTES The City reserves the right and privilege to issue additional revenue obligations payable from the same source and ranking on a parity with the Series 2016D Notes and the Water Parity Obligations as defined herein for the purpose of refunding any outstanding Series 2016D Notes, Water Parity Obligations or general obligation notes outstanding, or to make extensions, additions, improvements or replacements to the Water System payable from the net revenues of the Water System, but only if there will have been procured and filed with the City Clerk, a statement from an independent auditor, independent financial consultant or a consulting engineer, not a regular employee of the City, reciting the opinion based upon necessary investigations that the net revenues of the Water System for the preceding fiscal year (with adjustments as provided for in the resolution for the Series 2016D Notes) were equal to at least 1.25 times the maximum amount that will be required in any fiscal year prior to the longest maturity of any of the Series 2016D Notes or Water Parity Obligations for both principal of and interest on all Series 2016D Notes or Water Parity Obligations then outstanding which are payable from the net earnings of the Water System and the additional obligations then proposed to be issued. OPTIONAL REDEMPTION OF THE NOTES The Notes will NOT be subject to redemption prior to the stated maturity. INTEREST ON THE NOTES Interest on the Notes will be payable on January 1, 2017 and semiannually thereafter. Interest and principal shall be paid to the registered holder of a note as shown on the records of ownership maintained by the Registrar as of the 15a' day of the month preceding such interest payment date (the "Record Date"). Interest will be computed on the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. GOOD FAITH DEPOSITS Good faith deposits in the amounts of $102,150 for the Series 2016C Notes (the "Series 2016C Deposit"), and $40,250 for the Series 2016D Notes (the "Series 2016D Deposit") (collectively the "Deposits") are required from the lowest bidders only of each series of the Notes. The lowest bidder(s) is required to submit such Deposit(s) payable to the order of the City in the form of either (i) a cashier's check provided to the City or its Municipal Advisor or (ii) a wire transfer as instructed by the City's Municipal Advisor not later than 12:00 o'clock P.M. Central Time on the day of sale of the Notes. If not so received, the bid of the lowest bidder may be rejected and the City may direct the second lowest bidder to submit a deposit and thereafter may award the sale of the respective series of Notes to the same. No interest on the Deposits will accrue to the successful bidder(s) (the "Purchaser(s)"). The Deposits will be applied to the purchase price of the respective series of Notes. In the event a Purchaser(s) fails to honor its accepted bid proposal, any Deposits will be retained by the City. 10)11 UW K0) a:36 91 -VA t761 All bids shall be unconditional for each series of the Notes for a price not less than $10,163,952 for the Series 2016C Notes, and $3,996,825 for the Series 2016D Notes, plus accrued interest, and shall specify the rate or rates of interest in conformity to the limitations set forth under the "BIDDING PARAMETERS" section. Bids must be submitted on or in substantial compliance with the OFFICIAL BID FORMS provided by the City. The Notes will be awarded to the bidder offering the lowest interest rate to be determined on a true interest cost (the "TIC") basis assuming compliance with the "GOOD FAITH DEPOSITS" section. The TIC shall be determined by the present value method, i.e., by ascertaining the semiannual rate, compounded semiannually, necessary to discount to present value as of the dated date of each respective series of Notes, the amount payable on each interest payment date and on each stated maturity date or earlier mandatory redemption, so that the aggregate of such amounts will equal the aggregate purchase price offered therefore. The TIC shall be stated in terms of an annual percentage rate and shall be that rate of interest, which is twice the semiannual rate so ascertained (also known as the Canadian Method). The TIC shall be as determined by the Municipal Advisor based on the TERMS OF OFFERING and all amendments, and on the bids as submitted. The iii Municipal Advisor's computation of the TIC of each bid shall be controlling. In the event of tie bids for the lowest TIC, the Notes will be awarded by lot. The City will reserve the right to: (i) waive non -substantive informalities of any bid or of matters relating to the receipt of bids and award of the Notes, (ii) reject all bids without cause and (iii) reject any bid which the City determines to have failed to comply with the terms herein. BIDDING PARAMETERS For each respective series, the rates of interest specified in the bidder's proposal must conform to the following limitations: 1. For each respective series, each annual maturity must bear a single rate of interest from the dated date of the Notes to the date of maturity. 2. For each respective series, rates of interest bid must be in multiples of one-eighth or one -twentieth of one percent. 3. For each respective series, the initial price to the public for each maturity must be 98% or greater. RECEIPT OF BIDS Forms of Bids: Bids must be submitted on or in substantial compliance with the NOTICE OF BOND SALE and OFFICIAL BID FORMS provided by the City or through PARITY® competitive bidding system (the "Internet Bid System"). Neither the City nor its agents shall be responsible for malfunction or mistake made by any person, or as a result of the use of the electronic bid or any other means used to deliver or complete a bid. The use of such means is at the sole risk of the prospective bidder who shall be bound by the terms of the bid as received. No bid will be accepted after the time specified in the NOTICE OF BOND SALE. A bid may be withdrawn before the bid deadline using the same method used to submit the bid. If more than one bid is received from a bidder, the last bid received shall be considered. Sealed Bidding: Sealed bids may be submitted and will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440. Electronic Internet Bidding: Electronic intemet bids will be received at the office of the Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440. Electronic intemet bids must be submitted through the Internet Bid System. Information about the Internet Bid System may be obtained by calling 212-404-8102. Each prospective bidder shall be solely responsible for making necessary arrangements to access the Internet Bid System for purposes of submitting its intemet bid in a timely manner and in compliance with the requirements of the NOTICE OF BOND SALE and OFFICIAL BID FORMS. The City is permitting prospective bidders to use the services of Internet Bid System solely as a communication mechanism to conduct the Internet bidding and the Internet Bid System is not an agent of the City. Provisions of the TERMS OF OFFERING and OFFICIAL BID FORMS shall control in the event of conflict with information provided by the Internet Bid System. Electronic Facsimile Bidding: Electronic facsimile bids will be received at the Office of the Finance Director, Finance Director at City Hall, 410 E. Washington, Iowa City, Iowa, 52440 (facsimile number: 319-341-4008. Electronic facsimile bids will be sealed and treated as sealed bids. Electronic facsimile bids received after the deadline will be rejected. Bidders electing to submit bids via facsimile transmission bear full responsibility for the transmission of such bid. Neither the City nor its agents will assume liability for the inability of the bidder to reach the above named facsimile numbers prior to the time of sale specified above. Time of receipt shall be the time recorded by the facsimile operator receiving the bids. iv BOOK -ENTRY -ONLY ISSUANCE The Notes will be issued by means of a book -entry -only system with no physical distribution of note certificates made to the public. The Notes will be issued in fully -registered form and one note certificate, representing the aggregate principal amount of the Notes maturing in each year will be registered in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), New York, NY, which will act as securities depository of the Notes. Individual purchases of the Notes may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the Registrar to DTC or its nominee as registered owner of the Notes. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The Purchaser(s), as a condition of delivery of the Notes, will be required to deposit the bond certificate with DTC. NOTE INSURANCE AT PURCHASER'S OPTION If the Notes qualify for issuance of any policy of municipal bond insurance or commitment therefore at the option of the bidder, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the Purchaser(s). Any increased costs of issuance of the Notes resulting from such purchase of insurance shall be paid by the Purchaser(s), except that, if the City has requested and received a rating on the Notes from a raring agency, the City will pay that initial raring fee. Any other rating agency fees shall be the responsibility of the Purchaser(s). Failure of the municipal bond insurer to issue the policy after the Notes have been awarded to the Purchaser(s) shall not constitute cause for failure or refusal by the Purchaser(s) to accept delivery on the Notes. The City reserves the right in its sole discretion to accept or deny changes to the financing documents requested by the insurer selected by the Purchaser(s). DELIVERY The Notes will be delivered to the Purchaser(s) via Fast Automated Securities Transfer ("FAST") delivery with the Registrar holding the Notes on behalf of DTC, against full payment in immediately available cash or federal funds. The Notes are expected to be delivered within forty-five days after the sale. Should delivery be delayed beyond sixty days from the date of sale for any reason except failure of performance by the Purchaser(s), the Purchaser(s) may withdraw their bid and thereafter their interest in and liability for the Notes will cease. When the Notes are ready for delivery, the City will give the Purchaser(s) five working days notice of the delivery date and the City will expect payment in full on that date; otherwise, reserving the right at its option to determine that the Purchaser(s) failed to comply with the offer of purchase. INFORMATION FROM PURCHASERS The Purchaser(s) will be required to certify to the City immediately after the opening of bids: (i) the initial public offering price of each maturity of the Notes (not including sales to bond houses and brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Notes (not less than 10% of each maturity) were sold to the public; or (ii) if less than 10% of any maturity has been sold, the price for that maturity determined as of the time of the sale based upon the reasonably expected initial offering price to the public; and (iii) that the initial public offering price does not exceed the fair market value of the Notes on the sale date. The Purchaser(s) will also be required to provide a certificate at closing confirming the information required by this paragraph. OFFICIAL STATEMENT The City has authorized the preparation of a Preliminary Official Statement containing pertinent information relative to the Notes. The Preliminary Official Statement when further supplemented with offering prices, interest rates, selling compensation, aggregate principal amount, principal amount per maturity, anticipated delivery date and the identity of the underwriters, together with any other information required by law or deemed appropriate by the City, shall constitute a Final Official Statement of the City with respect to the Notes, as that term is defined in Rule 15c2-12 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, (the "Rule"). By awarding the Notes to any underwriter or underwriting syndicate submitting an OFFICIAL BID FORM therefore, the City agrees that, no more than seven (7) business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Notes are awarded up to 15 copies of the Final Official Statement to permit each "Participating Underwriter" (as that term is defined in the Rule) to comply with the provisions of the Rule. The City shall treat the senior managing underwriter of the syndicate to which the Notes are awarded as its designated agent for purposes of distributing copies of the Final Official Statement to the Participating Underwriter. Any underwriter executing and delivering an OFFICIAL BID FORM with respect to the Notes, agrees thereby that if its bid is accepted by the City, (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Notes for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement. CONTINUING DISCLOSURE In order to permit bidders for the Notes and other Participating Underwriters in the primary offering of the Notes to comply with paragraph (b)(5) of 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 Notes, in the resolutions for the Notes and the Continuing Disclosure Certificates, to provide annual reports of specified information and notice of the occurrence of certain material events as hereinafter described (the "Undertakings"). The information to be provided on an annual basis, the events as to which notice is to be given, and a summary of other provisions of the Undertakings, including termination, amendment and remedies, are set forth as APPENDIX D to this Preliminary Official Statement. Within the past five years, the City failed to timely file annual reports for Fiscal Year ended June 30, 2011. Breach of the Undertakings will not constitute a default or an "Event of Default" under the Notes or the resolutions for the Notes. A broker or dealer is to consider a known breach of the Undertakings, however, before recommending the purchase or sale of the Notes in the secondary market. Thus, a failure on the part of the City to observe the Undertakings may adversely affect the transferability and liquidity of the Notes and their market price. CUSIP NUMBERS It is anticipated that Committee on Uniform Security Identification Procedures ("CUSIP") numbers will be printed on the Notes and the Purchaser(s) must agree in the bid proposal to pay the cost thereof. In no event will the City, Bond Counsel or Municipal Advisor be responsible for the review of, or express any opinion that the CUSIP numbers are correct. hrcorrect CUSIP numbers on said Notes shall not be cause for the Purchaser(s) to refuse to accept delivery of said Notes. BY ORDER OF THE CITY COUNCIL Dennis Bockenstedt, Finance Director City of Iowa City, Iowa 410 East Washington Street Iowa City, Iowa 52240 vi SCHEDULE OF BOND YEARS $10,215,000* CITY OF IOWA CITY, IOWA SEWER REVENUE REFUNDING CAPITAL LOAN NOTES, SERIES 2016C Notes Dated: June 16, 2016 Interest Due: January 1, 2017 and each July 1 and January 1 to maturity Principal Due: July 1, 2017 - 2021 Cumulative Year Principal* Bond Years Bond Years 2017 $2,065,000 2,151.04 2,151.04 2018 2,100,000 4,287.50 6,438.54 2019 2,130,000 6,478.75 12,917.29 2020 1,960,000 7,921.67 20,838.96 2021 1,960,000 9,881.67 30,720.63 Average Maturity (dated date): 3.007 Years *Preliminary; subject to change. vii SCHEDULE OF BOND YEARS $4,025,0000* CITY OF IOWA CITY, IOWA WATER REVENUE REFUNDING CAPITAL LOAN NOTES, SERIES 2016D Notes Dated: June 16, 2016 Interest Due: January 1, 2017 and each July 1 and January 1 to maturity Principal Due: July 1, 2017 - 2024 Cumulative Year Principal* Bond Years Bond Years 2017 $475,000 494.79 494.79 2018 480,000 980.00 1,474.79 2019 485,000 1,475.21 2,950.00 2020 495,000 2,000.63 4,950.63 2021 505,000 2,546.04 7,496.67 2022 515,000 3,111.46 10,608.13 2023 530,000 3,732.08 14,340.21 2024 540,000 4,342.50 18,682.71 Average Maturity (dated date): 4.642 Years *Preliminary; subject to change. viii PRELIMINARY OFFICIAL STATEMENT CITY OF IOWA CITY, IOWA $10,215,000* Sewer Revenue Refunding Capital Loan Notes, Series 2016C $4,025,000* Water Revenue Refunding Capital Loan Notes, Series 2016D INTRODUCTION This Preliminary Official Statement contains information relating to the City of Iowa City, Iowa (the "City") and its issuance of $10,215,000* Sewer Revenue Refunding Capital Loan Notes, Series 2016C (the "Series 2016C Notes") and $4,025,000* Water Revenue Refunding Capital Loan Notes, Series 2016D (the "Series 2016D Notes"). This Preliminary Official Statement has been authorized on behalf of the City and its Finance Director and may be distributed in connection with the sale of the Notes, authorized therein. Inquiries may be made to the City's Municipal Advisor, Public Financial Management, Inc., 801 Grand Avenue, Suite 3300, Des Moines, Iowa 50309, or by telephoning 515-243-2600. Information can also be obtained from Mr. Dennis Bockenstedt, Finance Director, City of Iowa City, 410 East Washington Street, Iowa City, Iowa 52240, or by telephoning 319-356-5053. AUTHORITY AND PURPOSE The Notes are being issued pursuant to Division V of Chapter 384 of the Code of Iowa and resolutions to be adopted by the City Council of the City of Iowa City, Iowa (the "City"). The Series 2016C Notes are being issued to current refund, on July 1, 2016, $10,515,000 of the City's Sewer Revenue Refunding Capital Loan Notes, Series 2008C, dated October 15, 2008, maturing 2017 through 2022 (the "Series 2008C Notes"). The Series 2016D Notes are being issued to pay costs to current refund, on July 1, 2016, $4,085,000 of the City's Water Revenue Refunding Capital Loan Notes, Series 2008D, dated October 15, 2008, maturing 2017 through 2024 (the "Series 2008D Notes"). Issue to be Refunded By the Series 2016C Notes Call Date Call Price Series 2008C Notes 7/1/2016 100% Issue to be Refunded By the Series 2016D Notes Call Date Call Price Series 2008D Notes 7/1/2016 100% * Preliminary; subject to change. Maturities to Principal Coupon be Refunded Amount Coupon 7/1/2017 $2,035,000 4.000% 7/1/2018 2,095,000 4.000% 7/1/2019 2,205,000 5.000% 7/1/2020 1,775,000 5.000% 7/1/2021 1,850,000 5.000% 7/1/2022 555.000 5.000% $10,515,000 Maturities to Principal be Refunded Amount Coupon 7/1/2017 $445,000 4.000% 7/1/2018 460,000 4.000% 7/1/2019 475,000 4.000% 7/1/2020 495,000 4.000% 7/1/2021 515,000 4.125% 7/1/2022 540,000 4.250% 7/1/2023 565,000 4.375% 7/1/2024 590.000 4.375% $4,085,000 The estimated Sources and Uses of the Series 2016C Notes and Series 2016D Notes are as follows: Sources of Funds Series 2016C Notes Series 2016D Notes Par Amount of Notes $10,215,000.00 * $4,025,000.00 * Existing Reserve Fund 3.718.746.88 2.030.221.26 Total Uses $13,933,746.88 * $6,055,221.26 * Uses of Funds Deposit to Escrow Account $10,515,000.00 Deposit to Reserve Fund 3,286,897.55 Underwriter's Discount 51,075.00 Cost of Issuance and Contingency 80,774.33 Total Uses $13,933,746.88 * Preliminary; subject to change. OPTIONAL REDEMPTION OF THE NOTES The Notes will NOT be subject to redemption prior to the stated maturity. INTEREST ON THE NOTES $4,085,000.00 1,886,500.00 28,175.00 55,546.26 $6,055,221.26 Interest on the Notes will be payable on January 1, 2017 and semiannually on the I' day of July and January thereafter. Interest and principal shall be paid to the registered holder of a note as shown on the records of ownership maintained by the Registrar as of the 15u' day of the month preceding such interest payment date (the "Record Date"). Interest will be computed on the basis of a 360 -day year of twelve 30 -day months and will be rounded pursuant to rules of the Municipal Securities Rulemaking Board. PAYMENT OF AND SECURITY FOR THE SERIES 2016C NOTES This section is a summary of security provisions for the Series 2016C Notes. A detailed statement of security provisions is contained in the resolution for the Series 2016C Notes, which is available upon request from Public Financial Management, Inc. Source of Payment for the Series 2016C Notes: THE SERIES 2016C NOTES ARE NOT GENERAL OBLIGATIONS OF THE CITY, but are payable solely and only from a pledge of net revenues of the Municipal Sewer System (the "Sewer System"). The Series 2016C Notes and the $24,280,000 Sewer Revenue Refunding Capital Loan Notes, Series 2008C dated October 15, 2008 of which $1,945,000 will be outstanding after the refunding; $8,660,000 Sewer Revenue Refunding Capital Loan Notes, Series 2009A dated May 18, 2009 of which $6,275,000 is outstanding; the $15,080,000 Sewer Revenue Refunding Capital Loan Notes, Series 2010A dated April 15, 2010 of which $6,330,000 is outstanding; (collectively the "Sewer Parity Obligations"). The City pledges a lien on the net revenues of the Sewer System for payment of principal and interest on the Series 2016C Notes and all outstanding Sewer Parity Obligations. Unpaid Sewer Charges: As provided by Section 384.84, Subsection 1, City Code of Iowa, unpaid sewer charges constitute a lien upon the premises served by the Sewer System upon certification by the City to the County Treasurer that the rates or charges are past due. The lien has equal precedence with ordinary taxes, may be certified to the County Treasurer and collected in the same manner as taxes, and is not diversified by a judicial sale. Sewer Rate Covenant: On or before the beginning of each fiscal year, the City covenants to adopt or continue in effect rates for all services rendered by the Sewer System determined to be sufficient to produce net revenues for the next succeeding fiscal year adequate to pay principal and interest requirements and create reserves as provided in the resolution for the Series 2016C Notes but not less than 110% of the principal and interest requirements of the fiscal year. No free use of the Sewer System by the City or any department, agency or instrumentality of the City shall be permitted except upon the determination of the City that the rates and charges otherwise in effect are sufficient to provide net revenues at last equal to the requirements listed herein. Sewer Reserve Fund: The City covenants to establish and maintain a sewer debt service reserve fund (the "Sewer Reserve Fund") in an amount equal to lesser of (a) the maximum annual amount of the principal and interest coming due on the Series 2016C Notes and Sewer Parity Obligations; (b) 10% of the stated principal amount of the Series 2016C Notes and Sewer Parity Obligations or (c) 125% of the average annual principal and interest coming due on the Series 2016C Notes and Sewer Parity Obligations. Currently, the City meets the Sewer Reserve Fund requirement. Upon issuance of the Series 2016C Notes, the Sewer Reserve Fund will be reduced to $3,286,897.55, which represents 125% of the average annual principal and interest coming due on the Series 2016C Notes and Sewer Parity Obligations. Sewer Improvement Fund: The City covenants to maintain a sewer revenue improvement fund (the "Sewer Improvement Fund"). The minimum amount to be deposited in the Sewer Improvement Fund each month shall be $20,000 provided, however, that when the amount of such deposits in the fund shall equal or exceed $2,000,000, no further monthly deposits need be made into the Sewer Improvement Fund except to maintain it at such level. Money in the Sewer Improvement Fund shall be used solely for the purpose of paying principal of or interest on the Series 2016C Notes and Sewer Parity Obligations when there shall be insufficient money in the sinking fund and the Sewer Reserve Fund; and to the extent not required for the foregoing, to pay the cost of extraordinary maintenance expenses or repairs, renewals and replacements not included in the annual budget of revenues and current expenses, payment of rentals on any part of the Sewer System or payments due for any property purchased as a part of the Sewer System, and for capital improvements to the Sewer System. Whenever it shall become necessary to so use money in the Sewer Improvement Fund, the payments required above shall be continued or resumed until it shall have been restored to the required minimum amount. Sewer Additional Notes Test: The City reserves the right and privilege to issue additional revenue Notes payable from the same source and ranking on a parity with the Series 2016C Notes and Sewer Parity Obligations for the purpose of refunding any outstanding Series 2016C Notes, Sewer Parity Obligations or general obligation notes, or to make extensions, additions, improvements or replacements to the Sewer System payable from the net revenues of the Sewer System, but only if there will have been procured and filed with the City Clerk, a statement from an independent auditor, independent financial consultant or a consulting engineer, not a regular employee of the City, reciting the opinion based upon necessary investigations that the net revenues of the Sewer System for the preceding fiscal year (with adjustments as provided for in the resolution for the Series 2016C Notes) were equal to at least 1.25 times the maximum amount that will be required in any fiscal year prior to the longest maturity of any of the Series 2016C Notes and Sewer Parity Obligations for both principal of and interest on all Series 2016C Notes and Sewer Parity Obligations then outstanding which are payable from the net earnings of the Sewer System and the additional obligations then proposed to be issued. Any principal and interest falling due on the first day of a fiscal year shall be deemed a requirement of the immediately preceding fiscal year. The preceding fiscal year shall be the most recently completed fiscal year for which audited financial statements prepared by a certified public accountant are issued and available, but in no event a fiscal year which ended more than eighteen months prior to the date of issuance of additional obligations. PAYMENT OF AND SECURITY FOR THE SERIES 2016D NOTES This section is a summary of security provisions. A detailed statement of security provisions is contained in the resolution for the Series 2016D Notes, which is available upon request from Public Financial Management, Inc. Source of Payment: THE SERIES 2016D NOTES ARE NOT GENERAL OBLIGATIONS OF THE CITY, but are payable solely and only from a pledge of net revenues of the Municipal Water System (the "Water System"). The Series 2016D Notes will be issued on parity with the $7,115,000 Water Revenue Refunding Capital Loan Notes, Series 2008D dated October 15, 2008 of which $425,000 will be outstanding after the refunding; the $9,750,000 Water Revenue Refunding Capital Loan Notes, Series 2009B dated May 18, 2009 of which $6,870,000 is outstanding; and the $4,950,000 Water Revenue Refunding Bonds, Series 2012C dated June 20, 2012 of which $3,565,000 is outstanding (collectively the "Water Parity Obligations") . The City pledges a lien on the net revenues of the Water System for payment of principal and interest on the Series 2016D Notes and all outstanding Water Parity Obligations. Water Unpaid Water Charges: As provided by Section 384.84, Subsection 1, City Code of Iowa, unpaid water charges constitute a lien upon the premises served by the Water System upon certification by the City to the County Treasurer that the rates or charges are past due. The lien has equal precedence with ordinary taxes, may be certified to the County Treasurer and collected in the same manner as taxes, and is not diversified by a judicial sale. Water Rate Covenant: On or before the beginning of each fiscal year, the City covenants to adopt or continue in effect rates for all services rendered by the Water System determined to be sufficient to produce net revenues for the next succeeding fiscal year adequate to pay principal and interest requirements and create reserves as provided in the resolution for the Series 2016D Notes but not less than 110% of the principal and interest requirements of the fiscal year. No free use of the Water System by the City or any department, agency or instrumentality of the City shall be permitted except upon the determination of the City that the rates and charges otherwise in effect are sufficient to provide net revenues at last equal to the requirements listed herein. Water Reserve Fund: The City covenants to establish and maintain a water debt service reserve fund (the "Water Reserve Fund") in an amount equal to lesser of (a) the maximum annual amount of the principal and interest coming due on the Series 2016D Notes and Water Parity Obligations; (b) 10% of the stated principal amount of the Series 2016D Notes and Water Parity Obligations or (c) 125% of the average annual principal and interest coming due on the Series 2016D Notes and Water Parity Obligations. Currently, the City meets the Water Reserve Fund requirement. Upon issuance of the Series 2016D Notes, the Water Reserve Fund will be reduced to $1,886,500, which represents 10% of the stated principal amount of the Series 2016D Notes and Water Parity Obligations. Water Improvement Fund: The City covenants to maintain a water revenue improvement fund (the "Water Improvement Fund"). The minimum amount to be deposited in the Water Improvement Fund each month shall be $5,000 provided, however, that when the amount of such deposits in such fund shall equal or exceed $450,000, no further monthly deposits need be made into the Water Improvement Fund except to maintain it at such level. Money in the Water Improvement Fund shall be used solely for the purpose of paying principal of or interest on the Series 2016D Notes and Water Parity Obligations when there shall be insufficient money in the sinking fund and the Water Reserve Fund; and to the extent not required for the foregoing, to pay the cost of extraordinary maintenance expenses or repairs, renewals and replacements not included in the annual budget of revenues and current expenses, payment of rentals on any part of the Water System or payments due for any property purchased as a part of the Water System, and for capital improvements to the Water System. Whenever it shall become necessary to so use money in the Water Improvement Fund, the payments required above shall be continued or resumed until it shall have been restored to the required minimum amount. Water Additional Notes Test: The City reserves the right and privilege to issue additional revenue obligations payable from the same source and ranking on a parity with the Series 2016D Notes and Water Parity Obligations for the purpose of refunding any outstanding Series 2016D Notes, Water Parity Obligations or general obligittion notes outstanding, or to make extensions, additions, improvements or replacements to the Water System payable from the net revenues of the Water System, but only if there will have been procured and filed with the City Clerk, a statement from an independent auditor, independent financial consultant or a consulting engineer, not a regular employee of the City, reciting the opinion based upon necessary investigations that the net revenues of the Water System for the preceding fiscal year (with adjustments as provided for in the resolution for the Series 2016D Notes) were equal to at least 1.25 times the maximum amount that will be required in any fiscal year prior to the longest maturity of any of the Series 2016D Notes and Water Parity Obligations for both principal of and interest on all Series 2016D Notes and Water Parity Obligations then outstanding which are payable from the net earnings of the Water System and the additional obligations then proposed to be issued. Any principal and interest falling due on the first day of a fiscal year shall be deemed a requirement of the immediately preceding fiscal year. The preceding fiscal year shall be the most recently completed fiscal year for which audited financial statements prepared by a certified public accountant are issued and available, but in no event a fiscal year which ended more than eighteen months prior to the date of issuance of additional obligations. BOOK -ENTRY -ONLY ISSUANCE The information contained in the following paragraphs of this subsection "Book -Entry -Only Issuance" has been extracted from a schedule prepared by Depository Trust Company ("DTC') entitled "SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING DTC AND BOOK -ENTRY -ONLY ISSUANCE. " The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully - registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants (the "Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). DTC has Standard & Poor's rating: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security (the "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confinnations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by 5 arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co., nor any other DTC nominee, will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date identified in a listing attached to the Omnibus Proxy. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC, is the responsibility of the City or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to Tender/Remarketing Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to Tender/Remarketing Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC's records and followed by a book - entry credit of tendered Securities to Tender/Remarketing Agent's DTC account. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the City or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. The City may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof. FUTURE FINANCING In conjunction with the sale of the Notes, the City is also issuing approximately $8,795,000* General Obligation Bonds, Series 2016A and $620,000* Taxable General Obligation Bonds, Series 2016B. In addition, the City anticipates issuing approximately $12,635,000 Urban Renewal Revenue Capital Loan Notes later in calendar year 2016. LITIGATION The City is not aware of other threatened or pending litigation affecting the validity of the Notes or the City's ability to meet its financial obligations. DEBT PAYMENT HISTORY The City knows of no instance in which it has defaulted in the payment of principal or interest on its debt. LEGALITY The Notes are subject to approval as to certain matters by Ahlers & Cooney, P.C. of Des Moines, Iowa as Bond Counsel. Bond Counsel has not participated in the preparation of this Preliminary Official Statement and will not pass upon its accuracy, completeness or sufficiency. Bond Counsel has not examined, nor attempted to examine or verify, any of the financial or statistical statements or data contained in this Preliminary Official Statement, and will express no opinion with respect thereto. The "FORMS OF LEGAL OPINIONS" as set out in APPENDIX B to this Preliminary Official Statement, will be delivered at closing. The legal opinion to be delivered concurrently with the delivery of the Notes 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. There is no bond trustee or similar person to monitor or enforce the provisions of the resolutions for the Notes. The owners of the Notes should, therefore, be prepared to enforce such provisions themselves if the need to do so arises. In the event of a default in the payment of principal of or interest on the Notes, there is no provision for acceleration of maturity of the principal of the Notes. Consequently, the remedies of the owners of the Notes (consisting primarily of an action in the nature of mandamus requiring the City and certain other public officials to perform the terms of the resolutions for the Notes) may have to be enforced from year to year. In addition, the enforceability of the rights and remedies of owners of the Notes 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 Notes may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, to the exercise of judicial discretion in appropriate cases and to the exercise by the State and its governmental bodies of the police power inherent in the sovereignty of the State and to the exercise by the United States of America of the powers delegated to it by the Constitution of the United States of America. TAX MATTERS With Respect to the Notes Federal Income Tax Exemntion and State Taxability: Federal tax law contains a number of requirements and restrictions that apply to the Notes. These include investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of the note 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 Notes to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Notes to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Notes. Subject to the City's compliance with the above referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Notes is excludable from gross income of the owners thereof for federal income tax purposes, and interest on the Notes is not included as an item of tax preference in computing the federal alternative minimum tax imposed on individuals and corporations. However, with respect to corporations (as defined for federal income tax purposes), such interest is included in adjusted current earnings for the purpose of determining the federal alternative minimum tax imposed on certain corporations. Prospective purchasers of the Notes should be aware that ownership of the Notes 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 Notes should consult their tax advisors as to collateral federal income tax consequences. Interest on the Notes is not exempt from present Iowa income taxes Ownership of the Notes 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 Notes. Prospective purchasers of the Notes 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 Notes as "qualified tax-exempt obligations" under the exception provided in Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"). Tax Accounting Treatment of Discount and Premium on Certain Notes.: The initial public offering price of certain Notes (the "Discount Notes") may be less than the amount payable on such Notes at maturity. An amount equal to the difference between the initial public offering price of Discount Notes (assuming that a substantial amount of the Discount Notes of that maturity are sold to the public at such price) and the amount payable at maturity constitutes original issue discount to the initial purchaser of such Discount Notes. Owners of Discount Notes should consult with their own tax advisors with respect to the determination of accrued original issue discount on Discount Notes for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Discount Notes. It is possible that, under applicable provisions governing determination of state and local income taxes, accrued interest on Discount Notes 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 Notes ("Premium Notes") may be greater than the amount of such Notes at maturity. An amount equal to the difference between the initial public offering price of Premium Notes (assuming that a substantial amount of the Premium Notes 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 Notes. Purchasers of the Premium Notes should consult with their own tax advisors with respect to the determination of amortizable note premium on Premium Notes for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Notes. Related Tax Matters: The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Notes. If an audit is commenced, under current procedures the Service may treat the City as a taxpayer and the Bond holders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Notes until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Notes, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any note 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 note 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. From time to time, there are Presidential proposals, proposals of various federal committees, and legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to herein or adversely affect the marketability or market value of the Notes or otherwise prevent holders of the Notes realizing the full benefit of the tax exemption of interest on the Notes. Further, such proposals may impact the marketability or market value of the Notes simply by being proposed. No prediction is made whether such provisions will be enacted as proposed or concerning other future legislation affecting the tax treatment of interest on the Notes. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value, marketability or tax status of the Notes. 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 Notes would be impacted thereby. The enforceability of the rights and remedies of owners of the Notes may be subject to limitation as set forth in Bond Counsel's opinion. The opinion will state, in part, that the obligations of the City with respect to the Notes 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. [�Mrcr, The City has requested ratings on the Notes from Moody's Investors Service, Inc. ("Moody's"). Currently, Moody's rates the City's Sewer Revenue and Water Revenue long-term debt `Aa2'. The existing ratings on long-term debt reflect only the view of the rating agency and any explanation of the significance of such rating may only be obtained from Moody's. There is no assurance that such rating will continue for any period of time or that it will not be revised or withdrawn. Any revision or withdrawal of the rating may have an effect on the market price of the Notes. MUNICIPAL ADVISOR The City has retained Public Financial Management, Inc., Des Moines, Iowa as Municipal Advisor (the "Municipal Advisor") in connection with the preparation of the issuance of the Notes. In preparing the Preliminary Official Statement, the Municipal Advisor has relied on government officials, and other sources to provide accurate information for disclosure purposes. The Municipal Advisor is not obligated to undertake, and has not undertaken, an independent verification of the accuracy, completeness, or fairness of the information contained in the Preliminary Official Statement. Public Financial Management, Inc. is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. CONTINUING DISCLOSURE In order to permit bidders for the Notes and other Participating Underwriters in the primary offering of the Notes to comply with paragraph (b)(5) of Rule 15c2-12 promulgated by the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended, (the "Rule") the City will covenant and agree, for the benefit of the registered holders or beneficial owners from time to time of the outstanding Notes, in the resolutions for the Notes and the Continuing Disclosure Certificates, to provide annual reports of specified information and notice of the occurrence of certain material events as hereinafter described (the "Undertakings"). The information to be provided on an annual basis, the events as to which notice is to be given, and a summary of other provisions of the Undertakings, including termination, amendment and remedies, are set forth as APPENDIX D to this Preliminary Official Statement. Within the past five years, the City failed to timely file annual reports for Fiscal Year ended June 30, 2011. Breach of the Undertakings will not constitute a default or an "Event of Default" under the Notes or the resolutions for the Notes. A broker or dealer is to consider a known breach of the Undertakings, however, before recommending the purchase or sale of the Notes in the secondary market. Thus, a failure on the part of the City to observe the Undertakings may adversely affect the transferability and liquidity of the Notes and their market price. CERTIFICATION The City has authorized the distribution of this Preliminary Official Statement for use in connection with the initial sale of the Notes. I have reviewed the information contained within the Preliminary Official Statement prepared on behalf of the City by Public Financial Management, Inc., Des Moines, Iowa, and to the best of my knowledge, said Preliminary Official Statement does not contain any material misstatements of fact nor omission of any material fact regarding the issuance of $10,215,000* Sewer Revenue Refunding Capital Loan Notes, Series 2016C, and $4,025,000* Water Revenue Refunding Capital Loan Notes, Series 2016D. *Preliminary; subject to change. CITY OF IOWA CITY, IOWA /s/ Dennis Bockenstedt, Finance Director 10 DESCRIPTION OF THE MUNICIPAL SEWER SYSTEM MANAGEMENT AND ADMINISTRATION Sewer System and Management: The City operates a Municipal Sewer System (the "Sewer System") consisting of approximately 300 miles of sanitary sewers, 18 lift stations and 1 wastewater treatment plant. The Sewer System is operated under the direction of Mr. Ron Knoche, Public Works Director; Mr. Tim Wilkey, Division Superintendent; and Mr. Roger Overton, Assistant Superintendent. Wastewater Treatment Plants: The north wastewater treatment plant ("the "North Plant") was constructed in 1935 and the south wastewater treatment plant (the "South Plant") was completed in 1990. Both were upgraded in 2002, and the South Plant was expanded in 2014. The North and South Plants were connected in 1998 and after 79 years of being in service the North Plant was decommissioned in 2014. The City utilized federal and state grants to fund a flood recovery and mitigation project to decommission the North Plant by simultaneously expanding the South Plant. Currently, the City is diverting all wastewater treatment to the South Plant and control operations remotely through supervisory control and data acquisition ("SCADA") computer systems. The South Plant system design has a maximum daily treatment capacity of 43.30 million gallons per day ("MGD") and is in compliance with Federal clean water standards. Billings and Collections: Customers are billed monthly on a combined utility statement which includes charges for sewer, water, solid waste, and curbside recycling. Under present City policy and City ordinances, utility bills are due when received but contain a delinquency date which provides 15 days for payment. If payment is not made in full within 22 days, a notice is mailed which allows 25 calendar days before service is disconnected. The City's bad debt write-offs have been less than 0.2% of gross revenues for the past three years. SEWER SYSTEM RATES AND CHARGES The current following Sewer System rates and charges were approved by the City Council and became effective July 1, 2008: For the first 100 cubic feet or any lesser amount, $8.15 will be the minimum monthly bill. Each additional 100 cubic feet will be at the rate of $3.99 per each 100 cubic feet for metered usage. The following table shows historical rate increases since August 1, 2000. Sewer Rate Increases Sewer Sales Sewer System Effective Date Rate Increase August 1, 2000 5% August 1, 2001 5% July 1, 2006 8% July 1, 2008 5% SEWER SYSTEM SALES HISTORY AND TOTAL CHARGES 11 Sewer Sales Sewer System Fiscal Year Cubic Feet Sold Charges 2010-11 280,303,237 $12,748,695 2011-12 282,134,840 12,784,321 2012-13 285,472,392 12,883,641 2013-14 269,494,125 12,382,031 2014-15 266,341,791 12,248,082 11 NUMBER OF SEWER SYSTEM CUSTOMERS Fiscal Year Total 2010-11 23,527 2011-12 23,529 2012-13 24,059 2013-14 24,389 2014-15 24,533 LARGER SEWER SYSTEM CUSTOMERS (FY 2014-15) Total Fiscal Year 2014-15 Sewer System Charges: $12,248,082 SEWER SYSTEM FUNDS ON HAND (As of February 29, 2016) Sewer Operating Funds $18,019,875 % of Total 8,320,301 Total Funds on Hand Sewer System Customer Name Sewer Charges Consumption University of Iowa $1,831,543 14.95% Proctor & Gamble 1,111,847 9.08% Iowa City Landfill Division 137,895 1.13% Veterans Administration Medical Center 126,782 1.04% Dolphin Lake Point 123,920 1.01% Mercy Hospital 105,044 0.86% Mark IV Apartments 80,811 0.66% Campus Apartments 73,486 0.60% University of Iowa/Mayflower Apartments 68,369 0.56% RBDE Iowa City LLC (Sheraton Hotel) 59.569 0.48% Total Sewer System Charges $3,719,266 30.37% Total Fiscal Year 2014-15 Sewer System Charges: $12,248,082 SEWER SYSTEM FUNDS ON HAND (As of February 29, 2016) Sewer Operating Funds $18,019,875 Sewer Restricted Funds 8,320,301 Total Funds on Hand $26.340.176 SEWER SYSTEM EMPLOYEES; PENSIONS The Sewer System has 24.65 full-time employees, 23.15 of which are represented by the American Federation of State, County and Municipal Employees (the "AFSCME") Local 61. Employees are enrolled in the Iowa Public Employees Retirement System (the "IPERS") pension plan administered by the State of Iowa. The Sewer System's contributions to IPERS for the years ended June 30, 2013, 2014 and 2015 as shown below equal the required contributions for each year. FY 2012-13 FY 2013-14 FY 2014-15 IPERS Sewer System Contribution $140,355 $154,126 $144,863 12 SEWER SYSTEM REVENUE DEBT (Includes the Series 2016C Notes) The City has revenue debt payable solely from the net revenues of the Municipal Sewer System as follows: 1) The 2017 through 2022 maturities in the amount of $10,515,000 will be current refunded by the Series 2016C Notes on July 1, 2016. * Preliminary; subject to change. Annual Fiscal Year Sewer System Revenue Debt Service Payments (Includes the Series 2016C Notes) Current Outstanding Series 2016C Notes Total Outstanding Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 10/08C $24,280,000 Sewer Refunding 7/16 $1,945,000 q 5/09A 8,660,000 Sewer Refunding 7/25 6,275,000 4/10A 15,080,000 Sewer Refunding 7/20 6,330,000 6/16C 10,215,000* Sewer Refunding 7/21 10,215,000* Total 2,218,656 3,920,000 4,408,906 $24,765,000* 1) The 2017 through 2022 maturities in the amount of $10,515,000 will be current refunded by the Series 2016C Notes on July 1, 2016. * Preliminary; subject to change. Annual Fiscal Year Sewer System Revenue Debt Service Payments (Includes the Series 2016C Notes) * Preliminary; subject to change. 13 Current Outstanding Series 2016C Notes Total Outstanding Principal & Principal & Principal & Fiscal Year Principal Interest Principal* Interest* Principal* Interest* 2016-17 $3,625,000 $4,417,350 $86,324 $3,625,000 $4,503,674 2017-18 1,740,000 2,182,825 $2,065,000 2,211,152 3,805,000 4,393,977 2018-19 1,820,000 2,190,250 2,100,000 2,218,656 3,920,000 4,408,906 2019-20 1,885,000 2,178,338 2,130,000 2,217,762 4,015,000 4,396,100 2020-21 1,965,000 2,178,388 1,960,000 2,014,096 3,925,000 4,192,484 2021-22 635,000 793,288 1,960,000 1,978,522 2,595,000 2,771,810 2022-23 665,000 792,375 665,000 792,375 2023-24 700,000 793,250 700,000 793,250 2024-25 740,000 797,250 740,000 797,250 2025-26 775,000 794,375 775,000 794,375 Total $14,550,000 $10,215,000* $24,765,000* * Preliminary; subject to change. 13 HISTORICAL SEWER SYSTEM CASHFLOW AND ANTICIPATED DEBT COVERAGE The following table represents the financial performance of the Sewer System for Fiscal Year 2010-11 through Fiscal Year 2014-15 using information from the City's Comprehensive Annual Financial Reports (" CAFIU ). Based on the Fiscal Year 2014-15 CAFR, the $6,046,000 net revenue for debt service would provide 1.34 times coverage of the estimated $4,503,674 maximum annual debt service. In addition, the table below provides a pro forma of the Sewer System's anticipated operating revenues and expenditures for Fiscal Year 2015-16. The projected financial performance cannot be guaranteed. FY2010-11 FY2011-12 FY2012-13 FY2013-14 FY2014-15 : FY2015-16 Operating Revenues $3,405,000 Depreciation 4,017,000 Interest Income 382.000 Charges for Services $12,836,000 $12,670,000 $12,832,000 $12,559,000 $12,189,000 Miscellaneous Revenues 63,000 145, 10 000 75.000 1000 Total Operating Revenues $12,899,000 $12,815,000 $12,934,000 $12,634,000 $12,315,000 Operating Dense$ Series 2010 Ref. Notes 382,756 3,178,050 3,166,600 1,424,375 Personal Services $1,961,000 $1,993,000 $1,938,000 $2,001,000 $2,136,000 Corremdities 895,000 954,000 854,000 1,006,000 1,473,000 Services & Charges 2,621,000 2,716,000 2,548,000 2,701,000 2,965,000 Depreciation 4.017.000 3.952.000 93. 12.000 4.036.000 4.497.000 Total Operating Expense $9,494,000 $9,615,000 $9,252,000 $9,744,000 $11,071,000 Operating Income $3,405,000 Depreciation 4,017,000 Interest Income 382.000 Net Revenue for Debt Service $7,804,000 $3,200,000 $3,682,000 $2,890,000 3,952,000 3,912,000 4,036,000 360, X7.000 200, $7,512,000 $7,961,000 $7,126,000 Sevier Debt Service Series 2001 Notes $239,408 $0 $0 $0 Series 2002 Notes 3,058,890 0 0 0 Series 2008C Ref. Notes 2,459,975 2,476,600 2,459,625 2,459,131 Series 2009 Ref. Notes 632,975 653,350 785,663 785,175 Series 2010 Ref. Notes 382,756 3,178,050 3,166,600 1,424,375 Series 20160 Ref. Notes 0 0 0 0 Total Sevier Revenue Debt $6,774,003 $6,308,000 $6,411,888 $4,668,681 Debt Service Coverage 1.15 1.19 14 1.24 $1,244,000 j 4,497,000 30y $6,046,000 I $0 0 2,464,438 784,163 1,426,300 0� $4,674,900 $12,555,993 135.578 $12,691,571 $1,937,282 1,335,963 2,690,358 4.497.000 $10,460,604 $2,230,967 4,497,000 331.703 $7,059,670 $0 0 2,482,594 786,325 1,426,200 0 $4,695,119 DESCRIPTION OF THE MUNICIPAL WATER SYSTEM MANAGEMENT AND ADMINISTRATION Water System and Management: The City operates a Municipal Water System (the "Water System") consisting of approximately 273 miles of water mains, several wells and a treatment plant. The Water System is operated under the direction of Mr. Ron Knoche, Public Works Director; Mr. Kevin Slutts, Division Superintendent and an Assistant Superintendent whose position is currently vacant. The Water Division is comprised of five parts: Administration, Treatment Plant, Customer Service, Distribution, and Public Information/Education. There are a total of 32.0 (FTE) employees who work in the Water Division. This division serves about 73,400 people and has over 24,600 customer water accounts. The average daily use for Fiscal Year 2014-15 was approximately 5.33 MGD. A peak flow of over 8.6 MGD was experienced during the summer of 2012. Water Sources: The primary source of water for the City is the alluvial aquifer collector wells along the Iowa River. Four collector wells can provide approximately 10.5 MGD. Additional sources include two Jordan aquifer wells which can provide 2.0 MGD; three Siluran aquifer wells which can provide 1.0 MGD; a sand pit that can provide 1.0 MGD; a river intake that can provide 3.0 MGD; for a total of approximately 16.7 MGD maximum capacity. Water Treatment Processes: The facilities include one treatment plant (constructed in 2003) located at 80 Stephen Atkins Drive. The plant is a surface water plant design that includes aeration, lime softening (coagulation/flocculation/sedimentation) and granular activated carbon filtration processes with fluoridation and free chlorination. The grade -four water facility employs operators that perform over 230 water quality tests per day in- house and collect samples for testing at the University Hygienic Laboratory. This testing ensures that the water meets all of the Safe Drinking Water Act Standards. Distribution System: The water flows through approximately 273 miles of water mains and includes over 22,000 service connections. The distribution piping consists of cast iron, ductile iron and plastic main that ranges in size from 2" to 30". The treatment plant site has effective water storage capacity of 1.75 million gallons of water; in addition there are four remote ground storage reservoirs (with pumping stations) that add up to remote effective storage capacity of 6.0 million gallons of water. The water system also provides for fire protection with approximately 3,442 public and private hydrants located throughout the community. Billing and Collections: Customers are billed monthly on a combined utility statement which includes charges for sewer, water, solid waste, and curbside recycling. Under present City policy and City ordinances, utility bills are due when received but contain a delinquency date which provides 15 days for payment. If payment is not made in full within 22 days, a notice is mailed which allows 25 calendar days before service is disconnected. The City's bad debt write-offs have been less than 0.2% of gross revenues for the past three years. WATER SYSTEM RATES AND CHARGES The following rates and charges were adopted by the City Council on May 20, 2014 and became effective on July 1, 2015. Water Service Charge Minimums: includes up to the fust 100 cubic feet (c.£) Meter Size Meter Size Inches Charge Inches Charge 5/8" $7.07 2" $24.41 3/4" 7.72 3" 45.11 1" 9.10 4" 78.69 11/2" 18.15 6" 158.33 15 Monthly Usage in excess of 100 cubic feet (c.f.) 101-3,000 $3.30 per 100 c.f. 3,001 and over $2.37 per 100 c.f. The following table shows historical rate increases since July 1, 2007. Water Rate Increases Effective Date Rate Increase July 1, 2014 5% July 1, 2015 5% WATER SYSTEM SALES HISTORY AND TOTAL CHARGES Fiscal Total Water Water System Year Cubic Feet Sold Charges 2010-11 236,838,370 $7,661,898 2011-12 246,618,257 7,953,738 2012-13 254,616,773 8,194,467 2013-14 239,790,719 7,778,364 2014-15 240,423,612 8,136,670 NUMBER OF WATER SYSTEM CUSTOMERS * Implemented a new utility billing system during Fiscal Year 2014-15 which consolidated customers with multiple meters. WATER SYSTEM CUSTOMERS BY CLASSIFICATION n Classification Total Water Fiscal Year System Customers 2010-11 25,544 2011-12 25,790 2012-13 26,152 2013-14 26,498 2014-15 24,647' * Implemented a new utility billing system during Fiscal Year 2014-15 which consolidated customers with multiple meters. WATER SYSTEM CUSTOMERS BY CLASSIFICATION n Classification FY 2010/11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 Residential 23,875 24,086 24,442 24,790 23,089 Commercial 1,498 1,489 1,491 1,491 1,409 Industrial 15 15 15 15 14 Other 2) 156 200 204 202 135 Total Meters 25,544 25,790 26,152 26,498 24,647 1) Meter information above represents the number of meter customers billed as of the end of each fiscal year. 2) Other meters consist of rural, schools, government, churches, and City meters. 16 LARGER WATER SYSTEM CUSTOMERS (FY 2014-15) Total Fiscal Year 2014-15 Water System Charges: $8,136,670 WATER SYSTEM FUNDS ON HAND (As of February 29, 2016) Utility Operting Funds $8,879,400 Water Restricted and Designated Funds 4,317,294 Total 13.196.694 WATER SYSTEM EMPLOYEES; PENSIONS The Water System has 32 full-time employees (including seasonal employees), 30 of which are represented by the American Federation of State, County and Municipal Employees (AFSCME) Local 61. Employees are enrolled in the Iowa Public Employees Retirement System (IPERS) pension plan administered by the State of Iowa. The Water System's contributions to IPERS for the years ended June 30, 2013, 2014 and 2015 as shown below equal the required contributions for each year. FY 2012-13 FY 2013-14 FY 2014-15 IPERS Water System Contribution $169,616 $173,296 $170,516 WATER SYSTEM REVENUE DEBT (Includes the Series 2016D Notes) The City has revenue debt payable solely from the net revenues of the Municipal Water System as follows % of Total Principal Water System Customer Name Water Charges Consumotion Proctor & Gamble $611,186 7.51% Veterans Administration Medical Center 102,194 1.26% Dolphin Lake Point (Rus Properties Mgt) 76,188 0.94% Mercy Hospital 66,050 0.81% Mark IV Apts 60,058 0.74% Campus Apartments 59,240 0.73% University of Iowa (Mayflower Apartments) 41,017 0.50% RBD Iowa City LLC (Sheraton Hotel) 35,860 0.44% CCAL 100 Hawk Ridge Drive 32,187 0.40% Seville Apartments 31,979 0.39% Total Water System Charges $1,115,959 13.72% Total Fiscal Year 2014-15 Water System Charges: $8,136,670 WATER SYSTEM FUNDS ON HAND (As of February 29, 2016) Utility Operting Funds $8,879,400 Water Restricted and Designated Funds 4,317,294 Total 13.196.694 WATER SYSTEM EMPLOYEES; PENSIONS The Water System has 32 full-time employees (including seasonal employees), 30 of which are represented by the American Federation of State, County and Municipal Employees (AFSCME) Local 61. Employees are enrolled in the Iowa Public Employees Retirement System (IPERS) pension plan administered by the State of Iowa. The Water System's contributions to IPERS for the years ended June 30, 2013, 2014 and 2015 as shown below equal the required contributions for each year. FY 2012-13 FY 2013-14 FY 2014-15 IPERS Water System Contribution $169,616 $173,296 $170,516 WATER SYSTEM REVENUE DEBT (Includes the Series 2016D Notes) The City has revenue debt payable solely from the net revenues of the Municipal Water System as follows 1) The 2017 through 2024 maturities in the amount of $4,085,000 will be current refunded by Series 2016D Notes on July 1, 2016. * Preliminary; subject to change. 17 Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 10/08D $7,115,000 Water Refunding 7/16 $425,000 n 5/09B 9,750,000 Water Refunding 7/25 6,870,000 6/12C 4,950,000 Water Refunding 7/22 3,565,000 6/16D 4,025,000* Water Refunding 7/24 4,025,000* Total $14,885,000* 1) The 2017 through 2024 maturities in the amount of $4,085,000 will be current refunded by Series 2016D Notes on July 1, 2016. * Preliminary; subject to change. 17 Annual Fiscal Year Water System Revenue Debt Service Payments (Includes the Series 2016D Notes) * Preliminary; subject to change. In Current Outstanding Series 2016D Notes Total Outstanding Principal & Principal & Principal & Fiscal Year Principal Interest Principal* Interest* Principal* Interest* 2016-17 $1,465,000 $1,903,084 $40,363 $1,465,000 $1,943,447 2017-18 1,075,000 1,390,078 $475,000 546,477 1,550,000 1,936,555 2018-19 1,105,000 1,388,790 480,000 545,173 1,585,000 1,933,963 2019-20 1,145,000 1,395,078 485,000 543,126 1,630,000 1,938,204 2020-21 1,185,000 1,397,946 495,000 545,037 1,680,000 1,942,983 2021-22 1,225,000 1,397,678 505,000 545,958 1,730,000 1,943,636 2022-23 1,265,000 1,394,758 515,000 545,804 1,780,000 1,940,562 2023-24 760,000 850,675 530,000 549,380 1,290,000 1,400,055 2024-25 800,000 855,575 540,000 546,669 1,340,000 1,402,244 2025-26 835,000 853,788 835,000 853,788 Total $10,860,000 $4,025,000* $14,885,000* * Preliminary; subject to change. In HISTORICAL WATER SYSTEM CASHFLOW AND ANTICIPATED DEBT COVERAGE The following table represents the financial performance of the Water System for Fiscal Year 2010-11 through Fiscal Year 2014-15 using information from the City's Comprehensive Annual Financial Reports ("CAFR"). Based on the Fiscal Year 2014-15 CAFR, the $3,083,000 net revenue for debt service would provide 1.59 times coverage of the estimated $1,943,447 maximum annual debt service. In addition, the table below provides a pro forma of the Water System's anticipated operating revenues and expenditures for Fiscal Year 2015-16. The projected financial performance cannot be guaranteed. Operating Revenues Charges for Services Miscellaneous Revenues Total Operating Revenues Operating Expenses Personal Services Conmiodities Services & Charges Depreciation Total Operating Expense Operating Income Depreciation Interest Income Net Revenue for Debt Service Audited Financial Statements FY2010-11 FY2011-12 FY2012-13 FY2013-14 FY2014-15 t FY2015-16 $8,054,000 42.000 $8,096,000 $2,407,000 929,000 2,128,000 2.230.000 $7,694,000 $402,000 2,230,000 256.000 $2,888,000 $8,419,000 226.000 $8,445,000 $2,554,000 967,000 2,132,000 1275, 000 $7,928,000 $517,000 2,275,000 204, $2,996,000 $8,583,000 $8,443,000 $8,527,000 174.000 16 000 13.000 $8,757,000 $8,459,000 $8,540,000 $2,633,000 1,609,000 2,106,000 2.169.000 $8,517,000 $240,000 2,169,000 143.000 $2,552,000 $2,692,000 1,199,000 1,927,000 2.181,000 $7,999,000 $460,000 2,181,000 154.000 $2,795,000 $2,495,000 1,121,000 2,016,000 2.250.000 1 $7,882,000 I $658,000 j 2,250,000 j 175 $3,083,000 $9,265,018 ly $9,282,296 $2,931,656 1,317,189 2,368,825 2.250.000 $8,867,671 $414,625 2,250,000 130.169 $2,794,794 Water Debt Service Series 2002 $609,534 $616,596 $512,478 $0 $0 $0 Series 2008D Ref. Notes 609,500 603,775 602,363 605,094 601,925 602,838 Series 2009 Ref. Notes 792,938 841,038 842,438 847,938 847,538 846,338 Series 2012 Ref. Notes 0 0 45,251 531,915 540,053 538,040 Series 2016D Ref. Notes 0 0 0 0 0 0 Total Water Revenue Debt $2,011,971 $2,061,409 $2,002,529 $1,984,946 $1,989,515 I $1,987,215 Subordinated Debt Series 2002B CO. Bonds $362,287 $370,514 $0 $0 $01 $0 Series 20066140.0. Bonds 382,723 371.590 360.458 344.32513 4.503 1 306.8W Total Subordinated Debt $745,009 $742,104 $360,458 $344,325 $314,5031 $306,800 Total Water Debt Service $2,756,980 $2,803,513 $2,362,986 $2,329,271 $2,304,018 j $2,294,015 Debt Service Coverage 1 Net Revenues / Revenue Debt 1.44 1.45 1.27 1.41 1.55 j 1.41 Net Revenues / AO Debt 1.05 1.07 1.08 1.20 1.34 ; 1.22 19 APPENDIX A GENERAL INFORMATION ABOUT THE CITY OF IOWA CITY, IOWA This section is included for informational purposes only. THE $10,215,000* SEWER REVENUE REFUNDING CAPITAL LOAN NOTES, SERIES 2016C AND THE $4,025,000* WATER REVENUE REFUNDING CAPITAL LOAN NOTES, SERIES 2016D, (THE "NOTES') ARE NOT GENERAL OBLIGATIONS OF THE CITY OF IOWA CITY, , IOWA but are payable solely and only from net revenues of the Municipal Sewer System and the Municipal Water System. The Notes are not a debt of nor a charge against the City of Iowa City, Iowa (the "City') within the meaning of any constitutional or statutory limitation or provision and are not payable in any manner by taxation, and the City shall not be liable by reason of the failure of the net revenues to be sufficient for the payment of the Notes. * Preliminary; subject to change. CITY PROPERTY VALUES IOWA PROPERTY VALUATIONS In compliance with Section 441.21 of the Code of Iowa, the State Director of Revenue annually directs the county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The Johnson County Auditors adjusted the final Actual Values for 2014. The reduced values, determined after the application of rollback percentages, are the taxable values subject to tax levy. For assessment year 2014, the taxable value rollback rate was 55.7335% of actual value for residential property; 44.7021% of actual value for agricultural property; and 90% of actual value for commercial, industrial, and railroad property. No adjustment was ordered for utility property because its assessed value did not increase enough to qualify for reduction. Utility property is limited to an 8% annual growth. The Legislature's intent has been to limit the growth of statewide taxable valuations for the specific classes of property to 3% annually. Political subdivisions whose taxable values are thus reduced or are unusually low in growth are allowed to appeal the valuations to the State Appeal Board, in order to continue to fund present services. PROPERTY VALUATIONS (1/1/2014 Valuation Taxes payable July 1, 2015 to June 30, 2016) Taxable Value 100% Actual Value (With Rollback) Residential $3,603,743,609 $2,008,493,138 Commercial 1,129,397,979 1,016,458,199 Industrial 74,399,739 66,959,765 Railroads 4,015,580 3,614,022 Utilities w/o Gas & Electric 8,239,789 8,239,789 Gross valuation $4,819,796,696 $3,103,764,913 Less military exemption (2,828,002) (2,828,002) Net valuation $4,816,968,694 $3,100,936,911 TIF increment (used to compute debt service levies and constitutional debt limit) $42,307,287 $33,331,128 Taxed separately Ag. Land & Buildings $3,553,520 $1,588,496 Gas & Electric Utilities $87,728,294 $46,785,426 2014 GROSS TAXABLE VALUATION BY CLASS OF PROPERTY'S Taxable Valuation Percent Total Residential $2,008,493,138 63.75% Commercial, Industrial and Utility 1,091,657,753 34.65% Gas & Electric Utilities 46,785,426 1.48% Railroads 3,614,022 0.12% Total Gross Taxable Valuation $3,150,550,339 100.00% 1) Excludes Taxable TIF Increment and Ag. Land & Buildings. A-1 TREND OF VALUATIONS Assessment Payable Utility Taxable Valuation Taxable TIF Year Fiscal Year 100% Actual Valuation (With Rollback) Increment 2011 2012-13 4,615,527,744 2,946,951,863 11,712,327 2012 2013-14 4,668,318,992 3,020,306,824 14,113,908 2013 2014-15 4,826,647,177 3,114,066,554 21,131,574 2014 2015-16 4,950,557,795 3,147,722,337 33,331,128 2015 `1 2016-17 5,350,243,693 3,347,028,340 72,650,838 1) The City's 1/1/2015 valuations are now available from the State of Iowa and become effective July 1, 2016. The 100% Actual Valuations, before rollback and after the reduction of military exemption, include Ag. Land & Buildings, Taxable TIF Increment and Gas & Electric Utilities. The Taxable Valuations, with the rollback and after the reduction of military exemption, include Gas & Electric Utilities and exclude Ag. Land & Buildings and Taxable TIF Increment. Iowa cities certify operating levies against Taxable Valuation excluding Taxable TIF Increment and debt service levies are certified against Taxable Valuation including the Taxable TIF Increment. With the exception of the electric and natural gas providers (which is subject to an excise tax in accordance with Iowa Code chapter 437A), the City's mill levy is uniformly applicable to all of the properties included in the table, and thus taxes expected to be received by the City from such taxpayers will be in proportion to the assessed valuations of the properties LARGER TAXPAYERS Set forth in the following table are the persons or entities which represent larger taxpayers within the boundaries of the City, as provided by the Johnson County Auditor's Office. No independent investigation has been made of and no representation is made herein as to the financial condition of any of the taxpayers listed below or that such taxpayers will continue to maintain their status as major taxpayers in the City. With the exception of the electric and natural gas provider noted below (which is subject to an excise tax in accordance with Iowa Code chapter 437A), the City's mill levy is uniformly applicable to all of the properties included in the table, and thus taxes expected to be received by the City from such taxpayers will be in proportion to the assessed valuations of the properties. The total tax bill for each of the properties is dependent upon the mill levies of the other taxing entities which overlap the properties. Taxnaver'l Mid American Energy Co. American College Testing, Inc. ("ACT") Ann S. Gerdin Revocable Trust Dealer Properties IC LLC Procter & Gamble Hair Care LLC Alpla, Inc. CCAL 100 Hawk Ridge Drive LLC National Computer Systems Inc. Wal-Mart Real Estate Business Trust Kobrin Development Company Inc. Type of Property/Business 1/1/2014 Taxable Valuations Utility $44,301,833 Commercial 44,150,558 Commercial 21,232,925 Commercial 18, 675,864 Industrial 15,418,708 Industrial 14,615,928 Residential 13,171,260 Commercial 12,428,352 Commercial 12,078,378 Commercial & Residential 11,711,744 1) This list represents some of the top taxpayers in the City, not necessarily the top 10 taxpayers. Source: Johnson County Auditor's Office A-2 PROPERTY TAX LEGISLATION During the 2013 legislative session, the Iowa General Assembly enacted Senate File 295 (the "Act"), which the Governor signed into law on June 12, 2013. Among other things, the Act (i) reduced the maximum annual taxable value growth percent, due to revaluation of existing residential and agricultural property, from the 4% 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 95% for the 2013 assessment year and 90% for the 2014 assessment year and all years thereafter, (iii) created a new property tax classification for multi -residential properties (mobile home parks, manufactured home communities, land -lease communities, assisted living facilities and property primarily used or intended for human habitation containing three or more separate dwelling units) ("Multi -residential Property") that began in the 2015 assessment year, and assigned a declining rollback percentage of 3.75% to such properties for each subsequent year until the 2021 assessment year (the rollback percentage for Multi -residential Properties is equal to the residential rollback percentage in the 2022 assessment year and thereafter) and (iv) exempted a specified portion of the assessed value of telecommunication properties. The Act included a standing appropriation to replace some of the tax revenues lost by local governments, including tax increment districts, resulting from the new rollback for commercial and industrial property. Prior to Fiscal Year 2017- 18, the appropriation is a standing unlimited appropriation, but beginning in Fiscal Year 2017-18 the standing appropriation cannot exceed the actual Fiscal Year 2016-17 appropriation amount. The appropriation does not replace losses to local governments resulting from the Act's provisions that reduce the annual revaluation growth limit for residential and agricultural properties from 4% to 3%, the gradual transition for Multi -residential Property from the commercial rollback percentage (100% of Actual Value) to the residential rollback percentage (currently 55.7335% of Actual Valuation), or the reduction in the percentage of telecommunications property that is subject to taxation. Given the wide scope of the statutory changes, and the State of Iowa's discretion in establishing the annual replacement amount that is appropriated each year commencing in Fiscal Year 2017-18, the impact of the Act on the City's future property tax collections is uncertain and the City is unable to estimate the financial impact of the Act's provisions on the City's future operations. In Moody's Investor Service US Public Finance Weekly Credit Outlook, dated May 30, 2013, Moody's Investor Service ("Moody's") projected that local governments in the State of Iowa are likely to experience modest reductions in property tax revenues starting in Fiscal Year 2014-15 as a result of the Act, with sizeable reductions possible starting in Fiscal Year 2017-18. According to Moody's, local governments that may experience disproportionately higher revenue losses include regions that have a substantial commercial base, a large share of Multi -residential Property (such as college towns), or significant amounts of telecommunications property. Notwithstanding any decrease in property tax revenues that may result from the Act, Iowa Code section 76.2 provides that when an Iowa political subdivision issues general obligation bonds, "the governing authority of these political subdivisions before issuing bonds shall, by resolution, provide for the assessment of an annual levy upon all the taxable property in the political subdivision sufficient to pay the interest and principal of the bonds within a period named not exceeding twenty years. A certified copy of this resolution shall be filed with the county auditor or the auditors of the counties in which the political subdivision is located; and the filing shall make it a duty of the auditors to enter annually this levy for collection from the taxable property within the boundaries of the political subdivision until funds are realized to pay the bonds in full." From time to time, other legislative proposals may be considered by the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described in this Preliminary Official Statement. It cannot be predicted whether or in what forms any of such proposals may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for the levy of taxes by the City. A-3 CITY INDEBTEDNESS DEBT LIMIT Article XI, Section 3 of the State of Iowa Constitution limits the amount of debt outstanding at any time of any county, municipality or other political subdivision to no more than 5% of the actual value of all taxable property within the corporate limits, as taken from the last state and county tax list. The debt limit for the City, based on its 2015 valuation currently applicable to the Fiscal Year 2015-16 is as follows: 2014 Actual Valuation of Property $4,950,557,795 Legal Debt Limit of 5% 0.05 Legal Debt Limit $247,527,890 Less: TIF Revenue Debt Subject to Debt Limit (2,525,000) Less: Total G.O. Debt Subject to Debt Limit (55,360,000) Less: Lines of Credit (412,000) Less: TIF Rebate Agreements (13,506,152) Net Debt Limit $175,724,738 1) Actual Valuation of Property as reported on the Fiscal Year 2015-16 county tax roll. DIRECT DEBT General Obligation Debt Supported by Property Taxes and Tax Increment 1) The General Obligation Bonds, Series 2016A and Taxable General Obligation Bonds, Series 2016B are being sold in conjunction with the Notes. * Preliminary; subject to change. A-4 Principal Date Original Final Outstanding of Issue Amount Puroose Maturi As of 6/16/16 10/08B $17,005,000 Refunding 6/18 $3,055,000 6/09C 6,685,000 City Improvements 6/19 2,210,000 8/10B 7,420,000 City Improvements 6/20 3,115,000 6/11A 7,925,000 City Improvements 6/21 3,940,000 6/11C 10,930,000 Refunding 6/21 6,235,000 6/12A 9,070,000 City Improvements 6/22 5,680,000 7/13A 7,230,000 City Improvements 6/23 5,750,000 6/14 11,390,000 City Improvements 6/24 8,575,000 6/15 7,785,000 City Improvements 6/25 7,090,000 6/16A 8,795,000* City Improvements 6/26 8,795,000')* 6/16B 620,000* City Improvements 6/17 620,000'1* Subtotal $55,065,000 1) The General Obligation Bonds, Series 2016A and Taxable General Obligation Bonds, Series 2016B are being sold in conjunction with the Notes. * Preliminary; subject to change. A-4 General Obligation Debt Supported by Enterprise Funds OTHER DEBT The City has revenue debt payable solely from the net revenues of the City's Urban Renewal Areas as follows Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 6/14 $590,000 Refunding 6/17 $295,000 Total General Obligation Debt Subject to Debt Limit: $55,360,000 OTHER DEBT The City has revenue debt payable solely from the net revenues of the City's Urban Renewal Areas as follows 1) The City has defeased $6,045,000 of the Series 2009F Bonds maturing 2016 through 2024. Funds are being held in escrow until the July 1, 2017 call date. 2) The City has entered into a Lease Purchase Agreement in connection with the construction of a parking garage anticipated to be completed in August 2017. The commencement date of the Lease Purchase Agreement is anticipated in August 2017. INDIRECT GENERAL OBLIGATION DEBT Taxing District Johnson County Iowa City CSD Clear Creek-Amana CSD Kirkwood Comm. College 1/1/2015 Taxable Valuation $8,042,302,645 5,978,490,538 129,160,108 24,144,197,855 City's Share of Total Overlapping Debt Percent In City 42.54% rl 57.23%') 0.04% 14.17% s> G.O. Debt') $8,490,000 14,150,000 55,520,000 125,321,492 City's Proportionate Share $3,611,646 8,098,045 22,208 17.758,055 $29,489,954 1) Taxable Valuation excludes military exemption and includes Ag. Land & Buildings, Taxable TIF Increment and all Utilities. 2) Includes general obligation bonds, PPEL notes, certificates of participation and new jobs training certificates. 3) Includes city -exempt Ag TIF Increment valuation in the amount of $15,839. Evi Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 11/12D $2,655,000 Developer Grant 6/32 $2,525,000 The City has revenue debt payable solely from the net revenues of the Municipal Parking System as follows: Principal Date Original Final Outstanding of Issue Amount Purpose Maturity As of 6/16/16 11/09F $9,110,000 Parking 7/17 $01) 8/17 $15,300,000 Parking 6/37 15,300,000'1 Total $15,300,000 1) The City has defeased $6,045,000 of the Series 2009F Bonds maturing 2016 through 2024. Funds are being held in escrow until the July 1, 2017 call date. 2) The City has entered into a Lease Purchase Agreement in connection with the construction of a parking garage anticipated to be completed in August 2017. The commencement date of the Lease Purchase Agreement is anticipated in August 2017. INDIRECT GENERAL OBLIGATION DEBT Taxing District Johnson County Iowa City CSD Clear Creek-Amana CSD Kirkwood Comm. College 1/1/2015 Taxable Valuation $8,042,302,645 5,978,490,538 129,160,108 24,144,197,855 City's Share of Total Overlapping Debt Percent In City 42.54% rl 57.23%') 0.04% 14.17% s> G.O. Debt') $8,490,000 14,150,000 55,520,000 125,321,492 City's Proportionate Share $3,611,646 8,098,045 22,208 17.758,055 $29,489,954 1) Taxable Valuation excludes military exemption and includes Ag. Land & Buildings, Taxable TIF Increment and all Utilities. 2) Includes general obligation bonds, PPEL notes, certificates of participation and new jobs training certificates. 3) Includes city -exempt Ag TIF Increment valuation in the amount of $15,839. Evi DEBT RATIOS 1) Based on the City's 1/1/2015 100% Actual Valuation; includes Ag Land, Ag Buildings, all Utilities and TIF Increment. 2) Population based on the City's 2010 Census. 3) G.O. debt abated by Water Revenues. * Preliminary; subject to change. LEVIES AND TAX COLLECTIONS Fiscal Year Lcvv 2011-12 $49,589,988 Debt/Actual 50,407,375 2013-14 50,307,189 Market Value Debt/67,862 2015-16 G.O. Debt ($5,350,243,693) 0 Population xt Total General Obligation Debt $55,360,000 * 1.03% * $815.77 * Less G.O. Debt Service Paid by Enterprise Funds 3) (295,000) Iowa City CSD 14.59055 Net G.O. Debt Paid by Taxes and Tax Increment $55,065,000 * 1.03% * $811.42 * TIF Revenue Debt $2,525,000 0.05% $37.21 City's share of total overlapping debt $29,489,954 0.55% $434.56 1) Based on the City's 1/1/2015 100% Actual Valuation; includes Ag Land, Ag Buildings, all Utilities and TIF Increment. 2) Population based on the City's 2010 Census. 3) G.O. debt abated by Water Revenues. * Preliminary; subject to change. LEVIES AND TAX COLLECTIONS Fiscal Year Lcvv 2011-12 $49,589,988 2012-13 50,407,375 2013-14 50,307,189 2014-15 51,608,730 2015-16 52,033,986 Collected During Collection Year Percent Collected $49,543,860 99.9% 50,419,618 100.8% 49,835,540 99.1% 51,295,491 99.4% -------In Process of Collection ------- Collections include delinquent taxes from all prior years. Taxes in Iowa are delinquent each October 1 and April 1 and a late payment penalty of 1% per month of delinquency is enforced as of those dates. If delinquent taxes are not paid, the property may be offered at the regular tax sale on the third Monday of June following the delinquency date. Purchasers at the tax sale must pay an amount equal to the taxes, special assessments, interest and penalties due on the property and funds so received are applied to taxes. A property owner may redeem from the regular tax sale but, failing redemption within three years, the tax sale purchaser is entitled to a deed, which in general conveys the title free and clear of all liens except future tax installments. TAX RATES FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 A-6 $/$1.000 $/$1,000 $/$1,000 $/$1,000 $/$1,000 Johnson County 6.98984 6.74909 6.73712 6.74168 6.90337 City of Iowa City 17.84150 17.26864 16.80522 16.70520 16.65096 Iowa City CSD 14.59055 14.07327 13.68792 13.69999 13.86773 Clear Creek-Amana CSD (Clear Creek) 15.54876 15.31063 15.31055 15.06516 15.62084 Kirkwood Comm. College 0.99870 1.07888 1.06473 1.05754 1.06125 City Assessor 0.24632 0.24453 0.25873 0.23866 0.24325 County Ag. Extension 0.08358 0.08146 0.08160 0.08119 0.08129 State of Iowa 0.00320 0.00320 0.00330 0.00330 0.00330 Total Tax Rate - City Resident: Iowa City CSD 40.75369 39.49917 38.63862 38.52756 38.81115 Clear Creek -Aman CSD (Clear Creek) 41.71190 40.73653 40.26125 39.89273 40.56426 A-6 FMMWAP161VW A city's general fund tax levy is limited to $8.10 per $1,000 of taxable value, with provision for an additional $0.27 per $1,000 levy for an emergency fund which can be used for general fund purposes (Code of Iowa, Chapter 384, Division I). Cities may exceed the $8.10 limitation upon authorization by a special levy election. Further, there are limited special purpose levies which may be certified outside of the above described levy limits (Code of Iowa, Section 384.12). The amount of the City general fund levy subject to the $8.10 limitation is $8.10 for Fiscal Year 2015-16. The City does levy costs for operation and maintenance of publicly owned Transit, tort liability and other insurance, support of the public library, police and fire retirement, FICA and IPERS and other employee benefits expenses in addition to the $8.10 general fund limit as authorized by law. In addition, the City has not established an emergency fund levy for Fiscal Year 2015-16. Debt service levies are not limited. CITY FUNDS ON HAND (Cash and Investments as of February 29, 2016) City Operating Funds $136,030,184 City Restricted Funds 56,637,371 Total $192,667,555 A-7 THE CITY AIWLKI]r/ DRIOuJMiNA The City is governed by a seven member Council; each member serves a four-year term. Elections are held every two years allowing for continuation in office of at least three members in each biennial election. The Council members are elected at large, but three members are nominated from specific districts and the other four are nominated at large. The Mayor is elected by the Council from its own members. EMPLOYEES AND PENSIONS The City participates in two statewide employee retirement systems, the Iowa Public Employees Retirement System ("IPERS") and the Municipal Fire and Police Retirement System of Iowa ("MFPRSI"). The State of Iowa administers IPERS and a nine -member board of trustees governs the MFPRSI. Though separate and apart from state government, the MFPRSI board is authorized by state legislature, which also establishes by statute the pension and disability benefits and the system's funding mechanism. All full-time employees must participate in either IPERS or MFPRSI. The City has 540 full -rime, 60 permanent part-time and 377 temporary employees, including a police force of 82 sworn personnel and a fire department of 64 fire fighters. Of the City's 977 employees, 622 are enrolled in IPERS pension plan administered by the State of Iowa. The City's contributions to IPERS for the years ended June 30, 2013, 2014 and 2015 as shown below equal the required contributions for each year. FY 2012-13 FY 2013-14 FY 2014-15 IPERS City Contribution $2,423,438 $2,552,602 $2,544,577 The IPERS Comprehensive Annual Financial Report ("CAFR") is available on the IPERS website, https://www.iners.org/financial-and-investment, or by contacting IPERS at 7401 Register Drive P.O. Box 9117, Des Moines, IA 50321. Pursuant to Governmental Accounting Standards Board ("GASB") Statement No. 68, the City reported a liability of $17,366,321 within its CAFR at June 30, 2015 for its proportionate share of the net pension liability. The net pension liability is the amount by which the total actuarial liability exceeds the pension plan's net assets or fiduciary net position (essentially the market value) available for paying benefits. The net pension liability was measured as of June 30, 2014, 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, 2014, the City's proportion was 0.4378904% which was an increase of 0.008867% from its proportion measured as of June 30, 2013. For additional information, refer to Note 6 on page 69 of the City's June 30, 2015 CAFR contained as APPENDIX C of this Preliminary Official Statement. In addition to IPERS, the City is a participating employer in the MFPRSI and is current in its contributions. Of the City's 977 employees, 145 are enrolled in the MFPRSI. The City's contributions to MFPRSI for the years ended June 30, 2013, 2014 and 2015 as shown below equal the required contributions for each year. FY 2012-13 FY 2013-14 FY 2014-15 MFPRSI City Contribution $2,428,631 $2,920,967 $2,954,676 The MFPRSI Independent Auditors Report is available on the MFPRSI website, http://www.mfprsi.ore/about- mfprsi/mblications/, or by contacting MFPRSI at 7155 Lake Drive, Suite 201, West Des Moines, IA 50266. Pursuant to GASB Statement No. 68, the City reported a liability of $13,695,681 with its CAFR a June 30, 2015for its proportionate share of the net pension liability. The net pension liability is the amount by which the total actuarial on liability exceeds the pension plan's net assets or fiduciary net position (essentially the market value) available for paying benefits. The net pension liability was measured as of June 30, 2014, 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, 2014, the City's collective proportion was 3.778137% which was an increase of 0.130838% from its proportion measured as of June 30, 2013. 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 IPERS and MFPRSI discussed above or included on the IPERS and MFPRSI websites, including, but not limited to, updates of such information on the State Auditor's website or links to other Internet sites accessed through the IPERS and MFPRSI websites. For additional information, refer to Note 6 on page 65 of the City's June 30, 2015 CAFR contained as APPENDIX C of this Preliminary Official Statement. OTHER POST -EMPLOYMENT BENEFITS (OPEB) In addition to providing pension benefits, the City offers certain health care insurance benefits to its retirees. All full- time employees who retire or terminate/resign are offered the following post -employment benefit options: Health insurance and dental insurance: The option of continuing with the City's health insurance plan at the individual's expense. Life insurance: The option of converting the employee's City -paid policy to an individual policy at the individual's expense with the City's life insurance carrier. Long-term disability: For employees who terminate/resign and have been on the plan for a minimum of one year, the option of converting the employee's City -paid group policy to a personal policy at the individual's expense with the City's long-term disability insurance carrier. The above options, while at the individual's own expense, are included within the City's overall insurance package. Therefore, a portion of the above coverage is being subsidized by the City and its current employees. The City currently finances the benefit plan on a pay-as-you-go basis. Funding Policy: The plan member's contribution requirements are established and may be amended by the City. The City currently finances the benefit plans on a pay-as-you-go basis. Annual OPEB Cost and Net OPEB Obligation: The City's annual OPEB cost is calculated based on the annual required contribution ("ARC") of the City, an amount actuarially determined in accordance with GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The following table shows the components of the City's annual OPEB cost for the year ended June 30, 2015, the amount actually contributed to the plans, and changes in the City's net OPEB obligation: Annual required contribution $571,531 Interest on net OPEB obligation 126,506 Adjustment to annual required contribution (124,699) Annual OPEB costs 573,338 Contributions made (218,146) Increase in net OPEB obligation 355,192 Net OPEB obligation beginning of year 3,614,449 Net OPEB obligation end of year 69 6 For calculation of the net OPEB obligation, the actuary has set the transition day as July 1, 2008. The end of year net OPEB obligation was calculated by the actuary as the cumulative difference between the actuarially determined funding requirements and the actual contributions for the year ended June 30, 2015. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plans and the net OPEB obligation as of June 30, 2015 are summarized as follows: Year Annual Percentage of Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed from Ci [v Obligation June 30, 2013 $648,466 4.6% $3,305,626 June 30, 2014 649,497 52.5% 3,614,449 June 30, 2015 573,338 38.0% 3,969,641 Funded Status and Funding Progress: As of July 1, 2014, the most recent actuarial valuation date for the period July 1, 2014 through June 30, 2015, the actuarial accrued liability was $5,150,697, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability ("UAAL") of $5,150,697. The covered payroll (annual payroll of active employees covered by the plans) was $35,972,442 and the ratio of the UAAL to covered payroll was 14.3%. As of June 30, 2015 there were no trust fund assets. UNION CONTRACTS The City currently maintains labor agreements with the American Federation of State, County, and Municipal Employees ("AFSCME") and with Police ("PLRO") and Fire ("IAFF") bargaining units. Contracts have been negotiated as follows below. Wage Increases FY2017 FY2018 FY2019 Contract Expiration AFSCME 2.40% 2.40% N/A') June 30, 2020 PLRO 2.40% 2.40% 2.60% June 30, 2019 IAFF 0.00%2) 2.40% 2.60% June 30, 2019 1) Contract re -opens in FY 2018-19 and FY 2019-20 for wages and insurance. 2) One new step was added to the end of the pay plan. A-10 INSURANCE The City's insurance coverage is as follows Tyne of Insurance Limit General Liability $20,000,000 Automobile Liability $20,000,000 Wrongful Acts — Public Officials $20,000,000 Law Enforcement Liability $20,000,000 Boiler & Machinery Blanket $25,000,000 Extra Expense and Loss of use $500,000 Property Blanket $332,264,467 Workers Compensation Statutory Employers Liability Each Person Accident $2,000,000 Policy Limit Disease $2,000,000 Each Person Disease $2,000,000 Airport Commission General Liability Each Occurrence $5,000,000 Hangar Keepers Legal Liability Each Aircraft $1,000,000 Each Loss $1,000,000 A-11 GENERAL INFORMATION LOCATION AND TRANSPORTATION The City, with a 2010 Census population of 67,862, serves as the County seat for Johnson County. The City lies at the intersection of Highways 80 and 380. The City is approximately 115 miles east of the City of Des Moines, 20 miles south of the City of Cedar Rapids and 55 miles west of the City of Davenport. The Cedar Rapids Airport, located 20 miles from downtown Iowa City is served by a number of national and regional air carriers. Rail service is provided by the mainline of the Iowa Interstate Railway. LARGER EMPLOYERS A representative list of larger employers in the City is as follows: EmPloyer University of Iowa University of Iowa Hospitals Iowa City Comm. School District Veteran's Affairs Medical Center Mercy Hospital Pearson Educational Measurement Hy -Vee') ACT, Inc. City of Iowa City Systems Unlimited International Automotive Components Procter & Gamble Oral B Laboratories Johnson County Administration Alpla of Iowa United Natural Foods Type of Business Number of Employees 11 Education 18,650 Healthcare 8,704 Education 2,346 Health Services 1,562 Health Services 1,559 Educational Testing Services 1,200 a> Grocery 1,166 Education Programs 1,089 Government 977 Assisted Living 890 Auto Interior Components 785 Health & Beauty Products 588 Toothbrush Manufacturing 462 Government 435 Plastic Bottle Manufacturer 360 Organic Food Distribution 342 1) Includes full and part-time as well as seasonal employees. 2) Includes locations in Iowa City and Coralville. 3) News reports state Pearson Educational Measurement plans to cut 57 jobs within the City next month. Source: The City as of March 2016. A-12 BUILDING PERMITS City officials report the following construction activity as of February 29, 2016. Building permits are reported on a calendar year basis. New Construction: No. of new permits: Valuation: Remodeling Repair and Additions: No. of new permits: Valuation: Total Permits Total Valuations 2012 2013 2014 2015 225 248 250 $95,292,497 $151,138,166 $124,416,182 491 467 453 $73,944,194 $33,738,686 $28,163,030 716 715 $169,236,691 $184,876,852 Source: The City as of February 29, 2016. U.S. CENSUS DATA Population Trend 1980 U.S. Census 1990 U.S. Census 2000 U.S. Census 2002 Special City Census 2010 U.S. Census Source: U.S. Census Bureau website. UNEMPLOYMENT RATES 184 $106,350,572 2016 21 $42,194,158 461 69 $31,960,941 $16,101,290 703 645 90 $152,579,212 $138,311,513 $58,295,448 50,508 59,738 62,220 62,380 67,862 Source: Iowa Workforce Development website. EDUCATION Public education to the City is provided by the Iowa City Community School District, with certified enrollment of 13,671.2 for Fiscal Year 2016-17. There are approximately 2,346 full and part time employees of the district. The district owns and operates several pre-school sites, twenty elementary schools, three middle schools, two senior high schools, and one alternative school for ninth through twelfth graders. Education is also provided through the Clear Creek — Amana Community School District, with certified enrollment of 1,895.1 for Fiscal Year 2015-16. Four year college programs and vocational training are available throughout the area including University of Iowa and Kirkwood Community College. Source: Iowa Department of Education website. A-13 Johnson State of Iowa City County Iowa Annual Averages: 2012 3.5% 3.7% 5.1% 2013 3.3% 3.4% 4.7% 2014 3.0% 3.0% 4.2% 2015 2.5% 2.6% 3.7% 2016 (Jan -Feb) 2.7% 3.0% 4.5% Source: Iowa Workforce Development website. EDUCATION Public education to the City is provided by the Iowa City Community School District, with certified enrollment of 13,671.2 for Fiscal Year 2016-17. There are approximately 2,346 full and part time employees of the district. The district owns and operates several pre-school sites, twenty elementary schools, three middle schools, two senior high schools, and one alternative school for ninth through twelfth graders. Education is also provided through the Clear Creek — Amana Community School District, with certified enrollment of 1,895.1 for Fiscal Year 2015-16. Four year college programs and vocational training are available throughout the area including University of Iowa and Kirkwood Community College. Source: Iowa Department of Education website. A-13 EFFECTIVE BUYING INCOME Effective Buying Income and Retail Sales as reported for 2015 are as follows Total Median Total Retail EBI Household EBI Sales Iowa City $1,516,477,500 $36,577 $1,593,605,683 Johnson County 3,532,367,500 46,354 3,070,358,841 State of Iowa 70,849,182,500 45,457 54,757,355,015 Source: Claritas, Inc. FINANCIAL SERVICES Retail Sales Per Household $53,960 53,046 43,682 Commercial banking services are provided to residents of the City by Farmers & Merchants Savings Bank and MidWestOne Bank and branch offices of American Bank and Trust Company, N.A., Bank of the West, Corridor State Bank, First American Bank, Hills Bank and Trust Company, Liberty Bank, FSB, U.S. Bank, N.A., Wells Fargo Bank, N.A. and West Bank. Farmers & Merchants Savings Bank and MidWestOne Bank report the following annual deposits as of June 30 of each year: Year 2011 2012 2013 2014 2015 Source: FDIC official website. FINANCIAL STATEMENTS Farmers & Merchants Savings Bank 115,525,000 114,443,000 105,684,000 109,633,000 96,829,000 MidWestOne Bank 1,626,034,000 1,690,759,000 1,730,010,000 1,719,699,000 1,682,024,000 The City's June 30, 2015 COMPRENSIVE ANNUAL FINANCIAL REPORT is reproduced as APPENDIX C. The City's certified public accountant has not consented to distribution of the audited financial statements and has not undertaken added review of their presentation. Further information regarding financial performance and copies of the City's prior Comprehensive Annual Financial Reports may be obtained from the City's Municipal Advisor, Public Financial Management, Inc. EB EA! APPENDIX B FORMS OF LEGAL OKNIONS APPENDIX C JUNE 30, 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT APPENDIX D FORMS OF CONTINUING DISCLOSURE CERTIFICATES OFFICIAL BID FORM TO: City Council of City of Iowa City, Iowa Sale Date: May 17, 2016 10:00 o'clock A.M. Central Time RE: $10,215,000* Sewer Revenue Refunding Capital Loan Notes, Series 2016C (the "Series 2016C Notes") For all or none of the above Series 2016C Notes, in accordance with the TERMS OF OFFERING, we will pay you $ (not less than $10,163,935) plus accrued interest to date of delivery for fully registered Series 2016C Notes bearing interest rates and maturing in the stated years as follows: Coupon Maturity 2017 2018 2019 2020 2021 * Preliminary; subject to change. The aggregate principal amount of the Series 2016C Notes, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $10,500,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the - City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016C Notes is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016C Notes may be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of note principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. We hereby designate that the following Series 2016C Notes to be aggregated into term notes maturing on July 1 of the following years and in the following amounts (leave blank if no term notes are specified): Years Aggregated Maturity Year Aggregate Amount _through _through _ through through In making this offer we accept all of the terms and conditions of the TERMS OF OFFERING published in the Preliminary Official Statement dated April 19, 2016. In the event of failure to deliver these Series 2016C Notes in accordance with the TERMS OF OFFERING as printed in the Preliminary Official Statement and made a part hereof, we reserve the right to withdraw our offer. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: TRUE INTEREST COST: Account Manager: Account Members: (Calculated to the dated date of June 16, 2016) The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Iowa City, Iowa this 17ih day of May 2016. Attest: M Title: Title: OFFICIAL BID FORM TO: City Council of City of Iowa City, Iowa Sale Date: May 17, 2016 10:00 o'clock A.M. Central Time RE: $4,025,000* Water Revenue Refunding Capital Loan Notes, Series 2016D (the "Series 2016D Notes") For all or none of the above Series 2016D Notes, in accordance with the TERMS OF OFFERING, we will pay you $ (not less than $3,996,825) plus accrued interest to date of delivery for fully registered Series 2016D Notes bearing interest rates and maturing in the stated years as follows: Coupon Maturity 2017 2018 2019 2020 Coupon Maturity 2021 2022 2023 2024 * Preliminary; subject to change. The aggregate principal amount of the Series 2016D Notes, and each scheduled maturity thereof, are subject to increase or reduction by the City or its designee after the determination of the successful bidder. The City may increase or decrease each maturity in increments of $5,000 but the total amount to be issued will not exceed $4,415,000. Interest rates specified by the successful bidder for each maturity will not change. Final adjustments shall be in the sole discretion of the City. The dollar amount of the purchase price proposed by the successful bidder will be changed if the aggregate principal amount of the Series 2016D Notes is adjusted as described above. Any change in the principal amount of any maturity of the Series 2016D Notes may be made while maintaining, as closely as possible, the successful bidder's net compensation, calculated as a percentage of note principal. The successful bidder may not withdraw or modify its bid as a result of any post -bid adjustment. Any adjustment shall be conclusive, and shall be binding upon the successful bidder. We hereby designate that the following Series 2016D Notes to beaggregated into term notes maturing on July 1 of the following years and in the following amounts (leave blank if no term notes are specified): Years Ae reg Bated Maturity Year Aeereeate Amount through through through through In making this offer we accept all of the terms and conditions of the TERMS OF OFFERING published in the Preliminary Official Statement dated April 19, 2016. In the event of failure to deliver these Series 2016D Notes in accordance with the TERMS OF OFFERING as printed in the Preliminary Official Statement and made a part hereof, we reserve the right to withdraw our offer. All blank spaces of this offer are intentional and are not to be construed as an omission. Not as a part of our offer, the above quoted prices being controlling, but only as an aid for the verification of the offer, we have made the following computations: NET INTEREST COST: TRUE INTEREST COST: Account Manager: Account Members: (Calculated to the dated date of June 16, 2016) IN The foregoing offer is hereby accepted by and on behalf of the City Council of the City of Iowa City, Iowa this 17`s day of May 2016. Attest: 52 Title: Title: April 28, 2016 1438 Oaklawn Ave Iowa City, IA 52245 TO: Iowa City Parks and Recreation Commission Parks and Recreation Director CC: Iowa City Council RE: Preservation of Woodland Wildflower Area — City Park Dear Parks and Rec, The purpose of this letter is to insure that Commission members and city staff are aware of a very nice hillside in City Park that is densely populated with spring native woodland wildflowers in the hopes that any future work in the park will not disturb this habitat and the wildflowers within it. The hillside is located between upper and lower city park immediately north and northeast of the old log cabins in upper park. The wildflowers flank both sides of the old concrete stairway that connects upper and lower park and include, Bellwort, Trout Lily, Dutchman's -breeches, Spring Beauty and others. I have been visiting this hillside every spring since 1989 and the density of wildflowers has maintained itself well and perhaps increased since that year. I believe that this particular area of the park has the best concentration and diversity of native spring woodland wildflowers anywhere in the park. Perhaps staff and commission members are already aware of this beautiful hillside, but if not please take the time to visit while the flowers are in bloom. I know that with the possible renovation of the old cabins and the rebuilding of lower city park that this area, particularly the old concrete stairway within the wildflower patch may be subject to construction activity that could adversely affect this habitat. I urge staff and commission members to plan ahead to insure maximum preservation of this gem of a hillside. If the old concrete stairway is to be removed or renovated these wildflowers would be subject to disturbance so I urge caution with any work in this area. Sincerely, Robert M. McKay a N 7 M 9b i O 6� Jim Dickerson, PGA Golf 319-351-0596 p.1 05-05-16 IP11 Ir _� rll(Mlp mat CITY OF IOLNA CITY 410 East bvushington Strcct Iowa 01 V. lowu S2240-1826 (3191 356-5000 (317) 356.5009 FAX trrnr.3cgc v. o rg April 27, 2016 TO: The Honorable Mayor and the City Council RE: Civil Service Entrance Examination — Maintenance Worker I — Parks 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 I — Parks. Steven Erickson IOWA CITY CIVIL SERVICE COMMISSION Lyra V1. Dickerson, Chair Joint Meeting Johnson County Board of Supervisors — Iowa City Community School District — City of Iowa City — City of Coralville — City of North Liberty — Other Johnson County Municipalities and School Districts April 25, 2016 Harvat Hall, City Hall, Iowa City Minutes Call to order Iowa City Mayor Jim Throgmorton called the joint meeting of Johnson County entities to order at 4:30 P.M. Elected officials present: City of Coralville — Mayor John Lundell, Jill Dodds, Laurie Goodrich City of Iowa City — Mayor Jim Throgmorton, John Thomas, Pauline Taylor, Rockne Cole, Terry Dickens City of North Liberty — Mayor Amy Nielsen City of Hills — Mayor Tim Kemp Johnson County — Janelle Rettig, Pat Harney, Mike Carberry Iowa City Community School District — President Chris Lynch, Brian Kirschling, Tom Yates, Phil Hemingway City of Tiffin — Mayor Steve Berner City of University Heights —Mayor Wally Heitman Discussion/update items • Rose Oaks and affordable housing update Interim City Manager Geoff Fruin presented an update on the Rose Oaks (formerly known as Lakeside and Dolphin Pointe) situation in southeast Iowa City. He noted that there are 400 units in this complex, with currently 125 of them occupied. There are 50 occupants that have stated their willingness to take the incentive being offered by the owner/management group and are either waiting for a unit to open up or are looking for units elsewhere. The management has stated that anyone with an expiring lease will be allowed to stay on the premises until August 1". Management is also working on allowing 40 to 60 households to stay on the premises during the renovation phase. Sixteen of the buildings will be renovated completely, and four buildings and the clubhouse will be demolished and rebuilt. Fruin noted that site plan approval has not yet been given for this project. Tenants are being given help in finding suitable housing by Shelter House and other organizations in the area, with the City of Iowa City providing some federal dollars to assist residents, along with funds from the Rose Oaks' management group. Fruin also touched on the affordable housing issue, noting that the Iowa City City Council has a June 21 a work session planned to discuss strategy for the coming years on this topic. He invited anyone with ideas to share to contact the City Manager's office. Mayor Throgmorton invited anyone with an interest in this topic to attend the June 21St work session, as well. Joint Meeting April 25, 2016 Page 2 • Crisis Intervention Team (CIT) training and related services Board of Supervisors Vice Chair Janelle Rettig spoke to the CIT training that she and others attended in San Antonio recently. She stated that there was a large meeting of those who have attended the training, where four different subcommittees were put together in order to address the various issues. The Crisis Intervention Training subcommittee is planning to offer local training beginning next year, with the first training scheduled for March of 2017. The goal is to offer three training sessions per year in Johnson County. Rettig also spoke to the County's jail alternative program and how this ties in with the CIT training. She mentioned that a group will be headed to San Antonio next week for CIT training, with other sessions planned for August 15 and November 14"'. Coralville in regards to how many hours of training are required, Rettig noted that for law enforcement to receive their CIT certification they will need 40 hours of training. • Forevergreen Road interchange North Liberty Mayor Amy Nielsen noted that IDOT area engineer Newman Abuissa would be providing an update on this topic. Abuissa said the project involves an interchange of Forevergreen Road and Interstate 380. This will help to alleviate some of the congestion in the area of 965 and Forevergreen Road. Abuissa spoke to the goal of completing this project by 2020 and what other projects need to occur in order to make this happen. The project will consist of a five -lane bridge over Interstate 380, which will also include a pedestrian sidewalk on the north side and a 10 -foot trail on the south side. The interchange project is estimated at approximately $20 million. A public hearing will be held in North Liberty on May 19`h regarding this project. •Attendance Zones and Facilities Master Plan Chris Lynch, ICCSD President, spoke to the District's attendance zones and facilities master plan. Since the January meeting, he noted that they have approved the construction contract on Hoover East and have broken ground there. Contracts were also approved for the renovations at Weber and Lucas Elementary Schools. Lynch noted that they have been collecting community/neighborhood input regarding attendance zone changes. He added that they should be able to provide some type of update at the next joint cities meeting. • Hunger Task Force Report Mike Carberry with the Johnson County Board of Supervisors spoke to the Hunger Task Force report. He noted that they have met several times, with a Task Force of around 60 individuals from the area. They recently released a 25 -page report that is quite extensive, showing that the hunger needs of Johnson County are above the state average. Carberry noted that this is due, in part, to the affordable housing problem in Johnson County. Speaking to food insecurity, Carberry stated that there are approximately 18,600 individuals in Johnson County who are trying to deal with this issue. Some of the solutions noted in the report include farm stands in `food desert' areas; a mobile pantry for both `rural' areas and `food desert' areas, as well as food pantries in secondary schools; expanded outreach on food resources; and additional food storage for local pantries. The report, in its entirety, is available on the web site: www.johnson-countycorn/ss. Board of Supervisor Member Janelle Rettig added that it was Iowa City Councilor Botchway's suggestion initially to form a county -wide task force. Joint Meeting April 25, 2016 Page 3 • Minimum Wage Update Mayor Jim Throgmorton asked if the County could provide an update on this issue. Johnson County Supervisor Mike Carberry stated that May ls` is when there will be a 95 -cent increase, bringing the minimum wage to $9.15/hour. John County Adm. Andy Johnson then shared a handout, stating that it details the makeup of the committee that has been working on this. Johnson County Supervisor Janelle Rettig added that several of these issues are tied together — hunger, affordable housing, and wages. She also noted the problem with Iowa's minimum wage in certain counties being lower than Illinois' and Missouri's minimum wage. • Update of the County land use plan Johnson County Supervisor Pat Harney spoke briefly to the County's land use plan. He stated that they have contracted with East Central Iowa Council of Governments to review the present land use plan and will be developing their comprehensive plan, as well as updatin� the land use plan, based on what this study finds. There will be a town hall -style meeting on June 14 to review the comprehensive plan. • Transportation Renewal ICCSD President Chris Lynch provided an update, stating that they have been looking at eliminating discretionary busing, with the exception of neighborhoods where transportation would be a barrier to attendance. He also spoke to the appeals process and how they have simplified this. The topic of walkability in neighborhoods was also touched on briefly, with Iowa City Mayor Throgmorton noting that Iowa City will be having a few guest speakers to talk about walkability. Johnson County Supervisor Rettig stated that guest speaker Bill Nesper with the League of American Bicyclists will be in the area May 9 and 10 to speak to this issue as well. • Use of Pesticides and Herbicides Iowa City Councilor Rockne Cole spoke to the group regarding the use of pesticides and herbicides. He stated that this is a major public health issue and one that he receives a lot of comments on. He noted that Iowa City has gone `chem free' in all of its City parks and playing fields. Cole asked if the ICCSD would share where they are with their policy. ICCSD Board Member Phil Hemingway stated that they have had a task force working on this issue for about a year now. • Bell Schedule Chris Lynch, President of the ICCSD, stated that they have closed on their bell schedule, with elementary schools starting at 7:55 next year and secondary at 8:50. He reminded everyone that this is a research -based bell schedule, one that was approved in February after a great deal of input. Other Updates Coralville City Councilor Jill Dodds spoke about their `playvolution' initiative that they sponsored last September, noting that research has shown this is a good way for kids to learn and is also a positive thing for adults, as well. For a week they were renamed `Playville,' and events such as a community meal in the park were offered to residents. The event is again planned for September, and Dodds stated that they are hoping to include other communities in Johnson County. She asked for volunteers to join the steering committee to help plan this year's events. Joint Meeting April 25, 2016 Page 4 Janelle Rettig with the JC Board of Supervisors spoke about the Jingle Cross and World Cup event that will be taking place later this year. She noted that this cyclo -cross event will be broadcast live all over Europe. With this important event coming, Johnson County is planning some renovations at the Fairgrounds. Another event, Grand Gable, has moved to Labor Day and will include the Tour of the Cities of Johnson County, a biking event that includes all 11 cities in Johnson County. Rettig continued, noting other Johnson County projects that are being worked on. One is the affordable housing issue, which the County has put together 5600,000 towards. They will be working with the Housing Trust Fund on this. Sustainability is another big issue, with Rettig noting they have two solar arrays out on the west campus. Two more solar arrays will be coming soon, with one at the County Administration building and the other at the Health and Human Services building. There will be a new ambulance, medical examiner building on the site of the old one. Rettig also spoke to the financial assistance for non -profits to become more sustainable with things like LED lighting, solar projects, new windows, and other such changes. Road projects for the County include Ely Road, IWV, and Mahaffey Bridge, as well as several trail projects. There is also a roundabout project planned near Solon. Courthouse renovations will begin soon, with the 1970's third -story courtroom getting torn out and completely rebuilt. The Poor Farm is also seeing several projects, including Grow Johnson County and Table -to -Table, and the addition of restrooms later this year. • Public comment Audience Member Sally Scott spoke briefly to the Rose Oaks' issue, noting that it is important to acknowledge the role of The Center for Worker Justice and the Black Voices Project for advocating on the part of residents. Audience Member Bill Gerhardt noted that there is a film premiere tomorrow night at 7:00 P.M., at the School of Public Health, a documentary entitled "A Days Work," which is about a temp worker who is killed on their first day of work. Audience Member Bob Welsh gave his thanks for what he considers the best he has ever felt about Iowa City and Johnson County, and surrounding communities, for working together on important issues, such as affordable housing. ICCSD Board Member Phil Hemingway spoke briefly, noting that there will be several temporary structures available for use by any of the municipalities in Johnson County. These structures can be moved and placed most anywhere. Schedule next meeting The next joint meeting will be July 18, 2016, and will be hosted by Coralville. Adiourn Mayor Throgmorton adjourned the meeting at 6:05 P.M. 05-05-16 IP13 MINUTES PRELIMINARY HISTORIC PRESERVATION COMMISSION APRIL 14, 2016 EMMA J. HARVAT HALL MEMBERS PRESENT: Esther Baker, Zach Builta, Gosia Clore, Sharon DeGraw, Andrew Litton, Pam Michaud, Ben Sandell, Ginalie Swaim, Frank Wagner MEMBERS ABSENT: Thomas Agran, Cecile Kuenzli STAFF PRESENT: Jessica Bristow, Bob Miklo OTHERS PRESENT: Mitch King, Alicia Trimble, Julie Weeks RECOMMENDATIONS TO COUNCIL: (become effective only after separate Council action) CALL TO ORDER: Chairperson Swaim called the meeting to order at 5:30 p.m. At Swaim's request, each Commission member announced the district he/she represents or if he/she is an at -large member. She welcomed the new Commission members. PUBLIC DISCUSSION OF ANYTHING NOT ON THE AGENDA: There was none. CERTIFICATES OF APPROPRIATENESS: 613 Grant Street. Bristow said this property is in the Longfellow Historic District. She showed a photographs of the bungalow. Bristow showed the original exterior and the wall with a window in it that is perpendicular to the outside wall. Bristow said the proposal is to remove the window from that wall and put it on the outside. Bristow showed where there will also be a door added. She said the owner plans to put a gable -shaped entry -cover over the door, like the one that was approved for a house on Ronalds Street. Bristow said this will obviously need at least a couple of steps. Bristow said the plan is to put a small landing at the back door, and there will probably be about two steps. She said that at that point, a railing is not required, but if the owner installs one, it would match the railing on the front of the house. Bristow said the front door is basically a full panel with an insert to make it an oval shape. She said the owner found a salvage door that is a simpler version of that, which he plans to use. Bristow said staff recommends approval of the project, subject to making certain that the stairs and landing are approved by staff and the chair. She said it sounds like the owner plans to use the railing that meets the guidelines. MOTION: Wagner moved to approve a certificate of appropriateness for the project at 613 Grant Street as presented in the staff report with the following condition: the access for the new door (step) to be approved by staff and chair. Baker seconded the motion. The motion carried on a vote of 8-0 (A9ran, Kuenzli, and Michaud absent). HISTORIC PRESERVATION COMMISSION April 14, 2016 Page 2 of 9 716 Dubuaue Street Bristow said this is the house that the Commission looked at as a potential historic landmark at a previous meeting. She stated that the Board of Adjustment approved a special exception for a historic preservation waiver of required parking and to allow a fraternity of up to 21 residents, contingent on the applicant outlining a rehabilitation and maintenance plan to be approved by the Historic Preservation Commission. Bristow said staff went through the exterior of the property with the applicant and discussed what would be needed to maintain and rehabilitate the property. She showed the historic photographs and said that one of the things to note is the brick garden wall that originally went along the alley side. It was removed some time ago. Bristow stated that some of the work to be done includes tuck pointing and stabilizing the masonry. She said the applicant has provided information about his tuck pointer and his qualifications, which do meet the Secretary of the Interior Standards for Rehabilitation, based on staffs opinion. Bristow said that the arch is falling in and will need to be rebuilt. She said the top of the chimney will need to be rebuilt. Bristow said there are numerous places where tuck pointing and stabilizing the masonry will need to take place. Bristow said that currently there is a deck on the north side along the alley. She said the applicant proposes to remove that deck and replace the wall to look similar to the original wall along the alley. Bristow said that the space between the wall and the building will then become bicycle and scooter parking. She said the bricks will be matched as will the design of the historic wall. Bristow said the stairs there will be concrete, which they originally were. She said the owner will put on a new railing to match the railing currently around the porch. Bristow said one can see that there is a Tudor stucco and board portion on the second floor of this porch. She said there are also some dormers in the roof that have asphalt shingles on them currently. Bristow said the asphalt shingles are going to be removed and replaced with hardi-plank with the stucco texture to be put on the wall with a board to mimic the stucco and board pattern on the lower part. Bristow said that portions of the trim are deteriorated. She showed photographs of this. Bristow said that this will be repaired and replaced. She said that the front door is really too rotten to be repaired at the bottom, so it will be replicated with a newly constructed door. Bristow said that one of the other main things being done with this property is to remove the asphalt shingles. She said the roof has leaks and other problems. Bristow stated that the applicant has proposed a new material that mimics slate roofing. She said it appears to be attractive and added that both a large sample and small sample are available for the Commission members to examine. Bristow said it is a recycled plastic material that would be used in the slate -like configuration. She said that many of the Tudor homes, especially masonry ones, would have had a slate roof. Bristow said it looks good, and the color looks really good in the sample, which is called the cottage blend. Bristow said staff noticed a development up north of Oakdale with a roofs that are also a plastic shingle material. She showed photographs of a type of shake shingle plastic material. Bristow stated that one can see that, at least in this development, it has some color problems, and there are some issues where it is warping. She said there is also a product that would probably be considered the slate version of this material. Bristow said that all of the HISTORIC PRESERVATION COMMISSION April 14, 2016 Page 3 of 9 pieces shown in the photograph seem to be kind of cupping, and one can see that some of them are kind of curling a little bit. Bristow said staff has spoken to the applicant about this. She said the applicant believes that this is a different material and that the material he is proposing is an improved product. Bristow said that if the material were to fail or would have any of the issues seen in the other installations, it would have to be replaced. Bristow said it is up to the Commission to approve the material. Swaim asked about the photograph and if it shows a relatively new roof that has faded poorly. Bristow responded that they do not know exactly when it was installed. She said that the product the applicant brought in does come in a slate or a wood shake version to give a texture and three-dimensional quality. Bristow stated that both of the roofs in the photographs are the wood shake version. She said she does not know that this is exactly the same product or manufacturer and does not know when the roofs were installed. Miklo pointed out that the reason staff has gone into so much detail about the roof is that the guidelines call for genuine materials, and there is a list of approved materials, asphalt being one of them. He stated, however, that the guidelines do allow the Commission, on a case by case basis, to approve non -authentic materials. Miklo said that is what is being requested here. He said that staff has a comfort level with this in that it looks good from a distance and even up close. Miklo said initially staff had the concerns described by Bristow regarding coloration but has been reassured that this is an improved version. Miklo said that approval of this product is a Commission decision. He stated that if the Commission does not approve this, then an alternate material such as asphalt shingles or metal shingles would have to be considered. Miklo suggested that the Commission members take a minute to examine the material more closely. He passed around a sample. Miklo said there are several houses with this material in the development that staff looked at, and staff took photographs of the worst-case scenario. He said the applicant talked to the supplier of the material, and he may want to address this. Miklo said that there is a schedule for replacing the windows, as noted in the report. He said that they will not all be replaced all at once, but the windows facing Dubuque Street and the windows on the north side will be replaced in the initial year. Miklo stated that in subsequent years, additional windows will be replaced. He added that the windows are not original but are vinyl replacement windows. Miklo said that one of the reasons the Commission does not approve vinyl windows is that they do not have a long life span and are not very sustainable. He believes the vinyl windows were put in during the last 20 years. King said he is the applicant for this project and was available to answer any questions. Swaim discussed the proposal calls for the use of painted number two pine for window trim replacement is appropriate. Swaim said she has recently experienced how new wood does not hold up like old wood does. She said this is a lot of trim to be replaced. Swaim asked if another material would be a better good choice. Wagner said that the pine boards do not last very long before rotting. He said that fiber cement sheathing could be used in the stucco area. Wagner said that fir or vertical grain fir actually HISTORIC PRESERVATION COMMISSION April 14, 2016 Page 4 of 9 does better, as does southern yellow pine. He said that the number two pine boards off the shelf at Menards won't last. Miklo showed some areas on the photograph and asked if cedar would be an appropriate material. Wagner responded that on that bed mold with the decoration, there are pine boards that can be used, but that tends to rot. He said that one can use southern yellow pine that is a little more expensive, but if it is painted and sealed properly, it will last King said that when he first looked at this, he thought the trim was number two pine. He said that after looking at it more closely, he found that basically all of the trim is cedar. King said he would replace the rotted trim with cedar. Regarding the roofing material proposed, Clore asked if the individual pieces are larger than they would be with an asphalt shingle. King responded that what was seen is what they stagger. He said that is the normal piece; they just overlap like asphalt shingles. Miklo said they look to be about twice the size of asphalt shingles. He stated that a real slate roof, which Tudor houses often had, would be similar to the size proposed. Regarding the roof with discoloration, King said that is a totally different product. He referred to a e-mail from the owner of the company making the product he proposes to use stating that the company uses more UV in the product than in the past. King said they use more formula in the product so that it stands up longer. King said the company he plans to use is based in Washington, Iowa. He said the company has worked on the Dwell building in the past year or so. King said the product has a very high hail resistance. King stated that one of the stipulations of the special exception was to remove the back deck to add more parking. Sandell said that the brick area that is original seems out of place compared to the rest of the stone on the building. Bristow replied that it also had a brick surround on the front entry, and there are some low stone piers with a little brick band. She said there is brick on the back and brick on the chimney. Bristow said the back is a different color than the wall, but there are other places on the building where it had brick. She said one photograph of the entry shows a low brick wall between the two stone piers. Bristow said that the brick wall on the alley appears to be original. Miklo said brick was used as an accent and added that it would not have been unusual for a Tudor building to have several materials, including brick, stone, stucco, and timber. He said this is a good example of a Tudor building using all those materials. Regarding the roof material, Sandell agreed that it looks good and thinks it will look even better from a distance. He said that if the product fails over time, whether due to warping or discoloration, replacement would be needed at that point anyway, and it would come back before the Commission again. Miklo said it might involve a staff level review. Bristow added that since it is a landmark, it would call for an intermediate review, which would involve staff and the chair. HISTORIC PRESERVATION COMMISSION April 14, 2016 Page 5 of 9 Swaim asked what kind of warranty the roof would have. King replied that it has a 50 -year warranty. MOTION: Baker moved to approve a certificate of appropriateness for the project at 716 North Dubuque Street as presented in the staff report with the following conditions: trim and stucco colors to be approved by staff and the brick match to be approved by staff. Clore seconded the motion. The motion carried on a vote of 9-0 (Ag -ran and Kuenzli absent. Miklo stated that, in the certificate itself, the use of cedar versus pine will be cited, and the window schedule will also be spelled out. King said that he has guaranteed 36 windows to be replaced right now. He asked, once he gets into the work, if he notices one is worse for wear, does he need to come back before the Commission. Miklo said that Bristow could approve that administratively. Bristow stated that staffs only concern was making sure that there is not a facade where there is one really obvious window replacement and all the rest the same. Miklo said this approval will allow the applicant to replace all the windows over time without having to come back. REPORTS ON CERTIFICATES ISSUED BY CHAIR AND STAFF: 1118 East College Street. Bristow said this involved an asphalt shingle roof replacement. 508 Church Street Bristow said this house has replacement storm windows on all of the double hung windows. She said there are two original storm windows. Bristow said that all of the replacement storm windows are going to be replaced. She said that the two original ones will remain, and all of the big picture windows will remain. 530 Ronalds Street. Bristow said there have been a few small projects here over the past year. She said the membrane roofing on the porch will be replaced and any damaged siding above that as they re - flash will also be replaced. 120 Fairchild Street. Bristow said this is one of the historic landmarks. She said staff has been working with the new owner, William Means, since last summer. Bristow said the current project involves replacing the asphalt shingles, because there is quite a bit of leaking. She said Means is replacing all the copper flashing and the copper valleys with copper. Bristow said Means is also having the chimneys repaired. She said the caps have been replaced with new, smoother caps, and there was some discussion of replacing them like the HISTORIC PRESERVATION COMMISSION April 14, 2016 Page 6 of 9 historic photograph. Bristow said it is so difficult to tell what was there from the small photograph that she told Means to go with what is there right now to simplify the project. Bristow said that all of the K -style gutters will be replaced. She said that Means is going to clean to remove some of the mold in the dark places under the overhangs and repaint the entire house. Bristow said Means will do some work on the siding as needed. She said Means would like to remove the porch infill where a room was added, put the main stairs back, and turn it back into a single family home, but some of that is probably just not possible. Bristow said there is a large carriage house that Means is also working on with the same type of work. She commended Means for taking this on and said staff has been working on this with him for some time. MINOR REVIEW: 810 North Johnson Street Bristow referred to the photograph showing five windows with arrows. She said a previous owner replaced all of the original windows with metal storms so that there are not good double hung windows there anymore but just storm windows on the inside and storm windows on the outside. Bristow said this project just uses sash packs to replace those interior storms with double hung windows. She said they will match the divided light pattern on the other windows. COMMISSION REPRESENTATION STATE CODE AMENDMENT: Miklo said that the current State Code that allows cities to establish historic districts and historic preservation commissions requires that each historic district have a representative on the commission. He stated that this does not apply to conservation districts but only to historic districts. Miklo said that has been an issue in the past, and staff sees it as an issue going forward, in that some of the districts are fairly small and there are not many residents, making it a small pool from which to choose. He said therefore there has sometimes been difficulty finding people to fill those positions, for example for the Jefferson Street District. Miklo said that if more districts are added, the Commission would just become too large and unwieldy. He said that for a number of years, the Preservation Plan has suggested lobbying the State to change the law to specify a maximum number of district representatives or somehow amend the State Code so that a new member is not required each time a district is added. Miklo said that because this is a continuing issue, staff suggests contacting the State to ask for consideration of such an amendment. He said that if the Commission agrees, the appropriate course of action would be to authorize the chair to write a letter to the State Historic Preservation Office asking for such an amendment. Swaim said there are only 12 properties in the Woodlawn District, and many residents have been on the Commission before. She said that since there is a new stipulation that a Commission member may not serve more than two consecutive terms, finding a replacement in some of the small districts is somewhat difficult. HISTORIC PRESERVATION COMMISSION April 14, 2016 Page 7 of 9 Swaim said she would like to draft the letter and get comments from the Commission. Miklo said that staff could help come up with some language. He said that no action would be taken until at least next year. Sandell discussed adding districts in the future as properties get older and then not allowing those districts certain representation. He asked if there is any kind of special work around for that. Miklo said the intent is not to not allow them to have a representative but to not require a representative. He said there are at -large seats that could be appointed from new districts. BY-LAW AMENDMENTS: Miklo said the Commission recently recommended a couple of changes to the by-laws to the City Council, and those are going forward independently. He said these by-law changes are the result of some action the City Council has taken in terms of boards and commissions. Miklo said there is no longer a requirement that commission members be registered voters, so the language would align with that. He said that members do have to reside in Iowa City. Miklo said the second amendment arises from the City Council deciding that rather than appointing on a monthly basement, it will do commission appointments twice a year. He said that in order to put this in sync with the calendar, as noted in the memo from the City Clerk's Office, terms should expire in July instead of at the end of March in order to work with the proposed appointment schedule. Swaim asked if the twice a year schedule would result in staggered appointments. Miklo replied that the terms would be the same, but the City Council would not be making appointments throughout the year. He said that this would make all of the expiration dates the same, so the City Council would not be appointing new members all the time. Miklo said that special consideration may be given if someone resigns. Bristow said this would also keep the City from having to advertise continually. Michaud asked if all Historic Preservation Commission terms would be extended to July 1 of their expiration year. Miklo confirmed this. MOTION: Clore moved to approve the new, revised by-laws. Baker seconded the motion. The motion carried on a vote of 9-0 (Arran and Kuenzli absent). CONSIDERATION OF MINUTES FOR MARCH 10, 2016: MOTION: Wagner moved to approve the minutes of the Historic Preservation Commission's March 10, 2016 meeting, as written. Litton seconded the motion. The motion carried on a vote of 9-0 (Agran and Kuenzli absent). COMMISSION INFORMATION AND DISCUSSION: Swaim introduced Trimble as the Chair of Friends of Historic Preservation, which is undertaking the move of the house on Iowa Avenue. Swaim asked for an update. Trimble deferred to Bristow who is handling a lot of the details with the project. Trimble said the concrete foundation will probably be poured on Friday. Bristow said the hole was dug earlier in HISTORIC PRESERVATION COMMISSION April 14, 2016 Page 8 of 9 the day. She added that footings will come first and then the forms for the walls will be put up very quickly right after that. Trimble said the house will probably be moved on May 4. Trimble said that Friends of Historic Preservation owns the lot now, so everything is in place. She said she could use volunteers for April 26, 27, and 28. Bristow said there will be a variety of activities or volunteers. She that UAY, which currently occupies the homes, is having a garage sale on April 23, is finishing its packing on April 25, and is moving on April 26 and 27, with the house to be moved being emptied the morning of the 26. Bristow said then everything below the floor joists will need to be removed as well as the remaining parts of the brick chimney. She said the porch floors will need to be removed, with the porch roofs to be braced back to the wall. Bristow said the installed storms and screens will need to be removed. She said the gutters should be removed. Bristow said there are quite a few activities. She said the house movers will come in and begin digging into the hill in the front of the house on the 28th. Bristow said the house movers have told her that as long as the front porch is removed and water and gas are off and removed, then things toward the back may be finished while they start in the front. Bristow said the house movers will dig in and jack up the house, which is going to be 116,000 pounds. She said the bridge at Van Buren and Washington Streets has been calculated to allow a maximum of five miles per hour. Bristow said that MidAmerican Energy will engage three teams to cut and splice the power lines as the house moves. She said that many people will lose power for the time the power is cut. Bristow said that Friends of Historic Preservation will be sending postcards to those who will be affected. She added that there will be no parking all along Washington, Van Buren, and College Streets in the areas affected. Bristow said it will take about four hours on College Street to turn the wheels back around and back onto the lot. Trimble stated that the week the house is being moved, Friends of Historic Preservation will be salvaging the other UAY house and could use volunteers to help with that. Trimble added that a week from Saturday is the Craft Your Environment event at the East Side Recycling Center. She said that every craft has to have some reused or recycled part. Swaim said it would be great to have a video of this at the next awards program ADJOURNMENT: The meeting was adjourned at 6:23 p.m. Minutes submitted by Anne Schulte HISTORIC PRESERVATION COMMISSION ATTENDANCE RECORD 2015-2016 NAME TERM EXP. 5114 6/11 7/9 8113 9/10 1018 11112 12/10 1114 2/11 2/25 3112 4114 AGRAN, THOMAS 3/29/17 X X X X O/E X X X O/E X X O/E BAKER, ESTHER 3129/18 X X X X X X O/E X X X X X X BUILTA, ZACH — -- — — — --- — — — — — — X CLORE, GOSIA 3129/17 O/E O/E O/E X O/E X X X O/E X O/E X X DEGRAW, SHARON — — — — — — — — — — — — X KUENZLI, CECILE — — — — — — — — — — — — O/E LITTON, ANDREW 3/29/17 X X X O/E X X X X X X X X X MICHAUD, PAM 3/29/18 X O/E X X X X O/E X X X X X X SANDELL, BEN 3/29/17 X O/E X X X X X O/E X X X X X SWAIM, GINALIE 3/29/18 X X X X X X O/E X X X X X WAGNER, FRANK 3/29118 O/E X O/E O/E O/E X O/E X X X X X X KEY: X = Present O = Absent O/E = Absent/Excused -- = Not a Member MINUTES PRELIMINARY HOUSING AND COMMUNITY DEVELOPMENT COMMISSION APRIL 21, 2016 — 6:30 PM DALE HELLING CONFERENCE ROOM, CITY HALL MEMBERS PRESENT: Peter Byler, Syndy Conger, Harry Olmstead, Matthew Peirce, Emily Seiple MEMBERS ABSENT: Bob Lamkins, Dorothy Persson STAFF PRESENT: _ Kris Ackerson, Tracy Hightshoe, Steve Rackis OTHERS PRESENT: Mark Patton, Brian Loring, Bruce Teague, Maryann Dennis, Crissy Canganelli RECOMMENDATIONS TO CITY COUNCIL: By a vote of 5-0 the Commission recommends approval of the Iowa City Housing Authority FY16 Annual Report/Annual Plan. By a vote of 5-0 the Commission recommends the reallocated FY17 CDBG and HOME budget allocations to City Council: Housing Requested Amount Allocation Recommendation Re -Allocation Recommendation CHDOoperations — THF $ 16,000 $ 16,000 $ 16,000 Diamond Senior Apartments $237,636 $ — $ -- Habitat for Humanity $ 80,000 $ -- $ -- MYEP $ 65,000 $ 50,000 $ 50,000 The Housing Fellowship $300,000 $134,000 $58,000 Shelter House Permanent Supportive Housing $290,000 $250,000 $275,000 Subtotal $988,636 $450,000 $399,000 Public Facilities Arc of SE Iowa $160,000 $ -- $51,000 CSCC Childcare $145,000 $ -- $ -- DVIP Shelter $ 45,917 $ -- $ -- MYEP Facility $ 60,000 $ -- $ — Shelter House Winter Shelter $160,000 $ -- $ -- United Action for Youth $ 50,000 $ -- $ — Subtotal $620,917 $ -- $ 51,000 Byler called the meeting to order at 6:30 PM. Housing and Community Development Commission April 21, 2016 Page 2 of 8 APPROVAL OF MARCH 10. 2016 MINUTES: Peirce moved to approve the minutes of March 10, 2016 with minor edits. Conger seconded the motion. A vote was taken and motion passed 5-0. PUBLIC COMMENT: None. STAFF/COMMISSION ANNOUNCEMENTS: Olmstead mentioned that the Affordable Housing Coalition will be hosting a conference June 17 and the evening of the 16th there will be a get together that evening so perhaps the Commission would want to change the meeting time so they can attend. The conference on June 17 will be at the Radisson. Ackerson provided an update, at the last meeting the Commission discussed the Community Serving Community Daycare, and Persson suggested they meet with people from Home Ties, the daycare at the Mennonite Church. Ackerson set up a meeting and they went to visit with them and the folks from 4C's, that operate that daycare, said there is a lot of unmet demand for those kids that have daycare childcare assistance. After that discussion they decided to apply for the special exception that they will need from the City and then if that is approved they will come back to the Commission for a request for funding again. The special exception they will need is an exception on the zoning code for parking, which was an issue. Ackerson also mentioned that the promotion of Community Development Week went well. There were lots of donations that were taken to Shelter House. They also received letters from past CDBG recipients who contacted the press and congressional leaders. Ackerson also shared with the Commission some news articles. One was from the New York Times about HUD not using criminal background checks as a way to select tenants. There was discussion on the City's policy of looking back five years for criminal background checks, and helping to mitigate situations where housing is denied. Ackerson noted that the City is hosting some workshops for people who are interested in starting a business, it is a series of five workshops being hosted at Kirkwood. Hightshoe stated that City Council is going to start talking about affordable housing strategies and therefore are hoping that two or three of the HCDC members would like to form a subcommittee to create some recommendations for the whole Commission to hear in May and then forward onto City Council. CONSIDER A RECOMMENDATION TO CITY COUNCIL REGARDING APPROVAL OF THE IOWA CITY HOUSING AUTHORITY FY16 ANNUAL REPORT/ANNUAL PLAN: Byler asked if anyone had any questions of comments about the plan. Byler asked Rackis if the list at the end of the report was all applied to the previous 12 months. For example, the sale of the 18 units, and the reallocation of the money to Scattered Site Housing, could Rackis share more information with the Commission on that sale? Housing and Community Development Commission April 21, 2016 Page 3 of 8 Rackis said that sometime in the 90's the Housing Authority had the Broadway units that HAACP now owns, 18 units, and the City sold them to HAACP to convert them from public housing to transitional housing. The proceeds from that sale, the City has to use that money to develop additional public housing. At the time it was a direct replacement of 18 units. $1.2 or $1.3 million is not going to get the City 18 units in 2016. When they go to Council in June, they could propose to use those funds to expand public housing, whether that be new construction or not. Rackis noted his preference would be to look at neighborhoods where they do not have public housing units and buy homes that are for sale on the open market, rehab them, and then convert them into the public housing stock with HUD's approval. Byler asked if this was not the money that would be spent in the Chauncey Building, and Rackis confirmed it was not. Rackis said this money has not been sitting in City accounts since the 90's, HAACP didn't pay off the loan of the purchase of the 18 units until about 7 years ago. The money that is going to the Chauncey Building is the proceeds from the sale of the Scattered Site Public Housing units. Byler asked about the $1.3 million reported in this action plan and what are the stipulations on the use of those monies. Rackis said that money is to be used to replace the 18 public housing units, so it has to be used for City ownership. Rackis explained uses for other funds could also be used in partnership for public housing as well. Rackis said that here is about $2.6 million that is to be used overall for City owned properties that the City must manage and maintain ownership. Olmstead asked for clarification on the public housing rating versus the HCD rating and if a person or family could be on both. Rackis confirmed they could, which is why he presents them separate on the annual report. Byler asked how they get more vouchers in a given year. Rackis said they don't, there are never any new vouchers. The only new vouchers are the veterans support housing vouchers. The City just received notice that they can apply for six additional HUD vouchers. Byler asked if someone moves to Iowa City from another community what happens. Rackis said the City would either absorb that voucher and make it one of our own or bill the other housing authority but it doesn't change the number of vouchers, it becomes one of the 1215 the City is allocated. So by absorbing that voucher what it means is no new person is taken off the waiting list and given a voucher. Rackis also noted that project based vouchers that are not used can be converted into tenant based vouchers. Seiple asked about the home ownership program and if someone becomes a home owner that voucher cannot be used for rentals ever again. Rackis said yes, but they do have a cap of 3% of their 1215 vouchers to be used for home ownership. He also noted that most families on home ownership reach a point where their income rises above the point where they will continue to qualify for assistance, and then that voucher will be freed up. Seiple asked how they calculate the utilization rate, and how it can be over 100%. Rackis said that is an average, at any point in the year they could be over -utilized or under-utilized, so while they were at 101.3% when people go over the income for the program, they are counted in the program for 6 months even though they are not receiving assistance. Olmstead moves to approve the Iowa City Housing Authority FY16 Annual ReporHAnnual Plan. Pierce seconded the motion. A vote was taken and the motion passed 6-0. Housing and Community Development Commission April 21, 2016 Page 4 of 8 MONITORING REPORTS: Mark Patton (Habitat for Humanity) gave a report on construction projects. He began with an updated on the two homes being built on Prairie Du Chein. Patton talked about the families that they serve, it is a double blind selection process. Habitat is both the builder and the banker and these are set up as 25 year mortgages. There is no interest on the mortgages. In the double blind selection process they had 75 applications last year and they were only able to pick 6. The applicants must have ok credit and cannot have too much debt. They have found that immigrants are mostly picked because of their credit (or fear of credit) whereas Americans have more debt. All the families are given a full year of financial classes and financial counseling. DISCUSSION OF FY16 PROJECTS THAT HAVE NOT COMPLIED WITH THE 'UNSUCCESSFUL OR DELAYED PROJECTS POLICY' Ackerson explained that this is an annual review because HUD does not want the entitlement city siting on money and not having it get spent. So the awarded projects that have not spend at least half their funds by the middle of March are asked to come in and give an update to the Commission. Ackerson explained that the Domestic Violence Intervention Program had only spent about $9000 as of mid-March because they had to re -bid their project twice, but now are about 2/3 through the project now and making great progress. Brian Loring (Broadway Neighborhood Center) showed the Commission a calendar of their progress on their project. One of the reasons for the delay on their project is because the construction is to build onto a classroom so in order to complete that construction they will need to move that classroom. They need to wait until school lets out to have another classroom open up that they can use. The classroom they need to use is at Grantwood Elementary so once school is out, they will move the Broadway classroom to Grantwood. Loring explained that they did the walk through for potential bidders last Friday, bid opening is May 4, and construction is to begin May 23, with substantial completion by the end of August. He explained that because it is a preschool classroom, they can begin in September rather than when school starts in August so if the project goes a bit long they will be covered. The scope of the project is to create a new entrance to the preschool that is in the basement of the Broadway building for easier access to the preschool without having to go through the whole building. As part of the project they will need to relocate the furnace and washer and dryer. The amount of the entire project will be $94,000. Bruce Teague (Charm Homes LLC) explained that his grant was to do two houses and one of the delays is because they wanted to give preference for their houses to renters who either are elderly or have disabilities. Because that is their rental population, they are supported by Medicaid and with the change is Medicaid regulations the funding for the renters was changing so that made for some unknowns with how this project could move forward. Now that the April 1 implementation of the Medicaid change they have made announcements of the opening of housing units and are working on recruiting renters. Teague noted he has two realtors looking for possible houses and are having difficulty finding properties in the appropriate price range. Because they look to rent to those with disabilities the homes have to be accessible. The allocation for this project was $61,500. Byler asked if there as a date where it would become unfeasible for a closing to happen in time to expend the funds. Hightshoe said because its CDBG funds the Commission can decide how long they want to hold the funds for this project. If they have not found a property by June 30 then it will need to be discussed. Housing and Community Development Commission April 21, 2016 Page 5 of 8 W W W.I CGOV.ORG/ACTION PLAN) Consider reallocation of FY17 proposed The Housing Fellowship Project: Byler explained that at the last meeting the Commission funded 4 projects out of the 12 that applied and made the allocation to The Housing Fellowship Project of $134,000 which was for a tax credit application. The Housing Fellowship responded that they were not confident they would be competitive for a tax credit award due to recent developments with the program. The initial suggestion was to move The Housing Fellowship allocation into the Shelter House allocation because The Housing Fellowship may end up partnering with the Shelter House in some capacity. Byler explained that the Commission now can decide how to reallocate these funds. There is still a minimum amount of HOME funds that must be allocated to a Community Housing Development Organization (CHDO) which would be $58,000. The Housing Fellowship was the sole CHDO to apply for funds in this round. So the first question is what could be done with $58,000. Maryann Dennis (The Housing Fellowship) said they could buy a house with the $58,000. Byler noted that anytime money comes back to the Commission, he prefers to have a discussion amongst all the applicants rather than just reallocate without input. Therefore he suggests $58,000 be allocated to The Housing Fellowship to purchase a home and then take the remaining $76,000 into discussion for review for any of the remaining projects. Hightshoe explained that a recommended allocation needs to be decided at this meeting so the updated FY17 Annual Action Plan can go to Council. Crissy Canganelli (The Shelter House) addressed the Commissions questions regarding the scope of their projects. Canganelli stated that no other funding sources have been committed yet. They have an accepted purchase agreement for a property and are inquiring as to the maximum residential occupancy of that property. They need to isolate the permanent housing component and not include the low barrier shelter in the same building. They wish to just proceed with the housing. They are focusing on the chronic homeless individuals. The total project cost will be $1.6 million and the cost will still be the same without the winter shelter because they will still develop that space for common space. Canganelli spoke about visiting organizations that provide housing first for chronic homeless in Charlotte. This is all on a single site. They were extremely impressed with the design features of the facility and the security staffed on the property 24/7. They also had office space for staff and nursing staff. There was discussion on the design of the efficiency apartments planned and common space. Byler asked if anyone on the Commission wanted to make a recommendation for fund, noting that no public facility was funded. There is $76,000 that can be allocated to any of the applicants. Olmstead stated his recommendation for funding DVIP Shelter. Ackerson shared the Commission rankings of the applications to assist with the discussion. Dennis noted that in the Iowa City Strategic Plan states support for the FUSE project. That has not been noted in any previous City plan. Housing and Community Development Commission April 21, 2016 Page 6 of 8 Olmstead noted how nice it was to see organizations that have to compete for grants and funds working together for common goals. Conger shared her support of the FUSE project and committing the additional funds to that project. Seiple also stated her support is for the funds to go to the Shelter House to support the FUSE project. Byler stated his preference is to fund either partially or fully the DVIP or Arc projects. Pierce asked if granting $51,000 to Arc would support their projects and Ackerson and Hightshoe believed it would be a good start. Olmstead moved to reallocated FY17 CDBG and HOME budget allocations to City Council as: Housing Requested Amount Allocation Recommendation Re -Allocation Recommendation CHDOoperations — THF $ 16,000 $ 16,000 $ 16,000 Diamond Senior Apartments $237,636 $ -- $ - Habitat for Humanity $ 80,000 $ -- $ MYEP $ 65,000 $ 50,000 $ 50,000 The Housing Fellowship $300,000 $134,000 $58,000 Shelter House Permanent Supportive Housing $290,000 $250,000 $275,000 Subtotal $988,636 $450,000 $399,000 Public Facilities Arc of SE Iowa $160,000 $ -- $51,000 CSCC Childcare $145,000 $ -- $ -- DVIP Shelter $ 45,917 $ -- $ — MYEP Facility $ 60,000 $ -- $ — Shelter House Winter Shelter $160,000 $ -- $ -- United Action for Youth $ 50,000 $ -- $ -- Subtotal $620,917 $ -- $ — Pierce seconded the motion. A vote was taken and the motion passed 5-0. REVIEW ALLOCATION PROCESS FOR CDBG, HOME, AND AID TO AGENCIES FUNDING AND CONSIDER CREATING SUB -COMMITTEE Byler made two specific suggestions for these allocation processes. One thought is to possibly allocating a bit of money for applicants to work with an engineering firm to create a capital needs plan, and all the plans would be created by the same engineer from the same perspective. It would allow for a more consistent analysis of the needs of all the different agencies' applications. Housing and Community Development Commission April 21, 2016 Page 7 of 8 The other suggestion Byler has is to extend the funding round to two years so applicants can plan ahead using their capital plan and have time to find matching funds. Conger did voice concern about using an engineering firm would take away from the citizen aspect of this Commission. Olmstead stated he thought perhaps they need to look at these fundings as 0% loans and then extend it over a long period of time. Hightshoe noted that is hard to do for public facilities because they will not have income to pay back these loans. Byler asked if the Commission wanted to create a subcommittee to look into the allocation process more or just address this at a future meeting with the entire group. It was decided to put this item on a summer agenda. ADJOURNMENT: Olmstead moved to adjourn. Peirce seconded the motion. A vote was taken and motion carried 5-0. Housing and Community Development Commission Attendance Record Name Term Exp. 6/18/15 9117/15 10/22/15 11/19/15 1/21/16 2118/16 3/10/16 4/21/16 Bacon Curry, Michelle 9/1/2016 X X O/E O/E X O O -- Byler, Peter 9/1/2017 X X X X X X X X Conger, Syndy 9/1/2018 --- O/E O/E X X X O/E X Jacobson, Jim 9/1/2017 O/E X O/E X X X X O/E Lamkins, Bob 9/1/2016 O/E X X X X X X O/E Olmstead, Harry 9/112018 --- — --- --- X X X X Peirce, Matthew 9/1/2018 --- — --- --- X X X X Persson, Dottie 9/1/2016 X X X X X O/E X O/E Seiple, Emily 9/1/2018 -- X X X X X X X Kev: X = Present O = Absent O/E = Absent/Excused --- = Vacant IP15 MINUTES PRELIMINARY PLANNING AND ZONING COMMISSION APRIL 21, 2016 — 7:00 PM — FORMAL EMMA HARVAT HALL — CITY HALL MEMBERS PRESENT: Carolyn Dyer, Charlie Eastham, Ann Freerks, Mike Hensch, Phoebe Martin, Max Parsons, Jodie Theobald MEMBERS ABSENT: STAFF PRESENT: Sara Hektoen, Bob Miklo OTHERS PRESENT: RECOMMENDATIONS TO CITY COUNCIL: By a vote of 7-0 the Commission recommends the Iowa City Planning & Zoning Commission By -Laws with regards to qualifications that the Commission members must reside within City limits and also that the term expiration dates change from May 1 to July 1. Additionally update any code references to conform to the Zoning Code. CALL TO ORDER: Freerks called the meeting to order at 7:00 PM. PUBLIC DISCUSSION OF ANY ITEM NOT ON THE AGENDA: There were none COMPREHENSIVE PLAN ITEM: Consider a motion setting a public hearing for May 5 for discussion of an amendment to the Comprehensive Plan for property located north of Benton Street and west of Orchard Street to be included in the Downtown and Riverfront Crossings Master Plan. Miklo said at this point there is no discussion on this item tonight, but the proposal it to add properties on the west side of Orchard Street to the Riverfront Crossings Master Plan. Miklo showed a map of the area. The cul-de-sac with five buildings on it would also be included in this amendment, as well as three houses that do not have street frontage. The applicant owns several of these properties, but not all. Based on the application Staff prepared a rough draft for inclusion into the Riverfront Crossings Master Plan and that is what the public hearing will address. So Staff is recommending the Commission set a public hearing for May 5. Hensch moved to set a public hearing for May 5 for discussion of an amendment to the Comprehensive Plan for property located north of Benton Street and west of Orchard Street to be included in the Downtown and Riverfront Crossings Master Plan. Motion was seconded by Eastham. A vote was taken and the motion carried 7-0. AMENDMENT TO PLANNING & ZONING COMMISSION BY-LAWS: Planning and Zoning Commission April 21, 2016 — Formal Meeting Page 2 of 4 Miklo explained that currently the different City Commissions and Boards have different end dates to their terms. The proposed change is to have all terms expire on July 1. The second amendment is to not require members to be a registered voter to sit on a Board or Commission. The change states that one must be a resident of Iowa City. Miklo explained that these two amendments will clarify the by-laws. Martin asked if someone could be a registered voter without being a resident. Hektoen noted that one can be a resident without being a registered voter. Hektoen also suggested a by-laws amendment to update the code references, some are outdated. Eastham asked Hektoen to look at Article 5, section 11, Voting. The second sentence reads "a two-thirds vote of the members of the Commission present, or not less than four votes, should be required in consideration of a substantial amendment to the zoning chapter and the adoption of the Comprehensive Plan or amendment thereof'. Eastham noted that when rounding up two- thirds of seven would be five members. Freerks explained that sentence is to state one or the other. Either two-thirds vote of members OR not less than four votes, the not less than four votes is to cover the situation if a member is absent. Hektoen noted that under the zoning code it states "for zoning map amendments or text amendments not less than four votes shall be required to recommend approval for any amendment". Freerks suggested Staff look at this question and if it needs to be clarified or written in the by-laws more clearly, they could make that change in a future meeting. Freeks noted that on the back of the memorandum where it discussed the terms of Planning and Zoning Commissioners it states extension is one month, however it really is two. Hensch moved to amend the Iowa City Planning & Zoning Commission By-laws with regards to qualifications that the Commission members must reside within City limits and also that the term expiration dates change from May 1 to July 1. Additionally update any code references to conform to the Zoning Code. Parsons seconded the motion. A vote was taken and the motion carried 7-0. CONSIDERATION OF MEETING MINUTES: APRIL 7. 2016 Hensch moved to approve the meeting minutes of April 7, 2016. Martin seconded the motion. A vote was taken and the motion passed 7-0. PLANNING AND ZONING INFORMATION: Miklo noted that Karen Howard Julie Tallman are attending a form -based code Planning and Zoning Commission April 21, 2016 — Formal Meeting Page 3 of 4 conference in Utah this week and one of the speakers is the person who coined the term "the missing middle". Staff hopes to be able to work with the Commission to work on some Code amendments that would address that concept. Freerks presented Eastham with a certificate of acknowledgement and thanks for his service to the Commission. Eastham expressed his appreciation for having been able to serve on the Commission. ADJOURNMENT: Eastham moved to adjourn. Martin seconded. A vote was taken and motion carried 7-0. PLANNING & ZONING COMMISSION ATTENDANCE RECORD 2015-2016 FORMAL MEETING INFORMAL MEETING NAME 5/21 6/4 7/2 7/16 8/6 8/20 9/3 9/17 10/1 10/15 11/5111/19 HENSCH, MIKE 12/3 1/7 1/21 2/19 313 3/17 4/7 4/21 DYER, CAROLYN X X X X X X X X X X X X X X X X X X X X EASTHAM, CHARLIE X X O/E X X X X X X X X X X X X X X X X X FREERKS, ANN X X X O/E X X X X X X O/E X X X O/E X X X X X HENSCH, MIKE X X X X X X X X X X X X X X X X X X X X MARTIN, PHOEBE X X X X X X X O/E O/E X 01E X X X X X X X X X PARSONS, MAX X X X X X X X X X X X O/E X X X X X O/E X X THEOBALD, JODIE X X X X O/E X X X X X X X X X X X X X X X INFORMAL MEETING NAME TERM EXPIRES 5/18 DYER, CAROLYN 05/16 X EASTHAM, CHARLIE 05/16 X FREERKS, ANN 05/18 X HENSCH, MIKE 05/19 X MARTIN, PHOEBE 05/17 X PARSONS, MAX 05/19X THEOBALD, JODIE 05/18 X KEY: X = Present O = Absent O/E = Absent/Excused --- = Not a Member 05-05-16 IP16 MINUTES PRELIMINARY PUBLIC ART ADVISORY COMMITTEE MARCH 4TH, 2016 — 3:30 PM CITY MANAGER'S CONFERENCE ROOM — CITY HALL MEMBERS PRESENT: Brent Westphal, Sayuri Sasaki Hamann, John Engelbrecht, Juli Seydell-Johnson, Ron Knoche NOT PRESENT: Bill Nusser, Tam Bryk STAFF PRESENT: Marcia Bollinger, Calvin Hoff PUBLIC PRESENT: Geoff Fruin RECOMMENDATIONS TO THE CITY COUNCIL: (to become effective only after Council action) None CALL TO ORDER: Meeting called to order at 3:30pm. PUBLIC DISCUSSION OF ANY ITEM NOT ON THE AGENDA: Geoff Fruin spoke regarding Pedestrian Mall renovation and the proposed public art project "The Lens".. He stated that the council did not provide support for the request to contribute to the fundraiser for the project nor did they provide support for the project regardless of the fundraising request. He noted that at this time there were no updates on the Blackhawk mini park and that decisions will REVISED PUBLIC ART MATCHING FUND APPLICATION: After working through the process with the intital applicants for the program in January, Marcia felt that there needed to be adjustments to the application packet questions that provided the PAAC with the informationi that they needed to evaluate the requests. She explainted that the new application features more questions in simpler language. It also differentiated between physical and non-physical public art displays. The budget section of the new application has also been simplified. The new application inquires as to how the broader Iowa City community will be integrated, as well as how the success of the project will be gauged. A revision of the temporary display policy was also included. CONSIDERATION OF THE MINUTES OF THE FEBRUARY 4th, 2016 MEETING: MOTION: John Engelbrecht moved to approve the February 4th, 2016 minutes. Brent Westphal seconded. Motion passed unanimously. UPDATES: There were updates from Calvin Hoff regarding the Poetry in Public program. The number of both adult and child submissions were given. The makeup of the new Poetry in Public review committee was discussed as well. OTHER: John Engelbrecht asked if the group would like to invite Geoff Fruin back to discuss the city council process further. The group agreed with this decision. John Engelbrecht also inquired as to the source of the budget, which Marcia Bollinger explained was from general funds. ADJOURNMENT: John Engelbrecht moved to adjourn the meeting. Sayuri Sasaki Hemann seconded. Meeting adjourned at 4:30pm. Public Art Advisory Committee Attendance Record 2015-2016 Name Term Expires 11/6 12/4 2/5 3/5 5/8 6/4 7/16 2/4 3/3 Bodkin Bryk, Tam 01/01/19 X X X X X X O/E x O/E Engelbrecht, John 01/01/18 X X X X X O X x X Westphal, Brent 01/01/17 O/E X X X X X X x X Nusser, Bill 01/01/17 X O/E O/E O/E O O X O O Hemann, Sayuri Sasaki 01/01/18 --- --- X X X X X x X Knoche, Ron --- - X X X X X x X Moran, Mike X X X O/E X X X -- -- Seydell-Johnson, Juli --- --- --- --- --- --- X X Key: X = Present O = Absent O/E = Absent/Excused -- = Not a member