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FY2006 Annual Financial Report" W T t ' L 3 4 r 4 • A P t COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF IOWA CITY, IOWA FOR THE FISCAL YEAR ENDED JUNE 30, 2006 PREPARED BY: DEPARTMENT OF FINANCE CITY OF IOWA CITY, IOWA CITY OF IOWA CITY, IOWA TABLE OF CONTENTS June 30, 2006 Page INTRODUCTORY SECTION Table of contents................................................................................................................................ 1 Letter of transmittal............................................................................................................................ 3 City organizational chart.................................................................................................................... 10 City officials....................................................................................................................................... 11 Certificate of Achievement for Excellence in Financial Reporting................................................... 12 FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT......................................................................................... 13 MANAGEMENT’S DISCUSSION AND ANALYSIS.................................................................... 15 BASIC FINANCIAL STATEMENTS Government-wide financial statements Statement of net assets................................................................................................................. 26 Statement of activities.................................................................................................................. 28 Fund financial statements Balance sheet – governmental funds............................................................................................ 30 Reconciliation of the balance sheet of the governmental funds to the statement of net assets.... 32 Statement of revenues, expenditures, and changes in fund balances – governmental funds....... 33 Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental funds to the statement of activities..................................................................... 35 Statement of net assets – proprietary funds ................................................................................. 36 Statement of revenues, expenses, and changes in fund net assets – proprietary funds................ 39 Statement of cash flows – proprietary funds................................................................................ 40 Statement of fiduciary assets and liabilities................................................................................. 42 Notes to financial statements.......................................................................................................... 43 REQUIRED SUPPLEMENTARY INFORMATION Budgetary comparison schedule – budget and actual – all governmental funds and enterprise ... funds – budgetary basis……………………………………………………………………….... 70 Budgetary comparison schedule – budget to GAAP reconciliation …………………………….. 72 Note to required supplementary information – budgetary reporting…………………………….. 73 COMBINING AND INDIVIDUAL FUND STATEMENTS Combining balance sheet – nonmajor governmental funds............................................................ 76 Combining statement of revenues, expenditures, and changes in fund balances – nonmajor governmental funds...................................................................................................................... 77 Combining statement of net assets – nonmajor enterprise funds.................................................... 80 Combining statement of revenues, expenses, and changes in fund net assets – nonmajor enterprise funds............................................................................................................................ 81 Combining statement of cash flows – nonmajor enterprise funds.................................................. 82 Combining statement of net assets – internal service funds ........................................................... 84 Combining statement of revenues, expenses, and changes in fund net assets – internal service funds............................................................................................................................................. 85 Combining statement of cash flows – internal service funds.......................................................... 86 Combining statement of changes in assets and liabilities – agency funds...................................... 88 1 CITY OF IOWA CITY, IOWA TABLE OF CONTENTS June 30, 2006 Page STATISTICAL SECTION (UNAUDITED) Net assets by component.................................................................................................................... 93 Changes in net assets.......................................................................................................................... 94 Fund balances – governmental funds................................................................................................. 96 Changes in fund balances – governmental funds............................................................................... 97 General government tax revenues by source...................................................................................... 98 Assessed and taxable value of property.............................................................................................. 99 Property tax rates – direct and overlapping governments .................................................................. 100 Property tax budgets and collections.................................................................................................. 101 Principal taxpayers............................................................................................................................. 102 Ratios of outstanding debt by type..................................................................................................... 103 Ratios of general obligation bonded debt to assessed value and net bonded debt per capita............. 104 Ratio of annual debt service expenditures for general bonded debt to total general governmental expenditures..................................................................................................................................... 105 Computation of direct and overlapping debt...................................................................................... 106 Legal debt margin information........................................................................................................... 107 General obligation debt annual maturity schedule............................................................................. 108 Schedule of revenue bond coverage................................................................................................... 109 Revenue debt annual maturity schedule............................................................................................. 110 Demographic and economic statistics................................................................................................ 111 Principal employers............................................................................................................................ 112 Full-time equivalent city government employees by function........................................................... 114 Operating indicators by function........................................................................................................ 116 Capital assets by function................................................................................................................... 118 COMPLIANCE SECTION Report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards .. 121 Report on compliance with requirements applicable to each major program and internal control over compliance in accordance with OMB Circular A-133................................................ 123 Schedule of expenditures of federal awards....................................................................................... 125 Notes to the schedule of expenditures of federal awards ................................................................... 128 Schedule of findings and questioned costs......................................................................................... 129 2 I— ——— — CITY OF IOWA CITY 410 East Washington Street Iowa City, Iowa 52240-1826 (319)356-5000 (319) 356-5009 FAX www.icgov.org November 28, 2006 To the Citizens, Honorable Mayor, Members of the City Council and City Manager City of Iowa City, Iowa The Comprehensive Annual Financial Report (CAFR) of the City of Iowa City, Iowa (the City) for the fiscal year ended June 30, 2006 is submitted herewith in accordance with the provisions of Chapter 11 of the Code of Iowa. The City’s Finance Department prepared this report. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rest with the City. I believe the information, as presented, is accurate in all material respects and presented in a manner designed to fairly present the financial position and results of operations of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included. This report consists of management’s representation concerning the finances of the City of Iowa City. Management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The CAFR reflects all funds of the City in accordance with standards set by the Governmental Accounting Standards Board (GASB). In 1999, GASB adopted Statement No. 34, Basic Financial Statements – Management’s Discussion and Analysis – For State and Local Governments . The final effective date for the implementation of GASB No. 34 for the City of Iowa City was June 30, 2003. This report complies with those standards. This statement significantly changes governmental financial reporting in order to bring it closer to a private sector model. To facilitate an understanding of the City’s financial affairs, this report is organized into four sections: introductory, financial, statistical, and compliance. The introductory section contains the table of contents, listing of City officials, an organizational chart and this letter of transmittal. The financial section contains the independent auditors’ report, management’s discussion and analysis, the basic financial statements, required supplementary information, and other supplementary information. The statistical section contains comprehensive statistical data that is intended to provide a broader and more complete understanding of the financial and economic trends of the City. The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1996 and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments . Information related to this 3 single audit, including the schedules of federal financial assistance, findings and questioned costs, and independent auditors’ reports on the internal accounting and administrative controls and compliance with applicable laws and regulations are included in the compliance section of this report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors. The City of Iowa City’s financial statements have been audited by Eide Bailly, LLP of Dubuque, Iowa, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the City’s financial statements for the fiscal year ended, June 30, 2006 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement preparation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Iowa City’s financial statements for the fiscal year ended, June 30, 2006, are fairly presented in conformity with GAAP. Profile of the Government The City of Iowa City was incorporated April 6, 1853. The City is governed by a seven member Council; each member serves a four-year term. Elections are held every two years allowing for continuation in office of at least three members at each biennial election. The Council members are elected at large, but three members are nominated from specific districts, and the four other members are nominated at large. The Council elects the Mayor from its own members for a two- year term. The City Council is the legislative body and makes all policy determinations for the City through the enactment of ordinances and resolutions. It also adopts a budget to determine how the City will obtain and spend its funds. The Council appoints members of boards, commissions and committees. The City Manager is the chief administrative officer for the City and is appointed by the City Council. The City Manager implements policy decisions of the City Council and enforces City ordinances. In addition, the City Manager appoints and directly supervises the directors of the City’s operating departments and supervises the administration of the City’s personnel system. He supervises 537 full-time and 88 permanent part-time municipal employees and 492 temporary employees including a police force of 70 sworn personnel and a fire department of 55 firefighters. The City owns and operates its water supply and distribution system and sewage collection and treatment system with secondary treatment also provided. Virtually the entire City has separate storm and sanitary sewer systems. The City operates a municipal off-street and on-street parking system in the downtown area. Since 1971, the City has operated a transit system. The annual budget serves as the foundation for the City’s financial planning and control. All departments of the City are required to submit requests for appropriation to the City Manager in October. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the Council for review in 4 December. The Council is required to hold a public hearing on the proposed budget and to adopt a final budget no later than March 15. The appropriated budget is prepared by fund, function (e.g., Public Safety), and department (e.g., Police). The City adopts a three-year financial plan that includes both operations and capital improvements. This three-year plan permits a more comprehensive review of the City’s financial condition, allowing analysis of the current and future needs and requirements. During preparation of the plan, careful review is made of property tax levy rates, utility and user fee requirements, ending cash balances by fund, debt service obligations, bond financing needs, capital outlay for equipment purchases and major capital improvement projects. The state requires at least a one-year operating budget. While legal spending control is exercised at a state mandated function level, management control is set at the Department Manager level. Encumbrance accounting is utilized in all funds for budgetary control. Encumbrances outstanding at year-end for the governmental fund types are reflected as reservations of the fund balances. Appropriations that are not encumbered lapse at the end of the year. Information useful in assessing the government’s economic condition The City's economic strength is based upon education, medical services, and diversified manufacturing. The University of Iowa is the City’s largest employer with over 23,900 employees and the University of Iowa Hospitals and Clinics is the largest university-owned teaching medical center in the United States. The City also has a significant number of private employers who have a history of providing stable and increasing employment in the community. The relative stability of the University of Iowa, coupled with the City’s multi-sector base of industrial and commercial interests, will continue to help insulate the City from the significant negative economic impacts related to unemployment. The City continues to see sustained production in our major local industries, such as ACT, Proctor & Gamble, and Pearson. Continued economic development efforts involving the Iowa City and Coralville Chambers of Commerce, local private interests, the University of Iowa and other surrounding communities through participation as members of the Iowa City Area Development Group, have proved positive with the retention and expansion of businesses. In addition, the corridor between Iowa City and Cedar Rapids has been identified as one of the major growth areas for new business development in the State of Iowa. Continued developments within Iowa City and the region have a favorable impact upon the City's economy. There have been improvements in the budget challenges faced by the State of Iowa, however, the City's economy as a whole continues to grow. The major employers have been able to maintain their workforce size. The unemployment rate for Johnson County continues to remain low at between 2.3% and 2.9%. The City has consistently experienced modest increases in assessed property valuations. New housing construction continues to be relatively strong with 160 new single-family houses and 203 multi-family units added to the tax rolls for the year ended December 31, 2005. This, along with the low unemployment rate, continues to be indicative of the City's economic well being. The 2000 census population of Iowa City was 62,220. After further review by the United Census Bureau, the population was revised to 62,380 in 2002. This represents a 4.42% increase over the 1990 population of 59,738. In preparing the financial plan for the three years ending June 30, 2009, the process of budget balancing has again been most difficult. With the continued tax limitations imposed by the state (specifically the residential rollback factor) and other federal and state regulations and mandates, 5 the municipal service needs for our growing community are becoming increasingly difficult to satisfy. In balancing the budget for the three-year period, the City attempted to maintain service levels, wherever practical. In addition, our planning has been directed at maintaining our current fiscal strength and avoiding any erosion of that fiscal position, including the City’s Aaa bond rating. A continuing major objective in the three-year financial plan is to maintain or increase the City's cash reserve position. In addition, procedures were adopted to allocate unreserved fund balances between the contingency and undesignated fund balances. The contingency fund is available during the fiscal year for unanticipated and unbudgeted expenditures, while the undesignated fund balance is intended to be maintained as working capital. The City is committed to drawing from the undesignated fund balance only in emergency situations. This unreserved fund balance allocation along with specific budgeting techniques has allowed the City to increase or maintain fund balances over the past year. The City continues to pursue cooperative efforts with other local governments. Joint funding, purchasing, planning and other efforts allow the City to meet mandates for new and improved services in the future at the most reasonable cost. Joint cooperation currently encompasses regional transportation planning, human services, solid waste management planning, a hazardous materials response program, an enhanced 911 emergency communications system, community relations, joint operation of an animal control facility, joint operation of an indoor swimming pool facility, and joint economic development efforts. While such cooperative efforts are not new in concept, the City expects to enter into more agreements with neighboring governmental subdivisions, as well as with the University of Iowa. There are many signs that the City remains healthy and vibrant with great promise for the future. The University of Iowa continues to add new buildings and facilities. The City continues to see sustained production in major local industries. Industrial and commercial interests within the community have continued to thrive. The City will be challenged during the next couple of years to maintain its vitality through greater economic development efforts, fiscal restraint in local government, and continued cooperation among local government officials. We are confident that the City is positioning itself to better meet the needs of the community in the future through more effective long-term financial planning, and increased financial strength and stability of the City. The City Council and its staff are committed to managing the City's destiny well into the future. Major Initiatives The City continues to be proactive in maintaining and building its streets, bridges, storm water mains, and trail systems and spent approximately $10.7 million in fiscal year 2006 on various projects. The major projects were the widening of US Highway 6 from Lakeside Drive to the eastern city limits, including traffic controls; construction of Camp Cardinal Boulevard, an arterial street connecting western Iowa City to Coralville; widening State Highway 1(North Dodge Street) to Interstate 80; and renovation of the Iowa River Dam and Pedestrian Bridge. Construction continued on Phase 1 of the Mormon Trek Boulevard Extension, a three phase project to construct a southern arterial linking western and eastern sides of the City. Phase 1 began in FY02 with design costs, continued with land acquisition in FY03 and construction work concluding in FY06. Cost of Phase 1 was $3.7 million. Phase 2 of the Mormon Trek Boulevard Extension is 6 construction of a box culvert and the closing of an airport runway. Estimated cost of Phase 2 will be $3.6 million. Phase 3 will be the construction of McCollister Road and a bridge spanning the Iowa River. Estimated costs of Phase 3 are $7 million. When all phases are completed, the roadway will serve a combination of through and local traffic needs. Estimated costs for the entire project total $14.3 million with $6 million in federal funding. The Iowa City Housing Authority provides rental assistance for 1100 units, with an annual contribution contract with the Federal Government of $6.4 million. Community Development Block Grant and HOME Community Development Block Grant and Home Investment Partnership funds totaling approximately $2.039 million were utilized for economic development, housing, public services and facilities, and planning activities during fiscal year 2006. The CDBG and HOME funds also leveraged approximately $1.7 million in other funds. These programs provide for broad based financial impacts locally for builders, developers, and others. Financial Information Single Audit: As a recipient of federal financial assistance, the City is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws and regulations related to those programs. These internal accounting and administrative controls are subject to periodic evaluation by the City's management. The results of the City's single audit for the fiscal year ended June 30, 2006 provided no instances of material weaknesses in the internal controls or significant violations of applicable laws and regulations based upon the audit of the basic financial statements. Retirement Plans: With the exception of police and fire employees, substantially all permanent City employees are covered by the Iowa Public Employees Retirement System (IPERS). The state annually sets the contribution rate for all municipal entities and covered employees. All covered employees are required to contribute 3.7% of their salary, while employers contribute 5.75%. There is no allocation or measurement of unfunded liability to any municipal entity and, upon the retirement of employees, IPERS has the sole responsibility for their benefits. The City has no responsibility to pay employee pension benefits of IPERS besides the required contribution. The City’s police and fire employees are covered by the Municipal Fire and Police Retirement System of Iowa (MFPRSI). This statewide system is a cost-sharing multiple-employer public employee retirement system. The state annually sets the contribution rate for all municipal entities and employees. The City has no responsibility to pay employee pension benefits of MFPRSI besides the required contribution. Cash Management: The majority of the City's investment activity is carried on by the City's investment pool, except for those funds which are required to maintain their investments separately. This pooled concept provides for greater investment earnings that are then allocated to the City’s funds on a systematic basis. The intention of the cash management system is to limit the amount of funds placed in accounts where low or no interest is paid. Idle cash is invested in various instruments with various maturity dates of less than one year, depending on the anticipated cash requirements during the period. The overall strategy of holding deposits and making investments is to expose the City to a minimum amount of credit risk and market risk. All bank balances of deposits as of the balance sheet date are 7 entirely insured or collateralized with securities held by the State of Iowa Sinking Fund. For the year ended June 30, 2006, the City earned $5,253,000 from all investments, an increase of $1,906,000 from the prior year. The following table shows how this was allocated by fund type for the fiscal years 2006 and 2005: 2006 2005 Investment Investment Fund Type Earnings Earnings (in thousands) (in thousands) Governmental 2,678 $ 1,576 $ Proprietary 2,575 1,771 Totals 5,253 $ 3,347 $ Risk Management: The City is exposed to a variety of accidental losses and has established a risk management strategy that attempts to minimize losses and the carrying cost of insurance. Risk control techniques have been established to reasonably ensure that the City’s employees are aware of their responsibilities regarding loss exposures related to their duties. In a similar manner, risk control techniques have been established to reduce possible losses to property owned by or under the control of the City. Furthermore, supervisory personnel are held responsible for monitoring risk control techniques on an operational basis. The City completed its sixteenth year under a property and liability insurance program that provides for a $100,000 self-insured retention per occurrence on property losses, a $500,000 self-insured retention per occurrence on liability, and a $400,000 self-insured retention on workers’ compensation losses. The insurance provides coverage for claims in excess of the aforementioned self-insured retention up to a maximum of $19,000,000 annual aggregate of the losses paid. The operating funds pay annual premiums to the Loss Reserve Fund, which is accounted for as an internal service fund. The balance in the Loss Reserve Fund is available to cover the self-insured retention amounts and any uninsured losses. The total assets in the Loss Reserve Fund as of June 30, 2006 were $5,150,000. Independent Audit : Chapter 11 of the Code of Iowa requires an annual audit to be performed. The independent public accounting firm of Eide Bailly LLP was selected by the City. In addition to meeting the requirements set forth in Chapter 11, the audit was also designed to meet the requirements of the Single Audit Act of 1996 and related OMB Circular A-133. The independent auditors’ report on the basic financial statements and combining and individual fund statements and schedules is included in the financial section of this report. The independent auditors’ reports related specifically to the single audit are included in the compliance section of this report. The financial statements are the responsibility of the City. The responsibility of the certified public accountants is to express an opinion on the City’s financial statements based on their audit. An audit is conducted in accordance with generally accepted auditing standards. Those standards require that the audit be planned and performed in a manner to obtain a reasonable assurance as to whether the financial statements are free of material misstatement. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting (the Certificate) to the City of Iowa City, Iowa for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 8 2005. The Certificate is the highest form of recognition for excellence in state and local financial reporting. In order to be awarded the Certificate, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. The Comprehensive Annual Financial Report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. The Certificate is valid for a period of one year only. The City has received the Certificate for the last twenty-one consecutive years.I believe our current report continues to conform to the Certificate requirements and am submitting it to GFOA to determine its eligibility for another certificate. Responsibility and Acknowledgments The Department of Finance prepared the Comprehensive Annual Financial Report of the City of Iowa City, Iowa for the fiscal year ended June 30, 2006. The City Council, as required by law, is responsible for the complete and accurate preparation of the City's Comprehensive Annual Financial Report.I believe that the information presented is accurate in all material respects and that this report fairly presents the financial position and results of operations of the various funds of the City. The preparation of this report on a timely basis could not have been accomplished without the efficient and dedicated services of the entire staff of the City's Finance Department. I would like to express my appreciation to all members of the department who assisted and contributed to -its preparation.I want to especially recognize the contributions of the City's Controller, Robin Marshall, Assistant Controller, Sara Sproule, Senior Accountant, Esther Rusch, and Internal Auditor, Nicole Heinncy Schmitz. Also, I thank the Mayor, members of the City Council and the City Manager for their interest and support in planning and conducting the financial operations of the City in a dedicated, responsible, and progressive manner. 9 Respectfully submitted, Kevin O'Malley Director of Finance Ci t i z e n s o f I o w a C i t y Ci t y At t o r n e y Ci t y Ma n a g e r Ma y o r & Ci t y C o u n c i l Elected Of f i c i a l s Appointed By Council & Mayor Appointed By City Manager Di r e c t o r / Ma n a g e r Em p l o y e d b y Bo a r d o r Co m m i s s i o n Ci t y Cl e r k Li b r a r y Bo a r d o f Tr u s t e e s Bo a r d s & Co m m i s s i o n s Ai r p o r t Co m m i s s i o n Ai r p o r t Ma n a g e r Li b r a r y Di r e c t o r As s i s t a n t Cit y Ma n a g e r Br o a d b a n d Te l e c o m m . Hu m a n R i g h t s Hu m a n Re s o u r c e s Fi r e Ch i e f Ad m i n / Tr a i n i n g Fi r e Pr e v e n t i o n Fi r e Su p p r e s s i o n Ho u s i n g & In s p e c t i o n Se r v i c e s Di r e c t o r Ad m i n . Bu i l d i n g In s p e c t i o n Ho u s i n g Au t h o r i t y Ho u s i n g In s p e c t i o n Fi n a n c e Di r e c t o r Ad m i n i s t r a t i o n Ac c o u n t i n g Pu r c h a s i n g Do c u m e n t Se r v i c e s In f o r m a t i o n Te c h n o l o g y Se r v i c e s Re v e n u e Ri s k Ma n a g e m e n t Pa r k s & Re c r e a t i o n Di r e c t o r Ad m i n i s t r a t i o n CB D M a i n t e n a n c e Ce m e t e r y Fo r e s t r y Go v e r n m e n t Bu i l d i n g s Pa r k s Re c r e a t i o n Pl a n n i n g & Co m m u n i t y De v e l o p m e n t Di r e c t o r Ad m i n i s t r a t i o n Co m m u n i t y & Ec o n o m i c De v e l o p m e n t JC C O G P r o g r a m s Ne i g h b o r h o o d Se r v i c e s Ur b a n P l a n n i n g Po l i c e Ch i e f Ad m i n i s t r a t i o n An i m a l S e r v i c e s Co m m u n i t y Se r v i c e s Cr i m i n a l In v e s t i g a t i o n s Em e r g e n c y Co m m . Pa t r o l Re c o r d s & In v e s t i g a t i o n Pu b l i c W o r k s Director Administration Energy Conservation Engineering Equipment Maintenance Landfill Solid WasteCollection Stormwater Management Streets Traffic Engineering Wastewater Management WaterSenior Center Coordinator Senior Center Pa r k i n g & Tr a n s i t D i r e c t o r Pa r k i n g Tra n s i t O p e r a t i o n s Pa r a - T r a n s i t Key 10 CITY OF IOWA CITY, IOWA LISTING OF CITY OFFICIALS June 30, 2006 ELECTED OFFICIALS Term Expires Mayor Ross Wilburn January 1, 2008 Council Member and Mayor Pro tem Regenia Bailey January 1, 2008 Council Member Connie Champion January 1, 2010 Council Member Amy Correia January 1, 2010 Council Member Bob Elliott January 1, 2008 Council Member Mike O’Donnell January 1, 2010 Council Member Dee Vanderhoef January 1, 2008 APPOINTED OFFICIALS Date of Hire City Manager Stephen J. Atkins July 20, 1986 City Clerk Marian K. Karr May 21, 1979 City Attorney Eleanor Dilkes March 18, 1996 DEPARTMENT DIRECTORS Assistant City Manager Dale E. Helling August 16, 1975 Director of Housing and Inspection Services Douglas W. Boothroy September 22, 1975 Library Director Susan Craig July 28, 1975 Director of Planning & Community Development Karin Franklin May 19, 1980 Director of Public Works Rick Fosse February 22, 1984 Director of Parking and Transit Joseph Fowler January 2, 1970 Senior Center Coordinator Linda Kopping March 20, 1995 Fire Chief Andrew Rocca July 14, 1978 Parks and Recreation Director Terry G. Trueblood February 18, 1986 Director of Finance Kevin O’Malley August 19, 1985 Chief of Police Sam Hargadine August 29, 2005 11 Reporting Presented to City of Iowa City For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2005 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Certificate of Achievement for Excellence in Financial Association 01 tne (Jnitea states ana uanacia to government units and public employee retirement systems whose comprehensive annual financial reports (CAFR5) achieve the highest standards in government accounting and financial reporting. Executive Director President 12 3999 Pennsylvania Ave., Ste. 1001 Dubuque,Iowa 52002-22731 Phone 563.556.17901 Fax 563.557.78421 EOE 7,— CPAs & BUSINESS ADVISORS INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Iowa City, Iowa We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Iowa City, Iowa, as of and for the year ended June 30, 2006, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the management of the City of Iowa City. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall fmancial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Iowa City, Iowa, as of June 30, 2006, and the cLIlu,LLJL 5C41 LIICU CHUCU in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 16, 2006, on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 13 PEOPLE.PRINCIPLES. POSSIBILITIES. The management's discussion and analysis and budgetary comparison information listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements of the City of Iowa City, Iowa. The introductory section, combining nonmajor fund financial statements, and statistical section are presented for purposes of additional analysis and are not a reQuired part of the basic financial statements. The 14 Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-i 33, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the City of Iowa City, Iowa. The combining nonmajor fund financial statements and the Schedule of Expenditures of Federal Awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we express no opinion on them. Dubuque, Iowa November 16, 2006 Management’s Discussion and Analysis As management of the City of Iowa City, we present this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2006. This narrative is intended to be used in conjunction with additional information that is included in the letter of transmittal, which can be found on pages 3 – 9 of this report. Financial Highlights •The assets of the City of Iowa City exceeded its liabilities at the close of the fiscal year ending June 30, 2006 by $326,922,000 (net assets). Of this amount, $53,815,000 (unrestricted net assets) may be used to meet the government’s ongoing obligations to its citizens and creditors. •The City’s total net assets increased by $14,773,000 during the fiscal year. Governmental activities increased by $7,372,000 and business-type activities increased by $7,401,000. •At the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $31,953,000, a decrease of $1,564,000 in comparison with the prior year. Of this total amount, approximately $27,066,000, or 85% was unreserved and is available for spending at the City’s discretion. •At the end of the current fiscal year, the City’s unreserved, undesignated fund balance for the General Fund was $16,551,000, or 38% of total General Fund expenditures. •The City’s total debt decreased by $5,245,000, during the current fiscal year. The key factor to this decrease was the retirement of bonds. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government- wide financial statements, 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements: The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances in a manner similar to a private-sector business. The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets . Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities ) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges ( business-type activities ). The governmental activities of the City include Public Safety, Public Works (roads, traffic controls, and transit), Culture and Recreation, Community and Economic Development, General Government, and Interest on long-term debt. The business-type activities of the City include Airport, Cable Television, Housing Authority, Parking, Sanitation, Stormwater Collection, Wastewater Treatment, and Water. 15 The government-wide financial statements may be found on pages 26 – 29 of this report. Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds: Governmental funds are used to account for essentially the same function reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources , as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements and is typically the basis that is used in developing the next annual budget. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison. The City has five major governmental funds: General Fund, Employee Benefits Fund, Community Development Block Grant Fund, Capital Projects – Bridge, Street, and Traffic Control Construction Fund, and Debt Service Fund. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for these major funds. Data from all other non-major governmental funds is combined into a single aggregated presentation and are referenced under a single column as “Other Governmental Funds”. Individual fund data on each of these non-major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for all governmental funds as required by state statute. Budget comparisons have been provided for the Governmental funds and the Enterprise funds, to demonstrate compliance with the adopted budget. The basic governmental funds financial statements can be found on pages 30 – 35 of this report. Proprietary Funds: The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Airport, Cable Television, Housing Authority, Parking, Sanitation, Stormwater Collection, Wastewater Treatment, and Water activities. Internal Service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City has four Internal Service Funds: Equipment Maintenance, Central Services, Loss Reserve, and Information Technology. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Wastewater Treatment, Water, Sanitation, and Housing Authority Funds are considered to be major funds and are reported individually throughout the report. The other 4 non-major enterprise funds are grouped together for reporting purposes and listed under a single heading “Other Enterprise Funds”. Detailed information for each of the non-major funds is provided in the combining statements on pages 80 – 82. Individual fund data for the Internal Service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 36 – 41 of this report. 16 Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not available to support the City’s own programs and therefore are not reflected in the government-wide financial statements. The City has four fiduciary funds: Project Green, Library Foundation, Parks and Recreation Foundation, and PATV (Public Access Television) which are maintained as agency funds. The basic fiduciary funds financial statements can be found on page 42. Notes to Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 43 – 68 of this report. Other Information: The combining statements referred to in the above paragraphs in connection with non-major governmental funds, non-major enterprise funds, and internal service funds are presented immediately following the notes. Government-wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $326,922,000 at the close of the fiscal year ended June 30, 2006. By far, the largest portion of the City’s net assets reflect its investment in capital assets (e.g., land, building, machinery and equipment, improvements other than buildings, and infrastructure), less any related debt to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Iowa City's Net Assets June 30, 2006 (amounts expressed in thousands) Governmental Business-type activities activities Total 2006 2005 2006 2005 2006 2005 Current and other assets 99,035 $ 94,332 $ 87,544 $ 83,970 $ 186,579 $ 178,302 $ Capital assets 150,644 141,282 252,130 254,560 402,774 395,842 Total Assets 249,679 235,614 339,674 338,530 589,353 574,144 Long-term liabilities outstanding 80,333 79,122 121,239 126,966 201,572 206,088 Current and other liabilities 56,440 50,958 4,419 4,949 60,859 55,907 Total Liabilities 136,773 130,080 125,658 131,915 262,431 261,995 Net assets: Invested in capital assets, net of related debt 95,227 84,768 155,346 150,797 250,573 235,565 Restricted 6,852 16,973 15,682 15,038 22,534 32,011 Unrestricted 10,827 3,793 42,988 40,780 53,815 44,573 Total Net Assets 112,906 $ 105,534 $ 214,016 $ 206,615 $ 326,922 $ 312,149 $ 17 A portion of the City’s net assets (6.9% or $22,534,000) represents resources that are subject to external restrictions on how they may be used. The remaining balance of the unrestricted net assets (16.5% or $53,815,000) may be used to meet the government’s ongoing obligations to its citizens and creditors. At the end of the fiscal year ended June 30, 2006, the City is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. Governmental Activities: Governmental activities increased the City’s net assets by $7,372,000. The increase in net assets of governmental activities is primarily due to expenditures for capital assets less depreciation expense. The following is a more detailed review of FY06’s operation. City of Iowa City's Changes in Net Assets (amounts expressed in thousands) Governmental Business-type activities activities Total 2006 2005 2006 2005 2006 2005 Revenues: Program Revenues: Charges for services 6,296 $ 6,139 $ 33,973 $ 33,647 $ 40,269 $ 39,786 $ Operating grants and contributions 2,937 2,592 7,417 7,012 10,354 9,604 Capital grants and contributions 3,849 7,679 3,018 2,387 6,867 10,066 General Revenues: Property taxes 37,770 35,327 - - 37,770 35,327 Road use tax 5,303 5,269 - - 5,303 5,269 Other taxes 1,240 1,351 - - 1,240 1,351 Earnings on investments 2,678 1,576 2,575 1,771 5,253 3,347 Gain (loss) on disposal of capital assets 100 95 185 304 285 399 Other 4,422 3,994 391 418 4,813 4,412 Total revenues 64,595 64,022 47,559 45,539 112,154 109,561 Expenses: Public safety 16,690 15,286 - - 16,690 15,286 Public works 12,723 11,521 - - 12,723 11,521 Culture and recreation 11,458 11,341 - - 11,458 11,341 Community and economic development 6,264 6,960 - - 6,264 6,960 General government 6,892 6,500 - - 6,892 6,500 Interest on long-term debt 3,404 3,602 - - 3,404 3,602 Wastewater Treatment - - 11,710 12,214 11,710 12,214 Water - - 9,324 8,313 9,324 8,313 Sanitation - - 6,101 6,031 6,101 6,031 Housing Authority - - 7,026 7,466 7,026 7,466 Parking - - 3,884 3,989 3,884 3,989 Airport - - 512 520 512 520 Stormwater - - 817 1,452 817 1,452 Cable Television - - 576 607 576 607 Total expenses 57,431 55,210 39,950 40,592 97,381 95,802 Change in net assets before transfers 7,164 8,812 7,609 4,947 14,773 13,759 Transfers 208 645 (208) (645) - - Change in net assets 7,372 9,457 7,401 4,302 14,773 13,759 Net assets beginning of year 105,534 96,077 206,615 202,313 312,149 298,390 Net assets end of year 112,906 $ 105,534 $ 214,016 $ 206,615 $ 326,922 $ 312,149 $ 18 Business-type Activities: Business-type activities increased the City’s total assets by $7,401,000. The increases in net assets were primarily in the Wastewater, Water, and Sanitation funds. For all business- type activities, revenues exceeded expenses by $7,609,000. This was primarily due to increases in grants and contributions and earnings on investments. The graphs on the following pages represent a breakdown of revenue by source and expenditures by program area for governmental and business-type activities. 19 Governmental Activities FY2006 Revenue by Source Grants and Contributions 11% Charges for services 10% Misc. Other 11% Property taxes 58% Other Taxes 10% Business-Type Activities FY2006 Revenue by Source Charges for services 71% Misc. Other 7%Grants and Contributions 22% 20 Governmental Activities FY2006 Expenditures by Program Area (amounts expressed in thousands) Culture and Recreation Public Safety Interest Expense General Govt Community and Econ Dev Public Works 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Program Area Do l l a r s ( $ ) Business-Type Activities FY2006 Expenditures by Program Area (amounts expressed in thousands) Sanitation Airport Cable TV Water Parking Housing Authority Stormwater Wastewater Treatment 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Program Area Do l l a r s ( $ ) 21 Financial Analysis of the Government’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds: The financial reporting focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information may be/is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the fiscal year ended June 30, 2006, the City’s governmental funds reported combined ending fund balances of $31,953,000, a decrease of $1,564,000 in comparison with the prior year. Of this total amount, $27,066,000 constitutes unreserved fund balance, which is available to use as working capital for the General Fund since property tax revenues are received only twice a year and the remainder is available to meet the future needs of the City . The remainder of the fund balance (15.3%) is reserved to indicate that it is not available for new spending because it has already been committed. This remainder has been committed 1) to liquidate contracts and purchase orders of the prior period ($600,000), 2) to fund various debt service payments ($2,725,000), and 3) to fund employee retirement commitments ($1,299,000). The General Fund is the chief operating fund of the City. As of the fiscal year ended June 30, 2006, the unreserved fund balance of the General Fund was $16,551,000, while General Fund’s total fund balance was $17,121,000. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 38.3% of total General Fund expenditures ($43,158,000), while total fund balance represents 39.7% of that same amount. The fund balance of the City’s General Fund increased by $1,234,000 during the current fiscal year . This was primarily due to an increase in intergovernmental revenue. The Bridge, Street, and Traffic Control Construction Fund had a deficit fund balance of ($1,855,000) as compared to a deficit balance of ($1,210,000) in the prior period. This fund accounts for transactions relating to the acquisition or construction of major streets, bridges, and traffic control facilities. $20,000 of the fund balance (1.1%) is reserved to indicate that it is not available for new spending because it has already been committed to liquidate contracts and purchase orders of the prior period. The deficit is due to capital expenditures. The City anticipates receiving funds from the Iowa Department of Transportation. If not, bonds will be issued in 2007 to cover the capital expenditures. The Debt Service Fund had a fund balance of $2,725,000, a decrease of $342,000 from the prior year, all of which is reserved for the payment of debt service (i.e. payment of general obligation principal and interest). Proprietary Funds : The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The ending net assets of the enterprise funds were $208,152,000, a net asset increase of $7,398,000 . This was primarily due to an increase in the investment of capital assets, net of related debt . Of the enterprise funds’ net assets, $155,346,000 is invested in capital assets, net of related debt. Unrestricted net assets totaled $37,124,000, an increase of $2,205,000 compared to the previous year. The Internal Service funds showed net assets totaling $15,646,000 as of June 30, 2006, an increase of $281,000 from the previous year. Budgetary Highlights The City presents budgetary information as allowed by GASB Statement No. 41. Budgets are based on nine functional areas as required by state statute, not by fund or fund type. 22 The City had two budget amendments during the fiscal year, which is our common practice. These amendments increased the expenditure budget by $25.4 million to a total of $188.2 million. This represented a 15.6 percent increase. The major increase was due to capital projects in governmental and business-type funds due to timing of completion of projects. Capital Assets and Debt Administration Capital Assets: The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2006 amounts to $402,774,000 (net of accumulated depreciation). This investment in capital assets, including land, buildings, improvements other than buildings, equipment, streets, bridges, trails, wastewater and water systems, and other infrastructure represents the value of resources utilized to provide services to its citizens. The City’s investment in capital assets for the fiscal year ended June 30, 2006 increased by $9,363,000 for governmental activities compared to the prior year and decreased by $2,431,000 for business- type activities over the prior year. The following table reflects the $402,774,000 investment in capital assets (net of accumulated depreciation). City of Iowa City's Capital Assets (net of depreciation) (amounts expressed in thousands) Governmental Business-type Activities Activities Total 2006 2005 2006 2005 2006 2005 Land 12,969 $ 12,922 $ 22,997 $ 22,289 $ 35,966 $ 35,211 $ Buildings 44,258 33,766 84,113 87,213 128,371 120,979 Improvements other than buildings 3,672 2,958 8,340 8,697 12,012 11,655 Machinery and equipment 11,027 11,121 12,424 13,336 23,451 24,457 Infrastructure 64,939 64,312 121,064 119,773 186,003 184,085 Construction in progress 13,779 16,202 3,192 3,253 16,971 19,455 Total 150,644 $ 141,281 $ 252,130 $ 254,561 $ 402,774 $ 395,842 $ Major capital asset events during the current fiscal year included the following: • The Court Street Transportation Center opened in September 2005. It includes facilities for interstate bus service, taxi service, a parking facility, day care center and other commercial space. Total construction costs for this project were $11,860,000. • Airport projects included environmental assessment, runway design, grading, lighting, paving and runway extension. CIP at fiscal year end totaled $1,111,000. • A variety of street and bridge construction in new residential areas and replacement and expansion of existing infrastructure amounted to $10,501,000. • The fire department purchased a new aerial ladder truck at a cost of $848,000. • Restoration of the Iowa River Power Dam to preserve the City’s water supplies and reconstruction of a pedestrian bridge and observation platforms were completed at a cost of $2,286,000. • Construction of the fifth landfill cell as part of the landfill master plan. CIP at fiscal year end totaled $1,111,000. Additional information on the City’s capital assets can be found in Note 5 to the financial statements. 23 Debt Administration: At the end of the fiscal year, the City had total bonded debt outstanding of $190,975,000. Of this amount, $85,060,000 comprises debt backed by the full faith and credit of the City. However, 8% of this total, $6,879,000 is debt that serves enterprise funds and is abated by their charges for services. The remaining $105,915,000 represents revenue bonds secured solely by specific revenue sources. City of Iowa City's Outstanding Debt General Obligation and Revenue Bonds (amounts expressed in thousands) Governmental Business-type Activities Activities Total 2006 2005 2006 2005 2006 2005 General obligation bonds 78,181 $ 77,015 $ 6,879 $ 8,275 $ 85,060 $ 85,290 $ Revenue bonds - - 105,915 110,930 105,915 110,930 Total 78,181 $ 77,015 $ 112,794 $ 119,205 $ 190,975 $ 196,220 $ During the current fiscal year the City’s total bonded debt decreased by $5,245,000. • The City issued $7,265,000 in General Obligation bonds during FY06. The bonds were used to finance the cost of the City’s 2006 and 2007 Capital Improvements Programs. The City continues to have the same excellent bond rating on its General Obligation bonds that it has had for the past several years. This rating is given to those bonds judged to be of the best quality and carrying the smallest degree of investment risks. The City's bond ratings by Moody’s Investors Services, Inc. as of June 30, 2006 were as follows: General obligation bonds Aaa Parking revenue bonds A Wastewater treatment revenue bonds A Water revenue bonds A The City continues to operate well under the State debt capacity debt limitations. State statute limits the amount of General Obligation Debt outstanding to 5% of the assessed value of all taxable property in Iowa City. The current debt limitation for the City is $186,629,525. With outstanding General Obligation Debt applicable to this limit of $85,060,000 we are utilizing 46% of this limit. More detailed information on debt administration is provided in Note 6 of the financial statements . Economic Factors and Next Year’s Budget and Rates The City’s expectation is continued constraints by the State property tax formula. Therefore, the City will not have opportunities for new initiatives and will strive to maintain current service delivery levels. Requests for Information This report is designed to provide a general overview of the City of Iowa City’s finances for all of those with an interest in the government’s finances. Questions concerning any of the information provided in this report, or requests for additional financial information should be addressed to City of Iowa City, Finance Department, 410 E. Washington Street, Iowa City, IA, 52240. 24 25 Governmental Business-type Activities Activities Total Assets Equity in pooled cash and investments 39,127 $ 47,914 $ 87,041 $ Receivables: Property tax 39,313 - 39,313 Accounts and unbilled usage 96 3,664 3,760 Interest 667 1,210 1,877 Notes 10,920 1,477 12,397 Internal balances (6,696) 6,696 - Due from other governments 4,600 271 4,871 Prepaid insurance - - - Inventories 430 361 791 Restricted assets: Equity in pooled cash and investments 10,578 25,951 36,529 Capital assets: Land and construction in progress 26,748 26,188 52,936 Other capital assets (net of accumulated depreciation) 123,896 225,942 349,838 Total assets 249,679 339,674 589,353 Liabilities Accounts payable 4,151 467 4,618 Contracts payable 1,768 348 2,116 Accrued liabilities 3,117 292 3,409 Interest payable 286 2,642 2,928 Deposits 815 590 1,405 Due to other governments - 80 80 Unearned revenue 46,303 - 46,303 Noncurrent liabilities: Due within one year: Employee vested benefits 955 241 1,196 Bonds payable 6,715 6,584 13,299 Due in more than one year: Employee vested benefits 880 221 1,101 Notes Payable 211 - 211 Bonds payable 71,572 105,205 176,777 Landfill closure/post-closure liability - 8,988 8,988 Total liabilities 136,773 125,658 262,431 (continued) (amounts expressed in thousands) CITY OF IOWA CITY, IOWA STATEMENT OF NET ASSETS June 30, 2006 26 Governmental Business-type Activities Activities Total Net Assets Invested in capital assets, net of related debt 95,227 $ 155,346 $ 250,573 $ Restricted for or by: Employee benefits 1,299 - 1,299 Debt service 2,725 - 2,725 Streets 2,782 - 2,782 Other purposes 46 - 46 Bond ordinance - 13,254 13,254 State statute - 517 517 Future improvements - 42 42 Grant agreement - 1,869 1,869 Unrestricted 10,827 42,988 53,815 Total net assets 112,906 $ 214,016 $ 326,922 $ The notes to the financial statements are an integral part of this statement. CITY OF IOWA CITY, IOWA STATEMENT OF NET ASSETS (continued) June 30, 2006 (amounts expressed in thousands) 27 Operating Capital Charges Grants and Grants and Functions/Programs: Expenses for Services Contributions Contributions Governmental activities: Public safety 16,690 $ 2,971 $ 253 $ 58 $ Public works 12,723 1,062 837 3,695 Culture and recreation 11,458 707 - 96 Community and economic development 6,264 - 1,847 - General government 6,892 1,556 - - Interest on long-term debt 3,404 - - - Total governmental activities 57,431 6,296 2,937 3,849 Business-type activities: Wastewater Treatment 11,710 12,145 - 773 Water 9,324 9,012 - 606 Sanitation 6,101 7,133 3 46 Housing Authority 7,026 168 7,414 - Parking 3,884 3,936 - - Airport 512 264 - 1,125 Stormwater 817 597 - 468 Cable television 576 718 - - Total business-type activities 39,950 33,973 7,417 3,018 Total 97,381 $ 40,269 $ 10,354 $ 6,867 $ General revenues: Property taxes, levied for general purposes Road use tax Hotel/motel tax Gas and electric tax Earnings on investments Gain on disposal of capital assets Miscellaneous Transfers Total general revenues and transfers Changes in net assets Net assets beginning of year Net assets end of year The notes to the financial statements are an integral part of this statement. Program Revenues CITY OF IOWA CITY, IOWA STATEMENT OF ACTIVITIES For the Year Ended June 30, 2006 (amounts expressed in thousands) 28 Governmental Business-type Activities Activities Total (13,408) $ -$ (13,408) $ (7,129) - (7,129) (10,655) - (10,655) (4,417) - (4,417) (5,336) - (5,336) (3,404) - (3,404) (44,349) - (44,349) - 1,208 1,208 - 294 294 - 1,081 1,081 - 556 556 - 52 52 - 877 877 - 248 248 - 142 142 - 4,458 4,458 (44,349) 4,458 (39,891) 37,770 - 37,770 5,303 - 5,303 674 - 674 566 - 566 2,678 2,575 5,253 100 185 285 4,422 391 4,813 208 (208) - 51,721 2,943 54,664 7,372 7,401 14,773 105,534 206,615 312,149 112,906 $ 214,016 $ 326,922 $ Net (Expense) Revenue and Changes in Net Assets 29 CITY OF IOWA CITY, IOWA BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2006 (amounts expressed in thousands) Capital Projects Bridge, Community Street, and Development Traffic Other Employee Block Control Debt Governmental General Benefits Grant Construction Service Funds Total Assets Equity in pooled cash and investments 18,706 $ 1,233 $ -$ 1,325 $ 2,019 $ 3,844 $ 27,127 $ Receivables: Property tax 21,850 8,420 - - 9,042 1 39,313 Accounts and unbilled usage 93 - - - - 3 96 Interest 322 26 - - 24 103 475 Notes 121 - 10,029 - 387 383 10,920 Advances to other funds 16 - 18 - 247 - 281 Due from other governments 1,540 219 89 2,070 - 644 4,562 Inventories 167 - - - - - 167 Restricted assets: - Equity in pooled cash and investments 1,316 - - - - 9,262 10,578 Total assets 44,131 $ 9,898 $ 10,136 $ 3,395 $ 11,719 $ 14,240 $ 93,519 $ Special Revenue (continued) 30 CITY OF IOWA CITY, IOWA BALANCE SHEET (continued) GOVERNMENTAL FUNDS June 30, 2006 (amounts expressed in thousands) Capital Projects Bridge, Community Street, and Development Traffic Other Employee Block Control Debt Governmental General Benefits Grant Construction Service Funds Total Liabilities and Fund Balances Liabilities: Accounts payable 1,207 $ 4$ 37 $ 1,953 $ -$ 281 $ 3,482 $ Contracts payable - - - 1,233 - 535 1,768 Accrued liabilities 1,123 1 9 16 - 22 1,171 Advances from other funds 850 - 16 - - 247 1,113 Deferred revenue 23,015 8,594 10,047 2,048 8,994 519 53,217 Liabilities payable from restricted assets: Deposits 815 - - - - - 815 Total liabilities 27,010 8,599 10,109 5,250 8,994 1,604 61,566 Fund balances: Reserved for: Inventories 167 - - - - - 167 Encumbrances 307 - - 20 - 273 600 Debt service - - - - 2,725 - 2,725 Employee retirement commitments - 1,299 - - - - 1,299 Perpetual care 96 - - - - - 96 Unreserved Undesignated: General fund 16,551 - - - - 16,551 Special revenue funds - - 27 - - 3,395 3,422 Capital projects funds - - - (1,875) - 8,968 7,093 Total fund balances 17,121 1,299 27 (1,855) 2,725 12,636 31,953 Total liabilities and fund balances 44,131 $ 9,898 $ 10,136 $ 3,395 $ 11,719 $ 14,240 $ 93,519 $ Special Revenue The notes to the financial statements are an integral part of this statement. 31 CITY OF IOWA CITY, IOWA RECONCILIATION OF THE BALANCE SHEET OF THE GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS June 30, 2006 (amounts expressed in thousands) Total governmental fund balances 31,953 $ Amounts reported for governmental activities in the statement of net assets are different because: Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. 15,646 Other long-term assets are not available to pay for current period expenditures and therefore are deferred in the funds: Notes receivable - Earned but unavailable 6,914 Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds. 144,773 Accrued compensated absences are not due and payable in the current period and therefore are not reported in the funds. (1,732) Bonds payable are not due and payable in the current period and therefore are not reported in the funds. (78,287) Notes payable are not due and payable in the current period and therefore are not reported in the funds. (211) Accrued interest on bonds (286) Internal balance due to integration of internal service funds (5,864) Total net assets of governmental activities 112,906 $ The notes to the financial statements are an integral part of this statement. 32 Capital Projects Bridge, Community Street, and Development Traffic Other Employee Block Control Debt Governmental General Benefits Grant Construction Service Funds Total Revenues Taxes 20,897 $ 8,296 $ -$ -$ 8,841 $ 977 $ 39,011 $ Licenses and permits 1,279 - - - - - 1,279 Intergovernmental 3,033 - 1,626 2,606 - 6,995 14,260 Charges for services 2,040 187 - - - - 2,227 Use of money and property 1,677 11 - - 208 307 2,203 Miscellaneous 3,394 - 350 12 100 320 4,176 Total revenues 32,320 8,494 1,976 2,618 9,149 8,599 63,156 Expenditures Current: Public safety 15,678 124 - - - 17 15,819 Public works 8,987 - - 1,290 - 74 10,351 Culture and recreation 9,905 - - - - 217 10,122 Community and economic development 854 - 474 - - 3,370 4,698 General government 6,198 225 - - - 87 6,510 Debt service: Principal - - - - 6,099 - 6,099 Interest - - - - 3,458 - 3,458 Capital outlay 1,536 - 1,458 9,510 - 2,649 15,153 Total expenditures 43,158 349 1,932 10,800 9,557 6,414 72,210 Excess (deficiency) of revenues over (under) expenditures (10,838) 8,145 44 (8,182) (408) 2,185 (9,054) Other Financing Sources (Uses) Issuance of debt - - - 1,000 - 6,265 7,265 Sale of capital assets 91 - - 18 - - 109 Premium (discount) on issuance of bonds - - - (6) - 35 29 Transfers in 13,002 - - 7,370 66 1,189 21,627 Transfers out (1,021) (8,152) (65) (845) - (11,457) (21,540) Total other financing sources and (uses) 12,072 (8,152) (65) 7,537 66 (3,968) 7,490 Net change in fund balances 1,234 (7) (21) (645) (342) (1,783) (1,564) Fund Balances, Beginning 15,887 1,306 48 (1,210) 3,067 14,419 33,517 Fund Balances, Ending 17,121 $ 1,299 $ 27 $ (1,855) $ 2,725 $ 12,636 $ 31,953 $ Special Revenue (amounts expressed in thousands) For the Year Ended June 30, 2006 CITY OF IOWA CITY, IOWA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 33 34 Net change in fund balances - total governmental funds (1,564) $ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the asset. Capital outlays and contributed capital assets exceeded depreciation expense in the current year as follows: Expenditures for capital assets 14,488 $ Capital assets contributed 859 Depreciation expense (5,583) 9,764 Bond proceeds are reported as financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net assets, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net assets. Debt issued (7,265) Premium on bonds issued (29) Repayments of debt 6,099 Amortization of premium 14 (1,181) Because some revenues will not be collected for several months after the City's year end, they are not considered available revenues and are deferred in the governmental funds. 63 Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds: Change in accrued compensated absences (14) Change in accrued interest on debt 40 In the statement of activities, only the gain on the sale of the capital assets is recognized, whereas in the governmental funds, the proceeds from the sale increased financial resources. Thus, the change in net assets differs from the change in fund balance by the cost of the capital asset sold. (9) Prepaid items in the governmental funds have been recorded as expenditures when paid. However, the statement of activities will report these items as expenses in the period that the corresponding net asset is exhausted. (5) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. 278 Change in net assets of governmental activities 7,372 $ The notes to the financial statements are an integral part of this statement. (amounts expressed in thousands) For the Year Ended June 30, 2006 CITY OF IOWA CITY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 35 CITY OF IOWA CITY, IOWA STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2006 (amounts expressed in thousands) (continued) Governmental Activities - Other Internal Wastewater Housing Enterprise Service Treatment Water Sanitation Authority Funds Total Funds Assets Current assets: Equity in pooled cash and investments 10,598 $ 15,013 $ 15,551 $ 2,531 $ 4,221 $ 47,914 $ 12,000 $ Receivables: Accounts and unbilled usage 1,599 1,064 433 187 381 3,664 - Interest 303 324 403 74 106 1,210 192 Notes - - - 1,252 225 1,477 - Advances to other funds - - 2,074 - - 2,074 - Due from other governments - 68 51 64 88 271 38 Inventories - 361 - - - 361 263 Total current assets 12,500 16,830 18,512 4,108 5,021 56,971 12,493 Noncurrent assets: Restricted assets: Equity in pooled cash and investments 9,279 3,389 10,090 1,869 1,324 25,951 - Capital assets: Land 695 6,296 1,055 848 14,102 22,996 45 Buildings 59,486 23,408 999 5,474 29,274 118,641 831 Improvements other than buildings 7,365 2,318 121 9 408 10,221 50 Machinery and equipment 9,810 10,372 153 115 821 21,271 12,193 Infrastructure 83,453 40,281 9,315 - 30,734 163,783 940 Accumulated depreciation (46,118) (12,816) (6,888) (3,104) (19,048) (87,974) (8,188) Construction in progress 60 177 1,114 210 1,631 3,192 - Total noncurrent assets 124,030 73,425 15,959 5,421 59,246 278,081 5,871 Total assets 136,530 90,255 34,471 9,529 64,267 335,052 18,364 Business-type Activities - Enterprise Funds 36 CITY OF IOWA CITY, IOWA STATEMENT OF NET ASSETS (continued) PROPRIETARY FUNDS June 30, 2006 (amounts expressed in thousands) The notes to the financial statements are an integral part of this statement. Governmental Activities - Other Internal Wastewater Housing Enterprise Service Treatment Water Sanitation Authority Funds Total Funds Liabilities Current liabilities: Accounts payable 72 $ 167 $ 94 $ 79 $ 55 $ 467 $ 669 $ Contracts payable - - 155 - 193 348 - Accrued liabilities 129 190 185 58 192 754 2,049 Advances from other funds - - - - 1,224 1,224 - Due to other governments - 10 57 13 - 80 - Bonded debt payable (net of unamortized discounts) 4,073 1,866 - - 645 6,584 - Total current liabilities 4,274 2,233 491 150 2,309 9,457 2,718 Noncurrent liabilities: Liabilities payable from restricted assets: Interest payable 1,657 666 - - 319 2,642 - Deposits - 366 1 210 13 590 - Advances from other funds - - - 18 - 18 - Bonded debt payable (net of unamortized discounts) 63,967 30,930 - - 10,308 105,205 - Landfill closure/postclosure liability - - 8,988 - - 8,988 - Total noncurrent liabilities 65,624 31,962 8,989 228 10,640 117,443 - Total liabilities 69,898 34,195 9,480 378 12,949 126,900 2,718 Net Assets Invested in capital assets, net of related debt 55,376 42,391 5,869 3,552 48,158 155,346 5,871 Restricted by bond ordinance 9,278 2,705 - - 1,271 13,254 - Restricted by state statute - - 517 - - 517 - Restricted for future improvements - - - - 42 42 - Restricted by grant agreement - - - 1,869 - 1,869 - Unrestricted 1,978 10,964 18,605 3,730 1,847 37,124 9,775 Total net assets 66,632 $ 56,060 $ 24,991 $ 9,151 $ 51,318 $ 208,152 15,646 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 5,864 Net assets of business-type activities 214,016 $ Business-type Activities - Enterprise Funds 37 38 CITY OF IOWA CITY, IOWA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) The notes to the financial statements are an integral part of this statement. Governmental Activities - Other Internal Wastewater Housing Enterprise Service Treatment Water Sanitation Authority Funds Total Funds Operating Revenues: Charges for services 12,145 $ 9,012 $ 7,133 $ 168 $ 5,515 $ 33,973 $ 12,427 $ Miscellaneous 40 165 6 87 93 391 - Total operating revenues 12,185 9,177 7,139 255 5,608 34,364 12,427 Operating Expenses: Personal services 1,565 2,024 1,949 801 2,116 8,455 1,633 Commodities 533 1,908 215 29 199 2,884 1,900 Services and charges 2,162 1,765 3,379 6,007 1,216 14,529 8,066 4,260 5,697 5,543 6,837 3,531 25,868 11,599 Depreciation 4,037 1,985 553 178 1,563 8,316 1,342 Total operating expenses 8,297 7,682 6,096 7,015 5,094 34,184 12,941 Operating income (loss) 3,888 1,495 1,043 (6,760) 514 180 (514) Nonoperating Revenues (Expenses): Gain (loss) on disposal of equipment 17 (25) - 180 13 185 64 Operating grants - - 3 7,414 - 7,417 - Interest income 596 741 836 198 204 2,575 479 Interest expense (3,375) (1,607) - - (656) (5,638) - Total nonoperating revenues (expenses) (2,762) (891) 839 7,792 (439) 4,539 543 Income (loss) before capital contributions and transfers 1,126 604 1,882 1,032 75 4,719 29 Capital contributions 773 606 46 - 1,593 3,018 - Transfers in 60 - - 65 917 1,042 255 Transfers out (222) (467) (131) (86) (475) (1,381) (3) Change in net assets 1,737 743 1,797 1,011 2,110 7,398 281 Net Assets, Beginning 64,895 55,317 23,194 8,140 49,208 15,365 Net Assets, Ending 66,632 $ 56,060 $ 24,991 $ 9,151 $ 51,318 $ 15,646 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 3 Change in net assets of business-type activities 7,401 $ Business-type Activities - Enterprise Funds 39 CITY OF IOWA CITY, IOWA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) Governmental Activities - Other Internal Wastewater Housing Enterprise Service Treatment Water Sanitation Authority Funds Total Funds Cash Flows From Operating Activities Receipts from customers and users 12,058 $ 9,188 $ 7,268 $ 42 $ 5,602 $ 34,158 $ 12,531 $ Payments to suppliers (2,823) (3,980) (2,992) (6,030) (1,494) $ (17,319) (10,027) $ Payments to employees (1,561) (2,024) (1,924) (795) (2,094) $ (8,398) (1,220) $ Net cash flows from operating activities 7,674 3,184 2,352 (6,783) 2,014 8,441 1,284 Cash Flows From Noncapital Financing Activities Grants received - - 3 7,414 - 7,417 - Transfers from other funds 60 - - 65 917 1,042 255 Transfers to other funds (222) (467) (131) (86) (475) (1,381) (3) Repayment/(payment) of notes receivable - - - (189) 25 (164) - Advances to other funds - - (212) - - (212) - Repayment of advances from other funds - - - - (35) (35) - Net cash flows from noncapital financing activities (162) (467) (340) 7,204 432 6,667 252 Cash Flows From Capital and Related Financing Activities Capital grants received - - - - 1,125 1,125 - Acquisition and construction of property and equipment (233) (120) (1,691) (241) (1,985) (4,270) (948) Proceeds from sale of property 21 - - 462 13 496 64 Principal paid on bonded debt (3,983) (1,812) - - (616) (6,411) - Interest paid on bonded debt (3,398) (1,607) - - (661) (5,666) - Net cash flows from capital and related financing activities (7,593) (3,539) (1,691) 221 (2,124) (14,726) (884) Cash Flows From Investing Activities Interest on investments 490 635 711 169 159 2,164 404 Net increase (decrease) in cash and cash equivalents 409 (187) 1,032 811 481 2,546 1,056 Cash and Cash Equivalents, Beginning 19,468 18,589 24,609 3,589 5,064 71,319 10,944 Cash and Cash Equivalents, Ending 19,877 $ 18,402 $ 25,641 $ 4,400 $ 5,545 $ 73,865 $ 12,000 $ Business-type Activities - Enterprise Funds 40 CITY OF IOWA CITY, IOWA STATEMENT OF CASH FLOWS (continued) PROPRIETARY FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) The notes to the financial statements are an integral part of this statement. Governmental Activities - Other Internal Wastewater Housing Enterprise Service Treatment Water Sanitation Authority Funds Total Funds Reconciliation of operating income (loss) to net cash flows from operating activities: Operating income (loss) 3,888 $ 1,495 $ 1,043 $ (6,760) $ 514 $ 180 $ (514) $ Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation expense 4,037 1,985 553 178 1,563 8,316 1,342 $ Changes in: Receivables: Accounts and unbilled usage (127) (39) 179 (183) (37) (207) 96 Due from other governments - 53 (50) (27) 29 5 8 Inventories - (1) - - - (1) (23) Accounts payable (127) (284) 47 11 (79) (432) (38) Accrued liabilities 4 - 25 6 22 57 413 Due to other governments (1) (22) (8) (5) - (36) - Deposits - (3) - (3) 2 (4) - Landfill closure/postclosure liability - - 563 - - 563 - Total adjustments 3,786 1,689 1,309 (23) 1,500 8,261 1,798 Net cash flows from operating activities 7,674 $ 3,184 $ 2,352 $ (6,783) $ 2,014 $ 8,441 $ 1,284 $ Noncash Investing, Capital, and Financing Activities: Contributions of fixed assets from government and others 773 $ 606 $ 46 $ -$ 1,593 $ 3,018 $ - Business-type Activities - Enterprise Funds 41 CITY OF IOWA CITY, IOWA STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES June 30, 2006 (amounts expressed in thousands) The notes to the financial statements are an integral part of this statement. Agency Funds Assets Equity in pooled cash and investments 411 $ Accounts receivable 4 Interest receivable 7 Total assets 422 $ Liabilities Accounts payable 108 $ Accrued liabilities 4 Due to agency 310 Total liabilities 422 $ 42 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS June 30, 2006 1. Accounting Policies The City of Iowa City, Iowa, (the City) was incorporated April 6, 1853, and operates under the Council/Manager form of government. The City provides a broad range of services to its citizens including general government, a mass transportation system, public safety, streets, parks, and cultural facilities. It also operates an airport, parking facilities, water treatment, wastewater treatment, stormwater collection, sanitation collection and disposal (including landfill operations), cable television, and a housing authority. The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the City are described below. The Reporting Entity For financial reporting purposes, the City includes all of its funds, organizations, agencies, boards, commissions, and authorities. The City has also considered all potential component units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization’s governing body, and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific financial burdens on the City. There were no component units required to be included. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government. Governmental activities , which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities , which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues . As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s water and sewer function and various other functions of the government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. 43 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Description of Funds These financial statements include all funds owned or administered by the City, for which the City acts as custodian. The City maintains its records on a modified cash basis of accounting under which only cash receipts, cash disbursements and encumbrances, investments, and bonded debt are recorded. These modified cash basis accounting records have been adjusted to the accrual or modified accrual basis, as necessary, to prepare the accompanying financial statements in accordance with GAAP. The accounts of the City are organized on the basis of funds, each of which is considered to be a separate accounting entity. The fund categories are governmental, proprietary, and fiduciary. Each fund is accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, net assets, revenues, and expenditures or expenses, as appropriate. The individual funds account for the governmental resources allocated to them for the purpose of carrying on specific activities in accordance with laws, regulations, or other restrictions. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its “measurement focus.” The government-wide financial statements and proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Agency funds do not have a measurement focus and use the accrual basis of accounting. Under the accrual method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. The City applies all applicable Financial Accounting Standards Board pronouncements issued on or before November 30, 1989, except those that conflict with GASB pronouncements, in accounting and reporting for these funds. All governmental funds are accounted for using a current financial resources measurement focus, which generally includes only current assets and current liabilities on the balance sheet. The modified accrual basis of accounting is used for these funds. Under the modified accrual basis, revenue is recognized when susceptible to accrual, which is in the period in which it becomes both available (collectible within the current period or soon thereafter to be used to pay liabilities of the current period) and measurable (the amount of the transaction can be determined). Revenue accrued includes property taxes, intergovernmental revenue, and interest earned on investments (if they are collected within 60 days after the year-end). Expenditures are recorded when the related fund liability is incurred. Principal and interest on long-term debt, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. 44 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 The Employee Benefits Fund is used to account for the employee benefits related to those employees who are paid through governmental fund types, which are funded by a separate property tax levy. The Community Development Block Grant Fund accounts for revenue from the U.S. Department of Housing and Urban Development’s Community Development Block Grant programs. The Bridge, Street, and Traffic Control Construction Fund accounts for the construction or replacement of infrastructure fixed assets, such as streets, bridges, dams, sidewalks, and lighting systems. The Debt Service Fund accounts for the accumulation of resources for and the payment of general long-term debt principal, interest, and related costs. The City reports the following major proprietary funds: The Wastewater Treatment Fund is used to account for the operation and maintenance of the wastewater treatment facility and sanitary sewer system. The Water Fund is used to account for the operation and maintenance of the water system. The Sanitation Fund is used to account for the operation and maintenance of the solid waste collection system and landfill. The Housing Authority Fund is used to account for the operations and activities of the City’s low and moderate income housing assistance and public housing programs. Additionally, the City reports internal service funds to account for goods and services provided by one department to other City departments on a cost reimbursement basis. The funds in this category are the Equipment Maintenance Fund, Central Services Fund, Loss Reserve Fund , and the Information Technology Fund. The City also reports fiduciary funds which are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City has four fiduciary funds which are maintained as agency funds, with no attempt to create an ongoing fund balance. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and of the City’s internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds -include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. 45 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Uses of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue, expenditures and expenses, as appropriate, during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of landfill closure and postclosure care costs, total capacity of the landfill at closure, and calculation of the costs of claims incurred, but not reported. Cash and Investments The City maintains one primary demand deposit account through which the majority of its cash resources are processed. Substantially all investment activity is carried on by the City in an investment pool, except for those funds required to maintain their investments separately. The earnings on the pooled investments are allocated to the funds on a systematic basis. All investments are stated at fair value except for the Iowa Public Agency Investment Trust (IPAIT) which is valued at amortized cost pursuant to Rule 2a-7 under the Investment Company Act of 1940. For the purpose of the Statement of Cash Flows, restricted and nonrestricted investments with a maturity of three months or less when purchased are considered cash equivalents. Receivables and Revenue Recognition Property tax receivable is recognized in governmental funds on the levy or lien date, which is the date that the tax asking is certified by the City to the County Board of Supervisors. Current year delinquent property tax receivable represents unpaid taxes from the current year. The succeeding year property tax receivable represents taxes certified by the City to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the City is required to certify its budget to the County Auditor by March 15 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, the related revenue is deferred in both the government-wide and fund financial statements and will not be recognized as revenue until the year for which it is levied. Federal and state grants, primarily capital grants, are recorded as receivables and the revenue is recognized during the period in which the City fulfills the requirements for receiving the grant awards, as long as the susceptible to accrual criteria are met. Income from investments in all fund types and from charges for services in proprietary fund types is recognized when earned. Licenses and permits, fines and forfeitures, fees and refunds, charges for services (in governmental fund types), miscellaneous and other revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. 46 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Inventories Inventories are recognized only in those funds in which they are material to the extent of affecting operations. For the City, these are the General Fund, Water Fund, and the Equipment Maintenance Fund. Inventories are reported at the lower of cost (first-in, first-out) or market. The costs of governmental fund type inventories are recorded as expenditures when purchased. Capital Assets Capital assets, which include property, buildings, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The City follows the policy of not capitalizing an asset with an initial, individual cost of less than $50,000 for infrastructure assets and $5,000 for remaining assets. Such assets are recorded at original purchase cost or at fair value at the date of donation when received as donated properties. Depreciation is computed using the straight-line method over the following estimated useful lives: Infrastructure 3 – 100 years Buildings and structures 20 – 50 years Improvements other than buildings 15 – 50 years Vehicles 2 – 20 years Other equipment 5 – 30 years Bond Premiums and Discounts Debt issued at a premium or discount is recorded net of the unamortized premium or discount. In the governmental funds, premiums and discounts are recorded entirely as other financing sources or uses in the year of issuance. In the proprietary funds and the government-wide statements, they are amortized over the life of the bonds. Compensated Absences Permanent City employees accumulate vacation and sick leave hours for subsequent use or for payment upon death, resignation, or retirement. The City pays its employees (except firefighters) one-half of the accumulated sick leave at the time of termination on the basis of the employee’s then effective hourly base salary, provided that the dollar amount of the payment may be up to, but not exceed, the amount that an employee would be paid if the employee had terminated on June 28, 1985. Employees hired on or after June 29, 1985, are not eligible for payment of accumulated sick leave upon termination, death, or retirement. Pensions The provision for pension cost is recorded on the accrual basis (based on statutorily determined contribution rates), and the City’s policy is to fund pension costs as they accrue. 47 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Landfill Closing Costs Costs expected to be incurred in ultimately closing the present landfill site are being systematically provided for through charges to expense over the estimated useful life of the landfill on the basis of capacity used (see Note 13). Budgetary and Legal Appropriation and Amendment Policies The City prepares and adopts an annual function budget, as prescribed by Iowa statutes, for all funds except internal service and agency funds. This is formalized in a separate budgetary report, the Financial Plan. This budget is adopted on or before March 15 of each year to become effective July 1, and constitutes the City’s appropriation for each program and purpose specified therein until amended. The adopted budget must include the following: a. Expenditures for each function: Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital outlay Business-type b. The amount to be raised by property taxation c. Income from sources other than property taxation d. Transfers in and transfers out The legal level of control (the level at which expenditures may not legally exceed appropriations) is the function level for all funds combined, rather than at the individual fund level. Management can transfer appropriations within a function, within a fund type, and between fund types, without the approval of the governing body so long as the total budget by function area will not be exceeded. It is necessary, therefore, to aggregate the expenditures of the budgeted activities within the governmental fund types with the expenditures of the budgeted activities within the enterprise funds on a function basis, and to compare such function totals to function budgeted totals in order to demonstrate legal compliance with the budget. The City’s budget for revenue focuses on the individual fund revenue rather than on aggregated fund totals. The City formally adopts budgets for several funds that are not required by state law to be included in the annual function budget. Annual operating budgets are adopted for the internal service funds for management control purposes. Such budgets, however, are not legally required to be adopted under state statutes. These budgets are adopted and amended at the same time and in the same manner as the City’s annual function budget. 48 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 A City budget for the current fiscal year may be amended for any of the following purposes as prescribed by Iowa statute: a. To permit the appropriation and expenditure of unexpended, unencumbered cash balances on hand at the end of the preceding fiscal year. b. To permit the appropriation and expenditure of amounts anticipated being available from sources other than property taxation. c. To permit transfers between funds. d. To permit transfers between programs. A budget amendment must be prepared and adopted in the same manner as the original budget. The City’s budget was amended as prescribed, and the effects of those amendments are shown in the accompanying budgetary comparison schedule. The original budget was increased by $11.7 million in revenues and other financing sources and by $25.4 million in expenditures and other financing uses. Appropriations as adopted or amended, and not encumbered, lapse at the end of the fiscal year. As allowed by GASB Statement No. 41, Budgetary Comparison Schedules – Perspective Differences, the City presents budgetary comparison schedules as required supplementary information based on the program structure of nine functional areas as required by state statute for its legally adopted budget. Restricted Assets Assets within the individual funds, which can be designated by the City Council for any use within the fund’s purpose, are considered to be unrestricted assets. Assets, which are restricted for specific uses by bonded debt requirements, grant provisions, or other requirements, are classified as restricted assets. Liabilities which are payable from restricted assets, are classified as such. 2. Compliance and Accountability At June 30, 2006 the Capital Project Fund for bridge, street, and traffic control construction reported a deficit fund balance of $1,855,000. The deficit is due to capital expenditures. The City anticipates receiving funds from the Iowa Department of Transportation. If not, bonds will be issued in 2007 to cover the capital expenditures. 3. Cash and Pooled Investments The City’s deposits in banks at June 30, 2006 were entirely covered by federal depository insurance, national credit union administration, or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. 49 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 The City is authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured Iowa depository institutions approved by City Council and secured pursuant to the limitations set forth in Chapter 12C of the Code of Iowa; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; Iowa Public Agency Investment Trust (IPAIT); certain registered open–end management investment companies registered with the Securities & Exchange Commission under the federal Investment Company Act of 1940; certain joint investment trusts; and warrants or improvement certificates of a drainage district. Investments are stated at fair value. In addition, the City had investments in the Iowa Public Agency Investment Trust which are valued at an amortized cost of $3,284,233 pursuant to Rule 2a-7 under the Investment Company Act of 1940. At June 30, 2006 the City had the following investments: Type Fair Value Maturity U S Agencies $1,454,615 November 2006 Van Kampen U S Mutual Fund 164,115 none Interest rate risk. The City’s investment policy limits the investment of general and operating funds to one year, unless a temporary extension of maturities is approved by the City Council. In such cases, the average maturity of each fund’s portfolio shall not exceed 397 days. Funds not identified as operating funds may be invested in instruments whose maturities do not exceed five years at the time of purchase. Credit risk. State law limits investments to commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. It is the City’s policy to comply with rating restrictions. The City’s Van Kampen investment at June 30, 2006 is rated Aaa by Moody’s Investors service. The investment in Iowa Public Agency Investment Trust is not rated by Moody’s Investors service as it is a state security that is backed by the full faith and credit of the issuing government and is not subject to credit risk. Concentration of credit risk. The City investment policy limits the amount that may be invested in any one issuer to a maximum amount approved by the City Council. The aforementioned Iowa Public Agency Investment Trust (IPAIT) and mutual funds represent investments in pools managed by others. IPAIT is a common trust established under Iowa law pursuant to Iowa Code Chapter 28E in 1987 to enable eligible Iowa public agencies to safely and effectively invest their available operating and reserve funds. IPAIT is registered under the Investment Company Act of 1940. The IPAIT portfolios have followed established money market mutual fund investment parameters designed to maintain a $1 per unit net asset value since inception and were registered with the Securities and Exchange Commission (SEC). Due to legal and budgetary reasons, the general fund is assigned a portion of the investment earnings associated with other funds. These funds are the employee benefits, other shared revenue and sanitation funds. 50 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 4. Interfund Balances and Transfers Interfund balances for the year ended June 30, 2006, consisted of the following: Community Development Debt General Block Grant Service Sanitation Total Advances to: General -$ -$ -$ 849,785 $ 849,785 $ Community Development Block Grant 15,574 - - - 15,574 Nonmajor governmental - - 247,067 - 247,067 Housing Authority - 18,000 - 18,000 Nonmajor enterprise - - - 1,223,571 1,223,571 Total 15,574 $ 18,000 $ 247,067 $ 2,073,356 $ 2,353,997 $ Advances from Interfund balances at June 30, 2006, include advances due to/from other funds. Advances to/from other funds represent amounts for construction loans, land and negative cash funding. $1,183,532 of the $1,223,571 advances to the Non-Major Enterprise Funds and $720,157 of the $849,785 advances to the General Fund are not expected to be repaid within the next year. $237,810 of the $247,067 advance to the Non-Major Governmental Funds is not expected to be repaid within the next year. None of the $18,000 advance to Housing Authority is expected to be repaid within the next year. The $15,574 advance to the Community Development Block Grant Fund is expected to be repaid within the next year. 51 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Interfund transfers for the year ended June 30, 2006, consisted of the following: Bridge, Street and Community Traffic Employee Development Control Nonmajor General Benefits Block Grant Construction Governmental Transfer to: General -$ 8,152,026 $ -$ 195,587 $ 4,289,637 $ Debt service 21,250 - - - 44,289 Bridge, street and traffic control construction - - - - 6,697,847 Nonmajor governmental 790,627 - - - 270,258 Wastewater treatment - - - - - Housing - - 64,959 - - Nonmajor enterprise 112,000 - - 649,597 155,058 Internal Service 97,531 - - - - Total transfer to 1,021,408 $ 8,152,026 $ 64,959 $ 845,184 $ 11,457,089 $ Transfer From Transfers are used to move revenues and bond proceeds from the fund that State statutes or the budget requires to collect them to the fund that the State statutes or the budget requires to expend them. 52 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Wastewater Nonmajor Internal Total Treatment Water Sanitation Houisng Enterprise Service Transfer From -$ -$ -$ -$ 362,821 $ 2,500 $ 13,002,571 $ - - - - - - 65,539 153,994 407,044 - - 112,000 - 7,370,885 - 41,841 86,146 - - 1,188,872 - 60,000 - - - - 60,000 - - - - - 64,959 - - - - - 916,655 67,600 - 89,483 - - - 254,614 221,594 $ 467,044 $ 131,324 $ 86,146 $ 474,821 $ 2,500 $ 22,924,095 $ Transfer From 53 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 5. Capital Assets Capital asset activity for the year ended June 30, 2006, was as follows: Acquisitions Disposals Beginning and and Balance July 1, 2005 Transfers Transfers June 30, 2006 Governmental activities: Capital assets, not being depreciated: Land $ 12,922,537 $ 46,861 $ - $ 12,969,398 Construction in progress 16,201,606 13,332,361 15,754,947 13,779,020 Total capital assets, not being depreciated 29,124,143 13,379,222 15,754,947 26,748,418 Capital assets, being depreciated: Buildings 45,282,411 11,911,633 384,490 56,809,554 Improvements other than buildings 3,890,466 887,868 - 4,778,334 Machinery and equipment 30,791,142 3,210,013 1,591,549 32,409,607 Infrastructure 78,939,778 2,709,478 - 81,649,256 Total capital assets being depreciated 158,903,797 18,718,992 1,976,039 175,646,750 Less accumulated depreciation for: Buildings 11,516,340 1,419,551 384,490 12,551,401 Improvements other than buildings 932,513 173,762 - 1,106,275 Machinery and equipment 19,670,152 3,263,629 1,551,603 21,382,178 Infrastructure 14,628,020 2,082,640 - 16,710,660 Total accumulated depreciation 46,747,025 6,939,582 1,936,093 51,750,514 Total capital assets, being depreciated, net $112,156,772 $ 11,779,410 $ 39,946 $ 123,896,236 Governmental activities capital assets, net $141,280,915 $ 25,158,632 $ 15,794,893 $150,644,654 54 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Acquisitions Disposals Beginning and and Balance July 1, 2005 Transfers Transfers June 30, 2006 Business-type activities: Capital assets, not being depreciated: Land $ 22,288,569 $ 787,969 $ 79,500 $ 22,997,038 Construction in progress 3,252,982 3,942,054 4,003,371 3,191,665 Total capital assets, not being depreciated 25,541,551 4,730,023 4,082,871 26,188,703 Capital assets, being depreciated: Buildings 118,625,743 316,053 300,724 118,641,072 Improvements other than buildings 10,147,021 73,934 - 10,220,955 Machinery and equipment 21,098,981 243,595 72,374 21,270,202 Infrastructure 158,944,944 4,837,932 - 163,782,876 Total capital assets being depreciated 308,816,689 5,471,514 373,098 313,915,105 Less accumulated depreciation for: Buildings $ 31,412,533 $ 3,211,098 $ 95,403 $ 34,528,228 Improvements other than buildings 1,450,006 430,633 - 1,880,639 Machinery and equipment 7,762,754 1,126,784 43,552 8,845,986 Infrastructure 39,172,165 3,547,511 - 42,719,676 Total accumulated depreciation 79,797,458 8,316,026 138,955 87,974,529 Total capital assets, being depreciated, net 229,019,231 (2,844,512) 234,143 225,940,576 Business-type activities capital assets, net $254,560,782 $ 1,885,511 $ 4,317,014 $ 252,129,279 Depreciation expense was charged to functions as follows: Governmental activities: Public safety $ 582,414 Public works 2,644,912 Culture and recreation 1,980,292 Community and economic development 37,619 General government 338,572 Internal service funds 1,355,773 Total depreciation expense – governmental activities $ 6,939,582 Business-type activities: Wastewater treatment $ 4,036,633 Water 1,984,988 Sanitation 553,206 Housing authority 178,325 Nonmajor enterprise 1,562,876 Total depreciation expense – business-type activities $ 8,316,026 55 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 6. Bonded and Other Long-Term Debt Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2006, was as follows: July 1, June 30, Due Within 2005 Issues Retirements 2006 One Year Governmental activities: General obligation bonds $ 77,015,377 $ 7,265,000 $ 6,099,222 $ 78,181,155 $ 6,700,525 Plus: Unamortized Premium (discount) 90,026 29,843 14,223 105,646 14,223 Total general obligation bonds 77,105,403 7,294,843 6,113,445 78,286,801 6,714,748 Note payable 211,000 - - 211,000 - Employee vested benefits 1,805,610 952,046 922,823 1,834,833 955,000 $ 79,122,013 $ 8,246,889 $ 7,036,268 $ 80,332,634 $ 7,669,748 Business-type activities: General obligation bonds $ 8,274,623 $ - $ 1,395,778 $ 6,878,845 $ 1,429,475 Less: Unamortized discounts 71,626 - 6,609 65,017 6,609 Total general obligation bonds 8,202,997 - 1,389,169 6,813,828 1,422,866 Revenue bonds 110,930,000 - 5,015,000 105,915,000 5,155,000 Less: Unamortized discounts 1,011,761 - 72,049 939,712 72,049 Total revenue bonds 109,918,239 - 4,942,951 104,975,288 5,082,951 Landfill closure/post- closure 8,425,488 562,189 - 8,987,677 - Employee vested benefits 420,553 259,957 217,920 462,590 241,358 $126,967,277 $ 822,146 $ 6,550,040 $ 121,239,383 $ 6,747,175 A note payable was issued to Greater Iowa City Housing Fellowship for the purchase of an 11 unit apartment building for low income and disabled housing in the Peninsula Neighborhood. The terms of the loan are 1%, interest only payments for twenty years with a final balloon payment of $211,000 due on August 1, 2025. For the governmental activities, employee vested benefits are generally liquidated by the General Fund and Community Development Block Grant Fund. 56 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 General Obligation Bonds Various issues of general obligation bonds totaling $85,060,000 are outstanding as of June 30, 2006. The bonds have interest rates ranging from 2.5% to 5.6% and mature in varying annual amounts ranging from $275,000 to $2,195,000 per issue, with the final maturities due in the year ending June 30, 2023. Interest and principal payments on all general obligation bonds, except tax abated portions recorded in the enterprise funds, are accounted for through the Debt Service Fund. Portions of several general obligation bond issues have been used to acquire or expand the enterprise fund facilities. In some instances, revenue generated by the enterprise funds is used to pay the general long- term debt principal and interest. The liability for those bonds that are expected to be paid by enterprise funds is included in those funds. Annual debt service requirements to maturity for general obligation bonds are as follows: Fiscal Year Ending Governmental Activities Business-type Activities June 30 Principal Interest Principal Interest 2007 6,700,525 3,464,538 1,429,475 284,314 2008 6,578,235 3,222,276 561,765 238,554 2009 6,763,235 2,956,142 561,765 216,001 2010 6,889,538 2,680,499 580,462 192,794 2011 7,130,840 2,392,733 599,160 168,127 2012-2016 30,458,782 7,491,633 2,846,218 435,674 2017-2021 12,375,000 2,021,571 300,000 15,000 2022-2026 1,285,000 104,405 - - Total $ 78,181,155 $ 24,333,797 $ 6,878,845 $ 1,550,464 Revenue Bonds As of June 30, 2006, the following unmatured revenue bond issues are outstanding: Wastewater Parking Treatment Water Original issue amount $ 13,850,000 $ 83,935,000 $ 30,700,000 Interest rates 5.9% to 7.4% 3.5% to 5.8% 2.0% to 5.6% Annual maturities $ 305,000 to $ 270,000 to $ 245,000 to $ 895,000 $ 3,010,000 $ 910,000 Amount outstanding $ 10,725,000 $ 68,485,000 $ 26,705,000 57 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ending Business-type Activities June 30 Principal Interest 2007 5,155,000 5,128,064 2008 5,415,000 4,905,893 2009 5,625,000 4,668,765 2010 5,875,000 4,413,216 2011 6,195,000 4,139,939 2012-2016 28,725,000 16,432,893 2017-2021 31,470,000 9,078,823 2022-2026 17,455,000 1,966,613 $ 105,915,000 $ 50,734,206 The revenue bond ordinances required that wastewater treatment, parking system, and water revenues be set aside into separate and special accounts as they are received. The use and the amounts to be included in the accounts are as follows: Account Amount (a) Revenue Bond and Interest Amount sufficient to pay current bond and interest maturities. Sinking Reserve (b) Revenue Debt Service Reserve Amount required to be deposited in the Revenue Bond and Interest Reserve until the reserve fund equals: Parking Revenue and Water Revenue bonds – maximum debt service due on the bonds in any succeeding fiscal year. Wastewater Revenue bonds – 125% of the average principal and interest payments over the life of all the Wastewater Revenue bonds. (c) Improvement Reserve $20,000 per month until the reserve balance equals or exceeds $2,000,000 for Wastewater Revenue bonds, $5,000 per month until the reserve balance equals or exceeds $300,000 for Parking Revenue bonds and $450,000 for Water Revenue bonds, with no further deposits once the minimum balance is reached. If the reserve falls below the required minimum, monthly transfers in the aforementioned amounts will resume. 58 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Summary of Bond Issues General obligation and revenue bonds payable at June 30, 2006, are comprised of the following issues: Date of Amount Interest Final Outstanding Issue Issued Rates Maturity June 30, 2006 General Obligation Bonds: Multi-Purpose Mar. 1997 $5,200,000 4.5 – 4.7 6/07 $500,000 Water Construction (1) Nov. 1997 5,540,000 4.875 – 5.0 6/17 3,300,000 Multi-Purpose Apr. 1998 8,500,000 4.35 – 4.75 6/13 3,900,000 Multi-Purpose Mar. 1999 9,000,000 4.125 – 4.7 6/18 5,700,000 Multi-Purpose Jul. 2000 14,310,000 5.0 – 5.5 6/18 10,965,000 Multi-Purpose Jun. 2001 11,500,000 4.0 – 4.9 6/16 8,150,000 Multi-Purpose and Library Construction May 2002 29,100,000 3.5 – 5.0 6/21 22,495,000 Refunded Multi-Purpose (3) Oct. 2002 10,600,000 2.5 – 4.0 6/15 4,580,000 Multi-Purpose Nov. 2003 5,570,000 2.5 – 3.6 6/14 4,450,000 Taxable – Urban Renewal Mar. 2004 7,305,000 4.0 – 5.4 6/23 7,305,000 Multi-Purpose Mar. 2005 7,020,000 3.0 – 4.0 6/15 6,450,000 Multi-Purpose Jun. 2006 6,265,000 3.625-4.0 6/16 6,265,000 Multi-Purpose Jun. 2006 1,000,000 5.5 – 5.6 6/16 1,000,000 Total General Obligation Bonds 85,060,000 Date of Amount Interest Final Outstanding Issue Issued Rates Maturity June 30, 2006 Revenue Bonds: Parking Bonds Dec. 1999 $ 11,350,000 5.875 – 6.0 7/24 $10,725,000 Wastewater Treatment Bonds Mar. 1996 18,300,000 5.0 – 5.75 7/21 14,500,000 Wastewater Treatment Bonds May 1997 10,600,000 5.15 – 5.5 7/22 8,575,000 Wastewater Treatment Bonds Jan. 1999 7,000,000 4.25 – 4.87 7/24 5,470,000 Wastewater Treatment Bonds Oct. 2000 12,000,000 5.125 – 5.5 7/25 10,550,000 Wastewater Treatment Bonds Dec. 2001 10,250,000 4.5 – 5.0 7/20 10,250,000 Refunded Wastewater Treatment Bonds (2) May 2002 25,785,000 3.25 – 4.1 7/13 19,140,000 Water Bonds May 1999 9,200,000 4.75 – 5.0 7/25 7,885,000 Water Bonds Dec. 2000 13,000,000 5.0 – 5.625 7/26 11,325,000 Water Bonds Oct. 2002 8,500,000 2.0 – 4.65 7/22 7,495,000 Total Revenue Bonds 105,915,000 $190,975,000 59 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 (1) These bond issues have a portion of the general obligation bonds payable shown as a liability on the balance sheet of the Water Fund. (2) This bond issue refunds the January 1993 Wastewater Revenue Bonds. (3) This bond issue has a portion of the general obligation bonds payable shown as a liability on the balance sheet of the Water Fund, Wastewater Fund, and Parking Fund. Conduit Debt Obligations From time to time, the City has issued Industrial Development Revenue Bonds and Facility Refunding Revenue Bonds to provide financial assistance to private sector entities for the acquisition, construction, and renovation of industrial and commercial facilities deemed to be in the public interest. The bonds are collateralized by the property financed and are payable solely from payments received on the underlying mortgage loans. All payments on the bonds are made by the private sector entities directly to a bond trustee, who is a third party financial institution, and in turn, disburses the payment to the respective bond holders. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2006, there were two series of Industrial Development Revenue Bonds and Facility Refunding Revenue Bonds outstanding, with an aggregate principal amount payable of $44,565,000. Debt Legal Compliance Legal Debt Margin: As of June 30, 2006, the general obligation debt issued by the City did not exceed its legal debt margin computed as follows: Assessed valuation: Real property $3,682,279,290 Utilities 50,311,216 Total valuation $ 3,732,590,506 Debt limit, 5% of total assessed valuation $ 186,629,525 Debt applicable to debt limit: General obligation bonds 85,060,000 Legal debt margin $ 101,569,525 60 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 7. Segment Information The City issued revenue bonds to finance construction of its parking facilities. Summary financial information for the parking department is presented below: Condensed Statement of Net Assets Assets: Current assets $ 2,972 Restricted assets 1,317 Capital assets 18,666 Total assets 22,955 Liabilities: Current liabilities 958 Noncurrent liabilities payable from restricted assets 323 Other noncurrent liabilities 10,308 Total liabilities 11,589 Net assets: Invested in capital assets, net of related debt 8,902 Restricted 1,313 Unrestricted 1,151 $ 11,366 61 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Condensed Statement of Revenues, Expenses, and Changes in Net Assets Operating revenue $ 4,018 Depreciation expense (819) Other operating expenses (2,380) Operating income 819 Nonoperating revenues (expenses): Interest income 143 Interest expense (656) Transfer out (200) Change in net assets 106 Beginning net assets 11,260 Ending net assets $ 11,366 Condensed Statement of Cash Flows Net cash flows from: Operating activities $ 1,550 Noncapital financing activities (175) Capital and related financing activities (1,351) Investing activities 109 Net increase 133 Cash and cash equivalents, beginning 3,698 Cash and cash equivalents, ending $ 3.831 8. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; workplace accidents, errors and omissions; and natural disasters. During fiscal year 1988 the City established the Loss Reserve Fund, an internal service fund, to account for and finance its uninsured risks of loss. During the year ended June 30, 2006 the City purchased property, liability, and workers’ compensation insurance under the program that provides for a $100,000 self-insured retention per occurrence on property losses, a $500,000 self-insured retention per occurrence on liability, and a $400,000 self-insured retention on workers’ compensation losses. The liability insurance provides coverage for claims in excess of the aforementioned self-insured retention up to a maximum of $19,000,000 annual aggregate of losses paid. The operating funds pay annual premiums to the Loss Reserve Fund. Accumulated monies in the Loss Reserve Fund are available to cover the self-insured retention amounts and any uninsured losses. Settled claims have not exceeded this commercial coverage in any of the past eight fiscal years. 62 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 The Housing Authority Fund is insured under a separate policy with the Assisted Housing Risk Management Association. The remaining funds participate in the Loss Reserve Fund. The funds make payments to the Loss Reserve Fund based on actuarial estimates of the amounts needed to pay prior- and current-year claims and to establish a reserve for catastrophic losses. The Fund’s accrued liabilities balance includes a claims liability at June 30, 2006 based on the requirements of GASB Statement No. 10, as amended, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in the Loss Reserve Fund’s claims liability amount for property, liability, and workers’ compensation for the years ended June 30, 2006 and 2005 are as follows: Current-Year Beginning-of- Claims and Balance at Fiscal-Year Changes in Claim Fiscal Liability Estimates Payments Year-End 2004 – 2005 $ 808,000 $ 840,000 $ 534,000 $ 1,114,000 2005 – 2006 1,114,000 1,070,000 745,000 1,439,000 Also, the City is partially self-insured, through stop-loss insurance, for employee health care coverage, which is available to all of its permanent employees. This insurance provides stop-loss coverage for claims in excess of $100,000 per employee with an aggregate stop-loss of $6,393,248. For the year ended June 30, 2006, the aggregate stop-loss was approximately $5,941,466; otherwise, there was no change in coverage from the prior year. The operating funds are charged premiums by the Loss Reserve Fund. The City reimburses a health insurance provider for actual medical costs incurred, plus a claims processing fee. Changes in the Loss Reserve Fund’s claims liability amount for health care coverage for the years ended June 30, 2006 and 2005 are as follows: Current-Year Beginning-of- Claims and Balance at Fiscal-Year Changes in Claim Fiscal Liability Estimates Payments Year-End 2004 – 2005 $ 663,000 $ 3,577,000 $ 3,851,000 $ 389,000 2005 – 2006 389,000 5,317,000 5,261,000 445,000 63 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 9. Contractual Commitments and Contingencies The total outstanding contractual commitments as of June 30, 2006 are as follows: Fund Project Amount Bridge, street and traffic Paving and bridge construction, $ 2,835,615 control construction engineering design and consulting Other construction Transportation center construction center 739,970 Water Water main construction 1,856,161 Parking Fiber interconnect, Garage Repair & Main. 572,326 Sanitation Landfill cell construction 459,564 Airport Runway extension consulting 3,639 Cable TV Refranchising consulting 44,290 Economic development Hotel construction 229,531 $ 6,741,096 10. Contingent Liabilities Litigation The City is a defendant in a number of lawsuits arising principally from claims against the City for alleged improper actions by City employees, with such lawsuits typically involving claims of improper police action, unlawful taking of property by zoning, negligence, appeals of condemnations, and discrimination. Total damages claimed are substantial; however, it has been the City’s experience that such actions are settled for amounts substantially less than claimed amounts. The City’s management estimates that the potential claims against the City, not covered by various insurance policies, would not materially affect the financial condition of the City. The City has the authority to levy additional taxes (outside the regular limit) to cover uninsured judgments against the City. 64 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 11. Pension and Retirement Systems Municipal Fire and Police Retirement System of Iowa The City is a participating employer in the Municipal Fire and Police Retirement System of Iowa (MFPRSI or the Plan), which is a cost-sharing multiple-employer defined benefit public police and fire employees retirement system. All fire fighters and police officers appointed under civil service participate in the Plan. The Plan provides retirement, disability, and death benefits that are established under state statute. The Plan issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to Municipal Fire and Police Retirement System of Iowa, 2836 104 th Street, Urbandale, Iowa 50322. A member may retire at age 55 with 22 years of employment, and receive full benefits that are equal to 66% of the member’s average final compensation for a member retiring after July 1, 2000. Additionally, members retiring on or after July 1, 2000, with more than 22 years of service will receive an additional 2% of the member’s average final compensation for up to 8 years of additional service. Other benefits are also calculated as varying percentages of the average final compensation. Benefits vest after four years of service. Member contribution rates are established by statute. For the fiscal year ended June 30, 2006, members contributed 9.35%. The City’s contribution rate is based upon an actuarially determined normal contribution rate. The normal contribution rate is provided by state statute to be the actuarial liabilities of the Plan less current plan assets, the total then being divided by 1% of the actuarially determined present value of prospective future compensation of all members, further reduced by member contributions. Legislatively appropriated contributions from the state to the Plan may further reduce the City’s contribution rate. However, the City’s contribution rate may not be less than 28.21% of earnable compensation. The City was required to contribute 28.21% of earnable compensation of each member in 2006, 24.92% of earnable compensation in 2005. The contributions paid by the City for the years ended June 30, 2004, 2005, and 2006, were $1,335,065, $1,750,377, and $1,925,332 respectively, and was equal to the required contributions for each year. Iowa Public Employees Retirement System The City contributes to the Iowa Public Employees Retirement System (IPERS), which is a cost-sharing multiple-employer defined benefit pension plan administered by the State of Iowa. IPERS provides retirement and death benefits, which are established by State statute to plan members and beneficiaries. IPERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to IPERS, P.O. Box 9117, Des Moines, Iowa 50306-9117. All employees, except temporary employees of six months or less of employment duration, who do not participate in any other public retirement system in the state are eligible and must participate in IPERS. The pension plan provides retirement and death benefits that are established by state statute. Generally, a member may retire at the age of 65, or any time after age 62 and 26 years or more of service, or when age plus years of service equals or exceeds 88, and receive unreduced (for age) benefits. Members may also retire at the age of 55 or more at reduced benefits. Benefits vest after four years of service or after attaining the age of 55. Full benefits are equal to 60% of the average of the highest three years of covered wages times years of service divided by 30. 65 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 Plan members are required to contribute 3.70% of their annual covered salary and the City is required to contribute 5.75% of annual covered payroll. Contribution requirements are established by state statute. The City’s contributions to IPERS for the years ended June 30, 2004, 2005, and 2006, were $1,240,324, $1,247,065, and $1,329,784 respectively, and were equal to the required contributions for each year. 12. Post-Employment Benefits All full-time employees who retire or become disabled are offered the following post-employment benefit options: Health insurance – The option of continuing with the City’s health insurance plan at the individual’s own cost. Life insurance – The option of converting the employee’s City-paid policy from term insurance to whole life insurance at the individual’s expense with the City’s life insurance carrier. Long-term disability – 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. However, the City cannot reasonably estimate the amount of this subsidy and it is being expensed as incurred by the City. 13. Landfill Closure and Postclosure Care Costs In August 1993, the GASB issued Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs (the Statement). Under these rules, in addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and postclosure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. The estimated liability for landfill closure and postclosure care costs as of June 30, 2006, is approximately $8,988,000, which is based on 72% usage (filled) of the landfill and is included in accrued liabilities within the Sanitation Fund. It is estimated that an additional amount of approximately $4,513,000 will be recognized as closure and postclosure care expenses between the date of the balance sheet and the date the landfill is expected to be filled to capacity by the year ended June 30, 2019. The estimated total current cost of the landfill closure and postclosure care costs at June 30, 2006, was determined by engineers from Howard R. Green Company and approximated $12,379,000. It is based on the amount that would be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of June 30, 2006. These amounts are based on an estimated postclosure care and monitoring period of 30 years, consistent with current State Department of Natural Resources regulations. However, the actual cost of closure and postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. 66 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 The City is required by federal and state laws and regulations to provide some form of financial assurance to finance closure and postclosure care. The City will meet its financial assurance obligations through the issuance of general obligation bonds. As of June 30, 2006, the Sanitation Fund had $9,571,691 in related equity in pooled cash and investments, at fair value designated for satisfaction of postclosure costs. The City estimates that these cash reserves will only provide a fraction of the dollars needed to close and monitor the landfill. The remaining portion of postclosure care costs, anticipated future inflation costs and additional costs that might arise from changes in postclosure requirements (due to changes in technology or more rigorous environmental regulations, for example) may need to be covered by charges to future landfill users as well as City taxpayers. 14. New Governmental Accounting Standards Board (GASB) Standards The Governmental Accounting Standards Board (GASB) has issued four statements not yet implemented by the City. The statements, which might impact the City are as follows: Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans issued April 2004, will be effective for the City for the fiscal year ending June 30, 2008. This statement establishes uniform financial reporting standards for other postemployment benefit (OPEB) plans and supersedes the interim guidance included in Statement No. 26. This statement affects reporting by administrators or trustees of OPEB plan assets or by employers or sponsors that include OPEB plan assets as trust or agency funds in their financial reports. Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions issued June 2004, will be effective for the City for the fiscal year ending June 30, 2009. This statement establishes standards for the measurement, recognition, and display of (OPEB) expense/expenditures and related liabilities (assets), note disclosures and, if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. Statement No. 47, Accounting for Termination Benefits issued June 2005, establishes accounting standards for termination benefits. For termination benefits provided through an existing defined benefit OPEB plan, the provisions of this Statement should be implemented simultaneously with the requirements of Statement 45. Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues issued September 2006, will be effective for the fiscal year ending June 30, 2008. This statement establishes standards for transactions in which a government receives, or is entitled to, resources in exchange for future cash flows generated by collecting specific receivables or specific future revenues. It also establishes standards that apply to all intra-entity transfers of assets and future revenues. The City’s management has not yet determined the effect these statements will have on the City’s financial statements. 67 CITY OF IOWA CITY, IOWA NOTES TO FINANCIAL STATEMENTS (continued) June 30, 2006 15. Subsequent events On September 15, 2006 the City of Iowa City received and awarded capital loan notes for General Obligation Refunding Capital Loan Notes, Series 2006C in the amount of $3,350,000. The notes were issued to current refund, on September 22, 2006, $3,300,000 of the City’s outstanding General Obligation Bonds, Series 1997A, dated November 1, 1997. 68 69 Governmental Fund Types Enterprise Fund Actual Budgetary Types Actual Total Actual Basis Budgetary Basis Budgetary Basis Revenues: Property Tax 36,698 $ -$ 36,698 $ Tax increment financing taxes 976 - 976 Other city taxes 1,274 - 1,274 Licenses and permits 1,286 4 1,290 Intergovernmental 14,852 8,777 23,629 Charges for services 3,924 31,899 35,823 Use of money and property 1,694 2,561 4,255 Miscellaneous 2,645 1,781 4,426 Total revenues 63,349 45,022 108,371 Expenditures/Expenses: Public safety 16,187 - 16,187 Public works 9,625 - 9,625 Culture and recreation 9,450 - 9,450 Community and economic development 7,411 - 7,411 General government 6,471 - 6,471 Debt service 11,299 - 11,299 Capital outlay 12,971 - 12,971 Business-type - 40,019 40,019 Total expenditures/expenses 73,414 40,019 113,433 Excess (deficiency) of revenues over (under) expenditures/expenses (10,065) 5,003 (5,062) Other financing sources, net 10,253 (2,588) 7,665 Net change in fund balances 188 2,415 2,603 Balances, beginning of year 37,364 71,233 108,597 Balances, end of year 37,552 73,648 111,200 See Note to Required Supplementary Information. City of Iowa City, Iowa Budgetary Comparison Schedule Budget and Actual - All Governmental Funds and Enterprise Funds - Budgetary Basis Required Supplementary Information For the Year Ended June 30, 2006 (dollar amounts expressed in thousands) 70 Final to Actual Variance - Positive Original Final (Negative) 36,460 $ 36,460 $ 238 $ 837 837 139 1,322 1,385 (111) 1,250 1,251 39 23,166 26,788 (3,159) 36,717 36,632 (809) 1,806 2,170 2,085 3,725 4,569 (143) 105,283 110,092 (1,721) 16,128 17,591 1,404 9,651 10,800 1,175 9,756 10,732 1,282 4,907 8,690 1,279 6,933 7,042 571 11,436 11,436 137 15,463 24,765 11,794 44,616 46,610 6,591 118,890 137,666 24,233 (13,607) (27,574) 22,512 8,949 9,189 (1,524) (4,658) (18,385) 20,988 97,984 107,960 93,326 89,575 Budgeted Amounts 71 Accrual Modified Accrual Budget Basis Adjustments Basis Revenues 63,349 $ (193) $ 63,156 $ Expenditures 73,414 (1,204) 72,210 Net (10,065) 1,011 (9,054) Other financing sources (uses) 10,253 (2,763) 7,490 Beginning Fund Balances 37,364 $ (3,847) $ 33,517 $ Ending Fund Balances 37,552 $ (5,599) $ 31,953 $ Accrual Accrual Budget Basis Adjustments Basis Revenues 45,022 $ (6,119) $ 38,903 $ Expenditures 40,019 (5,835) 34,184 Net 5,003 (284) 4,719 Other financing sources (uses) (2,588) 9,986 7,398 Beginning Fund Balances 71,233 129,521 $ 200,754 Ending Fund Balances 73,648 $ 139,223 $ 212,871 $ See Note to Required Supplementary Information. City of Iowa City, Iowa Governmental Fund Types Enterprise Fund Types Budgetary Comparison Schedule Budget to GAAP Reconciliation Required Supplementary Information For the Year Ended June 30, 2006 (dollar amounts expressed in thousands) 72 City of Iowa City, Iowa Note to Required Supplementary Information - Budgetary Reporting For the Year Ended June 30, 2006 In accordance with Code of Iowa, the City Council annually adopts a budget following required public notice and hearing which includes all funds, except internal service funds and agency funds. The budget basis of accounting is cash basis. The annual budget may be amended during the year utilizing similar statutorily prescribed procedures. Formal and legal budgetary control is based upon nine major classes of expenditures known as functions, not by fund or fund type. These nine functions are: public safety, public works, health and social services, culture and recreation, community and economic development, general government, debt service, capital outlay and business-type. The legal level control is at the aggregated function level, not at the fund or fund type level. During the year, budget amendments increased budgeted expenditures by $18,776,000. The budget amendments were primarily due to changes in breadth and timing of capital improvement projects as well as changes necessitated by emergency protective measures, clean-up costs and uninsured losses from a tornado. 73 74 NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special Revenue Funds account for revenues derived from specific sources that are required to be accounted for as separate funds. The funds in this category and their purpose are as follows: Other Shared Revenue and Grants Fund – accounts for revenue from various sources, primarily road use tax monies from the State of Iowa and reimbursable programs funded by federal and state grants. Economic Development Fund – accounts for revenue and expenditures of economic development activities. Johnson County Council of Governments Fund – accounts for the financial activities of the metropolitan/rural cooperative planning organization. CAPITAL PROJECTS FUNDS Capital Projects Funds are utilized to account for all resources used in the acquisition and construction of capital facilities and other major fixed assets, with the exception of those that are financed by proprietary fund monies. The fund in this category is as follows: Other Construction Fund – accounts for the construction or replacement of other City general fixed assets, such as administrative buildings with various funding sources, including general obligation bonds, intergovernmental revenues and contributions. 75 CITY OF IOWA CITY, IOWA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2006 (amounts expressed in thousands) Capital Projects Other Johnson Shared County Revenue and Economic Council of Other Grants Development Governments Construction Total Assets Equity in pooled cash and investments 2,568 $ 557 $ 26 $ 693 $ 3,844 $ Receivables: Property tax - 1 - - 1 Accounts and unbilled usage - - - 3 3 Interest 46 9 - 48 103 Notes 383 - - - 383 Due from other governments 421 - 37 186 644 Restricted assets: Equity in pooled cash and investments 4 - - 9,258 9,262 Total assets 3,422 $ 567 $ 63 $ 10,188 $ 14,240 $ Liabilities and Fund Balances Liabilities: Accounts payable 6$ -$ -$ 275 $ 281 $ Contracts payable - - - 535 535 Accrued liabilities 4 - 17 1 22 Advances from other funds 247 - - - 247 Deferred revenue 383 - - 136 519 Total liabilities 640 - 17 947 1,604 Fund balances: Reserved for: Encumbrances - - - 273 273 Unreserved Designated for future improvements 8,968 8,968 Undesignated 2,782 567 46 - 3,395 Total fund balances 2,782 567 46 9,241 12,636 Total liabilities and fund balances 3,422 $ 567 $ 63 $ 10,188 $ 14,240 $ Special Revenue 76 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) Capital Projects Other Johnson Shared County Revenue and Economic Council of Other Grants Development Governments Construction Total Revenues Property taxes -$ 977 $ -$ -$ 977 $ Intergovernmental 5,391 500 251 853 6,995 Use of money and property 39 44 - 224 307 Miscellaneous 51 - 48 221 320 Total revenues 5,481 1,521 299 1,298 8,599 Expenditures Current: Public safety - - - 17 17 Public works 2 - - 72 74 Culture and recreation 217 217 Community and economic development 144 2,562 588 76 3,370 General government 87 87 Capital outlay 104 - 7 2,538 2,649 Total expenditures 250 2,562 595 3,007 6,414 Excess (deficiency) of revenues over (under) expenditures 5,231 (1,041) (296) (1,709) 2,185 Other Financing Sources (Uses) Issuance of bonds - - - 6,265 6,265 Premium (discount) on issuance of bonds - - - 35 35 Transfers in 228 - 294 667 1,189 Transfers out (7,195) - - (4,262) (11,457) Total other financing sources and (uses) (6,967) - 294 2,705 (3,968) Net change in fund balances (1,736) (1,041) (2) 996 (1,783) Fund Balances, Beginning 4,518 1,608 48 8,245 14,419 Fund Balances, Ending 2,782 $ 567 $ 46 $ 9,241 $ 12,636 $ Special Revenue 77 78 NONMAJOR ENTERPRISE FUNDS Enterprise Funds account for operations and activities of the City that are financed and operated in a manner similar to a private business enterprise, and where the costs of providing services to the general public on a continuing basis are expected to be financed or recovered primarily through user charges, or where the City has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The funds in this category are as follows: Parking Fund – accounts for the operation and maintenance of the “on” and “off” street public parking facilities. Airport Fund – accounts for the operation and maintenance of the airport facility. Stormwater Fund – accounts for the operation and maintenance of the stormwater operation. Cable Television Fund – accounts for the operation and maintenance of the Broadband Telecommunications Commission that oversees the franchise agreement with the cable television company, including production and broadcasting on the government television channels. 79 Cable Parking Airport Stormwater Television Total Assets Current assets: Equity in pooled cash and investments 2,514 $ 78 $ 767 $ 862 $ 4,221 $ Receivables: Accounts and unbilled usage 152 - 65 164 381 Interest 81 2 11 12 106 Notes 225 - - - 225 Due from other governments - 88 - - 88 Total current assets 2,972 168 843 1,038 5,021 Noncurrent assets: Restricted assets: Equity in pooled cash and investments 1,317 7 - - 1,324 Capital assets: Land 3,938 8,034 2,130 - 14,102 Buildings 25,039 3,494 - 741 29,274 Improvements other than buildings - 408 - - 408 Machinery and equipment 404 184 127 106 821 Infrastructure - 1,860 28,874 - 30,734 Accumulated depreciation (10,857) (2,981) (5,004) (206) (19,048) Construction in progress 142 1,489 - - 1,631 Total noncurrent assets 19,983 12,495 26,127 641 59,246 Total assets 22,955 12,663 26,970 1,679 64,267 Liabilities Current liabilities: Accounts payable 37 15 2 1 55 Contracts payable 144 49 - - 193 Accrued liabilities 132 8 6 46 192 Advances from other funds - 1,224 - - 1,224 Bonded debt payable (net of unamortized discounts) 645 - - - 645 Total current liabilities 958 1,296 8 47 2,309 Noncurrent liabilities: Liabilities payable from restricted assets: Interest payable 319 - - - 319 Deposits 4 9 - - 13 Bonded debt payable (net of unamortized discounts) 10,308 - - - 10,308 Total noncurrent liabilities 10,631 9 - - 10,640 Total liabilities 11,589 1,305 8 47 12,949 Net Assets Invested in capital assets, net of related debt 8,902 12,488 26,127 641 48,158 Restricted by bond ordinance 1,271 - - - 1,271 Restricted for future improvements 42 - - - 42 Unrestricted 1,151 (1,130) 835 991 1,847 Total net assets 11,366 $ 11,358 $ 26,962 $ 1,632 $ 51,318 $ (amounts expressed in thousands) CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS June 30, 2006 80 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) Cable Parking Airport Stormwater Television Total Operating Revenues: Charges for services 3,936 $ 264 $ 597 $ 718 $ 5,515 $ Miscellaneous 82 9 1 1 93 Total operating revenues 4,018 273 598 719 5,608 Operating Expenses: Personal services 1,499 69 116 432 2,116 Commodities 101 59 20 19 199 Services and charges 780 218 136 82 1,216 2,380 346 272 533 3,531 Depreciation 819 162 545 37 1,563 Total operating expenses 3,199 508 817 570 5,094 Operating income (loss) 819 (235) (219) 149 514 Nonoperating Revenues (Expenses): Gain on disposal of equipment - 13 - - 13 Interest income 143 3 27 31 204 Interest expense (656) - - - (656) Total nonoperating revenues (expenses) (513) 16 27 31 (439) Income (loss) before transfers 306 (219) (192) 180 75 Capital contributions - 1,125 468 - 1,593 Transfers in - 243 674 - 917 Transfers out (200) - (112) (163) (475) . Change in net assets 106 1,149 838 17 2,110 Net Assets, Beginning 11,260 10,209 26,124 1,615 49,208 Net Assets, Ending 11,366 $ 11,358 $ 26,962 $ 1,632 $ 51,318 $ 81 Cable Parking Airport Stormwater Television Total Cash Flows From Operating Activities Receipts from customers and users 3,989 $ 302 $ 592 $ 719 $ 5,602 $ Payments to suppliers (955) (270) (166) (103) (1,494) Payments to employees (1,484) (68) (116) (426) (2,094) Net cash flows from operating activities 1,550 (36) 310 190 2,014 Cash Flows From Noncapital Financing Activities Transfers from other funds - 243 674 - 917 Transfers to other funds (200) - (112) (163) (475) Repayment of advances from other funds - (35) - - (35) Repayment of notes receivable 25 - - - 25 Net cash flows from noncapital financing activities (175) 208 562 (163) 432 Cash Flows From Capital and Related Financing Activities Capital grants received - 1,125 - - 1,125 Acquisition and construction of property and equipment (74) (1,255) (654) (2) (1,985) Proceeds from sale of property - 13 - - 13 Principal paid on bonded debt (616) - - - (616) Interest paid on bonded debt (661) - - - (661) Net cash flows from capital and related financing activities (1,351) (117) (654) (2) (2,124) Cash Flows From Investing Activities Interest on investments 109 2 21 27 159 Net increase (decrease) in cash and cash equivalents 133 57 239 52 481 Cash and Cash Equivalents, Beginning 3,698 28 528 810 5,064 Cash and Cash Equivalents, Ending 3,831 $ 85 $ 767 $ 862 $ 5,545 $ Reconciliation of operating income (loss) to net cash flows from operating activities: Operating income (loss) 819 $ (235) $ (219) $ 149 $ 514 $ Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation expense 819 162 545 37 1,563 Changes in: Receivables: Accounts and unbilled usage (31) - (6) - (37) Due from other governments - 29 - - 29 Accounts payable (74) 7 (10) (2) (79) Accrued liabilities 15 1 - 6 22 Deposits 2 - - - 2 Total adjustments 731 199 529 41 1,500 Net cash flows from operating activities 1,550 $ (36) $ 310 $ 190 $ 2,014 $ Noncash Investing, Capital, and Financing Activities: Contributions of capital assets from government and others -$ 1,125 $ 468 $ -$ 1,593 $ (amounts expressed in thousands) CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS For the Year Ended June 30, 2006 82 INTERNAL SERVICE FUNDS Internal Service Funds account for goods and services provided by one department to other City departments on a cost-reimbursement basis. The funds in this category are: Equipment Maintenance Fund – accounts for the provision of maintenance for City vehicles and equipment and vehicle rental to other City departments from a central vehicle pool. Central Services Fund – accounts for the support services of photocopying, paper supplies, mail, overnight shipping, and two-way radios provided to other City departments. Loss Reserve Fund – accounts for the property, liability, Workers’ Compensation and health insurance premiums and claims activity for City departments, including the self-insured retention portion. Information Technology Fund – accounts for the accumulation and allocation of costs associated with telecommunications and data processing, including the operation and replacement of equipment. 83 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS June 30, 2006 (amounts expressed in thousands) Equipment Central Loss Information Maintenance Services Reserve Technology Total Assets Current assets: Equity in pooled cash and investments 4,311 $ 369 $ 5,067 $ 2,253 $ 12,000 $ Receivables: Interest 66 6 83 37 192 Due from other governments 38 - - - 38 Inventories 263 - - - 263 Total current assets 4,678 375 5,150 2,290 12,493 Noncurrent assets: Capital assets: Land 45 - - - 45 Buildings 578 - - 253 831 Improvements other than buildings 50 - - - 50 Machinery and equipment 10,568 264 - 1,361 12,193 Infrastructure - - - 940 940 Accumulated depreciation (6,897) (170) - (1,121) (8,188) Total noncurrent assets 4,344 94 - 1,433 5,871 Total assets 9,022 469 5,150 3,723 18,364 Liabilities Accounts payable 123 6 521 19 669 Accrued liabilities 88 2 1,895 64 2,049 Total liabilities 211 8 2,416 83 2,718 Net Assets Invested in capital assets, net of related debt 4,344 94 - 1,433 5,871 Unrestricted 4,467 367 2,734 2,207 9,775 Total net assets 8,811 $ 461 $ 2,734 $ 3,640 $ 15,646 $ 84 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) Equipment Central Loss Information Maintenance Services Reserve Technology Total Operating Revenues: Charges for services 3,615 $ 286 $ 6,837 $ 1,689 $ 12,427 $ Total operating revenues 3,615 286 6,837 1,689 12,427 Operating Expenses: Personal services 736 31 197 669 1,633 Commodities 1,483 15 60 342 1,900 Services and charges 247 204 7,082 533 8,066 2,466 250 7,339 1,544 11,599 Depreciation 1,074 34 - 234 1,342 Total operating expenses 3,540 284 7,339 1,778 12,941 Operating income (loss) 75 2 (502) (89) (514) Nonoperating Revenues (Expenses): Gain on disposal of equipment 60 - - 4 64 Interest income 161 15 201 102 479 Total nonoperating revenues 221 15 201 106 543 Income before capital contributions Income before transfers 296 17 (301) 17 29 Transfers in 254 - - 1 255 Transfers out (3) - - - (3) Change in net assets 547 17 (301) 18 281 Net Assets, Beginning 8,264 444 3,035 3,622 15,365 Net Assets, Ending 8,811 $ 461 $ 2,734 $ 3,640 $ 15,646 $ 85 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) Equipment Central Loss Information Maintenance Services Reserve Technology Total Cash Flows From Operating Activities Receipts from customers and users 3,623 $ 286 $ 6,933 $ 1,689 $ 12,531 $ Payments to suppliers (1,818) (215) (7,085) (909) (10,027) Payments to employees (723) (31) 189 (655) (1,220) Net cash flows from operating activities 1,082 40 37 125 1,284 Cash Flows From Noncapital Financing Activities Transfers from other funds 254 - - 1 255 Operating transfers to other funds (3) - - - (3) Net cash flows from noncapital financing activities 251 - - 1 252 Cash Flows From Capital and Related Financing Activities Acquisition and construction of property and equipment (918) (12) - (18) (948) Proceeds from sale of property 60 - - 4 64 Net cash flows from capital and related financing activities (858) (12) - (14) (884) Cash Flows From Investing Activities Interest on investments 137 12 166 89 404 Net increase in cash and cash equivalents 612 40 203 201 1,056 Cash and Cash Equivalents, Beginning 3,699 329 4,864 2,052 10,944 Cash and Cash Equivalents, Ending 4,311 $ 369 $ 5,067 $ 2,253 $ 12,000 $ Reconciliation of operating income (loss) to net cash flows from operating activities: Operating income (loss) 75 $ 2$ (502) $ (89) $ (514) $ Adjustments to reconcile operating income (loss) to net cash flows from operating activities: Depreciation expense 1,074 34 - 234 1,342 Changes in: Receivables: Accounts and unbilled usage - - 96 - 96 Due from other governments 8 - - - 8 Inventories (23) - - - (23) Accounts payable (65) 4 57 (34) (38) Accrued liabilities 13 - 386 14 413 Total adjustments 1,007 38 539 214 1,798 Net cash flows from operating activities 1,082 $ 40 $ 37 $ 125 $ 1,284 $ 86 AGENCY FUNDS The Agency Funds account for assets held by the City in a trustee or custodial capacity for other entities, such as individuals, private organizations, or other governmental units. The funds in this category are: Project Green Fund – accounts for donations that are received to plant and develop yards and lawns, both public and private, within Iowa City. Library Foundation – accounts for donations that are made to support the library development office. Parks and Recreation Foundation – accounts for donations that are received for park improvements. PATV – accounts for investments made on behalf of Public Access Television. 87 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) Balance Balance July 1, 2005 Increases Decreases June 30, 2006 Project Green Assets Equity in pooled cash and investments 203 $ 99 $ 61 $ 241 $ Interest receivable 2 4 2 4 Total assets 205 $ 103 $ 63 $ 245 $ Liabilities Accounts payable 6$ 54 $ 6$ 54 $ Due to agency 199 49 57 191 Total liabilities 205 $ 103 $ 63 $ 245 $ Library Foundation Assets Equity in pooled cash and investments -$ 2$ -$ 2$ Accounts receivable 16 4 16 4 16 $ 6$ 16 $ 6$ Liabilities Accounts payable 12 $ 1$ 12 $ 1$ Accrued liabilities 3 4 3 4 Due to agency 1 1 1 1 Total liabilities 16 $ 6$ 16 $ 6$ Parks and Recreation Foundation Assets Equity in pooled cash and investments 51 $ 1$ -$ 52 $ Interest receivable -$ 1$ -$ 1$ Total assets 51 $ 2$ -$ 53 $ Liabilities Accounts payable 51 $ 2$ -$ 53 $ (continued) 88 CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES (continued) AGENCY FUNDS For the Year Ended June 30, 2006 (amounts expressed in thousands) Balance Balance July 1, 2005 Increases Decreases June 30, 2006 PATV Assets Equity in pooled cash and investments 99 $ 115 $ 98 $ 116 $ Interest receivable 1 2 1 2 100 $ 117 $ 99 $ 118 $ Liabilities Due to agency 100 $ 117 $ 99 $ 118 $ Total Agency Funds Assets Equity in pooled cash and investments 353 $ 217 $ 159 $ 411 $ Accounts receivable 16 4 16 4 Interest receivable 3 7 3 7 Total assets 372 $ 228 $ 178 $ 422 $ Liabilities Accounts payable 69 $ 57 $ 18 $ 108 $ Accrued liabilities 3 4 3 4 Due to agency 300 167 157 310 Total liabilities 372 $ 228 $ 178 $ 422 $ 89 90 Statistical Section This part of the City of Iowa City’s comprehensive annual financial report represents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health. Contents Page Financial Trends 93 These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. Revenue Capacity 98 These schedules contain information to help the reader assess the government’s most significant local revenue source, the property tax. Debt Capacity 103 These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. Demographic and Economic Information 111 These schedule offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place. Operating Information 114 These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial report for the relevant year. 91 92 2003 2004 2005 2006 Governmental activities Invested in capital assets, net of related debt 73,447 $ 67,090 $ 84,768 $ 95,227 $ Restricted 22,499 17,705 16,973 6,852 Unrestricted 16,926 11,700 3,793 10,827 Total governmental activities net assets 112,872 $ 96,495 $ 105,534 $ 112,906 $ Business-type activities Invested in capital assets, net of related debt 111,487 $ 150,817 $ 150,797 $ 155,346 $ Restricted 24,420 14,932 15,038 15,682 Unrestricted 33,339 36,246 40,780 42,988 Total business-type activites net assets 169,246 $ 201,995 $ 206,615 $ 214,016 $ Primary government Invested in capital assets, net of related debt 184,934 $ 217,907 $ 235,565 $ 250,573 $ Restricted 46,919 32,637 32,011 22,534 Unrestricted 50,265 47,946 44,573 53,815 Total primary government net assets 282,118 $ 298,490 $ 312,149 $ 326,922 $ Fiscal Year CITY OF IOWA CITY, IOWA NET ASSETS BY COMPONENT Last Four Fiscal Years (amounts expressed in thousands) (Accrual basis of accounting) 93 2003 2004 2005 2006 Expenses Governmental activities: Public Safety 13,844 $ 15,015 $ 15,286 $ 16,690 $ Public Works 11,539 10,423 11,521 12,723 Culture and recreation 10,131 12,051 11,341 11,458 Community and economic development 3,133 2,580 6,960 6,264 General government 6,251 6,527 6,500 6,892 Debt Service 3,662 3,440 3,602 3,404 Total governmental activities expenses 48,560 50,036 55,210 57,431 Business-type activities: Wastewater 12,086 12,344 12,214 11,710 Water 7,861 8,011 8,313 9,324 Sanitation 4,082 6,103 6,031 6,101 Housing Authority 6,519 7,219 7,466 7,026 Parking 3,554 3,898 3,989 3,884 Airport 431 515 520 512 Stormwater 652 1,452 817 Cable Television 687 549 607 576 Total business-type activities expenses 35,220 39,291 40,592 39,950 Total primary government expenses 83,780 $ 89,327 $ 95,802 $ 97,381 $ Program Revenues Governmental activities: Charges for services 6,378 $ 6,102 $ 6,139 $ 6,296 $ Operating grants and contributions 2,965 2,150 2,592 2,937 Capital grants and contributions 2,205 6,198 7,679 3,849 Total governmental activities program revenues 11,548 14,450 16,410 13,082 Business-type activities: Charges for services: Wastewater 12,445 12,580 12,145 12,145 Water 9,677 9,164 8,602 9,012 Sanitation 6,531 7,111 7,154 7,133 Housing Authority 221 219 181 168 Parking 3,636 4,011 4,045 3,936 Airport 180 213 220 264 Stormwater - 104 592 597 Cable Television 298 673 708 718 Capital grants and contributions: Wastewater 1,077 968 761 773 Capital grants and contributions: Water 640 452 588 606 Capital grants and contributions: Sanitation - - - 46 Capital grants and contributions: Airport - 116 283 1,125 Capital grants and contributions: Stormwater - 717 755 468 Operating grants and contributions: Housing Authority 6,291 6,950 7,012 7,414 Operating grants and contributions: Water 131 Operating grants and contributions: Airport 36 Operating grants and contributions: Sanitation 201 9 - 3 Total business-type activities program revenues 41,364 43,287 43,046 44,408 Total primary government revenues 52,912 $ 57,737 $ 59,456 $ 57,490 $ (continued) Fiscal Year CITY OF IOWA CITY, IOWA CHANGES IN NET ASSETS Last Four Fiscal Years (amounts expressed in thousands) (Accrual basis of accounting) 94 2003 2004 2005 2006 Net (Expense) / Revenues Governmental activities (37,012) $ (35,586) $ (38,800) $ (44,349) $ Business-type activities 6,144 3,996 2,454 4,458 Total primary government net expense (30,868) $ (31,590) $ (36,346) $ (39,891) $ General Revenues and Other Changes in Net Assets Governmental activities: General revenues: Property taxes 32,257 $ 34,173 $ 35,327 $ 37,770 $ Road use tax 5,144 5,311 5,269 5,303 Other taxes 1,399 1,609 1,351 1,240 Earnings on investments 1,207 1,056 1,576 2,678 Miscellaneous 3,174 3,746 3,994 4,422 Gain on sale of assets (1,726) 65 95 100 Transfers 1,444 (1,840) 645 208 Total governmental activities 42,899 44,120 48,257 51,721 Business-type activities: General revenues: Earnings on investments 1,305 991 1,771 2,575 Gain on sale of assets 315 1,009 304 185 Miscellaneous 994 335 418 391 Transfers (1,444) 1,840 (645) (208) Total business-type activities 1,170 4,175 1,848 2,943 Total primary government 44,069 $ 48,295 $ 50,105 $ 54,664 $ Change in Net Assets Governmental activites 5,887 $ 8,534 $ 9,457 $ 7,372 $ Business-type activites 7,314 8,171 4,302 7,401 Total primary government 13,201 $ 16,705 $ 13,759 $ 14,773 $ Fiscal Year CITY OF IOWA CITY, IOWA CHANGES IN NET ASSETS (continued) Last Four Fiscal Years (amounts expressed in thousands) (Accrual basis of accounting) 95 2003 2004 2005 2006 General Fund Reserved 1,094 $ 396 $ 362 $ 570 $ Unreserved 13,012 14,301 15,525 16,551 Total general fund 14,106 $ 14,697 $ 15,887 $ 17,121 $ All other Governmental Funds Reserved 11,536 $ 1,677 $ 2,198 $ 1,592 $ Designated for long-term debt 4,448 6,930 3,067 2,725 Unreserved, reported in: Special revenue funds 3,819 9,379 6,222 3,422 Captal projects funds 1,047 3,882 6,143 7,093 Total all other governmental funds 20,850 $ 21,868 $ 17,630 $ 14,832 $ (amounts expressed in thousands) Fiscal Year CITY OF IOWA CITY, IOWA Last Four Fiscal Years (Modified accrual basis of accounting) FUND BALANCES, GOVERNMENTAL FUNDS 96 2003 2004 2005 2006 Revenues: Property taxes and assessments 31,966 $ 35,538 $ 36,677 $ 39,011 $ Licenses and permits 961 1,361 1,255 1,279 Intergovernmental 12,193 12,058 15,546 14,260 Charges for services 4,674 3,240 3,301 2,227 Use of money and property 997 1,002 1,354 2,203 Miscellaneous 2,558 4,377 4,121 4,176 Total governmental activities expenses 53,349 $ 57,576 $ 62,254 $ 63,156 $ Expenditures Current Public safety 13,115 $ 14,025 $ 14,601 $ 15,819 $ Public works 8,149 9,156 9,698 10,351 Culture and recreation 8,061 9,392 9,183 10,122 Community and economic development 3,715 3,486 6,375 4,698 General government 5,887 6,080 6,282 6,510 Debt service Principal 4,742 5,172 9,349 6,099 Interest 3,683 3,336 3,676 3,458 Capital projects 20,095 16,065 13,939 15,153 Total expenditures 67,447 $ 66,712 $ 73,103 $ 72,210 $ Excess (deficiency) of revenues over (under) expenditures (14,098) $ (9,136) $ (10,849) $ (9,054) $ Other financing sources (uses): Issuance of long-term debt 10,600 $ 12,875 $ 7,020 $ 7,265 $ Sale of capital assets - 384 406 109 Issuance of note payable - - 211 - Premium (discount) on issuance of bonds 93 (19) 43 29 Payment of refunded bonds (6,415) Transfers in 15,172 14,614 15,776 21,627 Transfers out (14,554) (16,733) (15,237) (21,540) Total other financing sources (uses) 4,896 $ 11,121 $ 8,219 $ 7,490 $ Net change in fund balances (9,202) $ 1,985 $ (2,630) $ (1,564) $ Debt service as a percentage of noncapital expenditures 17.8% 16.8% 22.0% 16.7% Fiscal Year CITY OF IOWA CITY, IOWA Last Four Fiscal Years (modified accrual basis of accounting) CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS (amounts expressed in thousands) 97 CITY OF IOWA CITY, IOWA GENERAL GOVERNMENT TAX REVENUES BY SOURCE Last Ten Fiscal Years (Modified accrual basis of accounting) (amounts expressed in thousands) Fiscal Year Property Tax Road Use Tax Hotel/Motel Tax Total 1997 19,659 $ 4,253 $ 427 $ 24,339 $ 1998 20,635 4,087 501 25,223 1999 22,153 4,575 570 27,298 2000 24,271 4,928 554 29,753 2001 27,071 4,852 497 32,420 2002 28,623 5,077 646 34,346 2003 31,966 5,103 559 37,628 2004 35,538 5,311 580 41,429 2005 36,677 5,269 611 42,557 2006 39,011 5,303 674 44,988 98 CITY OF IOWA CITY, IOWA ASSESSED AND TAXABLE VALUE OF PROPERTY Last Ten Fiscal Years (amounts expressed in thousands) Taxable Property Fiscal Assessed Value/ Total Taxable Total Year Ended Estimated Exempt Assessed Direct June 30 Actual Value Property Value Value Tax Rate 1997 2,373,523 $ 114,154 $ 2,259,369 $ 12.653 $ 1998 2,423,557 123,068 2,300,489 $ 13.050 1999 2,597,827 128,115 2,469,712 13.133 2000 2,699,944 136,493 2,563,451 13.851 2001 2,920,580 137,713 2,782,867 14.757 2002 2,975,254 152,991 2,822,263 14.850 2003 3,214,973 155,407 3,059,566 16.813 2004 3,322,001 176,188 3,145,813 17.596 2005 3,829,754 181,186 3,648,568 17.314 2006 3,946,328 183,799 3,762,529 17.729 Source: City of Iowa City Assessor’s Office Notes: Property is reassessed in the odd numbered years to make adjustments to all property values, according to current market values. As per the Code of Iowa, all real and tangible personal property subject to taxation shall be valued at its actual value and, except as otherwise provided, shall be reassessed at 100% of its actual value, and the value so assessed shall be taken and considered as the assessed value and taxable value of the property upon which the levy shall be made. Taxable property includes real property, buildings and structures, industrial plant and fixtures, commercial equipment assessed as real property and utilities distribution property. Exempt property includes all property that is owned by religious and educational institutions, charitable and benevolent societies, low-rent housing and associations for war veterans. Each must apply for property tax exempt status with the City Assessor, who determines if the property qualifies under state guidelines. Exempt property is assessed each year like other taxable property. Property owned by governmental entities is not taxable and is not included in “Exempt Property." 99 CI T Y O F I O W A C I T Y , I O W A PR O P E R T Y T A X R A T E S - D I R E C T A N D O V E R L A P P I N G G O V E R N M EN T S La s t T e n F i s c a l Y e a r s (p e r $ 1 , 0 0 0 a s s e s s e d v a l u a t i o n ) Total Io w a C i t y K i r k w o o d D i r e c t & Fi s c a l O p e r a t i n g D e b t S e r v i c e T o t a l C i t y J o h n s o n S c h o o l Co m m u n i t y S t a t e o f O v e r l a p p i n g Ye a r Mi l l a g e Mi l l a g e Mi l l a g e Co u n t y 1 Di s t r i c t Co l l e g e Iowa Rates 19 9 7 1 1 . 4 5 3 $ 1 . 2 0 0 $ 1 2 . 6 5 3 $ 5 . 5 1 5 $ 1 2 . 1 3 0 $ 0 . 5 8 9 $ 0 . 0 0 5 $ 3 0 . 8 9 2 $ 19 9 8 1 1 . 3 4 6 1 . 7 0 4 1 3 . 0 5 0 5 . 4 1 4 1 2 . 2 2 0 0 . 5 9 5 0 . 0 0 5 3 1 . 2 8 4 19 9 9 1 1 . 2 6 5 1 . 8 6 8 1 3 . 1 3 3 5 . 7 4 7 1 2 . 0 7 5 0 . 5 6 7 0 . 0 0 5 3 1 . 5 2 7 20 0 0 1 1 . 5 5 1 2 . 3 0 0 1 3 . 8 5 1 5 . 9 4 7 1 1 . 6 9 6 0 . 6 1 3 0 . 0 0 5 3 2 . 1 1 2 20 0 1 1 1 . 7 6 7 2 . 9 9 0 1 4 . 7 5 7 5 . 9 0 1 1 1 . 8 3 3 0 . 6 0 7 0 . 0 0 5 3 3 . 1 0 4 20 0 2 1 1 . 9 0 5 2 . 9 4 5 1 4 . 8 5 0 5 . 8 0 2 1 1 . 5 4 0 0 . 6 0 7 0 . 0 0 5 3 2 . 8 0 3 20 0 3 1 2 . 6 5 2 4 . 1 6 1 1 6 . 8 1 3 6 . 0 6 1 1 2 . 2 1 0 0 . 6 6 6 0 . 0 0 4 3 5 . 7 5 4 20 0 4 1 3 . 0 2 6 4 . 5 7 0 1 7 . 5 9 6 6 . 1 0 2 1 2 . 8 6 5 0 . 6 7 9 0 . 0 0 4 3 7 . 2 4 7 20 0 5 1 3 . 3 6 0 3 . 9 5 4 1 7 . 3 1 4 6 . 1 6 6 1 2 . 8 7 5 0 . 6 6 8 0 . 0 0 4 3 7 . 0 2 7 20 0 6 1 3 . 5 8 0 4 . 1 4 9 1 7 . 7 2 9 6 . 3 9 1 1 3 . 5 8 2 0 . 6 4 9 0 . 0 0 4 3 8 . 3 5 5 So u r c e : " T a x L e v i e s f o r J o h n s o n C o u n t y , I o w a , " c o m p i l e d b y t h e J o h n s o n C o u n t y A u d i t o r . No t e : 1 In c l u d e s J o h n s o n C o u n t y , C i t y o f I o w a C i t y A s s e s s o r , a n d A g r i c u l t u r a l E x t e n s i o n l e v i e s . Ov e r l a p p i n g R a t e s Ci t y o f I o w a C i t y 100 Collection Total Tax Current Tax Delinquent Tax Total Tax Year Levied Collections Collections Collections 1997 19,766 $ 19,765 $ 100.0 %17 $ 19,782 $ 100.1 % 1998 20,807 20,521 98.6 8 20,529 98.7 1999 21,735 21,842 100.5 22 21,864 100.6 2000 23,945 23,989 100.2 5 23,994 100.2 2001 26,089 25,684 98.4 31 25,715 98.6 2002 27,920 28,423 101.8 5 28,428 101.8 2003 31,975 31,863 99.6 16 31,879 99.7 2004 34,073 34,009 99.8 23 34,032 99.9 2005 34,403 34,814 101.2 15 34,829 101.2 2006 36,460 36,654 100.5 44 36,698 100.7 Source: City of Iowa City Assessor’s Office CITY OF IOWA CITY, IOWA PROPERTY TAX BUDGETS AND COLLECTIONS Last Ten Fiscal Years (Cash basis of accounting) (amounts expressed in thousands) Percent of Levy Collected Total as a Percent of Levy 101 19 9 7 2 0 0 6 % o f T o t a l % o f T o t a l Ta x a b l e A s s e s s e d T a x a b l e A s s e s s e d Te n l a r g e s t t a x p a y e r s 1 Ty p e o f B u s i n e s s Va l u a t i o n Ra n k Va l u a t i o n Valuation Rank Valuation Mi d - A m e r i c a n E n e r g y C o m p a n y 2 Pu b l i c G a s a n d E l e c t r i c U t i l i t y 5 6 , 2 0 5 $ 1 2 . 6 2 % 42,557 $ 1 1.28 % AC T I n c . ( f o r m e r l y A m e r i c a n C o l l e g e T e s t i n g P r o g r a m ) E d u c a t i o n a l T e s t i n g S e r v i c e 1 5 , 0 8 8 7 0 . 7 0 2 7 , 9 4 1 2 0.84 Ja m e A C l a r k A p a r t m e n t s 19 , 9 8 0 4 0 . 9 3 2 6 , 8 7 0 3 0.81 So u t h g a t e D e v e l o p m e n t C o m p a n y R e a l E s t a t e D e v e l o p e r 1 6, 6 3 3 6 0 . 7 7 2 1 , 8 7 3 4 0.66 NC S P e a r s o n I n f o r m a t i o n S e r v i c e s 1 6 , 8 7 5 5 0 . 7 9 1 5 , 7 2 8 5 0.47 Ra y c a l I o w a L T D A p a r t m e n t s - - 0 . 0 0 1 2 , 9 2 4 6 0.39 Un i t e d N a t u r a l F o o d s W h o l e s a l e D i s t r i b u t i o n C o m p a n y - - 0 . 0 0 1 2 , 7 1 6 7 0.38 ME H S M L C ( S y c a m o r e M a l l ) S h o p p i n g M a l l - - 0 . 0 0 1 2 , 5 8 8 8 0.38 MI P I o w a C i t y L L C ( S h e r a t o n H o t e l ) H o t e l - - 0 . 0 0 1 0 , 9 8 2 9 0.33 Pr o c t o r & G a m b l e L L C M a n u f a c t u r i n g C o m p a n y 2 3 , 9 3 8 2 1 . 1 2 1 0 , 8 4 1 10 0.33 He i t m a n P r o p e r t i e s O l d C a p i t o l M a l l S h o p p i n g C e n t e r 2 2, 1 2 6 3 1 . 0 3 - - - Un i t e d T e c h n o l o g i e s A u t o m o t i v e A u t o m o t i v e P r o d u c t s M an u f a c t u r i n g 1 3 , 0 1 3 8 0 . 6 1 - - - Re l e a s e I n t e r n a t i o n a l P a p e r M a n u f a c t u r i n g 1 2 , 9 6 0 9 0 . 6 0 - - - Gi l l e t t e - C a n a d ( O r a l - B ) B r u s h M a n u f a c t u r i n g 12 , 9 5 5 10 0 . 6 0 - - - To t a l 20 9 , 7 7 3 $ 9 . 7 7 % 1 9 5 , 0 2 0 $ 5.87 % So u r c e s : 1 Ci t y o f I o w a C i t y A s s e s s o r ' s O f f i c e - 2 0 0 4 A n n u a l R ep o r t - A s s e s s m e n t J a n u a r y 1 , 2 0 0 4 - P a y a b l e 2 0 0 6 2 St a t e D e p a r t m e n t o f R e v e n u e PR I N C I P A L T A X P A Y E R S Cu r r e n t Y e a r a n d N i n e Y e a r s A g o (a m o u n t s e x p r e s s e d i n t h o u s a n d s ) CI T Y O F I O W A C I T Y , I O W A 102 Ge n e r a l C a p i t a l G e n e r a l T o t a l P e r c e n t a g e Fi s c a l O b l i g a t i o n L o a n O b l i g a t i o n R e v e n u e P r i m a r y o f P e r s on a l P e r Ye a r Bo n d s No t e Bo n d s Bo n d s Go v e r n m e n t In c o m e 1 Capita 1 19 9 7 1 3 , 9 8 6 , 1 6 9 $ 2 6 0 , 0 0 0 $ 1 7 , 1 4 3 , 8 3 1 $ 6 7 , 1 5 0 , 0 0 0 $ 9 8 , 5 4 0 , 0 0 0 $ 3 . 2 0 % 1 6 3 8 . 2 9 2 19 9 8 2 0 , 5 7 7 , 0 0 0 1 9 5 , 0 0 0 2 0 , 9 0 2 , 9 9 1 6 5 , 2 7 0 , 0 0 0 1 0 6 , 9 4 4 , 9 9 1 3 . 2 5 % 1 7 7 8 . 0 3 1 19 9 9 2 7 , 2 0 3 , 0 2 3 1 3 0 , 0 0 0 1 8 , 8 3 1 , 9 7 7 7 8 , 9 9 0 , 0 0 0 1 2 5 , 1 5 5 , 0 0 0 3 . 5 9 % 2 0 8 0 . 7 8 4 20 0 0 2 4 , 3 6 3 , 3 2 9 6 5 , 0 0 0 1 6 , 7 6 1 , 6 7 1 8 9 , 3 7 5 , 0 0 0 1 3 0 , 5 6 5 , 0 0 0 3 . 4 2 % 2 1 7 0 . 7 2 9 20 0 1 4 6 , 6 9 7 , 3 4 3 1 4 , 8 6 7 , 6 5 7 1 1 1 , 2 4 5 , 0 0 0 1 7 2 , 8 1 0 , 0 0 0 4 . 3 9 % 2 7 7 7 . 4 0 3 20 0 2 7 2 , 1 9 8 , 6 5 2 1 3 , 0 6 1 , 3 4 8 1 4 1 , 4 1 0 , 0 0 0 2 2 6 , 6 7 0 , 0 0 0 5 . 5 6 % 3 6 4 3 . 0 4 1 20 0 3 7 1 , 6 4 1 , 1 6 9 1 1 , 3 5 8 , 8 3 1 1 2 0 , 3 1 0 , 0 0 0 2 0 3 , 3 1 0 , 0 0 0 4 . 8 4 % 3 2 5 9 . 2 1 8 20 0 4 7 9 , 3 4 4 , 6 0 0 9 , 6 4 0 , 4 0 0 1 1 5 , 7 1 0 , 0 0 0 2 0 4 , 6 9 5 , 0 0 0 4 . 5 5 % 3 2 8 1 . 4 2 20 0 5 7 7 , 0 1 5 , 3 7 9 8 , 2 7 4 , 6 2 2 1 1 0 , 9 3 0 , 0 0 0 1 9 6 , 2 2 0 , 0 0 1 4 . 1 4 % 3 1 4 5 . 5 5 9 20 0 6 7 8 , 1 8 1 , 1 5 5 6 , 8 7 8 , 8 4 5 1 0 5 , 9 1 5 , 0 0 0 1 9 0 , 9 7 5 , 0 0 0 3 . 8 3 % 3 0 3 6 . 7 9 6 No t e s : De t a i l s r e g a r d i n g t h e c i t y ' s o u t s t a n d i n g d e b t c a n b e f o u n d i n t h e n o t e s t o t h e f i n a n c i a l s t a t e m e n t s 1 P o p u l a t i o n a n d p e r s o n a l i n c o m e i n f o r m a t i o n c a n b e f o u n d o n p a g e 1 1 1 . Go v e r n m e n t a l A c t i v i t i e s B u s i n e s s - T y p e A c t i v i t i e s CI T Y O F I O W A C I T Y , I O W A RA T I O S O F O U T S T A N D I N G D E B T B Y T Y P E La s t T e n F i s c a l Y e a r s 103 CI T Y O F I O W A C I T Y , I O W A RA T I O S O F G E N E R A L O B L I G A T I O N B O N D E D D E B T 1 TO A S S E S S E D V A L U E A N D N E T B O N D E D D E B T P E R C A P I T A La s t T e n F i s c a l Y e a r s (a m o u n t s e x p r e s s e d i n t h o u s a n d s , e x c e p t p e r c a p i t a ) De b t N e t G e n e r a l R a t i o o f N e t N e t B o n d e d Fi s c a l A s s e s s e d G r o s s P a y a b l e f r o m D e b t S e r v i c e O b l i g a t i o n B o n d ed D e b t t o D e b t Ye a r Va l u e 2 Bo n d e d D e b t Pr o p r i e t a r y Fu n d B a l a n c e Bo n d e d D e b t As s e s s e d V a l u e Per Capita 3 19 9 7 2 , 3 7 3 , 5 2 3 $ 3 1 , 3 9 0 $ 1 7 , 1 4 4 $ 6 4 3 $ 1 3 , 6 0 3 $ 5 . 7 3 : 1 0 0 0 2 2 6 $ 19 9 8 2 , 4 2 3 , 5 5 7 4 1 , 6 7 5 2 0 , 9 0 3 6 1 6 2 0 , 1 5 6 8 . 3 2 : 1 0 0 0 3 3 5 19 9 9 2, 5 9 7 , 8 2 7 46 , 1 6 5 18 , 8 3 2 34 7 26 , 9 8 6 10 . 3 9 : 1 0 0 0 449 20 0 0 2 , 6 9 9 , 9 4 4 4 1 , 1 9 0 1 6 , 7 6 2 1 9 2 2 4 , 2 3 6 8 . 9 8 : 1 0 0 0 4 0 3 20 0 1 2 , 9 2 0 , 5 8 0 6 1 , 5 6 5 1 4 , 8 6 8 4 9 4 4 6 , 2 0 3 1 5 . 8 2 : 1 0 0 0 7 4 3 20 0 2 2 , 9 7 5 , 2 5 4 8 5 , 2 6 0 1 3 , 0 6 1 4 6 4 7 1 , 7 3 5 2 4 . 1 2 : 1 0 0 0 1 , 1 5 3 20 0 3 3 , 2 1 4 , 9 7 3 8 3 , 0 0 0 1 1 , 3 5 9 4 , 4 4 8 6 7 , 1 9 3 2 0 . 9 0 : 1 0 0 0 1 , 0 7 7 20 0 4 3, 3 2 2 , 0 0 1 85 , 0 8 5 9, 6 4 0 6, 9 3 0 68 , 5 1 5 20 . 6 2 : 1 0 0 0 1,098 20 0 5 3, 8 2 9 , 7 5 4 85 , 2 9 0 8, 2 7 5 3, 0 6 7 73 , 9 4 8 19 . 3 1 : 1 0 0 0 1,185 20 0 6 3, 9 4 6 , 3 2 8 85 , 0 6 0 6, 8 7 9 2, 7 2 5 75 , 4 5 6 19 . 1 2 : 1 0 0 0 1,200 No t e s : 1 Ge n e r a l O b l i g a t i o n b o n d s . 2 Ob t a i n e d f r o m t h e C i t y o f I o w a C i t y A s s e s s o r ' s O f f i c e. 3 Po p u l a t i o n d a t a c a n b e f o u n d o n p a g e 1 1 1 . 104 CITY OF IOWA CITY, IOWA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES 1 Last Ten Fiscal Years (amounts expressed in thousands) Total General Fiscal Year Governmental Ratio of Debt Ended Total Expenditures Service to General June 30 Principal Interest Debt Service and Transfers Expenditures 1997 1,499 $ 464 $ 1,963 $ 45,690 $ .04 : 1.00 1998 1,988 739 2,727 47,311 .06 : 1.00 1999 2,452 1,038 3,490 45,851 .08 : 1.00 2000 2,918 1,360 4,278 52,727 .08 : 1.00 2001 3,541 1,763 5,304 53,898 .10 : 1.00 2002 3,599 2,136 5,735 53,462 .11 : 1.00 2003 2 4,742 3,683 8,425 82,001 .10 : 1.00 2004 5,172 3,336 8,508 83,445 .10 : 1.00 2005 9,349 3,676 13,025 88,342 .15 : 1.00 2006 6,099 3,458 9,557 93,360 .10 : 1.00 Notes: 1General Fund, Special Revenue Funds and Debt Service Fund. 2 Beginning in FY03, Capital Projects Funds are also included. 105 CITY OF IOWA CITY, IOWA COMPUTATION OF DIRECT AND OVERLAPPING DEBT June 30, 2006 (amounts expressed in thousands, except per capita) Amount Total General % Applicable Applicable Long-Term to the to the Name of Bonded Debt City of City of Governmental Unit Outstanding Iowa City Iowa City Per Capita City of Iowa City 85,060 $ 100.00% 85,060 $ 1,367 $ Iowa City Community School District 34,080 61.20% 20,857 334 Total 119,140 $ 105,917 $ 1,702 $ Per capita assessed value 62,753 $ Source: Johnson County Auditor's Office Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Iowa City. This process recognizes that, when considering the city's ability to issue and repay long-term debt, the entire burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 106 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 2005 2006 De b t L i m i t 1 0 7 , 3 2 6 $ 1 0 9 , 2 5 8 $ 1 1 8 , 6 7 6 $ 1 2 1 , 1 7 8 $ 1 2 9 , 8 9 1 $ 1 3 4 , 9 9 7 $ 1 4 6 , 0 2 9 $ 1 4 8 , 7 6 3 $ 1 6 0 , 7 4 9 $ 186,630 $ To t a l n e t d e b t a p p l i c a b l e t o l i m i t 3 1 , 3 9 0 4 1 , 6 7 5 4 6 , 1 6 5 4 1 , 1 9 0 6 1 , 5 6 5 8 5 , 2 6 0 8 3 , 0 0 0 8 5 , 0 8 5 8 5 , 2 9 0 85,060 Le g a l d e b t m a r g i n 7 5 , 9 3 6 $ 6 7 , 5 8 3 $ 7 2 , 5 1 1 $ 7 9 , 9 8 8 $ 6 8 , 3 2 6 $ 4 9 , 7 3 7 $ 6 3 , 0 2 9 $ 6 3 , 6 7 8 $ 7 5 , 4 5 9 $ 101,570 $ To t a l n e t d e b t a p p l i c a b l e t o t h e l i m i t a s a p e r c e n t a g e o f d e b t l i m i t 2 9 . 2 5 % 3 8 . 1 4 % 3 8 . 9 0 % 3 3 . 9 9 % 4 7 . 4 0 % 6 3 . 1 6 % 5 6 . 84 % 5 7 . 2 0 % 5 3 . 0 6 % 4 5 . 5 8 % To t a l A s s e s s e d V a l u a t i o n De b t L i m i t - 5 % o f T o t a l A s s e s s e d V a l u a t i o n 1 8 6 , 6 2 9 , 525 Le s s : A m o u n t o f D e b t A p p l i c a b l e t o D e b t L i m i t 8 5 , 0 6 0,000 Le g a l D e b t M a r g i n No t e : U n d e r I o w a c o d e , t h e c i t y ' s o u t s t a n d i n g g e n e r a l o b li g a t i o n d e b t s h o u l d n o t e x c e e d 5 p e r c e n t o f t o t a l as s e s s e d p r o p e r t y v a l u e . CI T Y O F I O W A C I T Y , I O W A LE G A L D E B T M A R G I N I N F O R M A T I O N La s t T e n F i s c a l Y e a r s (a m o u n t s e x p r e s s e d i n t h o u s a n d s ) 101,569,525 $ Fi s c a l Y e a r Le g a l D e b t M a r g i n C a l c u l a t i o n f o r F i s c a l Y e a r 2 0 0 6 3,732,590,506 $ 107 Fi s c a l Ye a r Pr i n c i p a l In t e r e s t To t a l Pr o p e r t y T a x Re v e n u e Se w e r Re v e n u e Pa r k i n g Re v e n u e Water Revenue Principal Outstanding 20 0 6 7, 4 9 5 , 0 0 0 $ 3, 7 8 4 , 2 2 8 $ 11 , 2 7 9 , 2 2 8 $ 9, 2 0 2 , 6 8 9 $ 17 7 , 1 9 3 $ 31 0 , 9 0 0 $ 1,234,094 $ 85,290,000 $ 20 0 7 8 , 1 3 0 , 0 0 0 3 , 7 4 8 , 8 5 2 1 1 , 8 7 8 , 8 5 2 9 , 8 1 0 , 7 1 0 1 7 2 , 9 8 4 3 1 8 , 5 2 5 1 , 2 2 2 , 2 8 1 8 5 , 0 6 0 , 0 0 0 20 0 8 7 , 1 4 0 , 0 0 0 3 , 4 6 0 , 8 3 0 1 0 , 6 0 0 , 8 3 0 9 , 1 3 1 , 1 5 9 - - 8 0 0 , 3 1 8 7 6 , 9 3 0 , 0 0 0 20 0 9 7 , 3 2 5 , 0 0 0 3 , 1 7 2 , 1 4 3 1 0 , 4 9 7 , 1 4 3 9 , 0 4 7 , 6 2 4 - - 7 7 7 , 7 6 6 6 9 , 7 9 0 , 0 0 0 20 1 0 7 , 4 7 0 , 0 0 0 2 , 8 7 3 , 2 9 3 1 0 , 3 4 3 , 2 9 3 8 , 9 0 1 , 4 8 4 - - 7 7 3 , 2 5 6 6 2 , 4 6 5 , 0 0 0 20 1 1 7 , 7 3 0 , 0 0 0 2 , 5 6 0 , 8 6 0 1 0 , 2 9 0 , 8 6 0 8 , 8 5 3 , 6 2 1 - - 7 6 7 , 2 8 7 5 4 , 9 9 5 , 0 0 0 20 1 2 8 , 0 1 0 , 0 0 0 2 , 2 3 2 , 1 1 8 1 0 , 2 4 2 , 1 1 8 8 , 8 1 2 , 6 2 6 - - 7 6 0 , 5 1 4 4 7 , 2 6 5 , 0 0 0 20 1 3 6 , 9 9 5 , 0 0 0 1 , 8 8 4 , 2 9 3 8 , 8 7 9 , 2 9 3 7 , 4 6 0 , 2 0 1 - - 7 5 2 , 6 8 9 3 9 , 2 5 5 , 0 0 0 20 1 4 6 , 6 7 0 , 0 0 0 1 , 5 7 2 , 0 4 3 8 , 2 4 2 , 0 4 3 6 , 8 4 9 , 7 0 1 - - 7 2 4 , 2 2 7 3 2 , 2 6 0 , 0 0 0 20 1 5 6 , 3 3 0 , 0 0 0 1 , 2 6 7 , 6 0 5 7 , 5 9 7 , 6 0 5 6 , 2 1 4 , 2 6 5 - - 7 1 4 , 4 6 2 2 5 , 5 9 0 , 0 0 0 20 1 6 5 , 3 0 0 , 0 0 0 9 7 1 , 2 5 0 6 , 2 7 1 , 2 5 0 5 , 2 6 7 , 5 6 0 - - 3 3 0 , 0 0 0 1 9 , 2 6 0 , 0 0 0 20 1 7 3 , 5 6 0 , 0 0 0 7 1 2 , 4 1 8 4 , 2 7 2 , 4 1 8 3 , 2 8 0 , 3 2 8 - - 3 1 5 , 0 0 0 1 3 , 9 6 0 , 0 0 0 20 1 8 3 , 4 0 5 , 0 0 0 5 3 1 , 0 4 6 3 , 9 3 6 , 0 4 6 3 , 2 5 7 , 1 1 3 - - - 1 0 , 4 0 0 , 0 0 0 20 1 9 1 , 8 0 5 , 0 0 0 3 5 6 , 4 3 4 2 , 1 6 1 , 4 3 4 1 , 4 8 2 , 0 0 0 - - - 6 , 9 9 5 , 0 0 0 20 2 0 1 , 9 0 0 , 0 0 0 2 6 6 , 1 8 4 2 , 1 6 6 , 1 8 4 1 , 4 8 3 , 0 0 0 - - - 5 , 1 9 0 , 0 0 0 20 2 1 2 , 0 0 5 , 0 0 0 1 7 0 , 4 9 0 2 , 1 7 5 , 4 9 0 1 , 4 8 5 , 7 5 0 - - - 3 , 2 9 0 , 0 0 0 20 2 2 6 2 5 , 0 0 0 6 8 , 7 6 5 6 9 3 , 7 6 5 - - - - 1 , 2 8 5 , 0 0 0 20 2 3 6 6 0 , 0 0 0 3 5 , 6 4 0 6 9 5 , 6 4 0 - - - - 6 6 0 , 0 0 0 To t a l 9 2 , 5 5 5 , 0 0 0 $ 2 9 , 6 6 8 , 4 8 8 $ 1 2 2 , 2 2 3 , 4 8 8 $ 1 0 0 , 5 3 9 , 8 3 0 $ 3 5 0 , 1 7 6 $ 6 2 9 , 4 2 5 $ 9 , 1 7 1 , 8 9 3 $ Pa y m e n t s Fu n d i n g S o u r c e ( s ) CI T Y O F I O W A C I T Y , I O W A GE N E R A L O B L I G A T I O N D E B T A N N U A L M A T U R I T Y S C H E D U L E 108 Fiscal Year Net Revenue Annual Debt Service 2 Ended Available for Ratio of June 30 Revenue Expenses 1 Debt Service Principal Interest Total Coverage Parking Revenue 3 1997 3,338 $ 1,950 $ 1,388 $ 330 $ 218 $ 548 $ 2.53 1998 3,822 1,770 2,052 390 195 585 3.51 1999 3,653 1,713 1,940 415 168 583 3.33 2000 3,716 1,861 1,855 455 139 594 3.12 2001 4,309 2,176 2,133 485 836 1,321 1.61 2002 4,272 1,960 2,312 510 746 1,256 1.84 2003 4,198 1,953 2,245 375 715 1,090 2.06 2004 4,164 2,319 1,845 395 687 1,082 1.71 2005 4,360 2,377 1,983 305 663 968 2.05 2006 4,161 2,380 1,781 320 645 965 1.85 Wastewater Treatment Revenue 4 1997 11,040 $ 2,739 $ 8,301 $ 1,295 $ 2,923 $ 4,218 $ 1.97 1998 11,066 2,809 8,257 1,490 3,382 4,872 1.69 1999 11,362 2,987 8,375 2,065 3,519 5,584 1.50 2000 11,872 3,259 8,613 2,160 3,691 5,851 1.47 2001 12,824 3,248 9,576 2,505 3,589 6,094 1.57 2002 12,501 3,389 9,112 3,005 4,236 7,241 1.26 2003 13,000 4,463 8,537 3,060 4,385 7,445 1.15 2004 12,947 4,523 8,424 3,280 3,672 6,952 1.21 2005 12,600 4,432 8,168 3,630 3,537 7,167 1.14 2006 12,798 4,260 8,538 3,815 3,390 7,205 1.19 Water Revenue 5 1999 8,571 $ 3,295 $ 5,276 $ -$ -$ -$ 0.00 2000 9,626 3,384 6,242 - 299 299 20.88 2001 10,629 3,410 7,219 140 445 585 12.34 2002 10,179 3,428 6,751 705 1,175 1,880 3.59 2003 10,241 4,361 5,880 500 1,088 1,588 3.70 2004 10,627 4,360 6,267 925 1,427 2,352 2.66 2005 9,287 4,783 4,504 845 1,340 2,185 2.06 2006 9,918 5,722 4,196 880 1,305 2,185 1.92 Note: 1Excludes depreciation and interest. 2Includes principal and interest of revenue bonds only. 3Parking Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.25. 4Wastewater Treatment Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.10. 5Water Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.10. CITY OF IOWA CITY, IOWA SCHEDULE OF REVENUE BOND COVERAGE Last Ten Fiscal Years (amounts expressed in thousands) 109 Fi s c a l Se w e r P a r k i n g W a t e r P r i n c i p a l Ye a r P r i n c i p a l I n t e r e s t To t a l Re v e n u e Re v e n u e Re v e n u e Outstanding 20 0 6 5 , 0 1 5 , 0 0 0 $ 5 , 3 4 0 , 2 0 8 $ 1 0 , 3 5 5 , 2 0 8 $ 7 , 2 0 4 , 7 8 9 $ 9 6 5 , 1 0 4 $ 2 , 1 8 5 , 3 1 5 $ 1 1 0 , 9 3 0 , 0 0 0 $ 20 0 7 5 , 1 5 5 , 0 0 0 5 , 1 2 8 , 0 6 4 1 0 , 2 8 3 , 0 6 4 7 , 1 3 8 , 6 8 6 9 6 0 , 8 6 3 2 , 1 8 3 , 5 1 5 1 0 5 , 9 1 5 , 0 0 0 20 0 8 5 , 4 1 5 , 0 0 0 4 , 9 0 5 , 8 9 3 1 0 , 3 2 0 , 8 9 3 7 , 1 7 6 , 0 5 2 9 6 0 , 5 9 4 2 , 1 8 4 , 2 4 6 1 0 0 , 7 6 0 , 0 0 0 20 0 9 5 , 6 2 5 , 0 0 0 4 , 6 6 8 , 7 6 5 1 0 , 2 9 3 , 7 6 5 7 , 1 5 6 , 9 4 9 9 5 4 , 2 9 8 2 , 1 8 2 , 5 1 9 9 5 , 3 4 5 , 0 0 0 20 1 0 5 , 8 7 5 , 0 0 0 4 , 4 1 3 , 2 1 6 1 0 , 2 8 8 , 2 1 6 7 , 1 5 3 , 0 8 3 9 5 1 , 9 7 3 2 , 1 8 3 , 1 6 0 8 9 , 7 2 0 , 0 0 0 20 1 1 6 , 1 9 5 , 0 0 0 4 , 1 3 9 , 9 3 9 1 0 , 3 3 4 , 9 3 9 7 , 2 0 5 , 1 0 9 9 4 8 , 4 7 3 2 , 1 8 1 , 3 5 8 8 3 , 8 4 5 , 0 0 0 20 1 2 6 , 5 0 5 , 0 0 0 3 , 8 5 1 , 0 5 2 1 0 , 3 5 6 , 0 5 2 7 , 2 2 9 , 7 7 2 9 4 3 , 7 9 8 2 , 1 8 2 , 4 8 3 7 7 , 6 5 0 , 0 0 0 20 1 3 6 , 6 4 0 , 0 0 0 3 , 5 4 8 , 2 9 4 1 0 , 1 8 8 , 2 9 4 7 , 0 5 9 , 4 8 7 9 4 2 , 8 0 1 2 , 1 8 6 , 0 0 7 7 1 , 1 4 5 , 0 0 0 20 1 4 4 , 9 2 5 , 0 0 0 3 , 2 7 0 , 4 6 1 8 , 1 9 5 , 4 6 1 5 , 0 6 8 , 7 6 8 9 4 0 , 3 3 5 2 , 1 8 6 , 3 5 9 6 4 , 5 0 5 , 0 0 0 20 1 5 5, 1 8 5 , 0 0 0 3, 0 1 6 , 2 9 9 8, 2 0 1 , 2 9 9 5, 0 7 6 , 7 4 4 93 6 , 4 0 1 2, 1 8 8 , 1 5 5 59,580,000 20 1 6 5, 4 7 0 , 0 0 0 2, 7 4 6 , 7 8 6 8, 2 1 6 , 7 8 6 5, 0 9 4 , 8 9 0 93 5 , 8 5 1 2, 1 8 6 , 0 4 5 54,395,000 20 1 7 5 , 7 4 5 , 0 0 0 2 , 4 6 0 , 8 2 4 8 , 2 0 5 , 8 2 4 5 , 0 8 7 , 7 3 4 9 3 3 , 4 6 8 2 , 1 8 4 , 6 2 3 4 8 , 9 2 5 , 0 0 0 20 1 8 6 , 0 6 5 , 0 0 0 2 , 1 5 6 , 5 2 6 8 , 2 2 1 , 5 2 6 5 , 0 9 8 , 8 9 3 9 3 4 , 1 0 0 2 , 1 8 8 , 5 3 4 4 3 , 1 8 0 , 0 0 0 20 1 9 6 , 3 6 5 , 0 0 0 1 , 8 3 3 , 1 9 3 8 , 1 9 8 , 1 9 3 5 , 0 8 2 , 5 5 8 9 2 7 , 8 1 5 2 , 1 8 7 , 8 2 0 3 7 , 1 1 5 , 0 0 0 20 2 0 6 , 7 3 5 , 0 0 0 1 , 4 9 0 , 2 0 9 8 , 2 2 5 , 2 0 9 5 , 1 0 8 , 2 8 8 9 2 9 , 4 6 5 2 , 1 8 7 , 4 5 6 3 0 , 7 5 0 , 0 0 0 20 2 1 6 , 5 6 0 , 0 0 0 1 , 1 3 8 , 0 7 1 7 , 6 9 8 , 0 7 1 4 , 5 8 2 , 4 0 0 9 2 8 , 4 0 0 2 , 1 8 7 , 2 7 1 2 4 , 0 1 5 , 0 0 0 20 2 2 5 , 3 1 0 , 0 0 0 8 1 6 , 7 6 8 6 , 1 2 6 , 7 6 8 3 , 0 1 5 , 5 4 4 9 2 4 , 6 0 0 2 , 1 8 6 , 6 2 4 1 7 , 4 5 5 , 0 0 0 20 2 3 4 , 2 1 5 , 0 0 0 5 5 6 , 4 3 2 4 , 7 7 1 , 4 3 2 1 , 6 6 2 , 9 7 5 9 2 3 , 2 5 0 2 , 1 8 5 , 2 0 7 1 2 , 1 4 5 , 0 0 0 20 2 4 3 , 0 0 0 , 0 0 0 3 5 8 , 3 8 1 3 , 3 5 8 , 3 8 1 8 6 6 , 2 3 8 9 2 4 , 0 5 0 1 , 5 6 8 , 0 9 4 7 , 9 3 0 , 0 0 0 20 2 5 3 , 1 7 5 , 0 0 0 1 8 6 , 2 0 0 3 , 3 6 1 , 2 0 0 8 6 8 , 4 7 5 9 2 1 , 8 5 0 1 , 5 7 0 , 8 7 5 4 , 9 3 0 , 0 0 0 20 2 6 1 , 7 5 5 , 0 0 0 4 8 , 8 3 1 1 , 8 0 3 , 8 3 1 8 6 8 , 2 3 8 - 9 3 5 , 5 9 4 1 , 7 5 5 , 0 0 0 To t a l 1 1 0 , 9 3 0 , 0 0 0 $ 5 6 , 0 7 4 , 4 1 3 $ 1 6 7 , 0 0 4 , 4 1 3 $ 1 0 4 , 8 0 5 , 6 6 9 $ 1 8 , 7 8 7 , 4 8 6 $ 4 3 , 4 1 1 , 2 5 8 $ Pa y m e n t s Fu n d i n g S o u r c e ( s ) CI T Y O F I O W A C I T Y , I O W A RE V E N U E D E B T A N N U A L M A T U R I T Y S C H E D U L E 110 Pe r C a p i t a Ca l e n d a r P e r s o n a l P e r s o n a l S c h o o l U n e m p l o y m e n t R e t a i l Ye a r Po p u l a t i o n In c o m e 1 In c o m e 1 En r o l l m e n t 2 Ra t e 3 Sa l e s 5 19 9 7 6 0 , 1 4 8 3 , 0 7 7 , 6 4 4 $ 2 4 , 2 2 4 $ 1 1 , 2 9 4 2 . 8 6 7 7 , 7 0 0 , 0 0 0 $ 19 9 8 6 0 , 1 4 8 3 , 2 8 9 , 6 0 0 2 5 , 6 3 5 1 1 , 4 3 0 2 . 4 7 0 1 , 1 3 5 , 5 8 2 19 9 9 6 0 , 1 4 8 3 , 4 8 6 , 3 2 4 2 6 , 7 3 7 1 1 , 4 7 9 2 . 5 7 3 3 , 4 0 3 , 3 7 7 20 0 0 6 0 , 1 4 8 3 , 8 1 5 , 3 0 0 2 8 , 9 0 7 1 1 , 5 4 3 2 . 0 7 5 6 , 0 5 4 , 3 3 1 20 0 1 6 2 , 2 2 0 3 , 9 3 4 , 9 7 1 2 9 , 3 8 8 1 1 , 6 0 3 2 . 4 7 8 0 , 5 9 1 , 4 2 6 20 0 2 6 2 , 2 2 0 4 , 0 7 9 , 1 5 8 3 0 , 2 2 4 1 1 , 6 9 7 3 . 2 7 6 6 , 9 0 1 , 8 9 2 20 0 3 6 2 , 3 8 0 4 , 1 9 7 , 0 2 4 3 0 , 8 3 1 1 1 , 7 0 0 3 . 5 7 7 6 , 6 9 3 , 4 4 0 20 0 4 6 2 , 3 8 0 4 , 5 0 2 , 1 8 7 3 2 , 7 2 9 1 1 , 8 8 5 4 . 0 8 5 4 , 1 5 6 , 4 4 2 20 0 5 6 62 , 3 8 0 4 , 7 3 9 , 3 2 9 3 4 , 1 7 4 1 1 , 8 6 6 2 . 9 8 7 8 , 0 0 9 , 1 7 1 20 0 6 6 62 , 8 8 7 4 , 9 8 8 , 9 6 2 3 5 , 6 1 5 1 1 , 9 8 8 2 . 4 9 0 1 , 4 8 1 , 0 6 6 So u r c e s a n d N o t e s : 1 Pe r s o n a l I n c o m e a n d P e r C a p i t a P e r s o n a l I n c o m e b a s e d o n m e t r o p o l i t a n I o w a C i t y / C o r a l v i l l e a n d b a s e d on f i g u r e s f r o m B u r e a u o f E c o n o m i c A n a l y s i s . 2 Io w a C i t y C o m m u n i t y S c h o o l D i s t r i c t a n d l o c a l p r i v a te s c h o o l s 3 Io w a W o r k f o r c e D e v e l o p m e n t C e n t e r 4 Pe r c e n t o f P o p u l a t i o n c o m p l e t i n g 1 2 y e a r s o f f o r m a l s c h o o l i n g o r m o r e . 5 Io w a R e t a i l S a l e s & U s e R e p o r t , I o w a D e p a r t m e n t o f Re v e n u e a n d F i n a n c e . F i s c a l y e a r e n d i n g M a r c h 3 1 . DE M O G R A P H I C A N D E C O N O M I C S T A T I S T I C S CI T Y O F I O W A C I T Y , I O W A La s t T e n C a l e n d a r Y e a r s 111 CI T Y O F I O W A C I T Y , I O W A PR I N C I P A L E M P L O Y E R S Cu r r e n t Y e a r a n d N i n e Y e a r s A g o 19 9 7 2 0 0 6 Em p l o y e r s Em p l o y e e s Ra n k Employees Rank Un i v e r s i t y o f I o w a 22 , 5 5 5 1 2 3 , 9 7 5 1 AC T I n c . ( f o r m e r l y A m e r i c a n C o l l e g e T e s t i n g P r o g r a m ) 80 0 7 1 , 3 4 0 2 Me r c y H o s p i t a l 1, 1 0 0 4 1 , 2 5 0 3 Ve t e r a n s A d m i n i s t r a t i o n M e d i c a l C e n t e r 1, 3 0 0 2 1 , 2 3 2 4 Io w a C i t y C o m m u n i t y S c h o o l D i s t r i c t 1, 2 2 5 3 1 , 1 0 0 5 NC S P e a r s o n 85 7 5 1 , 0 5 3 6 Le a r C o r p o r a t i o n - - 8 5 0 7 Hy - V e e - - 7 7 5 8 Ci t y o f I o w a C i t y 58 2 9 6 2 5 9 Gi l l e t t e C a n a d a ( O r a l B L a b o r a t o r i e s ) 43 5 1 0 5 0 0 1 0 Un i t e d T e c h n o l o g i e s A u t o m o t i v e 81 0 6 -- Pr o c t o r & G a m b l e 60 2 8 -- So u r c e s : Io w a W o r k f o r c e D e v e l o p m e n t & I o w a C i t y A r e a C h a m b e r o f C o m m e r c e ( i n c l u d i n g f u l l a n d p a r t - t i m e e m p l o y e e s) . No t e : 112 113 1997 1998 1999 2000 2001 2002 Public Safety Police 82.5 88.25 90.75 96.25 96.25 97.25 Fire 52 52 52 52 52 58 Animal Shelter 5 5 5.44 5.5 5.5 5.5 Inspection Services 13 14.13 14.13 14.13 14.13 14.13 Public Works Public Works Admin 2 2 2 2 3 2 Engineering 9.5 11 11 10.6 11.6 13.6 Traffic Engineering 7 3.75 3.75 4.15 4.15 4.15 Streets 22.25 23 23 23.5 23.5 23.5 Culture and Recreation Parks and Rec Admin 2 2 2 2 2 2 Recreation 13 12.67 13.17 14.67 15.17 15.17 Parks 11 11.5 12 13 13 13 Forestry 3 3 3 3 3 3 Cemetery 3 3 3 3 3 3 CBD Maintenance 2 2.5 3 3 3 3 Library 37.25 38 38 40.25 40.25 41.25 Senior Center 5.5 5.5 5.5 6 6 6 Community and Economic Development 8.95 8.45 8.45 8.55 8.55 9.05 General Government City Council 7 7 7 7 7 7 City Manager 3 3 3 3 3 3 City Clerk 4.5 4.5 4.5 5 4.5 4.5 City Attorney 6 6 6 6 6 6.6 Personnel 3 3 4 4 4 4 Finance 28.32 28.22 28.62 27.71 27.36 28.61 Government Buildings 3.75 4.08 4.08 4.08 4.97 4.96 Energy Conservation 0.5 0.5 0.5 0.5 0.5 0.5 Human Rights 1.5 2 2 2 2 2 Transit 48.5 49.5 48.75 48.25 48.25 48.5 Special Revenue Employee Benefits 0.38 0.38 0.38 0.45 0.45 0.4 CIP / Roads 7 6 7 Community Development 4.75 4.75 4.75 4.75 4.75 4.75 JCCOG 4.8 5.8 5.8 6.1 6.1 6.1 Library Development 2 1.5 1.5 1.5 1.5 1.5 Internal Service Funds Information Technology 5.5 5.5 5.5 7.95 7.5 7.5 Equipment 10.5 9.5 9.5 9.5 9.5 10.25 Central Services 1.6 1.7 1.7 2.1 2.25 0.75 Risk Management 1.59 1.59 1.59 1.56 1.46 1.26 Business-Type Activities Parking 27.5 27.5 30.5 30.5 37 37 Wastewater Treatment 25 28.3 30.3 25.3 25.3 26.3 Water 26.75 25.95 25.95 26.2 26.2 28.2 Sanitation 31 31 31 31.85 32.35 32.35 Airport 1.5 1.5 1.5 1.75 2 2 Cable television 3.6 4.6 4.75 5.25 5.25 5.25 Stormwater Housing Authority 12.75 10.75 11.75 10.75 12.5 12.5 Total 544.24 553.87 565.11 581.65 591.79 606.38 Source: City's Financial Plans. CITY OF IOWA CITY, IOWA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION Last Ten Fiscal Years Full-Time Equivalent Employees as of June 30 114 2003 2004 2005 2006 97.25 97.25 94.25 94.25 58 58 56 57 6 6 6 6 14.13 14.13 13.88 14.88 2 2 2 2 13.6 13.6 11.6 11.6 5.65 5.65 5.65 4.15 22 22 22 23.5 2 2 2 2 15.17 15.17 15.17 15.17 13 13 12 13 3 3 3 3 3 3 3 3 3 3 3 3 41.25 43.25 42.63 42.63 5.81 5.81 6.31 6.31 8.35 9.45 8.45 8.45 7 7 7 7 3 3 3 3 4 4 4 4 6.6 6.6 6.6 6.6 4 4 4 4 28.61 28.61 26.61 26.75 4.96 4.96 4.96 4.96 0.5 0.5 0.5 0.5 2.5 2.5 2.5 2.5 48.5 48.5 50.5 50.5 0.34 0.34 0.34 0.39 7 7 3 2 5.45 5.35 4.35 4.35 6.1 6.1 6.1 6.6 1.5 1.5 0.8 1 7.5 7.5 8 11.75 11.25 11.26 11.25 11.26 0.75 0.75 0.75 0.75 1.33 1.33 1.32 1.38 31.5 31.5 32.75 32.75 26.3 27.3 27.3 25.5 30.7 31.7 31.7 32.5 32.35 32.35 34.35 33.85 2 2 2 1.6 6.19 6.19 6.19 6.19 0.5 12.5 12.5 12.75 13.25 605.64 610.65 599.56 605.37 Full-Time Equivalent Employees as of June 30 115 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 2004 2005 2006 Pu b l i c S a f e t y P o l i c e 1 P h y s i c a l a r r e s t s 71 7 5 7 4 8 1 7 8 3 5 7 8 3 5 7 3 3 9 8 9 2 9 8 0 1 6 7 2 8 8 7 5 2 8 6 4 8 7 T r a f f i c V i o l a t i o n s 8 0 2 1 7 1 0 7 5 3 5 5 8 0 6 1 8 0 4 7 7 6 3 9 7 4 2 8 8515 7428 7633 F i r e 2 N u m b e r o f c a l l s a n s w e r e d 3 , 2 1 5 3 , 6 7 9 3 , 7 7 2 3 , 7 6 8 3 , 57 0 3 , 5 1 9 3 , 5 4 6 3 , 5 1 8 3 , 5 9 6 3 , 4 6 2 I n s p e c t i o n s c o n d u c t e d 1 , 9 6 2 1 , 9 5 2 1 , 0 8 1 9 2 6 1 , 0 7 9 9 8 9 9 3 6 9 7 5 1 , 0 8 3 1 , 1 4 6 Pa r k i n g P a r k i n g V i o l a t i o n s 3 N/ A N / A N / A N / A N / A N / A 1 8 6 , 6 7 4 1 5 5 , 3 3 8 1 4 5 , 0 3 3 1 3 9 , 3 3 8 Wa s t e w a t e r T r e a t m e n t D a i l y a v e r a g e t r e a t m e n t i n g a l l o n s 4 , 7 2 0 , 0 0 0 5 , 8 70 , 0 0 0 5 , 3 4 0 , 0 0 0 4 , 5 0 0 , 0 0 0 5 , 7 1 0 , 0 0 0 5 , 1 1 0 , 0 0 0 4 , 5 3 0 , 0 0 0 4, 9 6 0 , 0 0 0 4 , 8 7 0 , 0 0 0 4 , 5 8 0 , 0 0 0 M a x i m u m d a i l y c a p a c i t y o f p l a n t i n g a l l o n s 3 5 , 0 00 , 0 0 0 3 5 , 0 0 0 , 0 0 0 3 5 , 0 0 0 , 0 0 0 3 5 , 0 0 0 , 0 0 0 3 5 , 0 0 0 , 0 0 0 4 0 , 0 0 0, 0 0 0 4 0 , 0 0 0 , 0 0 0 4 0 , 0 0 0 , 0 0 0 4 0 , 0 0 0 , 0 0 0 4 0 , 0 0 0 , 0 0 0 Wa t e r D a i l y a v e r a g e c o n s u m p t i o n i n g a l l o n s 6 , 1 0 0 , 0 0 0 6 ,0 5 0 , 0 0 0 6 , 1 2 1 , 0 0 0 5 , 8 9 0 , 0 0 0 5 , 7 1 7 , 0 0 0 6 , 0 0 0 , 0 0 0 6 , 0 3 4 , 0 00 5 , 7 4 2 , 0 0 0 5 , 4 4 8 , 5 0 0 5 , 6 8 0 , 6 0 0 M a x i m u m d a i l y c a p a c i t y o f p l a n t i n g a l l o n s 1 0 , 5 00 , 0 0 0 1 0 , 5 0 0 , 0 0 0 1 0 , 5 0 0 , 0 0 0 1 0 , 5 0 0 , 0 0 0 1 0 , 5 0 0 , 0 0 0 1 0 , 5 0 0, 0 0 0 1 6 , 7 0 0 , 0 0 0 1 6 , 7 0 0 , 0 0 0 1 6 , 7 0 0 , 0 0 0 1 6 , 7 0 0 , 0 0 0 Sa n i t a t i o n N u m b e r o f C u s t o m e r s 1 3 , 2 7 4 1 3 , 1 2 4 1 3 , 2 7 4 1 3 , 4 5 7 1 3 , 55 5 1 3 , 6 6 8 1 3 , 8 0 6 1 3 , 9 8 3 1 4 , 1 5 8 1 4 , 3 7 1 T o n s 7, 4 6 0 7 , 6 5 6 7 , 8 7 3 7 , 8 6 9 7 , 9 0 5 8 , 1 3 8 8 , 0 6 2 8 , 7 1 6 8 , 6 6 7 8 , 4 6 3 L a n d f i l l T o n n a g e 79 , 6 5 7 9 1 , 6 2 6 8 1 , 7 0 7 8 4 , 7 0 4 9 7 , 2 0 8 1 0 3 , 4 0 4 1 0 3 , 5 8 5 1 0 8 , 1 5 5 113,356 111,124 So u r c e s : Va r i o u s c i t y d i v i s i o n s . No t e s : 1 N u m b e r s a r e b a s e d o n a c a l e n d a r y e a r a n d 2 0 0 6 f i g u re s a r e c o m p i l e d t h r o u g h 1 1 / 3 0 / 0 6 . 2 Nu m b e r s a r e b a s e d o n a c a l e n d a r y e a r a n d 2 0 0 6 f i g u r es a r e c o m p i l e d t h r o u g h 1 2 / 6 / 0 6 . 3 I n f o r m a t i o n o n t h e n u m b e r o f p a r k i n g v i o l a t i o n s n o t a v a i l a b l e f o r y e a r s p r i o r t o F Y 0 3 . CI T Y O F I O W A C I T Y , I O W A OP E R A T I N G I N D I C A T O R S B Y F U N C T I O N La s t T e n F i s c a l Y e a r s Fi s c a l Y e a r 116 117 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 2005 2006 Pu b l i c S a f e t y P o l i c e S t a t i o n s 1 1 1 1 1 1 1 1 1 1 P a t r o l u n i t s 1 6 1 6 1 6 1 7 1 7 1 7 1 7 1 7 1 7 1 7 F i r e S t a t i o n s 3 3 3 3 3 3 3 3 3 3 F i r e a p p a r a t u s 7 7 8 8 8 8 8 8 8 8 Pu b l i c W o r k s S t r e e t s M i l e s 2 4 0 2 4 2 2 4 4 2 4 6 2 4 9 2 5 1 2 5 6 2 5 9 2 6 2 2 6 2 S t r e e t L i g h t s 2 5 7 0 2 6 4 1 2 6 8 2 2 7 1 7 2 8 6 3 2 9 2 0 2 9 1 9 3 3 5 2 3 357 3357 Cu l t u r e a n d R e c r e a t i o n L i b r a r y 1 1 1 1 1 1 1 1 1 1 C e m e t e r y 1 1 1 1 1 1 1 1 1 1 A c r e a g e 3 7 3 7 3 7 3 7 4 0 4 0 4 0 4 0 4 0 4 0 P a r k s 44 4 4 4 6 5 0 5 0 5 0 5 0 6 1 6 1 6 1 A c r e a g e 9 8 4 9 8 4 1 , 0 0 8 1 , 3 2 2 1 , 3 2 2 1 , 3 2 2 1 , 3 2 2 1 , 4 0 0 1 , 4 00 1,400 R e c r e a t i o n R e c r e a t i o n c e n t e r 1 1 2 2 2 2 2 2 2 2 S w i m m i n g p o o l s 3 3 3 3 3 3 3 3 3 3 B a l l d i a m o n d s 2 9 2 9 2 9 2 9 2 9 2 9 2 9 2 9 2 9 2 9 T e n n i s c o u r t s 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 1 2 S o c c e r f i e l d s 2 5 2 5 2 5 2 5 2 5 2 5 2 5 2 5 2 5 2 5 (continued) CI T Y O F I O W A C I T Y , I O W A CA P I T A L A S S E T S B Y F U N C T I O N La s t T e n F i s c a l Y e a r s Fi s c a l Y e a r 118 Pa r k i n g F a c i l i t i e s 3 3 3 3 4 4 4 4 4 5 S p a c e s 1 , 9 7 5 1 , 9 7 5 1 , 9 7 5 1 , 9 7 5 2 , 5 3 7 2 , 5 3 7 2 , 5 3 7 2 , 5 3 7 2,537 3,137 Wa s t e w a t e r T r e a t m e n t M i l e s o f s a n i t a r y s e w e r 2 3 5 2 3 8 2 4 0 2 6 0 2 6 3 2 6 6 2 6 9 2 7 4 2 7 7 280 M i l e s o f s t o r m s e w e r N / A N / A N / A N / A 9 1 9 4 9 8 1 0 2 1 0 5 1 1 0 N u m b e r o f t r e a t m e n t p l a n t s 2 2 2 2 2 2 2 2 2 2 N u m b e r o f s e r v i c e c o n n e c t o r s 1 9 , 1 8 4 1 9 , 8 0 8 2 0 , 1 9 5 2 0 , 63 5 2 1 , 0 6 1 2 1 , 7 8 5 2 2 , 5 1 4 2 3 , 0 7 7 2 3 , 5 5 8 2 4 , 1 1 3 Wa t e r M i l e s o f w a t e r m a i n s 2 3 3 2 3 6 2 3 9 2 4 4 2 5 2 2 6 0 2 6 5 2 6 9 2 7 2 2 7 7 N u m b e r o f a c t i v e a c c o u n t s 1 9 , 1 8 4 1 9 , 8 0 8 2 0 , 1 9 5 2 0 , 6 3 5 21 , 0 6 1 2 1 , 7 8 5 2 2 , 5 1 4 2 3 , 0 7 7 2 3 , 5 5 8 2 4 , 1 1 3 N u m b e r o f c i t y o w n e d f i r e h y d r a n t s 1 , 7 4 7 1 , 8 2 7 1 , 9 3 5 2, 0 2 9 2 , 1 0 9 2 , 1 8 2 2 , 2 4 3 2 , 3 4 0 2 , 4 4 8 2 , 4 7 4 Sa n i t a t i o n L a n d f i l l s 1 1 1 1 1 1 1 1 1 1 A c r e a g e 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 2 0 0 So u r c e s : Va r i o u s c i t y d i v i s i o n s . No t e s : 1 N u m b e r o f m i l e s o f s t o r m s e w e r n o t t r a c k e d i n p r i o r y e a r s . CI T Y O F I O W A C I T Y , I O W A CA P I T A L A S S E T S B Y F U N C T I O N ( c o n t i n u e d ) La s t T e n F i s c a l Y e a r s 119 120 www.eidebailly.com 3999 Pennsylvania Ave., Ste. 1001 Dubuque, Iowa 52002-22731 Phone 563.556.1790 I Fax 563.557.78421 EOE CPAs & BUSINESS ADVISORS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of the City Council City of Iowa City, Iowa We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining hind information of the City oflowa City, Iowa, as of and for the year ended June 30, 2006, which collectively comprise the City's basic financial statements, and have issued our report thereon dated November 16, 2006. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. (ftI,pr As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, we noted a certain immaterial instance of noncompliance or other matters that is described in Part II of the accompanying Schedule of Findings and Questioned Costs. Comments involving statutory and other legal matters about the City's operations for the year ended June 30, 2006, are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the City of Iowa City, Iowa. Since our audit was based on tests and samples, not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. 121 PEOPLE. PRINCIPLES. POSSIBILITIES. We noted certain matters that we reported to management of the City in a separate letter dated November 16, 2006. This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Iowa City, Iowa, and other parties to whom the City of Iowa City, Iowa, may report, including federal awarding agencies and entities. This report is not intended to be and should not be used by anyone other than these specified parties. We would like to acknowledge the many courtesies and assistance extended to us by personnel of the City of Iowa City, Iowa, during the course of our audit. Should you have any questions concerning any of the above matters, we shall be pleased to discuss them with you at your convenience. 122 Dubuque, Iowa November 16, 2006 S WAS S AWIAIW. In our opinion, the City of Iowa City, Iowa, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2006. Internal Control Over Compliance The management of the City of Iowa City, Iowa, is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grant agreements applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the internal control over compliance in accordance with 0MB Circular A- 133. 123 PEOPLE. PRINCIPLES. POSSIBILITIES. uompnance We have audited the compliance of the City of Iowa City, Iowa, with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) CircularA-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2006. The City's major federal programs are identified in the summary of the independent auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grant agreements applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0MB Circular A-I 33, Audits of States, Local Governments, and Non-P rofit Organizations. Those standards and 0MB Circular A-l 33 require thatwe plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and perfonning such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal nn the www.eidebailiy.com 3999 Pennsylvania Ave., Ste. 1001 Dubuque, Iowa 52002-22731 Phone 563556.17901 Fax 563.557.78421 EOE '7—.- CPAs & BUSINESS ADVISORS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 To the Honorable Mayor and Members of the City Council City of Iowa City, Iowa 124 Dubuque, Iowa November 16, 2006 Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grant agreements caused by error or fraud that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Iowa City, Iowa, and other parties to whom the City of Iowa City, Iowa, may report, including federal awarding agencies and pass-through entities. This report is not intended to be and should not be used by anyone other than these specified parties. CITY OF IOWA CITY, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2006 Agency or Pass-through Program Grantor/Program CFDA Number Number Expenditures Direct: Department of Housing and Urban Development: Community Development Block Grants! Entitlement Grants 14.218 B-03-MC-19-0009 $122,000 Community Development Block Grants! Entitlement Grants 14.218 B-04-MC-19-0009 752,474 Community Development Block Grants! - urants 14.218 B-05-MC-19-0009 230,497 1,104,971 HOME Investment Partnerships Program 14.239 M-02-MC-19-0205 18,783 HOME Investment Partnerships Program 14.239 M-03-MC-19-0205 332,133 HOME Investment Partnerships Program 14.239 M-04-MC-19-0205 51,907 HOME Investment Partnerships Program 14.239 M-05-MC-19-0205 485,721 888,544 Public and Indian Housing 14.850 1A022-3060 165,911 Resident Opportunity and Supportive Services 14.870 IAO22REFO1OAOO3 65,119 Section 8 Housing Choice Vouchers 14.87 1 KC9033 6,093,323 Public Housing Capital Fund 14.872 1A05P02250203 33,553 Public Housing Capital Fund 14.872 1A05P02250105 77,630 Public Housing Capital Fund 14.872 1A05P02250103 99,013 Public Housing Capital Fund 14.872 1A05P02250 104 173,244 101 AAfl 125 _, oj,'+'W Department of Justice: Local Law Enforcement Block Grants Program 16.592 2003-LB-BX-0934 44,748 Local Law Enforcement Block Grants Program 16.592 2004-LB-BX-0839 12.927 57,675 Bulletproof Vest Partnership Program 16.607 BVPO1O1 19380 3,025 Edward Byrne Memorial Justice Assistance Grant Program 16.738 2005-DJ-BX-0817 94,201 Department of Transportation: Airport Improvement Program 20.106 3-19-0047-10 947,448Airport Improvement Program 20.106 3-19-0047-1 1 95,825Airport Improvement Program 20.106 3-19-0047-13 8,127 1.05 1.400 (continued) L'lItt —INOL 126 CITY OF IOWA CITY, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (continued) YEAR ENDED JUNE 30, 2006 Agency or Pass-through Program Grantor/Program CFDA Number Number Expenditures Direct: (continued) Department of Transporation: (continued) Federal Transit —Formula Grants 20.507 IA-90-X289 $169,463 Federal Transit —Formula Grants 20.507 IA-90-X258 4,309 Federal Transit —Formula Grants 20.507 IA-90-X309 473,009 646,781 Federal Emergency Management Agency: All!rn 701 Grant Program 16.738 O5JAG-A24 21.189 Department of Transportation: Iowa Department of Transportation: Highway Planning and Construction 20.205 STP- 1-5(69)- -2C-52 62,146 Highway Planning and Construction 20.205 STP-U-3 715(625)- -70-52 1,251,040 Highway Planning and Construction 20.205 STP-U-3 715(629)- -70-52 94,054 Highway Planning and Construction 20.205 STP-U-3 715(627)- -70-52 137,045 Highway Planning and Construction 20.205 BROS-3715(626)- -8J-52 341.337 1.885.622 Federal Transit —Capital Investment Grants 20.500 IA-03-0 104-371-05 91,931 Federal Transit —Capital Investment Grants 20.500 IA-03-0 103-371-04 146.910 238.841 Transit Planning and Research 20.5 14 IA-26-0003-026-06 300 (continued) !.T/A —A vv I 0)0 101 Department of Home land Security: Assistance to Firefighters Grant 97.044 EMW-2004-FG-14334 67,599 KDHAP Rental Assistance and Administrative Expenditures 97.NA 1A022KC9033 6.156 Total direct 10,649.926 Indirect: Department of Housing and Urban Development: Iowa Department of Economic Development: Emergency Shelter Grants Program 14.231 05-ES-004 87,974 Department of Justice: Iowa Department of Justice: Violence Against Women Formula Grants 16.588 VW-06-45 38,000 Governor's Office of Drug Control Policy: Edward Byrne Memorial Justice Assistance 127 LJa*#LJ State and Community Highway Safety 20.600 PAP 05-04, Task 32 3,208 State and Community Highway Safety 20.600 PAP 06-02, Task 13 14,667 17,875 Safety Incentives to Prevent Operation of Motor Vehicles by Intoxicated Persons 20.605 PAP 05-163, Task 34 9,489 Safety Incentives to Prevent Operation of Motor Vehicles by Intoxicated Persons 20.605 PAP 06-163, Task 29 8,150 17,639 Total indirect 2.440,495 Total S 13.090.421 CITY OF IOWA CITY, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (continued) YEAR ENDED JUNE 30, 2006 Agency or Pass-through Program Grantor/Program CFDA Number Number Expenditures Indirect: (continued) Department of Transportation: (continued) Iowa Department of Transportation and Johnson County Council of Governments: State Planning and Research 20.5 15 O6MPO-JCCOG $133,055 Iowa Department of Public Safety: See notes to the Schedule of Expenditures of Federal Awards. CITY OF IOWA CITY, IOWA NOTES TO THE SCHEDULE OF EXPENDiTURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2006 NOTE I. BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Iowa City, Iowa, and is presented on the accrual basis of accounting. The information on this schedule is presented in accordance with the requirements of 0MB Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. NOTE 2. SUBRECIPIENTS .1..-.r_1_1'JI iii uiv UI IUWd '..ALy,proviueu icuerdi awaras w subrecipients as follows: Federal Amount Provided Program Title CFDA Number to Subrecipients Community Development Block Grants/ Entitlement Grants 14.218 $70,1,113 Emergency Shelter Grants Program 14.231 83,575 HOME Investment Partnerships Program 14.23 9 758,015 128 Recommendation—The budget should have been amended in accordance with Chapter 384.18 of the Code of Iowa before disbursements were allowed to exceed the budget. Response The budget will be amended in the future, if applicable. Conclusion —Response accepted. II-B-06 Ouestionable Expenditures —We noted no expenditures that we believe may fail to meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25,1979. II-C-06 Travel Expense No expenditures of City money for travel expenses of spouses of City officials or employees were noted. (f)The audit disclosed no audit findings which were required to be reported in accordance with Office of Management and Budget Circular A-i 33, Section .510(a). (g)The major programs were: • CFDA 14.239 —HOME Investment Partnerships Program • CFDA 20.106 Airport Improvement Program • CFDA 20.205 —Highway Planning and Construction (h)The dollar threshold used to distinguish between Type A and Type B programs was $387,629. (i)The City of Iowa City, Iowa, qualified as a low-risk auditee. Part II: Other Findin2s Related to Reciuired Statutory Reporting: II-A-06 Certified Budget —Disbursements at June 30, 2006, did not exceed the amount budgeted. However, Community and Economic Development expenditures exceeded budget amounts before the first budget amendment. Chapter 384.20 of the Code of Iowa states in part that public monies may not be pyni'ndpd nr 'nntiniiinci CITY OF IOWA CITY, IOWA SCHEDULE OF FiNDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 Part I: Summary of the Independent Auditor's Results: (a)Unqualified opinions were issued on the financial statements. (b)No material weaknesses in internal control over financial reporting were noted. (c)The audit did not disclose any noncompliance which is material to the financial statements. (d)No material weaknesses in internal control over the major programs were noted. (e)An unqualified opinion was issued on compliance with requirements applicable to the major programs. 129 CITY OF IOWA CITY, IOWA SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2006 Part II: Other Findin2s Related to Reciuired Statutory Reporting: (continued) II-D-06 Business Transactions —Business transactions between the City and City officials or employees are detailed as follows: Name, Title, and Transaction Business Connection Description Amount Dee Vanderhoef, City Council Member,Supplies $1,661 owner of Iowa Book and Supply 130 i. ne aoove transaction uoes not appear to represent a coniiict or interest since icm or tne total was entered into through competitive bidding in accordance with Chapter 362.5(4)of the Code of Iowa and the remainder is less than $1,500 in accordance with Chapter 362.5(10). ll-E-06 Bond —Surety bond coverage of City officials and employees is in accordance with statutory provisions. The amount of coverage should be reviewed annually to insure the coverage is adequate for current operations. ll-F-06 Council Minutes —No transactions were found that we believe should have been approved in the Council minutes but were not. II-G-06 Deposits and Investments —No instances of noncompliance with the deposit and investment provisions of Chapters 1 2B and 1 2C of the Code of Iowa and the City's investment policy were noted. ll-H-06 Revenue Bonds —We noted no instances of noncompliance with the provisions of the City's revenue bond resolutions.