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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
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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
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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
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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
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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,
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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
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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
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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,
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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.
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Respectfully submitted,
Kevin O'Malley
Director of Finance
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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
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)
Total
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y
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d
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g
Ye
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r
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l
a
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Mi
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l
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Co
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n
t
y
1
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c
t
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Iowa Rates
19
9
7
1
1
.
4
5
3
$
1
.
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0
0
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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
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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
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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)
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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
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13 13 12 13
3 3 3 3
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41.25 43.25 42.63 42.63
5.81 5.81 6.31 6.31
8.35 9.45 8.45 8.45
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4.96 4.96 4.96 4.96
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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
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605.64 610.65 599.56 605.37
Full-Time Equivalent Employees as of June 30
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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.