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FY2020 Annual Financial ReportComprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2020 Designed by Neumann Monson Architects, this project represents the ambitious first step in a 14-acre master plan to consolidate and upgrade a scattered set of aging municipal operations. The predominately concrete structure houses the Streets and Water Departments along with their associated vehicles and equipment. Program includes shop space, large-scale storage, mezzanine storage with elevator and forklift access, a fire training tower, fire pump truck training, police and fire storage, and vehicle/equipment wash bays. The facility’s east facade faces a residential neighborhood across an arterial just south of downtown. It sets an edge condition for the well-trafficked bike trail that links recreational grounds to the north and south, establishing a civic presence and measured cadence that belies the rough and tumble flexibility that it accommodates deeper into the site. Projecting windows modulate the structure’s scale and provide dynamic exterior lighting at night. They diffuse daylight that they admit during work hours—combined with 40 skylights as well as translucent polycarbonate walls on the north and south facades—provides a superior work environment and lends operational efficiencies. The west façade provides vehicular access to services including shops and wash bays. A 12-foot canopy provides outdoor cover for materials storage. The building’s volumetric aspect ratio enables the mechanical system to heat and cool efficiently. The structure’s 50-foot module anticipates future additions and modifications. Material choices are highly durable, easily maintained, and cost effective. The building’s anticipated LEED Gold certification furthers the city’s commitment to carbon neutrality as they deliver vital public services from this facility. © Cameron Campbell 2020 Comprehensive Annual Financial Report City of Iowa City, Iowa For the fiscal year ended June 30, 2020 Prepared by: Finance Department City of Iowa City, Iowa Introductory Section Tab City of Iowa City, Iowa Table of Contents June 30, 2020 Page Introductory Section Table of contents ................................................................................................................................ 1 Letter of transmittal ............................................................................................................................ 3 Certificate of Achievement for Excellence in Financial Reporting ................................................... 13 City organizational chart .................................................................................................................... 14 City officials....................................................................................................................................... 15 Financial Section Independent Auditor’s Report ............................................................................................................ 17 Management’s Discussion and Analysis ............................................................................................ 21 Basic Financial Statements Government-wide financial statements Statement of net position ............................................................................................................. 32 Statement of activities .................................................................................................................. 35 Fund financial statements Balance sheet – governmental funds ............................................................................................ 36 Reconciliation of the balance sheet of the governmental funds to the statement of net position 37 Statement of revenues, expenditures, and changes in fund balances – governmental funds ....... 38 Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental funds to the statement of activities ..................................................................... 39 Statement of net position – proprietary funds .............................................................................. 40 Statement of revenues, expenses, and changes in fund net position – proprietary funds ............ 41 Statement of cash flows – proprietary funds ................................................................................ 42 Statement of fiduciary assets and liabilities ................................................................................. 43 Notes to financial statements .......................................................................................................... 45 Required Supplementary Information Budgetary comparison schedule – budget and actual – all governmental funds and enterprise funds – budgetary basis………………………………………………………………………… 80 Budgetary comparison schedule – budget to GAAP reconciliation …………………………….. 82 Note to required supplementary information – budgetary reporting…………………………….. 83 Schedule of the City’s proportionate share of MFPRSI net pension liability…………………… 85 Schedule of City’s MFPRSI contributions………………………………………………………. 86 Notes to required supplementary information – MFPRSI pension liability……………………... 88 Schedule of the City’s proportionate share of IPERS net pension liability…………………… .. 89 Schedule of City’s IPERS contributions……………………………………………………….... 90 Notes to required supplementary information – IPERS pension liability……………………….. 92 Required supplementary information – schedule of changes in the City’s total OPEB liability, related ratios and notes…………………….………………………………………….……… . 93 Combining Fund Statements Combining balance sheet – nonmajor governmental funds ............................................................ 96 Combining statement of revenues, expenditures, and changes in fund balances – nonmajor governmental funds ...................................................................................................................... 97 Combining statement of net position – nonmajor enterprise funds ................................................ 100 Combining statement of revenues, expenses, and changes in fund net position – nonmajor enterprise funds ............................................................................................................................ 101 Combining statement of cash flows – nonmajor enterprise funds .................................................. 102 Combining statement of net position – internal service funds ........................................................ 104 Combining statement of revenues, expenses, and changes in fund net position – internal service funds ............................................................................................................................................. 105 1 City of Iowa City, Iowa Table of Contents June 30, 2020 Page Combining Fund Statements (continued) Combining statement of cash flows – internal service funds .................................................... 106 Statement of changes in assets and liabilities – agency funds ................................................... 108 Statistical Section (Unaudited) Net position by component ........................................................................................................... 111 Changes in net position ................................................................................................................ 112 Fund balances – governmental funds ........................................................................................... 114 Changes in fund balances – governmental funds ......................................................................... 115 General government tax revenues by source ................................................................................ 116 Assessed and taxable value of property ........................................................................................ 117 Property tax rates – direct and overlapping governments ............................................................ 118 Levies and collections .................................................................................................................. 119 Principal taxpayers ....................................................................................................................... 120 Larger water system customers .................................................................................................... 122 Sales history and water system charges ........................................................................................ 123 Larger sewer system customers .................................................................................................... 124 Sales history and sewer system charges ....................................................................................... 125 Ratios of outstanding debt by type ............................................................................................... 126 Ratios of general obligation bonded debt to assessed value and net bonded debt per capita ....... 127 Computation of direct and overlapping debt ................................................................................ 128 Legal debt margin information ..................................................................................................... 129 Schedule of revenue bond coverage ............................................................................................. 130 Schedule of TIF revenue bond coverage ...................................................................................... 131 Demographic and economic statistics .......................................................................................... 132 Principal employers ...................................................................................................................... 133 Full-time equivalent city government employees by function ..................................................... 134 Operating indicators by function .................................................................................................. 135 Capital assets by function ............................................................................................................. 136 Compliance Section Independent auditor’s report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards ....................................................................................................................... 137 Independent auditor’s report on compliance for each major federal program and report on internal control over compliance required by the Uniform Guidance ....................................................... 139 Schedule of expenditures of federal awards ................................................................................. 141 Notes to the schedule of expenditures of federal awards ............................................................. 144 Schedule of prior audit findings ................................................................................................... 145 Schedule of findings and questioned costs ................................................................................... 146 2 December 8, 2020 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, 2020 is submitted herewith in accordance with the provisions of Chapter 11 of the Code of Iowa. The City’s Finance Department prepared this report. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rest with the City. I believe the information, as presented, is accurate in all material respects and presented in a manner designed to fairly present the financial position and results of operations of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included. Management assumes full responsibility for the completeness and reliability of all of the information presented in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements will be free of any material misstatement. Bohnsack & Frommelt, LLP, a firm of independent public accountants has issued an unmodified (“clean”) opinion on the City’s financial statements for the year ended June 30, 2020. Their opinion is included in the Financial Section of this report. The City is required to undergo an annual single audit in conformity with the provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Information to comply with the Uniform Guidance and “Government Auditing Standards” is included in the Compliance Section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Iowa City was incorporated April 6, 1853. The City is governed by a seven member Council; each member serves a four-year term. Elections are held every two years allowing for continuation in office of at least three members at each biennial election. The Council members are elected at large, with three members nominated from specific districts and the remaining four members nominated at large. The Council elects the Mayor from its own members for a two-year term. 3 The City Council is the legislative body and makes all policy determinations for the City through the enactment of ordinances and resolutions. It also adopts a budget to determine how the City will obtain and spend its funds. The Council appoints members of boards, commissions and committees. The City Manager is the chief administrative officer for the City and is appointed by the City Council. The City Manager implements policy decisions of the City Council and enforces City ordinances. In addition, the City Manager appoints and directly supervises the directors of the City’s operating departments and supervises the administration of the City’s personnel system. The City Manager supervises 502 full-time and 48 part-time permanent municipal employees and 124 temporary employees, including a police force of 81 sworn personnel and a fire department of 64 firefighters. The City Clerk is appointed by the City Council and reports to the Council. The City Clerk's Office administers the City government's documentation, City licenses and permits, and provides information from the Municipal Code and City Ordinances to the public and other City departments. The City Clerk’s Office is also responsible for distributing and maintaining accurate records of all City Council proceedings. The Clerk supervises 3 full-time employees and 1 temporary employee. The City Attorney is also appointed by the City Council and works at the direction of the City Council. The City Attorney supervises the City Attorney's Office, including 4 Assistant City Attorneys and 2 other full-time employees. In addition, the City Attorney acts as Chief Legal Counsel to the City Council, City Manager, the various City departments and staff, and most City commissions, committees and boards. The City provides a full range of services including police and fire protection, construction and maintenance of roads, streets and infrastructure, inspection and licensing functions, a municipal airport, library, recreational activities, and cultural events. The City owns and operates its water supply and distribution system and sewage collection and treatment system with secondary treatment also provided. Virtually the entire City has separate storm and sanitary sewer systems. The City operates a municipal off-street and on-street parking system in the downtown area. The City also operates a transit system. The annual budget serves as the foundation for the City’s financial planning and control. All departments of the City are required to submit requests for appropriation to the City Manager in October. The City Manager uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the Council for review in December. The Council is required to hold a public hearing on the proposed budget and to adopt a final budget no later than March 15. The appropriated budget is prepared by fund, function (e.g., Public Safety), and department (e.g., Police). The City adopts a three-year financial plan that includes both operations and capital improvements. This three-year plan permits a more comprehensive review of the City’s financial condition, allowing analysis of the current and future needs and requirements. During preparation of the plan, careful review is made of property tax levy rates, utility and user fee requirements, ending cash balances by fund, debt service obligations, bond financing needs, capital outlay for equipment purchases and major capital improvement projects. The state requires at least a one-year operating budget. While legal spending control is exercised at a state mandated function level, management control is set at the Department Manager level. Encumbrance accounting is utilized in all funds for budgetary control. Appropriations that are not spent lapse at the end of the year. 4 Information Useful in Assessing the Government’s Economic Condition The City's economic strength is based on the educational sector, medical services, and diversified manufacturing. The University of Iowa and the University of Iowa Hospital and Clinics are the City’s largest employers with over 30,000 employees. The University of Iowa had an enrollment in fall 2020 of 31,730 students, which is a decrease of 805 students from 32,535 students in the fall of 2019. The academic and research missions of the University, along with the health care services provided at its hospitals and clinics, have an extremely positive economic impact on the area. The City also has a significant number of national and international businesses, including Fortune 500 companies: ACT Inc., NCS Pearson, and Procter & Gamble. In February 2018, Procter & Gamble announced that in approximately two years they would be shifting their beauty care products production from Iowa City to their West Virginia plant. The announced plan was to eventually reduce the workforce from approximately 600 down to 100 employees. This would also impact nearby businesses that produce bottles and labels for this production plant in Iowa City. In May 2020, Procter & Gamble announced that they were going to maintain more employees in Iowa City by maintaining its oral rinse production here and by shifting newer product lines here. In addition, Procter & Gamble has added and is expanding an electric toothbrush plant in Iowa City which is expected to employ several hundred employees; it currently has added approximately 100 employees. The estimated investment in this new facility has been nearly $100 million. Overall, the continued economic development efforts with the Iowa City and Coralville Chambers of Commerce, private interests, the University of Iowa, other surrounding communities, and the Iowa City Area Development Group, have produced positive results with the retention and expansion of businesses. In addition, Iowa’s Creative Corridor is a seven-county alliance surrounding Iowa City and has been identified as one of the major growth areas for new business development in the State of Iowa. This Corridor gives employers workforce access to a region uniquely Iowan, founded with a manufacturing heritage, but actively seeking new frontiers and opportunities in information technology, biotechnology and bioprocessing, renewable energy, insurance and financial services, advanced manufacturing, and educational services. Continued developments within Iowa City and the region have a favorable impact upon the City's economy and growth. According to the 2010 census, the population of Iowa City is 67,862. This is an increase of 5,672 or 9.1% as compared to the 2000 census. Iowa City population in 2019 is estimated to be 75,149 by the U.S. Census Bureau which is a 10.7% increase over 2010. The rate of new housing construction also increased in comparison to the prior year based on the number of building permits issued. This consisted of 84 new single-family houses and duplexes in 2019 as compared to 114 in 2018; multi-family dwelling units added during fiscal year 2019 was 417, compared to 163 in 2018; and mixed commercial/residential developments added 59 dwelling units in 2019 versus 169 residential units in 2018. Altogether these housing additions totaled 560 units valued at $124,362,697 in 2019 versus a total of 446 units valued at $95,524,761 in 2018. In contrast to the increase in residential construction in 2019, the City had a decrease in commercial construction. The value of permits for commercial and utility construction decreased by $10,325,673 to $9,755,586 from 2018 to 2019; however, the value of remodeling permits for residential and commercial properties increased by $24,068,275 to $96,159,999 from 2018 to 2019. Total permits issued in 2019 for all purposes was 606 permits for $231,521,881 which was less than the 2018 total permit issuance of 618 permits for $192,814,810. Although there was a decrease in the total number of building permits issued in 2019 versus 2018, the total value of building permits issued in 2019 was higher by 20% than 2018. 5 As a whole, the City's economy continues to grow, established firms continue to prosper and expand, and there are opportunities for growth for new businesses; however, the COVID-19 pandemic has had a substantial short-term impact on the City’s economy. On March 13, 2020, the President of the United States declared a national emergency in response to the COVID-19 pandemic, and the State of Iowa declared a public health disaster emergency on March 17, 2020. Much of the City of Iowa City, the State of Iowa, and the United States shut down at that time. Due to the impact of the pandemic, the historically low unemployment rate for the City took a dramatic jump up and was at 7.6% for June 2020. This still compared favorably against the State of Iowa at 8.4% and the National rate of 11.1%. Comparably, in June 2019, Iowa City’s unemployment rate was 2.2%, the State of Iowa’s was 2.8%, and the National rate was 3.7%. The COVID-19 pandemic has had a significant short-term impact on the City of Iowa City; however, the City’s unemployment rate has dropped steadily since its peak in April 2020 as the City’s economy has started to open back up. The stability of the University of Iowa coupled with historically steady employment by the City’s multi-sector base of manufacturing and service industries helps to insulate the City from significant negative impacts of economic recessions. The City’s property valuations continue to rise which is indicative of the City's relative economic stability. The City is well positioned to recover from the negative economic effects of the COVID- 19 pandemic. Major Initiatives The City of Iowa City, with the assistance of Kirkwood Community College, completed the City’s Strategic Plan. The strategic planning process involved multiple steps, including gathering input from the general public, front-line City staff, department directors, and the City Council. The Strategic Plan establishes the following organizational priorities, programs, policies, and initiatives: 1. Promote a Strong and Resilient Local Economy • Undertake a comprehensive assessment of the current public transit system and implement changes to assure that the service best meets the needs of the entire community • Effectively market and grow the local food economy • Through cooperation with the Iowa City School District, Iowa Workforce Development, Kirkwood Community College, Iowa Works, and others, increase opportunities for marginalized populations and low-income individuals to obtain access to skills training and good jobs • Work with Procter & Gamble and impacted supply chain companies, local economic development organizations, and labor unions to respond effectively to the company’s decision to terminate its local production of beauty care products 2. Encourage a Vibrant and Walkable Urban Core • Collaborate with the University of Iowa on its redevelopment of University-owned property located in the Riverfront Crossings District, and on improving the quality, accessibility, and use of the Iowa River Corridor • Preserve important parts of Iowa City's history by considering the designation of additional buildings as historic landmarks, and by considering the creation of a historic preservation district for part of the downtown after consulting with stakeholders 6 • Evaluate existing strategies and consider additional actions to address the need for reinvestment in the city’s existing private housing stock 3. Foster Healthy Neighborhoods throughout the City • Modify the existing Affordable Housing Action Plan to include new strategies to improve the availability and affordability of housing in Iowa City • Embed the “Missing Middle” concept into the City’s land development practices by adopting a Form Based Code for at least one (preferably two) of our neighborhoods • Ensure the next two budgets contain sufficient funds to make meaningful progress toward achieving the goals of the Bicycle Master Plan and Parks Master Plan • Complete an analysis of traffic accident data and identify actions to improve the safety of our roadways for motorists, bicyclists, and pedestrians 4. Maintain a Solid Financial Foundation • Continue to monitor the impact of the 2013 property tax reform and evaluate alternative revenue sources as determined necessary • Continue to build the City’s Emergency Fund • Monitor potential changes to Moody’s rating criteria and maintain the City’s Aaa bond rating • Continue to reduce the City’s property tax levy • Maintain healthy fund balances throughout the City’s diverse operations 5. Enhance Community Engagement and Intergovernmental Relations • Experiment with innovative ways of engaging with diverse populations in person and on social media • Improve collaborative problem-solving with governmental entities in the region on topics of shared interest • Improve relationships with the executive branch and legislature by reaching out to legislators and other elected officials and working with City lobbyists 6. Promote Environmental Sustainability • Adopt an effective Climate Action and Adaptation Plan and ensure the next two budgets contain sufficient funds to facilitate achieving its goal • Support efforts to increase the reach of the Parks and Recreation Foundation 7. Advance Social Justice and Racial Equity • Support organizations and efforts that provide services to people experiencing and recovering from trauma and crisis related to mental health and substance abuse • Consider a policy to limit city business to vendors that pay all employees a wage of $10.10 or higher • Explore expanded use of a racial equity toolkit within City government, embedding it within city department and Council levels • Consider elevating hourly staff wages to $15/hour or more within two years 7 The City Council has also promoted private investment and re-development of other targeted areas throughout the community. The areas that are currently being focused on include the Riverfront Crossings area, the Downtown District, the Towncrest commercial area, the Riverside Drive commercial area, the 420th Street Industrial Park, and the Foster Road Urban Renewal Area. The Riverfront Crossing area is an initiative to revitalize the area south of Iowa City’s downtown district. This area was hard hit by flooding in 2008 and ideas for improving the district were initiated as part of a combined flood mitigation plan. The district features a riverfront park with walking and biking trails, a variety of housing options near shopping, restaurants, a state-of-the-art recital hall and recreational facilities and is a short walk to downtown Iowa City and the University of Iowa campus. This area has seen significant development over the past few years. The Riverfront Crossings area is anchored by a 76.8 acre park that was formerly comprised of public facilities including the City’s north wastewater treatment plant. An $8.5 million hazard mitigation grant from the State of Iowa assisted the City in removing the public facilities in this area and then converting the area into a riverfront park and wetland. Construction of phases 1 through 3 of the park began in 2017 and were completed during the fall of 2019; phase 4 of the park started in 2019 and is expected to be completed in the fall of 2020. On the north side of the Riverfront Crossing area, the University of Iowa recently constructed the Voxman School of Music. On the opposite side of the street, the redevelopment of an empty lot was completed in the spring of 2019 which includes a 7-story, mixed-use building with 40 apartment units, retail space on the street level, and office space on the second floor. An adjacent building houses a 7-story Element Hotel by Marriott. The estimated cost of these developments is approximately $40 million. On the back side of the School of Music, a new development has been approved for two new 15 story towers with up to 820 total units and 1,575 beds. This area is approximately one city block in size, will provide right-of-way to re-connect Capitol Street, and has an estimated investment of $200 million. There have also been numerous other public and private developments that have recently been completed in this area including a 12-story, $33 million Hilton Garden Inn, an $102.5 million mixed-use development with a 14-story tower and a 15-story tower that will include the Hyatt Place hotel, apartments, retail space, and office space, and the $50-$60 million redevelopment of a lumber store into a 40,000 square foot brewery, restaurant, and tap room that is flanked by 300+ dwelling units. The City also completed construction of a $15.3 million, 600 space parking garage in April 2017 to service growth in this area, which has 28 new townhomes and an office building constructed around it as its facade. In the Downtown District, the City completed a streetscape plan for the Central Business District which included lighting, landscaping, parking, utility improvements, art work, and pedestrian amenities. Reconstruction and enhancements for the Washington Street corridor were completed in 2017 and reconstruction of Black Hawk mini-park and the downtown pedestrian mall are currently under construction and are nearly complete. 8 Other buildings in the downtown that are undergoing major re-development include the Wilson Building and public space which has been developed into a 15-story mixed-use development known as the Chauncey; this building has 8 floors of residential units, a 35 unit hotel, two floors of commercial space, a movie theatre and a bowling alley. The project is estimated to be $49 million. Also being re-developed is the City Hall parking lot and neighboring church into 126 residential units, parking, and commercial space. The project is estimated to cost $33.4 million. Both of these projects are mostly complete with the exception of some of the commercial spaces which are still being remodeled. Also new in 2020, was the addition of a 13,000+ square foot Target in a large downtown store front that had been vacant for years. This store represents a trend away from big box stores on the edges of town and a focus on University related downtown foot traffic. In the Towncrest commercial area, City staff is working to facilitate redevelopment of key properties that will improve the function and aesthetic appeal of the area. The Towncrest Urban Renewal Area was developed to revitalize the Towncrest commercial district in ways that would serve existing businesses while also drawing new retailers, service providers, and consumers to the area. A major project in the area completed last year was a $7.4 million senior housing complex with 40 units which was built on the former site of a dilapidated commercial structure. Also, completed last year was the consolidation and redevelopment of two older gas stations located on the primary intersection in this district into a new gas station/marketplace. The Riverside Drive commercial area is an area that stretches from the University of Iowa campus to the intersection of Highways 1 and 6 and is across the river from the Riverfront Crossings development area. The development of a 4-story, $16.1 million multi-family/student housing development in the Riverside Drive area was completed in late 2016, and adjacent to this development several new retail spaces including a gas station/marketplace and additional multi- residential housing units were also constructed or renovated. The City is developing a streetscape plan for this area which will include lighting, trails, landscaping, and other amenities and improvements. Construction of the streetscape and intersection improvements began in 2018 and will continue through 2020. Additional streetscape and trail improvements are planned for this area in the future. The 420th Street Industrial Park is an extension of the Scott Boulevard Industrial Park at the corner of Scott Boulevard and Highway 6. It is a 171-acre, shovel-ready business park with available sites that include arterial road, highway, and railroad access. Alexander Lumber, previously located in the Riverfront Crossing district, purchased an 11.2-acre lot in the Industrial Park to construct a contractor showroom for home and office construction materials. This project has an estimated value of $2.6 million and was completed last year. Their future plans include a commercial/industrial manufacturing facility. In addition to this development, the northern portion of the 420th Street Industrial Park has been designated as a future site for a youth sports complex. The planning phase has been completed on the complex and a tree buffer was added between the two portions of the Industrial Park. The northern section of the Park is located close to the new Hoover Elementary School with a future residential growth area located between the school and the complex. Sanitary sewer to be extended into this area is under design with construction expected to start in 2021. 9 Development of the Foster Road Urban Renewal Area is underway which will convert a 53.29 acre wooded area north of the Downtown area and near Interstate 80 into a new residential/multi- residential development with a total estimated cost of approximately $33 million. This area will include construction of a 53-unit, 55+ senior living facility as well as the construction of an additional 52 townhomes. The project also extends the Foster Road arterial from Dubuque Street to Prairie Du Chien Road and will provide Low-Middle Income funding through a tax increment district that can be used by the City anywhere to assist with the development of affordable housing. The 55+ senior living facility and the arterial extension were completed during 2020. Long-term Financial Planning It is management’s intent to support the major City Council initiatives through budget appropriations, departmental operations, and employee development so that the organization as a whole is moving in the same direction. A significant influence in the preparation of the three-year financial plan (FY2020 – FY2022) was the passage of property tax reform (SF295) by the state legislature in 2013. The property tax reform bill had multiple components including a property tax rollback for commercial and industrial property, which reduced the taxable value of these property types. The bill established a State funded “backfill” to reimburse the City for lost property tax revenues due to the commercial and industrial rollback. The State “backfill” payments began in fiscal year 2015 but were capped at the fiscal year 2017 levels for years thereafter. The cumulative reduction in commercial and industrial property tax revenues due to this rollback are estimated to be $17,762,000 between fiscal year 2015 to fiscal year 2024, and the maximum reimbursement from the State during that time period would be $16,986,000 for a net loss in revenues of $776,000. For fiscal years 2015 through 2020, the City received actual State “backfill” payments for the commercial and industrial rollback totaling $9,322,403. This bill also limited the annual taxable valuation growth of residential and agricultural property to 3 percent, instead of the previous limit of 4 percent. The impact of this provision is that the taxable percentage of residential property is expected grow at a slower pace. Without this change, the estimated taxable percentage of residential property was estimated to be 60.85% in fiscal year 2024. With this provision in place, the estimated taxable percentage in fiscal year 2024 is estimated to be 55.11%, a reduction of 5.74%. Based on the assessed value of residential property in Iowa City, the cumulative loss is estimated to be $22,638,000 from fiscal year 2015 to fiscal year 2024. The City will not receive any money from the State due to lost revenue from this provision. SF295 also established a multi-residential property classification that includes mobile home parks, assisted living facilities, and property primarily intended for human habitation. A gradual rollback will be applied to these properties to eventually tax them similarly to residential property, rather than commercial, by fiscal year 2024. The estimated cumulative loss from fiscal year 2015 to fiscal year 2024 is $16,722,000, which will not be reimbursed by the State of Iowa. Fiscal year 2017 was the first year for this new class of property, and the estimated lost revenue from this provision in from fiscal year 2017 to fiscal year 2020 was $5,793,450. Due to the passage of SF295, the City estimates its net revenue losses to be $14,580,000 for fiscal years 2015 through 2020. The cumulative net revenue loss from fiscal years 2015 through 2024 is estimated to be $40,136,000. It is possible that this could affect the City’s ability to finance services at current levels without finding other revenue sources or more efficient ways to deliver services. 10 The City’s long-term financial planning strategy is to promote targeted economic development, diversify its revenue structure, control spending and create efficiencies, and to build adequate reserves and contingencies into its financial structure. In addition, the City is annually reviewing and adjusting its user fees, service charges, and fine structures to try to maintain all of its major enterprise funds with a positive net income after depreciation but before capital contributions, transfers, and extraordinary items. The City also continues to strive to reduce the City’s property tax levy rate to be competitive for economic development purposes. In fiscal year 2013, the City’s property tax levy rate was $17.269 per $1,000 of assessed value. The property tax levy rate has been reduced for seven consecutive years to $15.773 in fiscal year 2021. This has been a reduction of $1.496 per $1,000 of assessed value or 8.66% over that time period. In looking at expenses for the FY2020 – FY2022 Financial Plan and FY2021 operating budget, the City will generally experience increased expenditures; however, at a modest pace, with General Fund expenditures and total operating expenditures growing less than 1% from FY2020 to FY2021. Bargaining unit cost-of-living wage increases are approximately 2% to 4% each year. In prior years, the budgeted full-time equivalents (FTE) has generally remained flat - from 607.66 in FY2015 to 608.18 in FY2020, but in FY2021, the permanent FTE count increases to 624.08 primarily due to the conversion of temporary workers to permanent part-time or permanent full- time positions. In addition, public safety pension contribution rates increased slightly in FY21 from 24.41% to 25.31%. The City has averaged a 4.95% increase in its health insurance premium rates over the previous eight years and is expecting a similar rate increase in FY2021 and FY2022. Employee contributions for health insurance are expected to increase in FY2021, and employee contributions, deductibles, and out-of-pocket maximums for health insurance are all expected to increase in FY2022, which should help mitigate the impact to the City’s overall premium increase. Although, personnel costs are growing at a faster pace than 1%, expenditures for services, supplies, capital outlay, and other financing uses in the General Fund are all projected to decrease in FY2021 and then remain relatively flat in FY2022. In balancing the budget for the three-year period, the City attempts to mitigate the growth of costs while continuing to provide high quality services by identifying ways to provide services more efficiently, reviewing and updating existing revenue sources to meet strategic goals, strategically funding new programming and economic development to ensure strong property value growth, providing for necessary improvements to existing infrastructure, and upholding fiscal integrity by maintaining adequate cash reserves. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting (the Certificate) to the City of Iowa City, Iowa for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019. The Certificate is the highest form of recognition for excellence in state and local financial reporting. In order to be awarded the Certificate, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. The Comprehensive Annual Financial Report must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements. The Certificate is valid for a period of one year only. The City has received the Certificate for the last thirty-five consecutive years. I believe our current report continues to conform to the Certificate requirements and I will submit it to GFOA to determine its eligibility for another certificate. 11 In addition, the City received the GFOA’s Award for Distinguished Budget Presentation for its annual appropriated budget beginning July 1, 2020. In order to qualify for the Distinguished Budget Presentation Award, the City’s budget document was judged to be proficient or outstanding in several categories including policy documentation, financial planning, and organization. This is the ninth consecutive year the City has received this award. Responsibility and Acknowledgments The Department of Finance prepared the Comprehensive Annual Financial Report of the City of Iowa City, Iowa for the fiscal year ended June 30, 2020. 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 Assistant Finance Director, Nicole Knudtson- Davies, Assistant Controller, Sara Sproule, Senior Accountants, TaraLynne Werthmann and Angie Ogden and Senior Payroll Accountant, Chris Hurlbert. Also, I thank the Mayor, members of the City Council and the City Manager for their interest and support in planning and conducting the financial operations of the City in a dedicated, responsible, and progressive manner. Respectfully submitted, Dennis Bockenstedt Director of Finance 12 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Iowa City Iowa For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2019 Executive Director/CEO 13 City of Iowa City Organization Chart Community City Manager City Manager Communications Office Human Resources Human Rights Economic Development Airport Airport Operations City Attorney City Clerk Library Board Airport Commission Library Library Operations Library Foundation Fire Administration Emergency Operations Fire Prevention Training Police Administration Support Services Field Operations Parks & Recreation Administration Recreation Park Maintenance Cemetery Finance Administration Accounting Purchasing Revenue Risk Management Information Technology Services Senior Center Senior Center Operations Neighborhood & Development Services Administration Development Services Neighborhood Services Metropolitan Planning Organization of Johnson County Public Works Administration Engineering Streets Wastewater Water Resource Management Equipment Transportation Services Administration Parking Public Transportation City Council City Manager City Clerk City Clerk City Attorney City Attorney 14 City of Iowa City, Iowa Listing of City Officials June 30, 2020 Elected Officials Term Expires Mayor Bruce Teague January 2, 2022 Council Member and Mayor Pro Tem Mazahir Salih January 2, 2022 Council Member Pauline Taylor January 2, 2024 Council Member John Thomas January 2, 2024 Council Member Susan Mims January 2, 2022 Council Member Laura Bergus January 2, 2024 Council Member Janice Weiner January 2, 2024 Appointed Officials Date of Hire City Manager Geoff Fruin November 28, 2011 City Clerk Kellie Fruehling July 10, 2000 City Attorney Eleanor Dilkes March 18, 1996 Department Directors Assistant City Manager Ashley Monroe December 1, 2016 Director of Neighborhood Development Services Tracy Hightshoe August 27, 2001 Library Director Elsworth Carman January 2, 2019 Director of Public Works Ron Knoche April 28, 1999 Director of Transportation Services Darian Nagle Gamm May 21, 2008 Senior Center Coordinator LaTasha DeLoach July 31, 2018 Fire Chief John Grier August 10, 1992 Parks and Recreation Director Juli Seydell Johnson January 4, 2016 Director of Finance Dennis Bockenstedt February 15, 2013 Interim Chief of Police William Campbell April 27, 1990 15 16 Financial Section Tabs (This page left blank intentionally.) 20 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, 2020. 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 – 12 of this report. Financial Highlights •The assets and deferred outflows of resources of the City of Iowa City exceeded its liabilities and deferred inflows of resources at the close of the fiscal year ending June 30, 2020 by $684,143,000 (net position). Of this amount, $98,480,000 (unrestricted net position) may be used to meet the government’s ongoing obligations to its citizens and creditors. •The City’s total net position increased by $17,782,000 during the fiscal year. Governmental activities increased by $8,430,000 and business-type activities increased by $9,352,000. •At the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $91,768,000, an increase of $19,000 in comparison with the prior year. Of this total amount, approximately $34,758,000 or 37.9% is unassigned and available for spending at the City’s discretion. •At the end of the current fiscal year, the City’s unassigned fund balance for the General Fund was $35,369,000 or 67.9% of total General Fund expenditures. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements: The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances in a manner similar to a private-sector business. The statement of net position presents information on all of the City’s assets and deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include Public Safety, Public Works (roads and traffic controls), Culture and Recreation, Community and Economic Development, General Government, and Interest on long-term debt. The business-type activities of the City include Airport, Housing Authority, Parking, Sanitation, Stormwater Collection, Transit, Wastewater Treatment, and Water. The government-wide financial statements may be found on pages 32 – 35 of this report. 21 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 six major governmental funds: General Fund, Other Shared Revenue and Grants Fund, Employee Benefits Fund, Other Construction Fund, Bridge, Street and Traffic Control Construction Fund, and Debt Service Fund. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for these major funds. Data from all other non-major governmental funds is combined into a single aggregated presentation and are referenced under a single column as “Other Governmental Funds”. Individual fund data on each of these non- major governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for all governmental funds as required by state statute. Budget comparisons have been provided for the Governmental funds and the Enterprise funds, to demonstrate compliance with the adopted budget. The basic governmental funds financial statements can be found on pages 36 – 39 of this report. Proprietary Funds: The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Airport, Housing Authority, Parking, Sanitation, Stormwater Collection, Transit, Wastewater Treatment, and Water activities. Internal Service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City has four Internal Service Funds: Equipment Maintenance, Central Services, Loss Reserve, and Information Technology. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds financial statements provide the same type of information as the government-wide financial statements, only in more detail. Transit, Wastewater Treatment, Water, Sanitation, Stormwater and Housing Authority are considered to be major funds and are reported individually throughout the report. The other two non-major enterprise funds are grouped together for reporting purposes and listed under a single heading “Other Enterprise Funds”. Detailed information for each of the non-major funds is provided in the combining statements on pages 100 – 102. 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 40 – 42 of this report. Fiduciary Funds: Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not available to support the City’s own programs and therefore are not reflected in the government-wide financial statements. The City has one fiduciary fund: Project Green, which is maintained as an agency fund. 22 The basic fiduciary funds financial statements can be found on page 43. 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 44 – 79 of this report. Other Information: The combining statements referred to in the above paragraphs in connection with non- major governmental funds and internal service funds are presented immediately following the notes. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $684,143,000 at the close of the fiscal year ended June 30, 2020. By far, the largest portion of the City’s net position reflect its investment in capital assets (e.g., land, building, machinery and equipment, improvements other than buildings, and infrastructure), net any related debt to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other resources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Iowa City's Net Position June 30, 2020 (amounts expressed in thousands) Governmental Business-type activities activities Total 2020 2019 2020 2019 2020 2019 Current and other assets 192,519$ 187,619$ 121,004$ 119,256$ 313,523$ 306,875$ Capital assets 273,877 261,593 331,450 334,810 605,327 596,403 Total assets 466,396 449,212 452,454 454,066 918,850 903,278 Deferred outflows of resources 11,421 12,722 2,385 2,843 13,806 15,565 Long-term liabilities outstanding 118,763 116,127 38,531 52,122 157,294 168,249 Current and other liabilities 14,198 16,384 5,971 4,526 20,169 20,910 Total liabilities 132,961 132,511 44,502 56,648 177,463 189,159 Deferred inflows of resources 69,455 62,452 1,595 871 71,050 63,323 Net position: Net investment in capital assets 220,004 208,028 314,523 304,111 534,527 512,139 Restricted 33,578 38,819 17,558 18,055 51,136 56,874 Unrestricted 21,819 20,124 76,661 77,224 98,480 97,348 Total net position 275,401$ 266,971$ 408,742$ 399,390$ 684,143$ 666,361$ 23 A portion of the City’s net position, $51,136,000 or 7.5%, represents resources that are subject to external restrictions on how they may be used. The remaining balance of the unrestricted net position, $98,480,000 or 14.4%, 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, 2020, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. The following is a more detailed review of FY20’s operation. Governmental Activities: Governmental activities increased the City’s net position by $8,430,000. The increase in net position of governmental activities is primarily from earnings on investments and a decrease in net transfers out. The total revenues for governmental activities for FY20 were $94,901,000. Governmental activities are primarily funded through taxes, $65,542,000 or 69.1%, and grants and contributions, $16,541,000 or 17.4%. Taxes increased from the prior year by $868,000, mostly due to increased property taxes which was due to an increase in the taxable value of all property. Grants and contributions decreased from prior year by $741,000 due mainly to less state grants for street overlay projects. Expenses for governmental activities totaled $80,084,000. Governmental activities are tracked by function including Public Safety, Public Works, Community and Economic Development, Culture and Recreation, and General Government. In FY20, Public Safety accounted for the highest portion of governmental expenses, $29,252,000 or 36.6%, and increased over the prior year due to increases in salaries and benefits. Culture and Recreation expenses of $16,233,000 or 20.3% made up another large portion of the governmental expenses and increased over the prior year due mainly to expenditures related to pension and OPEB. Public Works expenses of $16,071,000 or 20.0% made up the third highest portion of governmental expenses and had a slight decrease in expenses from the prior year. Business-type Activities: Business-type activities increased the City’s total net position by $9,352,000. The increase in net position was primarily from the Wastewater Treatment, Water and Stormwater funds. Wastewater and Water generated operating income of $1,537,000 and $790,000, respectively. Wastewater also received $2,042,000 from the state for the redevelopment of the land that was the site of the former wastewater treatment plant. All three funds received contributions of infrastructure assets from developers. Wastewater, Water and Stormwater received $507,000, $965,000 and $876,000, respectively. Revenues for business-type activities totaled $62,004,000. The primary revenue source for business-type activities is charges for services, $41,135,000 or 66.3%. In addition for FY20, the City’s business type-activities had a significant portion, $13,911,000 or 22.4%, of their revenues from grants and contributions used to help fund operation and capital projects for business-type activities. The total expenses for business-type activities in FY20 were $59,039,000. Wastewater Treatment represented the highest portion of business-type activities, $10,807,000 or 18.3%, with Sanitation, $10,145,000 or 17.2%, Housing Authority, $10,021,000 or 17.0%, Water, $9,302,000 or 15.8%, and Transit, $9,041,000 or 15.3%, making up the remainder of the majority of business-type activities expenses. 24 The graphs on the following pages represent a breakdown of revenue by source and expenses by program area for governmental and business-type activities. City of Iowa City's Changes in Net Position (amounts expressed in thousands) Governmental Business-type activities activities Total 2020 2019 2020 2019 2020 2019 Revenues: Program Revenues: Charges for services 6,791$ 8,279$ 41,135$ 42,865$ 47,926$ 51,144$ Operating grants and contributions 13,113 13,758 13,911 11,713 27,024 25,471 Capital grants and contributions 1,915 1,972 4,525 3,268 6,440 5,240 General Revenues: Property taxes 62,846 61,739 - - 62,846 61,739 Other taxes 2,696 2,935 - - 2,696 2,935 Grants and contributions not restricted to specific purposes 1,513 1,552 - - 1,513 1,552 Earnings on investments 2,585 3,257 1,794 2,166 4,379 5,423 Gain on disposal of capital assets 111 186 74 1 185 187 Other 3,331 3,329 565 838 3,896 4,167 Total revenues 94,901 97,007 62,004 60,851 156,905 157,858 Expenses: Public safety 29,252 26,265 - - 29,252 26,265 Public works 16,071 16,324 - - 16,071 16,324 Culture and recreation 16,233 16,009 - - 16,233 16,009 Community and economic development 9,383 16,022 - - 9,383 16,022 General government 7,693 7,524 - - 7,693 7,524 Interest on long-term debt 1,452 1,444 - - 1,452 1,444 Wastewater treatment - - 10,807 11,413 10,807 11,413 Water - - 9,302 9,543 9,302 9,543 Sanitation - - 10,145 10,858 10,145 10,858 Housing authority - - 10,021 10,170 10,021 10,170 Parking - - 5,014 5,461 5,014 5,461 Airport - - 2,511 1,466 2,511 1,466 Stormwater - - 2,198 1,832 2,198 1,832 Transit - - 9,041 8,833 9,041 8,833 Total expenses 80,084 83,588 59,039 59,576 139,123 143,164 Change in net position before transfers 14,817 13,419 2,965 1,275 17,782 14,694 Transfers (6,387) (8,661) 6,387 8,661 - - Change in net position 8,430 4,758 9,352 9,936 17,782 14,694 Net position beginning of year 266,971 262,213 399,390 389,454 666,361 651,667 Net position end of year 275,401$ 266,971$ 408,742$ 399,390$ 684,143$ 666,361$ 25 Charges for services 7% Grants and Contributions 18% Property taxes 66% Other Taxes 3% Misc. Other 6% Governmental Activities FY2020 Revenue by Source Charges for services 66% Grants and Contributions 30% Misc. Other 4% Business-Type Activities FY2020 Revenue by Source 26 Public Safety Public Works Culture and Recreation Community and Econ Dev General Govt Interest Expense 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 32,000 Dollars ($)Program Area Governmental Activities FY2020 Expenses by Program Area (amounts expressed in thousands) Wastewater Treatment Water Sanitation Housing Authority Parking Airport Stormwater Transit 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 Dollars ($)Program Area Business-Type Activities FY2020 Expenses by Program Area (amounts expressed in thousands) 27 Financial Analysis of the Government’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds: The financial reporting focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information may be/is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions effective with the June 30, 2011 financial statements. Fund balances for the governmental funds are reported in classifications that comprise a hierarchy based on the extent to which the government honors constraints on the specific purposes for which amounts in those funds can be spent. As of the fiscal year ended June 30, 2020, the City’s governmental funds reported combined ending fund balances of $91,768,000, an increase of $19,000 in comparison with the prior year. Of this total amount, $34,758,000 constitutes unassigned fund balance, which is available to use as working capital for the General Fund since property tax revenues are received only twice a year and the remainder is available to meet the future needs of the City. The remainder of the fund balance is not available for new spending because of constraints imposed externally by creditors, grantors, contributors, or laws or regulations of other governments or constraints imposed internally on the specific purposes for which these amounts can be spent. The restricted fund balance of $50,475,000 or 55.0% contains external restraints on its use. The assigned fund balances of $5,708,000 or 6.2% has been identified by the City to be used for specific purposes. The nonspendable fund balance is $827,000 or 0.9%, which the City is contractually required to maintain intact or cannot be spent because it is in a nonspendable format, such as inventories. The General Fund is the chief operating fund of the City. As of the fiscal year ended June 30, 2020, the unassigned fund balance of the General Fund was $35,369,000 while General Fund’s total fund balance was $43,373,000. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 67.9% of total General Fund expenditures of $52,078,000, while total fund balance represents 83.3% of that same amount. During the current fiscal year, the fund balance of the City’s General Fund increased by $2,755,000. This is due to transfers in from other funds. The fund balance in the Bridge, Street, and Traffic Control Construction Fund was $15,842,000, a increase of $5,025,000. This fund accounts for transactions relating to the acquisition or construction of major streets, bridges, and traffic control facilities. The change in the fund balance is due to bond sales. The fund balance in the Other Construction Fund was $8,763,000, a decrease of $7,861,000. This fund accounts for the construction or replacement of other governmental general capital assets, such as administrative buildings, with various funding sources, including general obligation bonds, intergovernmental revenues, and contributions. This decrease is mainly due to expenditures for capital outlay. The ending fund balance of the Debt Service Fund was $9,724,000, an increase of $76,000, all of which is reserved for the payment of debt service (i.e. payment of general obligation principal and interest). The ending fund balance of the Employee Benefits Fund was $3,585,000, a decrease of $370,000 due to an increase in worker’s comp claims. The ending fund balance of the Other Shared Revenue and Grants Fund was $5,755,000, an increase of $558,000 due to less Low-Income Housing Tax Credits paid in the current year. 28 Proprietary Funds: The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. The ending net position of the enterprise funds was $389,423,000, an increase in net position of $7,588,000. This was primarily due to capital contributions of federal and state grants to fund capital improvement projects and transfers of business-type capital assets from governmental capital project funds. Of the enterprise funds’ net position, $314,523,000 is net investment in capital assets. Unrestricted net position totaled $57,342,000, a decrease of $2,326,000 compared to the previous year. The Internal Service funds showed net position totaling $47,810,000 as of June 30, 2020, an increase of $4,595,000 primarily due to operating income in the Equipment Reserve Fund to build up reserves for future capital outlay and in the Loss Reserve Fund to build up reserves for future health and liability expenses. Budgetary Highlights The City presents budgetary information as allowed by GASB Statement No. 41. Budgets are based on nine functional areas as required by state statute, not by fund or fund type. The City had two budget amendments during the fiscal year. These amendments increased budgeted revenues by $11,481,000 or 7.3% to a total of $168,949,000 and the expenditure budget by $68,016,000 or 40.6% to a total of $235,730,000. These increases were due primarily to capital projects in governmental and business- type funds because of timing of completion of projects. Capital Assets and Debt Administration Capital Assets: The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2020 amounts to $605,327,000, 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, 2020 increased by $12,284,000 for governmental activities compared to the prior year and decreased by $3,360,000 for business- type activities from the prior year. The following table reflects the $605,327,000 investment in capital assets, net of accumulated depreciation. City of Iowa City's Capital Assets (net of depreciation) (amounts expressed in thousands) Governmental Business-type Activities Activities Total 2020 2019 2020 2019 2020 2019 Land 31,159$ 30,808$ 30,317$ 30,316$ 61,476$ 61,124$ Buildings 37,467 38,495 63,080 66,513 100,547 105,008 Improvements other than buildings 3,568 3,501 3,635 3,906 7,203 7,407 Machinery and equipment 31,057 18,018 16,301 13,109 47,358 31,127 Infrastructure 160,625 150,288 214,010 217,222 374,635 367,510 Construction in progress 10,001 20,483 4,107 3,744 14,108 24,227 Total 273,877$ 261,593$ 331,450$ 334,810$ 605,327$ 596,403$ 29 Major capital asset events during the current fiscal year included the following: • Two large construction projects were completed during FY 20. The first is the Public Works Facility. This project replaces the equipment storage, offices and maintenance facilities for the streets, traffic engineering, storm and sanitary sewer maintenance, refuse collection and equipment divisions. This project had construction in progress balance at the beginning of the year of $6,854,000 and current year expenditures of $5,568,000. The total cost of the project that was capitalized was $12,422,000. The project was funded by an internal loan from the Sanitation Fund, Road Use Tax funds and cash on hand from the General, Water, Sanitation, Stormwater and Equipment Funds. The other project is the Pedestrian Mall Reconstruction which had a construction in progress balance at the beginning of the year of $6,606,000 and current year expenditures of $2,300,000. The total cost of the project that was capitalized was $8,906,000 and it was primarily funded through bond sales. This project is part of the downtown streetscape master plan. This project updates the Black Hawk mini park and the east and west wings of the pedestrian mall. The project includes replacing brick pavers, new landscape and lighting, enhanced fountain lighting and a performance stage. Additional information on the City’s capital assets can be found in Note 4 to the financial statements. Debt Administration: At the end of the fiscal year, the City had total bonded debt outstanding of $84,225,000. Of this amount, $53,370,000 comprises debt backed by the full faith and credit of the City. $3,106,000 or 5.8% of these bonds is debt that will be paid with Tax Increment Financing revenues. $30,855,000 represents revenue bonds secured solely by specific revenue sources. The City issued $12,145,000 of General Obligation bonds during FY20. This increase in debt was offset by the retirement of debt for a net decrease of City’s total bonded debt by $3,315,000. The City continues to have the same excellent bond rating on its General Obligation bonds that it has had for the past several years. This rating is given to those bonds judged to be of the best quality and carrying the smallest degree of investment risks. The City's bond ratings by Moody’s Investors Services, Inc. as of June 30, 2020 were as follows: General obligation bonds Aaa Wastewater treatment revenue bonds Aa2 Water revenue bonds Aa2 The City continues to operate well under the State debt capacity debt limitations. State statute limits the amount of debt outstanding to 5% of the assessed value of all taxable property in Iowa City. Debt subject to the debt limit includes general obligation debt and revenue bonds issued pursuant to Iowa Code Chapter 403 (tax increment). The current debt limitation for the City is $306,679,000. With outstanding debt applicable to this limit of $94,037,000 we are utilizing 30.7% of this limit. More detailed information on debt administration is provided in Note 6 of the financial statements. City of Iowa City's Outstanding Debt General Obligation and Revenue Bonds (amounts expressed in thousands) Governmental Business-type Activities Activities Total 2020 2019 2020 2019 2020 2019 General obligation bonds 53,370$ 52,470$ -$ -$ 53,370$ 52,470$ Revenue bonds 14,790 14,930 16,065 20,140 30,855 35,070 Total 68,160$ 67,400$ 16,065$ 20,140$ 84,225$ 87,540$ 30 Economic Factors and Next Year’s Budget and Rates The City expects continued constraints by the State’s property tax formula. The State passed property tax reform, which will negatively affect the City’s general operating funds. Without the potential for new revenue sources, like those mentioned above, the City’s opportunities for new initiatives are limited. The Council has established a budget where revenues exceed expenditures by $2 million in the General Fund for FY21 that strives to maintain current service delivery levels. The tax levy rate per $1,000 of assessed valuation for FY21 is provided below: Requests for Information This report is designed to provide a general overview of the City of Iowa City’s finances for all of those with an interest in the government’s finances. Questions concerning any of the information provided in this report, or requests for additional financial information should be addressed to City of Iowa City, Finance Department, 410 East Washington Street, Iowa City, IA, 52240. General Levy $ 8.100 Debt Service Levy 2.579 Employee Benefits Levy 3.344 Transit Levy 0.950 Liability Insurance Levy 0.290 Library Levy 0.270 Total City Levy $ 15.533 31 Governmental Business-type Activities Activities Total Assets Equity in pooled cash and investments 113,883$ 59,544$ 173,427$ Receivables: Property tax 66,479 - 66,479 Accounts and unbilled usage 707 3,595 4,302 Interest 547 328 875 Notes 5,300 357 5,657 Internal balances (22,551) 22,551 - Due from other governments 7,125 3,462 10,587 Prepaids and other assets 13 - 13 Inventories 793 743 1,536 Assets held for resale 480 - 480 Restricted assets: Equity in pooled cash and investments 19,743 30,424 50,167 Capital assets: Land and construction in progress 41,160 34,424 75,584 Other capital assets (net of accumulated depreciation)232,717 297,026 529,743 Total assets 466,396 452,454 918,850 Deferred Outflows of Resources Pension related deferred outflows 10,119 1,890 12,009 OPEB related deferred outflows 1,302 495 1,797 Total deferred outflows of resources 11,421 2,385 13,806 Liabilities Accounts payable 3,494 1,351 4,845 Contracts payable 3,725 1,287 5,012 Accrued liabilities 5,558 612 6,170 Interest payable 158 265 423 Deposits 1,222 2,216 3,438 Advances from grantors 3 - 3 Due to other governments 38 43 81 Unearned revenue - 197 197 Noncurrent liabilities: Due within one year: Employee vested benefits 1,525 496 2,021 Bonds payable 11,119 4,544 15,663 Due in more than one year: Employee vested benefits 1,206 366 1,572 Net pension liability 39,796 7,850 47,646 Other post employment benefits liability 6,253 2,374 8,627 Notes payable 211 - 211 Bonds payable 58,653 12,241 70,894 Landfill closure/post-closure liability - 10,660 10,660 Total liabilities 132,961$ 44,502$ 177,463$ (continued) (amounts expressed in thousands) City of Iowa City, Iowa Statement of Net Position June 30, 2020 32 Governmental Business-type Activities Activities Total Deferred inflows of resources Pension related deferred inflows 3,045$ 1,240$ 4,285$ OPEB related deferred inflows 560 213 773 Deferred amount on refunding - 142 142 Succeeding year property taxes 65,850 - 65,850 Total deferred inflows of resources 69,455 1,595 71,050 Net position Net investment in capital assets 220,004 314,523 534,527 Restricted for or by: Employee benefits 3,875 - 3,875 Capital projects: Expendable 11,464 - 11,464 Nonexpendable 278 - 278 Debt service 9,590 - 9,590 Police 294 - 294 Other purposes Expendable 4,552 - 4,552 Nonexpendable 69 - 69 Bond ordinance - 9,714 9,714 State statute - 4,322 4,322 Future improvements - 100 100 Grant agreement 3,456 3,422 6,878 Unrestricted 21,819 76,661 98,480 Total net position 275,401$ 408,742$ 684,143$ The notes to the financial statements are an integral part of this statement. June 30, 2020 (amounts expressed in thousands) City of Iowa City, Iowa Statement of Net Position (continued) 33 34 Operating Capital Charges Grants and Grants and Governmental Business-type Functions/Programs:Expenses for Services Contributions Contributions Activities Activities Total Governmental activities: Public safety 29,252$ 4,430$ 2,094$ -$ (22,728)$ -$ (22,728)$ Public works 16,071 243 9,434 1,657 (4,737) - (4,737) Culture and recreation 16,233 508 16 258 (15,451) - (15,451) Community and economic development 9,383 59 1,564 - (7,760) - (7,760) General government 7,693 1,551 5 - (6,137) - (6,137) Interest on long-term debt 1,452 - - - (1,452) - (1,452) Total governmental activities 80,084 6,791 13,113 1,915 (58,265) - (58,265) Business-type activities: Wastewater treatment 10,807 12,357 8 2,550 - 4,108 4,108 Water 9,302 10,048 2 965 - 1,713 1,713 Sanitation 10,145 10,193 20 - - 68 68 Housing authority 10,021 280 9,875 - - 134 134 Parking 5,014 4,354 3 - - (657) (657) Airport 2,511 371 896 134 - (1,110) (1,110) Stormwater 2,198 1,730 - 876 - 408 408 Transit 9,041 1,802 3,107 - - (4,132) (4,132) Total business-type activities 59,039 41,135 13,911 4,525 - 532 532 Total 139,123$ 47,926$ 27,024$ 6,440$ (58,265) 532 (57,733) General revenues: Property taxes, levied for general purposes 62,846 - 62,846 Hotel/motel tax 1,135 - 1,135 Gas and electric tax 677 - 677 Utility franchise tax 884 - 884 Grants and contributions not restricted to specific purposes 1,513 - 1,513 Earnings on investments 2,585 1,794 4,379 Gain on disposal of capital assets 111 74 185 Miscellaneous 3,331 565 3,896 Transfers (6,387) 6,387 - Total general revenues and transfers 66,695 8,820 75,515 Changes in net position 8,430 9,352 17,782 Net position beginning of year 266,971 399,390 666,361 Net position end of year 275,401$ 408,742$ 684,143$ The notes to the financial statements are an integral part of this statement. Program Revenues Net (Expense) Revenue and Changes in Net Position City of Iowa City, Iowa Statement of Activities For the Year Ended June 30, 2020 (amounts expressed in thousands) 35 Bridge, Other Street, and Shared Traffic Other Revenue and Employee Other Control Debt Governmental General Grants Benefits Construction Construction Service Funds Total Assets Equity in pooled cash and investments 42,371$ 2,751$ 3,468$ 8,414$ 8,155$ 9,225$ 1,149$ 75,533$ Receivables: Property tax 40,081 3 14,935 - - 10,982 478 66,479 Accounts and unbilled usage 355 59 - - 150 - - 564 Interest 163 6 - 46 62 22 8 307 Notes 1,252 200 - -- 288 3,560 5,300 Due from other funds 299 - - - - - - 299 Advances to other funds - - - - - 82 - 82 Due from other governments 3,661 1,174 317 371 1,275 - 285 7,083 Inventories - 278 - - - - - 278 Prepaid item 13 - - - - - - 13 Assets held for resale 480 - - - - - - 480 Restricted assets: Equity in pooled cash and investments 2,209 1,600 - 4,974 10,960 - - 19,743 Total assets 90,884$ 6,071$ 18,720$ 13,805$ 20,602$ 20,599$ 5,480$ 176,161$ Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable 1,356$ 92$ 4$ 219$ 1,124$ 3$ 65$ 2,863$ Contracts payable - - - 1,328 2,397 - - 3,725 Accrued liabilities 1,673 123 2 - 4 - 28 1,830 Due to other funds - - - - - - 161 161 Advances from other funds - 82 - 3,370 - - - 3,452 Due to other governments 38 - - - - - - 38 Liabilities payable from restricted assets: Deposits 1,217 5 - - - - - 1,222 Advances from grantors - 3 - - - - - 3 Total liabilities 4,284 305 6 4,917 3,525 3 254 13,294 Deferred inflows of resources : Unavailable revenues: Succeeding year property taxes 39,720 - 14,812 - - 10,872 446 65,850 Grants 1,791 11 - 34 1,235 - 54 3,125 Other 1,716 - 317 91 - - - 2,124 Total deferred inflows of resources 43,227 11 15,129 125 1,235 10,872 500 71,099 Fund balances: Nonspendable 549 278 - - - - - 827 Restricted 1,747 5,477 3,585 8,763 15,842 9,748 5,313 50,475 Assigned 5,708 - - - - - - 5,708 Unassigned 35,369 - - - - (24) (587) 34,758 Total fund balances 43,373 5,755 3,585 8,763 15,842 9,724 4,726 91,768 Total liabilities, deferred inflows of resources and fund balances 90,884$ 6,071$ 18,720$ 13,805$ 20,602$ 20,599$ 5,480$ 176,161$ The notes to the financial statements are an integral part of this statement. Special Revenue Capital Projects City of Iowa City, Iowa Balance Sheet Governmental Funds June 30, 2020 (amounts expressed in thousands) 36 Total governmental fund balances 91,768$ Amounts reported for governmental activities in the statement of net position are different because: Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position.47,810 Other long-term assets are not available to pay for current period expenditures and therefore are unavailable in the funds: Grants and other receivables - Earned but unavailable.5,249 Capital assets used in governmental activities are not current financial resources and therefore are not reported in the funds. 259,408 Pension and OPEB related deferred outflows of resources and deferred inflows of resources are not due and payable in the current period and therefore are not reported in the funds. Deferred outflows of resources 11,040$ Deferred inflows of resources (3,374) 7,666 Net pension liabilities are not due and payable in the current period and therefore are not reported in the funds.(38,515) Accrued compensated absences are not due and payable in the current period and therefore are not reported in the funds.(2,595) Accrued post employment benefit liabilities are not due and payable in the current period and therefore are not reported in the funds.(5,930) Bonds payable are not due and payable in the current period and therefore are not reported in the funds.(69,772) Notes payable are not due and payable in the current period and therefore are not reported in the funds.(211) Accrued interest on bonds (158) Internal balance due to integration of internal service funds (19,319) Total net position of governmental activities 275,401$ The notes to the financial statements are an integral part of this statement. (amounts expressed in thousands) City of Iowa City, Iowa Reconciliation of the Balance Sheet of the Governmental Funds to the Statement of Net Position June 30, 2020 37 Bridge, Other Street, and Shared Traffic Other Revenue and Employee Other Control Debt Governmental General Grants Benefits Construction Construction Service Funds Total Revenues Taxes 38,087$ 3$ 12,175$ -$ -$ 11,505$ 3,772$ 65,542$ Licenses and permits 2,352 - - - - - - 2,352 Intergovernmental 4,009 9,176 302 581 2,576 280 1,679 18,603 Charges for services 1,113 97 321 91 93 - - 1,715 Fines and forfeits 609 - - - - - - 609 Use of money and property 1,102 91 - 174 172 249 84 1,872 Miscellaneous 2,031 113 - 98 31 - 167 2,440 Total revenues 49,303 9,480 12,798 944 2,872 12,034 5,702 93,133 Expenditures Current: Public safety 24,611 - 1,000 26 - - - 25,637 Public works 2,219 5,913 - 515 1,939 - - 10,586 Culture and recreation 13,146 - - 507 - - - 13,653 Community and economic development 3,678 712 - 214 - - 4,023 8,627 General government 6,336 - 381 8 - 64 - 6,789 Debt service: Principal - - - - - 11,385 - 11,385 Interest - - - - - 1,648 - 1,648 Capital outlay 2,088 529 - 12,432 6,162 - - 21,211 Total expenditures 52,078 7,154 1,381 13,702 8,101 13,097 4,023 99,536 Excess (deficiency) of revenues over (under) expenditures (2,775) 2,326 11,417 (12,758) (5,229) (1,063) 1,679 (6,403) Other Financing Sources (Uses) Issuance of debt - - - 4,076 8,014 55 - 12,145 Sale of capital assets 111 - - - - - - 111 Premiums on issuance of bonds - - - 311 612 4 - 927 Transfers in 12,578 1,634 - 1,900 3,538 1,080 506 21,236 Transfers out (7,159) (3,402) (11,787) (1,390) (1,910) - (2,349) (27,997) Total other financing sources and (uses)5,530 (1,768) (11,787) 4,897 10,254 1,139 (1,843) 6,422 Net change in fund balances 2,755 558 (370) (7,861) 5,025 76 (164) 19 Fund Balances, Beginning 40,618 5,197 3,955 16,624 10,817 9,648 4,890 91,749 Fund Balances, Ending 43,373$ 5,755$ 3,585$ 8,763$ 15,842$ 9,724$ 4,726$ 91,768$ The notes to the financial statements are an integral part of this statement. Special Revenue Capital Projects City of Iowa City, Iowa Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2020 (amounts expressed in thousands) 38 Net change in fund balances - total governmental funds 19$ 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 17,749$ Transfers of capital assets (to)\from enterprise funds - net (103) Capital assets contributed 956 Depreciation expense (7,618) 10,984 Bond proceeds are reported as other financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net position. Debt issued (12,145) Premium on bonds issued (927) Repayments of debt 11,385 Amortization of premium 220 (1,467) Because some revenues will not be collected for several months after the City's year end, they are not considered available revenues in the governmental funds.(12) 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 (399) Pension expense (3,158) Change in accrued post employment benefit liability (339) Change in accrued interest on debt (24) In the statement of activities, only the gain on the sale of the capital assets is recognized, whereas in the governmental funds, the proceeds from the sale increased financial resources. Thus, the change in net position differs from the change in fund balance by the cost of the capital asset sold.(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.2,831 Change in net position of governmental activities 8,430$ The notes to the financial statements are an integral part of this statement. (amounts expressed in thousands) For the Year Ended June 30, 2020 City of Iowa City, Iowa Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 39 GovernmentalActivities - Other Internal Wastewater Housing Enterprise ServiceTransitTreatmentWaterSanitationStormwaterAuthorityFundsTotalFunds Assets Current assets: Equity in pooled cash and investments 5,529$ 20,868$ 9,741$ 12,965$ 2,467$ 4,632$ 3,342$ 59,544$ 38,350$ Receivables (net of allowance for uncollectibles): Accounts and unbilled usage 81 1,426 1,133 663 194 35 63 3,595 143 Interest 19 118 33 97 8 42 11 328 240 Notes - - - - - 357 - 357 - Due from other governments 2,491 9 2 86 - 31 843 3,462 42 Inventories 378 - 365 - - - - 743 515 Total current assets 8,498 22,421 11,274 13,811 2,669 5,097 4,259 68,029 39,290 Noncurrent assets: Restricted assets: Equity in pooled cash and investments - 6,303 4,842 14,700 - 4,471 108 30,424 - Advances to other funds - -- 4,544 - -- 4,544 - Capital assets: Land 2,630 759 6,296 2,264 2,264 620 15,484 30,317 45 Buildings 15,399 36,858 24,019 5,402 - 5,338 47,105 134,121 1,481 Improvements other than buildings - 7,261 2,742 512 - 34 773 11,322 50 Machinery and equipment 15,472 12,997 12,589 252 27 71 1,938 43,346 22,787 Infrastructure 955 158,767 70,933 19,344 66,924 - 17,451 334,374 3,542 Accumulated depreciation (17,410) (89,060) (44,049) (18,679) (17,566) (4,754) (34,619) (226,137) (14,317) Construction in progress - 1,326 1,073 - 1,555 - 153 4,107 881 Total noncurrent assets 17,046 135,211 78,445 28,339 53,204 5,780 48,393 366,418 14,469 Total assets 25,544 157,632 89,719 42,150 55,873 10,877 52,652 434,447 53,759 Deferred Outflows of Resources Pension related deferred outflows 539 284 363 373 25 123 183 1,890 314 OPEB related deferred outflows 150 67 93 104 5 29 47 495 67 Total deferred outflows of resources 689 351 456 477 30 152 230 2,385 381 Liabilities Current liabilities: Accounts payable 419 149 304 148 25 58 248 1,351 631 Contracts payable 2 438 218 - 154 - 475 1,287 - Accrued liabilities 186 89 112 118 9 37 61 612 3,728 Employee vested benefits 140 69 88 100 3 35 61 496 75 Due to other funds - - - - - - 138 138 - Due to other governments - - 15 2 - 26 - 43 - Unearned revenue - - - - - 197 - 197 - Interest payable - 157 108 - - - - 265 - Bonded debt payable (net of unamortized premium and discounts)- 2,884 1,660 - - - - 4,544 - Total current liabilities 747 3,786 2,505 368 191 353 983 8,933 4,434 Noncurrent liabilities: Liabilities payable from restricted assets: Deposits - - 1,148 10 - 1,049 9 2,216 - Advances from other funds - - - - - - 1,174 1,174 - Employee vested benefits 98 52 66 76 3 27 44 366 61 Bonded debt payable (net of unamortized premium and discounts)- 5,030 7,211 - - - - 12,241 - Net pension liability 2,227 1,173 1,506 1,530 103 519 792 7,850 1,281 Other post employment benefits liability 721 323 448 497 25 137 223 2,374 323 Landfill closure/postclosure liability - - - 10,660 - - - 10,660 - Total noncurrent liabilities 3,046 6,578 10,379 12,773 131 1,732 2,242 36,881 1,665 Total liabilities 3,793 10,364 12,884 13,141 322 2,085 3,225 45,814 6,099 Deferred Inflows of Resources Pension related deferred inflows 352 185 238 242 16 82 125 1,240 202 OPEB related deferred inflows 65 29 40 45 2 12 20 213 29 Deferred amount on refunding - 74 68 - - - - 142 - Total deferred inflow of resources 417 288 346 287 18 94 145 1,595 231 Net Position Net investment in capital assets 17,046 120,920 64,664 9,095 53,204 1,309 48,285 314,523 14,469 Restricted by bond ordinance - 6,145 3,569 - - - - 9,714 - Restricted by state statute - - 4,322 - - - 4,322 - Restricted for future improvements - - - - - - 100 100 - Restricted by grant agreement - - - - - 3,422 - 3,422 - Unrestricted 4,977 20,266 8,712 15,782 2,359 4,119 1,127 57,342 33,341 Total net position 22,023$ 147,331$ 76,945$ 29,199$ 55,563$ 8,850$ 49,512$ 389,423$ 47,810$ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.19,319 Net position of business-type activities 408,742$ The notes to the financial statements are an integral part of this statement. Business-type Activities - Enterprise Funds City of Iowa City, Iowa Statement of Net Position Proprietary Funds June 30, 2020 (amounts expressed in thousands) 40 Governmental Activities - Other Internal Wastewater Housing Enterprise Service Transit Treatment Water Sanitation Stormwater Authority Funds Total Funds Operating Revenues: Charges for services 1,802$ 12,357$ 10,048$ 10,193$ 1,730$ 280$ 4,725$ 41,135$ 21,646$ Miscellaneous 114 116 49 104 5 110 65 563 16 Total operating revenues 1,916 12,473 10,097 10,297 1,735 390 4,790 41,698 21,662 Operating Expenses: Personal services 4,499 3,080 3,676 3,754 313 989 1,907 18,218 2,486 Commodities 793 1,075 1,103 371 231 15 955 4,543 2,221 Services and charges 2,822 2,211 1,973 6,011 327 8,927 1,946 24,217 11,949 8,114 6,366 6,752 10,136 871 9,931 4,808 46,978 16,656 Depreciation 1,028 4,570 2,555 832 1,332 116 2,262 12,695 2,051 Total operating expenses 9,142 10,936 9,307 10,968 2,203 10,047 7,070 59,673 18,707 Operating income (loss)(7,226) 1,537 790 (671) (468) (9,657) (2,280) (17,975) 2,955 Nonoperating Revenues (Expenses): Gain (loss) on disposal of capital assets - 41 10 23 - - (189) (115) 52 Insurance recoveries - - - - - 2 - 2 - Operating grants 3,107 8 2 20 - 9,875 899 13,911 1 Interest income 114 436 300 645 37 101 161 1,794 713 Interest expense - (25) (174) - - - (345) (544) - Total nonoperating revenues (expenses)3,221 460 138 688 37 9,978 526 15,048 766 Income (loss) before capital contributions and transfers (4,005) 1,997 928 17 (431) 321 (1,754) (2,927) 3,721 Capital contributions - 2,550 1,040 - 904 - 134 4,628 - Transfers in 3,676 507 717 182 1,227 64 100 6,473 940 Transfers out - (224) (141) (150) - (50) (21) (586) (66) Change in net position (329) 4,830 2,544 49 1,700 335 (1,541) 7,588 4,595 Net Position, Beginning 22,352 142,501 74,401 29,150 53,863 8,515 51,053 43,215 Net Position, Ending 22,023$ 147,331$ 76,945$ 29,199$ 55,563$ 8,850$ 49,512$ 47,810$ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 1,764 Change in net position of business-type activities 9,352$ The notes to the financial statements are an integral part of this statement. Business-type Activities - Enterprise Funds City of Iowa City, Iowa Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30, 2020 (amounts expressed in thousands) 41 Governmental Activities - Other Internal Wastewater Housing Enterprise Service Transit Treatment Water Sanitation Stormwater Authority Funds Total Funds Cash Flows From Operating Activities Receipts from customers and users 1,892$ 12,623$ 10,050$ 10,471$ 1,708$ 856$ 4,769$ 42,369$ 21,799$ Payments to suppliers (3,418) (3,311) (3,045) (5,473) (534) (8,934) (2,364) (27,079) (14,094) Payments to employees (4,336) (3,122) (3,619) (3,495) (292) (938) (1,846) (17,648) (2,443) Net cash flows from (used for) operating activities (5,862) 6,190 3,386 1,503 882 (9,016) 559 (2,358) 5,262 Cash Flows From Noncapital Financing Activities Grants received 642 - - 13 - 9,868 150 10,673 - Transfers from other funds 3,676 2 2 116 1 64 100 3,961 - Transfers to other funds - (224) (141) (110) - (50) (15) (540) - Repayment/(payment) of notes receivable - -- -- 16 - 16 - Advances to other funds - -- (1,000) - -138 (862) - Repayment of advances from other funds - -- 379 - -- 379 - Repayment of advances to other funds - -- - - -(249) (249) - Net cash flows from (used for) noncapital financing activities 4,318 (222) (139) (602) 1 9,898 124 13,378 - Cash Flows From Capital and Related Financing Activities Capital grants received - 2,042 - 2 - - 54 2,098 - Acquisition and construction of property and equipment (318) (2,775) (924) (33) (204) (24) (141) (4,419) (2,605) Proceeds from sale of property - 48 10 31 - -- 89 175 Proceeds from insurance recoveries - -- -- 2 - 2 - Principal paid on capital lease obligation - -- -- -(9,413) (9,413) - Interest paid on capital lease obligation - -- -- -(376) (376) - Principal paid on bonded debt - (2,510) (1,565) - - - - (4,075) - Interest paid on bonded debt - (342) (227) - - - - (569) - Net cash flows used for capital and related financing activities (318) (3,537) (2,706) - (204) (22) (9,876) (16,663) (2,430) Cash Flows From Investing Activities Interest on investments 137 483 343 725 41 124 225 2,078 735 Net increase (decrease) in cash and cash equivalents (1,725) 2,914 884 1,626 720 984 (8,968) (3,565) 3,567 Cash and Cash Equivalents, Beginning 7,254 24,257 13,699 26,039 1,747 8,119 12,418 93,533 34,783 Cash and Cash Equivalents, Ending 5,529$ 27,171$ 14,583$ 27,665$ 2,467$ 9,103$ 3,450$ 89,968$ 38,350$ Reconciliation of operating income (loss) to net cash flows from (used for) operating activities: Operating income (loss)(7,226)$ 1,537$ 790$ (671)$ (468)$ (9,657)$ (2,280)$ (17,975)$ 2,955$ Adjustments to reconcile operating income (loss) to net cash flows from (used for) operating activities: Depreciation expense 1,028 4,570 2,555 832 1,332 116 2,262 12,695 2,051 Changes in: Receivables: Accounts and unbilled usage (48) 150 (88) 172 (27) (34) (21) 104 149 Due from other governments 30 - 2 - - 46 - 78 (12) Inventories (31) - (11) - - - - (42) - Prepaid item 11 11 11 11 - - 15 59 - Accounts payable 217 (33) 36 (12) 24 10 522 764 3 Accrued liabilities 22 23 21 22 - 7 10 105 93 Employee vested benefits 16 28 14 30 2 8 37 135 12 Due to other governments - (3) (5) 1 - (2) - (9) - Unearned revenue - -- -- 197 - 197 - Deposits (6) - 39 2 - 257 - 292 - Net pension liability (167) (236) (201) - (5) (59) (82) (750) (174) Deferred outflows of resources 127 86 92 63 2 27 60 457 73 Deferred inflows of resources 221 77 131 161 10 49 76 725 118 Other post employment benefits liability (56) (20) - (17) 12 19 (40) (102) (6) Landfill closure/postclosure liability - -- 909 - - - 909 - Total adjustments 1,364 4,653 2,596 2,174 1,350 641 2,839 15,617 2,307 Net cash flows from (used for) operating activities (5,862)$ 6,190$ 3,386$ 1,503$ 882$ (9,016)$ 559$ (2,358)$ 5,262$ Noncash Investing, Capital, and Financing Activities: Contributions of capital assets from government and others -$ 1,013$ 1,755$ 66$ 2,130$ -$ -$ 4,964$ 940$ Contributions of capital assets to government and others -$ -$ -$ 40$ -$ -$ -$ 40$ 66$ Capital grants not yet received -$ -$ -$ -$ -$ -$ 80$ 80$ -$ Operating grants not yet received 2,465$ 8$ 2$ 7$ -$ 30$ 763$ 3,275$ -$ The notes to the financial statements are an integral part of this statement. Business-type Activities - Enterprise Funds City of Iowa City, Iowa Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2020 (amounts expressed in thousands) 42 Agency Funds Assets Equity in pooled cash and investments 90$ Total assets 90$ Liabilities Accounts payable 10$ Due to agency 80 Total liabilities 90$ The notes to the financial statements are an integral part of this statement. June 30, 2020 (amounts expressed in thousands) City of Iowa City, Iowa Statement of Fiduciary Assets and Liabilities 43 44 City of Iowa City, Iowa Notes to Financial Statements June 30, 2020 1. Accounting Policies The City of Iowa City, Iowa, (the City) was incorporated April 6, 1853, and operates under the Council/Manager form of government. The City provides a broad range of services to its citizens including general government, public safety, streets, parks, and cultural facilities. It also operates an airport, a mass transportation system, parking facilities, water treatment, wastewater treatment, storm water collection, sanitation collection and disposal (including landfill operations) and a housing authority. The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the City are described below. The Reporting Entity For financial reporting purposes, the City includes all of its funds, organizations, agencies, boards, commissions, and authorities. The City has also considered all potential component units for which it is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability. These criteria include appointing a voting majority of an organization’s governing body, and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific benefits to or impose specific financial burdens on the City. There were no component units required to be included. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non-fiduciary activities of the primary government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. As a general rule, the effect of inter-fund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s water and sewer function and various other functions of the government. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. 45 Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Description of Funds These financial statements include all funds owned or administered by the City or for which the City acts as custodian. The accounts of the City are organized on the basis of funds, each of which is considered to be a separate accounting entity. The fund categories are governmental, proprietary, and fiduciary. Each fund is accounted for by providing a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position, revenues, and expenditures or expenses, as appropriate. The individual funds account for the governmental resources allocated to them for the purpose of carrying on specific activities in accordance with laws, regulations, or other restrictions. Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its “measurement focus.” The government-wide financial statements and proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Agency funds do not have a measurement focus and use the accrual basis of accounting. Under the accrual method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. All governmental funds are accounted for using a current financial resources measurement focus, which generally includes only current assets and current liabilities on the balance sheet. The modified accrual basis of accounting is used for these funds. Under the modified accrual basis, revenue is recognized when susceptible to accrual, which is in the period in which it becomes both available (collectible within the current period or soon thereafter to be used to pay liabilities of the current period) and measurable (the amount of the transaction can be determined). Revenue accrued includes property taxes, intergovernmental revenue, and interest earned on investments (if they are collected within 60 days after the year-end). Expenditures are recorded when the related fund liability is incurred. Principal and interest on long-term debt, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Other Shared Revenue and Grants Fund is used to account for revenue from various sources, primarily road use tax monies from the State of Iowa and reimbursable programs funded by federal and state grants. The Employee Benefits Fund is used to account for the employee benefits related to those employees who are paid through governmental fund types, which are funded by a separate property tax levy. The Other Construction Fund accounts for the construction or replacement of other City general fixed assets, such as administrative buildings with various funding sources, including general obligation bonds, intergovernmental revenues, and contributions. The Bridge, Street, and Traffic Control Construction Fund accounts for the construction or replacement of infrastructure fixed assets, such as streets, bridges, dams, sidewalks, and lighting systems. 46 The Debt Service Fund accounts for the accumulation of resources for the payment of general long- term debt principal, interest, and related costs. The City reports the following major proprietary funds: The Transit Fund is used to account for the operation and maintenance of the public transportation system. The Wastewater Treatment Fund is used to account for the operation and maintenance of the wastewater treatment facility and sanitary sewer system. The Water Fund is used to account for the operation and maintenance of the water system. The Sanitation Fund is used to account for the operation and maintenance of the solid waste collection system and landfill. The Stormwater Fund is used to account for the operation and maintenance of the stormwater utility system. The Housing Authority Fund is used to account for the operations and activities of the City’s low and moderate income housing assistance and public housing programs. The City has two nonmajor enterprise funds, the Airport Fund is used to account for the operation and maintenance of the airport facility and the Parking Fund is used to account for the operation and maintenance of the “on” and “off” street public parking facilities. Additionally, the City reports internal service funds to account for goods and services provided by one department to other City departments on a cost reimbursement basis. The funds in this category are the Equipment Maintenance Fund, Central Services Fund, Loss Reserve Fund, and the Information Technology Fund. The City also reports fiduciary funds which are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The City has one fiduciary fund which is maintained as an agency fund, with no attempt to create an ongoing fund balance. The fund in this category is Project Green, which accounts for donations that are received to plant and develop yards and lawns, both public and private, within Iowa City. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and of the City’s internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. 47 Uses of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue, expenditures and expenses, as appropriate, during the reporting period. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of other post employment benefit obligation, net pension liability, landfill closure and post-closure care costs, total capacity of the landfill at closure, and calculation of the costs of claims incurred, but not reported. Cash and Investments The City maintains one primary demand deposit account through which the majority of its cash resources are processed. Substantially all investment activity is carried on by the City in an investment pool, except for those funds required to maintain their investments separately. The earnings on the pooled investments are allocated to the funds on a systematic basis. All investments are stated at fair value except for the Iowa Public Agency Investment Trust (IPAIT) which is valued at amortized cost pursuant to Rule 2a-7 under the Investment Company Act of 1940. For the purpose of the Statement of Cash Flows, restricted and non-restricted investments with a maturity of three months or less when purchased are considered cash equivalents. Receivables and Revenue Recognition Property tax receivable is recognized in governmental funds on the levy or lien date, which is the date that the tax asking is certified by the City to the County Board of Supervisors. Current year delinquent property tax receivable represents unpaid taxes from the current year. The succeeding year property tax receivable represents taxes certified by the City to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the City is required to certify its budget to the County Auditor by March 15 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, it will not be recognized as revenue until the year for which it is levied. Federal and state grants are recorded as receivables and the revenue is recognized during the period in which the City fulfills the requirements for receiving the grant awards, as long as the susceptible to accrual criteria are met. Income from investments in all fund types and from charges for services in proprietary fund types is recognized when earned. Licenses and permits, fines and forfeitures, fees and refunds, charges for services (in governmental fund types), miscellaneous, and other revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Inventories Inventories are recognized only in those funds in which they are material to the extent of affecting operations. For the City, these are the Other Shared Revenue and Grants Fund, Transit Fund, Water Fund, and the Equipment Maintenance Fund. Inventories of materials and supplies are determined by actual count and priced on the FIFO method in the Other Shared Revenue and Grants Fund and the average cost method for the Transit, Water and Equipment Maintenance Fund. 48 Capital Assets Capital assets, which include property, buildings, equipment, and infrastructure assets (e.g., roads, bridges, water mains, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The City follows the policy of not requiring capitalization of an asset with an initial, individual cost of less than $50,000 for infrastructure, $25,000 for buildings and improvements, and $5,000 for equipment assets. Such assets are recorded at original purchase cost or at acquisition value at the date of donation when received as donated properties. Depreciation is computed using the straight-line method over the following estimated useful lives: Infrastructure 3 – 100 years Buildings and structures 20 – 50 years Improvements other than buildings 10 – 50 years Vehicles 2 – 20 years Other equipment 3 – 30 years Deferred Outflows of Resources Deferred outflows of resources represent a consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. Deferred outflows of resources consist of unrecognized items not yet charged to pension and OPEB expense and contributions from the employer after the measurement date but before the end of the employer’s reporting period. Bond Premiums and Discounts Debt issued at a premium or discount is recorded net of the unamortized premium or discount. In the governmental funds, premiums and discounts are recorded entirely as other financing sources or uses in the year of issuance. In the proprietary funds and the government-wide statements, they are amortized over the life of the bonds. Compensated Absences Permanent City employees accumulate vacation and sick leave hours for subsequent use or for payment upon death, resignation, or retirement. The City pays its employees (except firefighters) one-half of the accumulated sick leave at the time of termination on the basis of the employee’s then effective hourly base salary, provided that the dollar amount of the payment may be up to, but not exceed, the amount that an employee would be paid if the employee had terminated on June 28, 1985. Employees hired on or after June 29, 1985, are not eligible for payment of accumulated sick leave upon termination, death, or retirement. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Iowa Public Employees’ Retirement System and the Municipal Fire and Police Retirement System (Systems’) and additions to/deductions from the Systems’ fiduciary net position have been determined on the same basis as they are reported by the Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Landfill Closing Costs Costs expected to be incurred in ultimately closing the present landfill site are being systematically provided for through charges to expense over the estimated useful life of the landfill on the basis of capacity used (see Note 8). 49 Deferred Inflows of Resources Deferred inflows of resources represent an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. Although certain revenues are measurable, they are not available. Available means collected within the current year or expected to be collected soon enough thereafter to be used to pay liabilities of the current year. Deferred inflows of resources in the governmental fund financial statements represent the amount of assets that have been recognized, but the related revenue has not been recognized since the assets are not collected within the current year or expected to be collected soon enough thereafter to be used to pay liabilities of the current year. Deferred inflows of resources consist of property tax receivable, grants receivable and other receivables. Deferred inflows of resources in the Statement of Net Position consist of succeeding year property tax receivable that will not be recognized as revenue until the year for which they are levied, the difference in the carrying value of refunded debt and it’s acquisition price and the unamortized portion of pension and OPEB related items. Budgetary and Legal Appropriation and Amendment Policies The City prepares and adopts an annual function budget, as prescribed by Iowa statutes, for all funds except internal service and agency funds. This is formalized in a separate budgetary report, the Financial Plan. This budget is adopted on or before March 15 of each year to become effective July 1, and constitutes the City’s appropriation for each program and purpose specified therein until amended. The adopted budget must include the following: a. Expenditures for each function: Public safety Public works Health and social services Culture and recreation Community and economic development General government Debt service Capital projects Business-type/enterprise b. The amount to be raised by property taxation c. Income from sources other than property taxation d. Transfers in and transfers out The legal level of control (the level at which expenditures may not legally exceed appropriations) is the function level for all funds combined, rather than at the individual fund level. Management can transfer appropriations within a function, within a fund type, and between fund types, without the approval of the governing body so long as the total budget by function area will not be exceeded. It is necessary, therefore, to aggregate the expenditures of the budgeted activities within the governmental fund types with the expenditures of the budgeted activities within the enterprise funds on a function basis, and to compare such function totals to function budgeted totals in order to demonstrate legal compliance with the budget. The City’s budget for revenue focuses on aggregated totals by revenue source. The City formally adopts budgets for several funds that are not required by state law to be included in the annual function budget. Annual operating budgets are adopted for the internal service funds for management control purposes. Such budgets, however, are not legally required to be adopted under state statutes. 50 A City budget for the current fiscal year may be amended for any of the following purposes as prescribed by Iowa statute: a. To permit the appropriation and expenditure of unexpended, unencumbered cash balances on hand at the end of the preceding fiscal year. b. To permit the appropriation and expenditure of amounts anticipated being available from sources other than property taxation. c. To permit transfers between funds. d. To permit transfers between functions. A budget amendment must be prepared and adopted in the same manner as the original budget. The City’s budget was amended as prescribed, and the effects of those amendments are shown in the accompanying budgetary comparison schedule. The original budget was increased by $42,985,024 in revenues and other financing sources and by $97,885,699 in expenditures and other financing uses. Appropriations, as adopted or amended, 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. Classification of Fund Balances Fund balances for the governmental funds are reported in classifications based on the nature of any limitations requiring the use of resources for specific purposes (see Note 10). 2. Cash and Pooled Investments The City’s deposits in banks at June 30, 2020 were entirely covered or collateralized by federal depository insurance, national credit union administration, letters of credit held by the City or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. The City is authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured Iowa depository institutions approved by City Council and secured pursuant to the limitations set forth in Chapter 12C of the Code of Iowa; prime eligible bankers acceptances; certain high rated commercial paper or other short-term corporate debt; perfected repurchase agreements; Iowa Public Agency Investment Trust (IPAIT); certain registered open–end management investment companies registered with the Securities & Exchange Commission under the federal Investment Company Act of 1940; and warrants or improvement certificates of a drainage district. 51 The City uses the fair value hierarchy established by generally accepted accounting principles based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. Level 2 inputs are significant other observable inputs. Level 3 inputs are significant unobservable inputs. The recurring fair value measurement for the Federal Home Loan Mortgage Corporation securities of $8,017,934 and the Federal Farm Credit Bank securities of $10,235,291 were determined using the last reported sales price at current exchange rates (Level 1 inputs). The fair value measurement for the Exxon Mobil Corporation commercial paper of $4,931,028 and the Toyota Motor Credit Corporation commercial paper of $4,978,396 was determined using the last reported sales price at current exchange rates (Level 1 inputs). The City had no other investments meeting the disclosure requirements of Governmental Accounting Standards Board Statement No. 72. In addition, the City had investments in the Iowa Public Agency Investment Trust (IPAIT), which are valued at an amortized cost of $5,055,920, which approximates fair value. The Diversified Portfolio consists of cash and short-term investments valued at amortized cost, which approximates fair value, pursuant to Governmental Accounting Standards Board Statement No. 79. The Iowa Public Agency Investment Trust (IPAIT) represents an investment in a pool managed by others. IPAIT is a common trust established under Iowa law pursuant to Iowa Code Chapter 28E in 1987 to enable eligible Iowa public agencies to safely and effectively invest their available operating and reserve funds. IPAIT is registered under the Investment Company Act of 1940. The IPAIT portfolios have followed established money market mutual fund investment parameters designed to maintain a $1 per unit net asset value since inception and were registered with the Securities and Exchange Commission (SEC). Interest rate risk - The City’s investment policy limits the investment of operating funds to investments that mature within 397 days. The portion of operating funds in excess of 33% of operating funds may be invested in certificates of deposit which mature within 63 months or less. Funds not identified as operating funds may be invested in instruments with maturities longer than 397 days. Credit risk. State law limits investments to commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. It is the City’s policy to comply with rating restrictions. The investment in Iowa Public Agency Investment Trust is not rated by Moody’s Investors service as it is a state security that is backed by the full faith and credit of the issuing government and is not subject to credit risk. Concentration of credit risk. The City investment policy limits the amount that may be invested in any one issuer to a maximum amount approved by the City Council. At June 30, 2020 the City of Iowa City had the following investments: Fair Investment Value Maturities Federal Home Loan Mortgage Corporation Notes 8,017,934$ November 2023 to June 2025 Federal Farm Credit Bank Notes 10,235,291 March 2022 to January 2026 Exxon Mobil Corporation Commercial Paper 4,931,028 December 2020 Toyota Motor Credit Corporation Commercial Paper 4,978,396 September 2020 28,162,649$ 52 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 Grants, and Sanitation funds. 3.Interfund Balances and Transfers Interfund balances for the year ended June 30, 2020, consisted of the following: Interfund balances at June 30, 2020, include due to/from other funds, which represent amounts for negative cash balance funding. The $160,750 advance to the Nonmajor Governmental Funds is expected to be repaid within the next year. The $138,202 advance to the Nonmajor Enterprise Funds is expected to be repaid within the next year. Interfund balances at June 30, 2020, include advances to/from other funds, which represent amounts for construction loans and a revenue bond redemption loan. $66,731 of the $81,980 advance to the Other Shared Revenue and Grants Fund is not expected to be repaid within the next year. $3,186,669 of the $3,370,298 advance to the Other Construction Fund is not expected to be repaid within the next year. $900,244 of the $1,173,649 advance to the Nonmajor Enterprise Funds is not expected to be repaid within the next year. Due from General D ue to: Nonmajor Governmental 160,750$ Nonmajor Enterprise 138,202 Total 298,952$ Debt Service Sanitation Total Advances to: Other Shared Revenue and Grants 81,980$ -$81,980$ Other Construction - 3,370,298 3,370,298 Nonmajor Enterprise - 1,173,649 1,173,649 Total 81,980$ 4,543,947$ 4,625,927$ Advances from 53 Interfund transfers for the year ended June 30, 2020, consisted of the following: Transfers are used to move revenues and bond proceeds from the fund that State statutes or the budget requires to collect them to the fund that the State statutes or the budget requires to expend them. In the fund financial statements, total transfers in and transfers out of $28,649,108 are less than total transfers of $28,752,493 because of the treatment of transfers of capital assets from the governmental activities capital assets. Capital Projects Bridge, Street Other Capital Projects and Traffic Shared Revenue Employee Other Control Nonmajor General and Grants Benefits Construction Construction Governmental Transfer to: General -$ 82,326$ 11,279,971$ -$ -$ 1,166,614$ Other Shared Revenue and Grants 1,009,533 - 507,510 116,827 - - Debt Service 20,052 - - - - 1,059,633 Capital Projects Other Construction 1,840,778 - - - - 59,537 Capital Projects Bridge, Street and Traffic Control Construction 287,157 2,917,360 - - - - Nonmajor Governmental 222,663 283,240 - - - - Transit 3,660,631 - - - - - Wastewater Treatment 1,971 - - - 505,028 - Water 1,710 - - 99,448 615,728 - Sanitation 5,773 - - - - - Stormwater 1,088 - - 558,485 636,358 Housing Authority - - - - - 63,563 Nonmajor Enterprise 100,000 - - - - - Internal Service 7,114 118,786 - 614,980 153,133 - Total Transfer to 7,158,470$ 3,401,712$ 11,787,481$ 1,389,740$ 1,910,247$ 2,349,347$ Transfer from 54 During the year, construction in progress related to construction for the Burlington and Clinton Intersection with values of $74,859 and $28,526, were transferred from governmental activities capital asset to Water and Stormwater, respectively. No amounts were reported in the governmental funds, as the amounts did not involve the transfer of financial resources. However, Water and Stormwater did report capital contributions for the capital resources received. Wastewater Housing Nonma jor Internal Total Treatment Water Sanitation Authority Enterprise Service Transfer from -$ -$ -$ 49,483$ -$ -$ 12,578,394$ - - - - - - 1,633,870 - - - - - - 1,079,685 - - - - - - 1,900,315 224,000 - 110,000 - - - 3,538,517 - - - - - - 505,903 - - - - 15,000 - 3,675,631 - - - - - - 506,999 - - - - - - 716,886 - 110,000 - - - 66,390 182,163 - 30,718 - - - - 1,226,649 - - - - - - 63,563 - - - - - - 100,000 - - 40,344 - 6,176 - 940,533 224,000$ 140,718$ 150,344$ 49,483$ 21,176$ 66,390$ 28,649,108 Transfers from governmental activities capital assets to enterprise funds 103,385 28,752,493$ Transfer from 55 4. Capital Assets Capital asset activity for the year ended June 30, 2020, was as follows: Beginning July 1, 2019 Acquisitions and Transfers Disposals and Transfers Balance June 30, 2020 Governmental activities: Capital assets, not being depreciated: Land 30,807,744$ 351,351$ -$ 31,159,095$ Construction in progress 20,483,970 7,467,555 17,950,999 10,000,526 Total capital assets, not being depreciated 51,291,714 7,818,906 17,950,999 41,159,621 Capital assets, being depreciated: Buildings 66,364,532 663,620 84,629 66,943,523 Improvements other than buildings 7,525,406 332,605 8,500 7,849,511 Machinery and equipment 45,371,289 16,725,781 2,408,002 59,689,068 Infrastructure 200,274,745 14,493,790 23,290 214,745,245 Total capital assets being depreciated 319,535,972 32,215,796 2,524,421 349,227,347 Less accumulated depreciation for: Buildings 27,870,343 1,690,363 84,629 29,476,077 Improvements other than buildings 4,024,287 265,730 8,500 4,281,517 Machinery and equipment 27,353,016 3,556,654 2,277,692 28,631,978 Infrastructure 49,988,162 4,155,476 23,290 54,120,348 Total accumulated depreciation 109,235,808 9,668,223 2,394,111 116,509,920 Total capital assets, being depreciated, net 210,300,164 22,547,573 130,310 232,717,427 Governmental activities capital assets, net 261,591,878$ 30,366,479$ 18,081,309$ 273,877,048$ Business-type activities: Capital assets, not being depreciated: Land 30,317,185$ -$ -$ 30,317,185$ Construction in progress 3,743,884 3,034,253 2,670,659 4,107,478 Total capital assets, not being depreciated 34,061,069 3,034,253 2,670,659 34,424,663 Capital assets, being depreciated: Buildings 134,184,994 - 64,770 134,120,224 Improvements other than buildings 11,229,367 124,941 32,887 11,321,421 Machinery and equipment 38,799,873 4,837,885 290,031 43,347,727 Infrastructure 330,627,557 4,255,311 507,462 334,375,406 Total capital assets being depreciated 514,841,791 9,218,137 895,150 523,164,778 Less accumulated depreciation for: Buildings 67,672,589 3,424,305 56,322 71,040,572 Improvements other than buildings 7,323,877 396,081 32,887 7,687,071 Machinery and equipment 25,692,122 1,597,355 242,919 27,046,558 Infrastructure 113,405,414 7,278,183 318,310 120,365,287 Total accumulated depreciation 214,094,002 12,695,924 650,438 226,139,488 Total capital assets, being depreciated, net 300,747,789 (3,477,787) 244,712 297,025,290 Business-type activities capital assets, net 334,808,858$ (443,534)$ 2,915,371$ 331,449,953$ 56 5.Capital Lease Obligation In 2017, the government entered into a lease agreement as lessee for financing the acquisition of a parking ramp valued at $15,497,867. The parking ramp has a 30-year estimated useful life. This year, $516,596 was included in depreciation expense. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of future minimum lease payments as of the inception date. On June 1, 2020, the government made a payment of $9,238,148 from cash on hand. On June 29, 2020, the government defeased the remaining $174,876 capital lease obligation by prepaying all remaining principal and interest from cash on hand. The total amount of interest that was paid was $1,160. Liabilities for the defeased capital lease are not included in the City’s financial statements. Total interest paid in fiscal year 2020 was $375,798. Changes in Capital Lease Obligation Changes in the capital lease obligation for the year ended June 30, 2020, was as follows: Depreciation expense was charged to functions as follows: Governmental activities: Public safety 1,490,645$ Public works 4,735,338 Culture and recreation 3,032,335 Community and economic development 60,862 General government 349,043 Total depreciation expense - governmental activities 9,668,223$ Business-type activities: Transit 1,027,517$ Wastewater treatment 4,570,353 Water 2,554,752 Sanitation 831,982 Stormwater 1,332,301 Housing authority 116,450 Nonmajor enterprise 2,262,569 Total depreciation expense - business-type activities 12,695,924$ Due Within July 1, 2019 Issues Retirements June 30, 2020 One Year Business-type activities:9,413,024$ -$ 9,413,024$ -$ -$ 57 6. Long Term Debt Changes in Debt for Bonds Bond debt activity for the year ended June 30, 2020, was as follows: General Obligation Bonds Various issues of general obligation bonds totaling $53,370,000 are outstanding as of June 30, 2020. The bonds have interest rates ranging from 1.00% to 5.00% and mature in varying annual amounts ranging from $785,000 to $3,600,000 per issue, with the final maturities due in the year ending June 30, 2030. Interest and principal payments on all general obligation bonds, except tax abated portions recorded in the enterprise funds, are accounted for through the Debt Service Fund. Annual debt service requirements to maturity for general obligation bonds are as follows: Due Within July 1, 2019 Issues Retirements June 30, 2020 One Year Governmental activities: General obligation bonds 52,470,000$ 12,145,000$ 11,245,000$ 53,370,000$ 10,760,000$ Plus: Unamortized Premium 932,638 926,475 221,168 1,637,945 221,168 Total general obligation bonds 53,402,638 13,071,475 11,466,168 55,007,945 10,981,168 Revenue bonds 14,930,000 - 140,000 14,790,000 140,000 Less: Unamortized Discounts 27,612 - 2,124 25,488 2,124 Total revenue bonds 14,902,388 - 137,876 14,764,512 137,876 68,305,026$ 13,071,475$ 11,604,044$ 69,772,457$ 11,119,044$ Business-type activities: Revenue bonds 20,140,000$ -$ 4,075,000$ 16,065,000$ 4,250,000$ Plus: Unamortized Premium 1,015,710 - 294,352 721,358 294,352 Total revenue bonds 21,155,710$ -$ 4,369,352$ 16,786,358$ 4,544,352$ Fiscal Year Ending June 30 Principal Interest 2021 10,760,000$ 1,456,373$ 2022 9,120,000 1,118,613 2023 7,675,000 870,863 2024 6,550,000 657,962 2025 5,495,000 488,712 2026-2030 13,770,000 742,925 Total 53,370,000$ 5,335,448$ Governmental Activities 58 Revenue Bonds As of June 30, 2020, the following unmatured revenue bond issues are outstanding: Wastewater Taxable Urban Treatment Water Renewal Original issue amount $ 13,910,000 $ 14,510,000 $ 15,460,000 Interest rates 2.0% to 5.0% 1.5% to 5.0% 1.0% to 3.9% Annual maturities $ 835,000 to $ 445,000 to $ 140,000 to $ 2,085,000 $ 1,225,000 $ 965,000 Amount outstanding $ 7,365,000 $ 8,700,000 $ 14,790,000 Revenue bond debt service requirements to maturity are as follows: The revenue bond ordinances required that wastewater treatment, water revenues, and urban renewal tax revenues be set aside into separate and special accounts as they are received. The use and the amounts to be included in the accounts are as follows: Account 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: Taxable Urban Renewal Revenue bonds – maximum debt service due on the bonds in any succeeding fiscal year. Wastewater Revenue and Water Revenue bonds – 10% of the original principal amounts of all related bond issues. (c) Improvement Reserve $20,000 per month until the reserve balance equals or exceeds $2,000,000 for Wastewater Revenue bonds and $5,000 per month until the reserve balance equals or exceeds $450,000 for Water Revenue bonds, with no further deposits once the minimum balance is reached. If the reserve falls below the required minimum, monthly transfers in the aforementioned amounts will resume. Fiscal Year Ending June 30 Principal Interest Principal Interest 2021 140,000$ 448,695$ 4,250,000$ 477,665$ 2022 1,110,000 445,475 4,350,000 298,690 2023 1,110,000 413,045 3,840,000 149,270 2024 1,105,000 380,345 1,745,000 55,825 2025 1,105,000 347,495 1,325,000 26,081 2026-2030 4,850,000 1,261,750 555,000 6,244 2031-2035 4,480,000 531,075 - - 2036 890,000 26,700 - - Total 14,790,000$ 3,854,580$ 16,065,000$ 1,013,775$ Governmental Activities Business-type Activities 59 In fiscal year ended June 30, 2020, the Wastewater Treatment Fund had net revenue of $6,551,000 and the amount of principal and interest due was $2,877,000. In fiscal year ended June 30, 2020, the Water Fund had net revenues of $3,647,000 and the amount of principal and interest due was $1,803,000. Summary of Bond Issues General obligation and revenue bonds payable at June 30, 2020, are comprised of the following issues: (1) This bond issue is an advance refunding of portions of the September 2006 and May 2007 General Obligation Bonds. (2) This bond issue refunded the October 2008 Wastewater Revenue Bond. (3) This bond issue refunded the May 2009 Wastewater Revenue Bonds. (4) This bond issue refunded the October 2002 Water Revenue Bonds. (5) This bond issue refunded the October 2008 Water Revenue Bonds. (6) This bond issued refunded the May 2009 Water Revenue Bonds. Date of Amount Interest Final Outstanding Issue Issued Rates Maturity June 30, 2020 General Obligation Bonds: Multi-Purpose June 2012 9,070,000 2.0 - 2.25 6/22 1,980,000 Multi-Purpose July 2013 7,230,000 1.0 - 2.0 6/23 2,560,000 Refunded Multi-Purpose (1) June 2014 11,980,000 2.0 - 3.0 6/24 3,950,000 Multi-Purpose June 2015 7,785,000 2.0 - 2.25 6/25 4,150,000 Multi-Purpose June 2016 8,795,000 2.0 - 3.0 6/26 5,875,000 Multi-Purpose June 2017 9,765,000 2.0 - 2.5 6/27 7,040,000 Multi-Purpose June 2018 8,895,000 1.8 - 2.65 6/28 7,260,000 Multi-Purpose June 2019 12,535,000 2.0 - 2.25 6/29 8,410,000 Multi-Purpose June 2020 12,145,000 2.0 - 5.0 6/30 12,145,000 Total General Obligation Bonds 53,370,000$ Date of Amount Interest Final Outstanding Issue Issued Rates Maturity June 30, 2020 Revenue Bonds: Refunded Wastewater Treatment Bonds (2)June 2016 9,360,000 3.0 - 4.0 7/21 3,590,000 Refunded Wastewater Treatment Bonds (3)June 2017 4,550,000 2.0 - 5.0 7/22 3,775,000 Refunded Water Bonds (4) June 2012 4,950,000 1.5 - 2.1 7/22 1,590,000 Refunded Water Bonds (5) June 2016 3,650,000 1.5 - 5.0 7/24 2,445,000 Refunded Water Bonds (6) June 2017 5,910,000 2.0 - 2.25 7/25 4,665,000 Taxable Urban Renewal Nov. 2012 2,655,000 1.0 - 3.9 6/32 1,985,000 Taxable Urban Renewal Sept. 2016 12,805,000 3.0 6/36 12,805,000 Total Revenue Bonds 30,855,000$ 84,225,000$ 60 Conduit Debt Obligations From time to time, the City has issued Industrial Development Revenue Bonds and Midwestern Disaster Area Revenue Bonds to provide financial assistance to private sector entities for the acquisition, construction, and renovation of industrial and commercial facilities deemed to be in the public interest. The bonds are collateralized by the property financed and are payable solely from payments received on the underlying mortgage loans. All payments on the bonds are made by the private sector entities directly to a bond trustee, who is a third party financial institution, and in turn, disburses the payment to the respective bond holders. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2020, there were three series of Industrial Development Revenue Bonds outstanding, with an aggregate principal amount payable of $28,283,674. Debt Legal Compliance Legal Debt Margin: As of June 30, 2020, the general obligation debt issued by the City did not exceed its legal debt limit computed as follows (amounts expressed in thousands): Assessed valuation: Real property $ 6,024,446 Utilities 109,124 Total valuation $ 6,133,570 Debt limit, 5% of total assessed valuation $ 306,679 Debt applicable to debt limit: General obligation bonds 53,370 Urban renewal revenue bonds 14,790 Notes payable 211 Other legal indebtedness (TIF rebates)(Note 12) 25,877 Total net debt applicable to limit 94,248 Legal debt margin $ 212,431 7.Pension and Retirement Systems The City contributes to two employee retirement systems, the Municipal Fire and Police Retirement System of Iowa (MFPRSI) and the Iowa Public Employees Retirement System (IPERS). MFPRSI is governed by a nine-member Board of Trustees. Though separate and apart from state government, the Board is authorized by the state legislature, which also establishes by statute the pension and disability benefits and the System’s funding mechanism. IPERS is administered by the State of Iowa. All full-time employees must participate in either MFPRSI or IPERS. As of June 30, 2020, the City had the following balances related to its pension accounts: IPERS MFPRSI Total Net Pension Liability 23,474,689$ 24,170,107$ 47,644,796$ Deferred Inflows 3,709,183 576,745 4,285,928 Deferred Outflows 5,640,199 6,368,299 12,008,498 Pension Expense 4,034,704 5,143,397 9,178,101 61 Municipal Fire and Police Retirement System of Iowa (MFPRSI) Plan Description MFPRSI membership is mandatory for fire fighters and police officers covered by the provisions of Chapter 411 of the Code of Iowa. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by MFPRSI. MFPRSI issues a stand-alone financial report which is available to the public by mail at 7155 Lake Drive, Suite #201, West Des Moines, Iowa 50266 or at www.mfprsi.org. MFPRSI benefits are established under Chapter 411 of the Code of Iowa and the administrative rules thereunder. Chapter 411 of the Code of Iowa and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information. Pension Benefits Members with 4 or more years of service are entitled to pension benefits beginning at age 55. Full service retirement benefits are granted to members with 22 years of service, while partial benefits are available to those members with 4 to 22 years of service based on the ratio of years completed to years required (i.e., 22 years). Members with less than 4 years of service are entitled to a refund of their contribution only, with interest, for the period of employment. Benefits are calculated based upon the member’s highest 3 years of compensation. The average of these 3 years becomes the member’s average final compensation. The base benefit is 66 percent of the member’s average final compensation. Additional benefits are available to members who perform more than 22 years of service (2 percent for each additional year of service, up to a maximum of 8 years). Survivor benefits are available to the beneficiary of a retired member according to the provisions of the benefit option chosen plus an additional benefit for each child. Survivor benefits are subject to a minimum benefit for those members who chose the basic benefit with a 50 percent surviving spouse benefit. Active members, at least 55 years of age, with 22 or more years of service have the option to participate in the Deferred Retirement Option Program (DROP). The DROP is an arrangement whereby a member who is otherwise eligible to retire and commence benefits opts to continue to work. A member can elect a 3, 4, or 5 year DROP period. By electing to participate in DROP the member is signing a contract indicating the member will retire at the end of the selected DROP period. During the DROP period the member’s retirement benefit is frozen and a DROP benefit is credited to a DROP account established for the member. Assuming the member completes the DROP period, the DROP benefit is equal to 52% of the member’s retirement benefit at the member’s earliest date eligible and 100% if the member delays enrollment for 24 months. At the member’s actual date of retirement, the member’s DROP account will be distributed to the member in the form of a lump sum or rollover to an eligible plan. Disability and Death Benefits Disability coverage is broken down into two types, accidental and ordinary. Accidental disability is defined as permanent disability incurred in the line of duty, with benefits equivalent to the greater of 60 percent of the member’s average final compensation or the member’s service retirement benefit calculation amount. Ordinary disability occurs outside the call of duty and pays benefits equivalent to the greater of 50 percent of the member’s average final compensation, for those with 5 or more years of service, or the member’s service retirement benefit calculation amount, and 25 percent of average final compensation for those with less than 5 years of service. Death benefits are similar to disability benefits. Benefits for accidental death are 50 percent of the average final compensation of the member plus an additional amount for each child, or the provisions for ordinary death. Ordinary death benefits consist of a pension equal to 40 percent of the average final compensation of the member plus an additional amount for each child, or a lump-sum distribution to the designated beneficiary equal to 50 percent of the previous year’s earnable compensation of the member or equal to the amount of the member’s total contributions plus interest. 62 Benefits are increased annually in accordance with Chapter 411.6 of the Code of Iowa which states a standard formula for the increases. The surviving spouse or dependents of an active member who dies due to a traumatic personal injury incurred in the line of duty receives a $100,000 lump-sum payment. Contributions Member contribution rates are set by state statute. In accordance with Chapter 411 of the Code of Iowa, the contribution rate was 9.40% of earnable compensation for the year ended June 30, 2020. Employer contribution rates are based upon an actuarially determined normal contribution rate and set by state statute. The required actuarially determined contributions are calculated on the basis of the entry age normal method as adopted by the Board of Trustees as permitted under Chapter 411 of the Code of Iowa. The normal contribution rate is provided by state statute to be the actuarial liabilities of the plan less current plan assets, with such total divided by 1 percent of the actuarially determined present value of prospective future compensation of all members, further reduced by member contributions and state appropriations. Under the Code of Iowa the employer’s contribution rate cannot be less than 17.00% of earnable compensation. The contribution rate was 24.41% for the year ended June 30, 2020. The City’s contributions to MFPRSI for the year ended June 30, 2020 was $2,808,200. If approved by the state legislature, state appropriation may further reduce the employer’s contribution rate, but not below the minimum statutory contribution rate of 17.00% of earnable compensation. The State of Iowa therefore is considered to be a nonemployer contributing entity in accordance with the provisions of the Governmental Accounting Standards Board Statement No. 67 – Financial Reporting for Pension Plans, (GASB 67). There were no state appropriations to MFPRSI during the fiscal year ended June 30, 2020. Net Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2020, the City reported a liability of $24,170,107 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s share of contributions to the pension plan relative to the contributions of all MFPRSI participating employers. At June 30, 2019, the City’s proportion was 3.684880% which was a decrease of .022090% from its proportions measured as of June 30, 2018. 63 For the year ended June 30, 2020, the City recognized pension expense of $5,143,397. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: $2,808,200 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Actuarial Assumptions The total pension liability in the June 30, 2019, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Total 6,368,299$ 576,745$ Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between City contributions and proportionate share of contributions City contributions subsequent to the measurement date 2,808,200 - 1,331,681 182,589 - 245,376 Change of assumptions Deferred Outflows of Resources 832,292$ 1,213,537 Differences between expected and actual experience Deferred Inflows of Resources 226,173$ 105,196 Year Ended June 30, 2021 June 30, 2022 June 30, 2023 June 30, 2024 June 30, 2025 Total 2,983,354$ 526,466 27,337 193,860 710,066 1,525,625$ Rate of inflation 3.00 percent per annum Salary increases 3.75 to 15.11 percent, including inflation Investment rate of return 7.50 percent, net of pension plan investment expens e, including inflation 64 The actuarial assumptions used in the June 30, 2019 valuation were based on the results of an actuarial experience study for the period from July 1, 2007 to June 30, 2017. Postretirement mortality rates were based on the RP-2014 Blue Collar Combined Healthy Annuitant Table with males set-forward zero years, females set-forward two years and disabled individuals set-forward three years (male only rates), with generational projection of future mortality improvement with 50 percent of Scale BB beginning in 2017. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates (i.e., expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Discount Rate The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and the City contributions will be made at rates equal to the difference between actuarially determined rates and the member rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of City’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.5%, as well as what the city’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1% lower (6.5%) or 1% higher (8.5%) than the current rate. Asset Class Core Plus Fixed Income 3.3 % Emerging Markets 9.0 Emerging Markets Debt 6.3 Large Cap 5.5 Small Cap 5.8 Master Limited Partnerships (MLP)9.0 International Large Cap 7.3 Tactical Asset Allocation 6.4 Private Equity 9.0 Private Non-Core Real Estate 8.0 Private Core Real Estate 6.0 Long-Term Expected Real Rate of Return 1% Decrease (6.5%) Discount Rate (7.5%) 1% Increase (8.5%) City's proportionate share of the net pension liability:39,353,172$ 24,170,107$ 11,595,557$ 65 Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued MFPRSI financial report which is available on MFPRSI’s website at www.mfprsi.org. Payables to the Pension Plan At June 30, 2020, there were no amounts due to MFPRSI. Iowa Public Employees Retirement System (IPERS) Plan Description IPERS membership is mandatory for employees of the City, except for those covered by another retirement system. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by IPERS. IPERS issues a stand-alone financial report which is available to the public by mail at 7401 Register Drive P.O. Box 9117, Des Moines, Iowa 50306-9117 or at www.ipers.org. IPERS benefits are established under Iowa Code chapter 97B and the administrative rules thereunder. Chapter 97B and the administrative rules are the official plan documents. The following brief description is provided for general informational purposes only. Refer to the plan documents for more information. Pension Benefits A regular member may retire at normal retirement age and receive monthly benefits without an early- retirement reduction. Normal retirement age is age 65, any time after reaching age 62 with 20 or more years of covered employment, or when the member’s years of service plus the member’s age at the last birthday equals or exceeds 88, whichever comes first. (These qualifications must be met on the member’s first month of entitlement to benefits.) Members cannot begin receiving retirement benefits before age 55. The formula used to calculate a Regular member’s monthly IPERS benefit includes: • A multiplier (based on years of service). • The member’s highest five-year average salary. (For members with service before June 30, 2012, the highest three-year average salary as of that date will be used if it is greater than the highest five- year average salary.) If a member retires before normal retirement age, the member’s monthly retirement benefit will be permanently reduced by an early-retirement reduction. The early-retirement reduction is calculated differently for service earned before and after July 1, 2012. For service earned before July 1, 2012, the reduction is 0.25 percent for each month that the member receives benefits before the member’s earliest normal retirement age. For service earned starting July 1, 2012, the reduction is 0.50 percent for each month that the member receives benefits before age 65. Generally, once a member selects a benefit option, a monthly benefit is calculated and remains the same for the rest of the member’s lifetime. However, to combat the effects of inflation, retirees who began receiving benefits prior to July 1990 receive a guaranteed dividend with their regular November benefit payments. Disability and Death Benefits A vested member who is awarded federal Social Security disability or Railroad Retirement disability benefits is eligible to claim IPERS benefits regardless of age. Disability benefits are not reduced for early retirement. If a member dies before retirement, the member’s beneficiary will receive a lifetime annuity or a lump-sum payment equal to the present actuarial value of the member’s accrued benefit or calculated with a set formula, whichever is greater. When a member dies after retirement, death benefits depend on the benefit option the member selected at retirement. 66 Contributions Contribution rates are established by IPERS following the annual actuarial valuation, which applies IPERS’ Contribution Rate Funding Policy and Actuarial Amortization Method. Statute limits the amount rates can increase or decrease each year to 1 percentage point. IPERS Contribution Rate Funding Policy requires that the actuarial contribution rate be determined using the “entry age normal” actuarial cost method and the actuarial assumptions and methods approved by the IPERS Investment Board. The actuarial contribution rate covers normal cost plus the unfunded actuarial liability payment based on a 30-year amortization period. The payment to amortize the unfunded actuarial liability is determined as a level percentage of payroll, based on the Actuarial Amortization Method adopted by the Investment Board. In fiscal year 2020, pursuant to the required rate, Regular members contributed 6.29% of pay and the City contributed 9.44% for a total rate of 15.73%. The City’s total contributions to IPERS for the year ended June 30, 2020 were $2,958,649. Net Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2020, the City reported a liability of $23,474,689 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s share of contributions to the pension plan relative to the contributions of all IPERS participating employers. At June 30, 2019, the City’s proportion was .405389% which was an increase of .003702% from its proportions measured as of June 30, 2018. For the year ended June 30, 2020, the City recognized pension expense of $4,034,704. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Total Changes in proportion and differences between City contributions and proportionate share of contributions 101,997 City contributions subsequent to the measurement date 2,958,649 5,640,199$ Change of assumptions 2,514,475 - Net difference between projected and actual earnings on pension plan investments - 2,645,315 3,709,183$ 219,841 - Deferred Inflows of Resources Deferred Outflows of Resources Differences between expected and actual experience 65,078$ 844,027$ 67 $2,958,649 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Actuarial Assumptions The total pension liability in the June 30, 2018, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: The actuarial assumptions used in the June 30, 2019 valuation were based on the results of actuarial experience study dated March 24, 2017 and a demographic assumption study dated June 28, 2018. Mortality rates were based on the RP-2014 Employee and Healthy Annuitant Tables with MP-2017 generational adjustments. Year Ended June 30, 2021 J une 30, 2022 June 30, 2023 June 30, 2024 June 30, 2025 (363,020) (403,192) (43,586) Total 360,751$ (578,586) (1,027,633)$ Rate of inflation 2.60% per annum (effective June 30, 2017) Salary increases 3.25 to 16.25%, average, including inflation. Rates vary by (effective June 30, 2017)membership group. 7.00% compounded annually, net of pension plan investment (effective June 30, 2017)expense, including inflation 3.25% per annum based on 2.60% inflation and 0.65% (effective June 30, 2017)real wage inflation Wage growth Investment rate of return 68 The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates (i.e., expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Discount Rate The discount rate used to measure the total pension liability was 7.0%. The projection of cash flows used to determine the discount rate assumed employee contributions will be made at the contractually required rate and that the contributions from the City will be made at contractually required rates, actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments to current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of City’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.0%, as well as what the city’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1% lower (6.0%) or 1% higher (8.0%) than the current rate. Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued IPERS financial report which is available on IPERS’ website at www.ipers.org. Payables to the Pension Plan At June 30, 2020, there were no amounts due to IPERS. Asset Class Core Plus Fixed Income 27.0 %1.71 % D omestic Equity 22.0 5.60 International Equity 15.0 6.08 Private Equity 11.0 10.13 Private Real Assets 7.5 4.76 Public Real Assets 7.0 2.81 Public Credit 3.5 3.32 Private Credit 3.0 3.01 Global Smart Beta Equity 3.0 5.82 Cash 1.0 (0.21) Total 100.0 % Target Allocation Long-Term Expected Real Rate of Return 1% Decrease (6.0%) Discount Rate (7.0%) 1% Increase (8.0%) City's proportionate share of the net pension liability:41,683,469$ 23,474,689$ 8,201,364$ 69 8. Other Long-term Liabilities 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 $210,784 due on August 1, 2025. For the governmental activities, employee vested benefits are generally liquidated by the General Fund, Community Development Block Grant Fund and Other Shared Revenue and Grants Fund. In August 1993, the GASB issued Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Post-closure Care Costs (the Statement). Under these rules, in addition to operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and post-closure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and post-closure care costs is based on the amount of the landfill used during the year. Changes in Long-Term Liabilities - Notes Payable Note Payable activity for the year ended June 30, 2020, was as follows: Due Within July 1, 2019 Issues Retirements June 30, 2020 One Year Governmental activities: $ 210,784 -$ -$ 210,784$ -$ Changes in Long-Term Liabilities - Employee Vested Benefits Employee Vested Benefits activity for the year ended June 30, 2020, was as follows: Due Within July 1, 2019 Issues Retirements June 30, 2020 One Year Governmental activities: $ 2,319,452 1,718,532$ 1,307,338$ 2,730,646$ 1,524,381$ Business-type activities: $ 727,970 558,226$ 424,617$ 861,579$ 496,373$ Changes in Long-Term Liabilities - Landfill Closure Post-closure Care Costs Landfill Closure Post-closure care activity for the year ended June 30, 2020, was as follows: Due Within July 1, 2019 Issues Retirements June 30, 2020 One Year Business-type activities: $ 9,751,079 $ 909,199 -$ $ 10,660,278 -$ 70 The estimated liability for landfill closure and post-closure care costs as of June 30, 2020, is $10,660,278, which is based on 53.6% usage (filled) of the landfill and is included in accrued liabilities within the Sanitation Fund. It is estimated that an additional amount of approximately $9,228,301 will be recognized as closure and post-closure care expenses between the date of the balance sheet and the date the landfill is expected to be filled to capacity by the year ended June 30, 2039. The estimated total current cost of the landfill closure and post-closure care costs at June 30, 2020, was determined by a licensed professional engineer and approximated at $19,888,579. 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, 2020. These amounts are based on an estimated post-closure care and monitoring period of 30 years, consistent with current State Department of Natural Resources regulations. However, the actual cost of closure and post-closure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City is required by federal and state laws and regulations to provide some form of financial assurance to finance closure and post-closure care. The City will meet its financial assurance obligations through the issuance of general obligation bonds. As of June 30, 2020, the Sanitation Fund had $14,457,544 in related equity in pooled cash and investments, at fair value designated for satisfaction of closure and post-closure costs. The City estimates that these cash reserves will only provide a fraction of the dollars needed to close and monitor the landfill. The remaining portion of post-closure care costs, anticipated future inflation costs and additional costs that might arise from changes in post-closure requirements (due to changes in technology or more rigorous environmental regulations, for example) may need to be covered by charges to future landfill users as well as City taxpayers. Changes in Long-Term Liabilities – Other Postemployment Benefits (OPEB) Plan Description: The City operates a single-employer self-funded medical and dental plan for all employees, which is offered to current and retired employees and their dependents. Group insurance benefits are established under Iowa Code Chapter 509A.13. No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No. 75. All full-time employees who retire or terminate/resign and their eligible dependents are offered the following post-employment benefit options: Health insurance and dental insurance – The option of continuing with the City’s health insurance plan at the individual’s expense. These benefits cease upon Medicare eligibility. Life insurance – The option of converting the employee’s City-paid policy to an individual policy at the individual’s expense with the City’s life insurance carrier. Long-term disability – For employees who terminate/resign and have been on the plan for a minimum of one year, the option of converting the employee’s City-paid group policy to a personal policy at the individual’s expense with the City’s long-term disability insurance carrier. The above options, while at the individual’s own expense, are included within the City’s overall insurance package, which results in an implicit rate subsidy and an OPEB liability. Retired participants must be age 55 or older at retirement. At June 30, 2020, the following employees were covered by the benefit terms: Total OPEB Liability: The City’s total OPEB liability of $8,627,420 was measured as of June 30, 2020 and was determined by an actuarial valuation as of that date. Inactive employees or beneficiaries currently receiving benefit payments 59 Active employees 614 Total 673 71 Actuarial Assumptions: The total OPEB liability in the June 30, 2020 actuarial valuation was determined using the following actuarial assumptions and the entry age normal actuarial cost method, applied to all periods included in the measurement. Discount Rate: The discount rate used to measure the total OPEB liability was 2.66% which reflects the index rate for 20-year tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher as of the measurement date. Mortality rates for general participants are from the SOA Pub-2010 General Headcount Weighted Mortality Table fully generational using Scale MP-2019. Mortality rates for public safety participants are from the SOA Pub-2010 General Headcount Weighted Mortality Table fully generational using Scale MP-2019. Annual retirement probabilities are based on varying rates by age and turnover probabilities mirror those used by IPERS and MFPRSI. The actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study with dates corresponding to those listed above. Changes of assumptions reflect a change in the discount rate from 3.51% in fiscal year 2019 to 2.66% in fiscal year 2020. It also reflects changes in the mortality tables, termination rates, salary merit increase rates, retirement rates and decreasing the initial health care trend rate from 8.50% in fiscal year 2019 to 8.00% in fiscal year 2020. Rate of inflation 2.60% per annum (effective June 30, 2020) Rates of salary increases 3.25% per annum based on 2.60% inflation and 0.65% (effective June 30, 2020)real wage inflation Discount rate 2.66%, compounded annually, including inflation (effective June 30, 2020) Healthcare cost trend rate 8.00% initial rate decreasing by .5% annually to an ultimate (effective June 30, 2020)rate of 4.50% Total OPEB Liability Total OPEB liability beginning of year 8,877,831$ Change s for the year: Service Cost 633,456 Interest 322,689 Difference between expected and actual experience (482,695) Changes in assumptions (82,608) Benefit payments (641,253) Net changes (250,411) Total OPEB liability end of year 8,627,420$ 72 Sensitivity of the City’s Total OPEB Liability to Changes in the Discount Rate: The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is 1% lower (1.66%) or 1% higher (3.66%) than the current discount rate. Sensitivity of the City’s Total OPEB Liability to Changes in the Healthcare Cost Trend Rate: The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rate that is 1% lower (7.00%) or 1% higher (9.00%) than the current healthcare cost trend rate. OPEB Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB: For the year ended June 30, 2020, the City recognized OPEB expense of $1,098,814. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following resources: The amount reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows: 1% Decrease (1.66%) Discount Rate (2.66%) 1% Increase (3.66%) Total OPEB liability 9,232,982$ 8,627,420$ 8,047,366$ 1% Decrease (7.00%) Healthcare Cost Trend Rate (8.00%) 1% Increase (9.00%) Total OPEB liability 7,646,293$ 8,627,420$ 9,786,806$ Total Differences between expected and actual experience 928,688$ 698,197$ Change of assumptions 868,141 74,347 1,796,829$ 772,544$ Deferred Outflows of Resources Deferred Inflows of Resources Year Ended June 30, 2021 June 30, 2022 June 30, 2023 June 30, 2024 June 30, 2025 Thereafter Total 142,669$ 142,669 142,669 142,669 310,940 142,669 1,024,285$ 73 9. Short Term Debt During FY20, the City entered into additional multiple short-term loans totaling $349,000 and repaid multiple short-term loans totaling $951,500. The loans were used to fund the acquisition and rehabilitation of single-family homes as part of the UniverCity Neighborhood Partnership Program (UniverCity). UniverCity is a cooperative effort of the City of Iowa City and the University of Iowa dedicated to ensuring that the University of Iowa Campus and surrounding neighborhoods remain vital, safe, affordable, and attractive places to live and work for both renters and homeowners. The short-term loans were repaid with the proceeds from the sale of the rehabilitated homes. During FY20, all lines of credit were closed. 10. Fund Equity Fund balances for the governmental funds are reported in classifications that comprise a hierarchy based on the extent to which the government honors constraints on the specific purposes for which amounts in those funds can be spent. • The Nonspendable classification contains amounts not in spendable form or legally or contractually required to be maintained intact. • Restricted amounts contain restraint on their use externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. • Committed amounts can only be used for specific purposes imposed by formal action of the government’s highest level of decision-making authority. The highest level of decision-making authority is the City Council and it takes a resolution to establish, modify or rescind a fund balance commitment. • Amounts intended to be used for specific purposes are Assigned. Assignments should not cause deficits in the Unassigned fund balance. The Finance Director has been delegated authority by the City Council through a resolution to assign amounts to be used for specific purposes. • Unassigned fund balance is the residual classification for the General Fund. The General Fund is the only fund that would report a positive amount in unassigned fund balance. Residual deficit amounts of other governmental funds would also be reported as unassigned. The City would use Restricted fund balances first, followed by Committed resources, and then Assigned resources, as appropriate opportunities arise, but reserves the right to selectively spend Unassigned resources first to defer the use of these other classified funds. Changes in Short-Term Liabilities - Notes Payable Notes Payable activity for the year ended June 30, 2020, was as follows: Due Within July 1, 2019 Issues Retirements June 30, 2020 One Year Governmental activities: $ 602,500 349,000$ 951,500$ -$ -$ 74 11. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; workplace accidents, errors and omissions; and natural disasters. During fiscal year 1988 the City established the Loss Reserve Fund, an internal service fund, to account for and finance its uninsured risks of loss. During the year ended June 30, 2020 the City purchased property, liability, and workers’ compensation insurance under the program that provides for a $100,000 self-insured retention per occurrence on property losses, a $500,000 self-insured retention per occurrence on liability, and a $500,000 self-insured retention on workers’ compensation losses. The liability insurance provides coverage for claims in excess of the aforementioned self-insured retention up to a maximum of $21,000,000 annual aggregate of losses paid. Settled claims have not exceeded this commercial coverage in any of the past thirty-one fiscal years. The operating funds pay annual premiums to the Loss Reserve Fund. Accumulated monies in the Loss Reserve Fund are available to cover the self-insured retention amounts and any uninsured losses. Components of Fund Balance Bridge, Other Street and Shared Traffic Other Revenue and Employee Other Control Debt Governmental General Grants Benefits Construction Construction Service Funds Total Nonspendable: Perpetual Care Principal 69,000$ -$ -$ -$ -$ -$ -$ 69,000$ Inventory - 277,620 - - - - - 277,620 Property Held for Resale 479,910 - - - - - - 479,910 Total Nonspendable 548,910 277,620 - - - - - 826,530 Restricted for: Public Safety 442,891 - - - - - - 442,891 Debt Service - - - - - 9,748,129 - 9,748,129 GO Bond Projects - - - 8,763,260 15,841,985 - - 24,605,245 State Funding - 3,547,923 - - - - - 3,547,923 Grant Agreement - - - - - - 3,505,346 3,505,346 Affordable Housing - 1,622,344 - - - - - 1,622,344 Economic Development - - - - - - 1,374,175 1,374,175 Notes Receivable 1,252,093 - - - - - - 1,252,093 Public Safety Employee Benefits - - 3,584,853 - - - - 3,584,853 Other Restricted 52,114 306,805 - - - - 434,367 793,286 Total Restricted 1,747,098 5,477,072 3,584,853 8,763,260 15,841,985 9,748,129 5,313,888 50,476,285 Assigned to: Library Programs 1,189,393 - - - - - - 1,189,393 Replacement and Acquisition Reserves 4,480,791 - - - - - - 4,480,791 Other Assigned 37,563 - - - - - - 37,563 Total Assigned 5,707,747 - - - - - - 5,707,747 Unassigned:35,369,153 - - - - (24,180) (586,726) 34,758,247 Total Fund Balances 43,372,908$ 5,754,692$ 3,584,853$ 8,763,260$ 15,841,985$ 9,723,949$ 4,727,162$ 91,768,809$ 75 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, 2020 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, 2020 and 2019 are as follows: Current-Year Beginning-of- Claims and Balance at Fiscal-Year Changes in Claim Fiscal Liability Estimates Payments Year-End 2018 – 2019 $ 2,173,000 $ 1,510,000 $ 976,000 $ 2,707,000 2019 – 2020 2,707,000 761,000 907,000 2,561,000 Also, the City is partially self-insured, through stop-loss insurance, for employee health care coverage, which is available to all of its permanent employees. This insurance provides stop-loss coverage for claims in excess of $125,000 per employee with an aggregate stop-loss of $12,281,650. The operating funds are charged premiums by the Loss Reserve Fund. The City reimburses a health insurance provider for actual medical costs incurred, plus a claims processing\administrative fee. Changes in the Loss Reserve Fund’s claims liability amount for health care coverage for the years ended June 30, 2020 and 2019 are as follows: Current-Year Beginning-of- Claims and Balance at Fiscal-Year Changes in Claim Fiscal Liability Estimates Payments Year-End 2018 – 2019 $ 410,000 $ 9,735,000 $ 9,295,000 $ 850,000 2019 – 2020 850,000 9,167,000 8,948,000 1,069,000 76 12. Commitments and Contingencies Contractual Commitments Developer Commitments In order to encourage development within designated TIF districts, the City Council has approved developer grants to 7 different projects. The grants are to be paid only after certain conditions have been met by each project developer, and are to be paid over many years in the form of a rebate of a predetermined percentage of future property taxes generated by the property. Currently, it is estimated that outstanding commitments totaling $25,876,859 exist, of which $1,197,073 is expected to be paid in the next fiscal year. These items are expensed in the period in which they are paid. There were payments made in the current fiscal year in the amount of $1,576,991. No liability is recognized due to the fact that the agreements are conditional and the payments are to be funded by future property taxes receivable on the project. 13. Contingent Liabilities Litigation The City is a defendant in a number of lawsuits arising principally from claims against the City for alleged improper actions by City employees, with such lawsuits typically involving claims of improper police action, unlawful taking of property by zoning, negligence, appeals of condemnations, and discrimination. Total damages claimed are substantial; however, it has been the City’s experience that such actions are settled for amounts substantially less than claimed amounts. The City’s management estimates that the potential claims against the City, not covered by various insurance policies, would not materially affect the financial condition of the City. The City has the authority to levy additional taxes (outside the regular limit) to cover uninsured judgments against the City. The total outstanding contractual commitments as of June 30, 2020 are as follows: Project Amount Bridge, street and traffic Paving and Bridge Construction, contr ol construction Engineering Design and Consulting 9,916,449$ Other construction Public Works & Culture and Recreation Construction 2,120,463 Parking Parking Facility Restoration Repair 8,675 Wastewater Sewer Construction & Generator Relocation 373,940 Water Water Construction & Water Pressure Zone Improvement 185,751 Tra nsit Pedestrian/Transit Amenities 13,937 Airport Runway Obstruction Mitigation & Fuel Kiosks 399,444 Stormwater Stormwater System Improvements & Storm Sewer 608,496 Replacements 13,627,155$ Fund 77 14. Tax Abatements Governmental Accounting Standards Board Statement No. 77 defines tax abatements as a reduction in tax revenues that results from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax revenues to which they are otherwise entitled and (b)the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments. City Tax Abatements The City provides tax abatements for urban renewal and economic development projects with tax increment financing as provided for in Chapters 15A and 403 of the Code of Iowa. For these types of projects, the City enters into agreements with developers which require the City, after developers meet the terms of the agreements, to rebate a portion of the property tax paid by the developers, to pay the developers an economic development grant or to pay the developers a predetermined dollar amount. No other commitments were made by the City as part of these agreements. For the year ended June 30, 2020, $597,327 of property tax was diverted from the City under the urban renewal and economic development projects. Tax Abatements of Other Entities Property tax revenues of the City were not reduced by any amount for the year ended June 30, 2020 under agreements entered into by any entities. 15.Subsequent Event The COVID-19 outbreak is disrupting business across a range of industries in the United States and financial markets have experienced a significant decline. As a result, local, regional and national economies, including that of the City, may be adversely impacted. The extent of the financial impact of COVID-19 will depend on future developments, including the duration and spread, which are uncertain and cannot be predicted. Due to the uncertainties surrounding the outbreak, management cannot presently estimate the potential impact on the City’s operations and finances. 16.New Governmental Accounting Standards Board (GASB) Standards The Governmental Accounting Standards Board (GASB) has issued ten statements not yet implemented by the City. The statements, which might impact the City’s financial statements, are as follows: Statement No. 84, Fiduciary Activities, will be effective for fiscal year ending June 30, 2021. The objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. Statement No. 87, Leases, will be effective for fiscal year ending June 30, 2022. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, will be effective for fiscal year ending June 30, 2022. The objectives of this Statement are to enhance the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest cost incurred before the end of a construction period. 78 Statement No. 90, Majority Equity Interests – an amendment of GASB Statements No. 14 and No. 61 will be effective for fiscal year ending June 30, 2021. The objectives of this Statement are to improve the consistency and comparability of reporting a government’s majority equity interest in a legally separate organization and to improve the relevance of financial statement information for certain component units. Statement No. 91, Conduit Debt Obligations, will be effective for fiscal year ending June 30, 2023. The objectives of this Statement are to provide a single method of reporting conduit debt obligations by issuers and eliminate diversity in practice associated with (1) commitments extended by issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. Statement No. 92, Omnibus 2020, will be effective for fiscal year ending June 30, 2022. The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing practice issues that have been identified during implementation and application of certain GASB Statements. Statement No. 93, Replacement of Interbank Offered Rates, will be effective for fiscal year ending June 30, 2022. The objective of this Statement is to address those and other accounting and financial reporting implications that result from the replacement of an IBOR. Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, will be effective for fiscal year ending June 30, 2023. The primary objective of this Statement is to improve financial reporting by addressing issues related to public-private and public-public partnership arrangements (PPPs). Statement No. 96, Subscription-Based Information Technology Arrangements, will be effective for fiscal year ending June 30, 2023. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans- an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32, will be effective for fiscal year ending June 30, 2022. The primary objective of this Statement are to 1) increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which a potential component unit does not have a governing board and the primary government performs the duties that a governing board typically would perform; 2) mitigate costs associated with the reporting of certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and employee benefit plans other than pension plans or OPEB plans (other employee benefit plans) as fiduciary component units in fiduciary fund financial statements; and 3) enhance the relevance, consistency, and comparability of the accounting and financial reporting for Internal Revenue Code (IRC) Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan and for benefits provided through those plans. The City’s management has not yet determined the effect these statements will have on the City’s financial statements. 79 Governmental Fund Types Enterprise Fund Actual Budgetary Types Actual Total Actual Basis Budgetary Basis Budgetary Basis Revenues: Property taxes 59,257$ -$ 59,257$ Delinquent property taxes 103 - 103 Tax increment financing taxes 3,435 - 3,435 Other city taxes 2,747 - 2,747 Special assessments - - - Licenses and permits 2,352 12 2,364 Intergovernmental 19,060 16,343 35,403 Charges for services 5,764 39,878 45,642 Use of money and property 1,842 2,612 4,454 Miscellaneous 2,044 689 2,733 Total revenues 96,604 59,534 156,138 Expenditures/Expenses: Public safety 25,917 - 25,917 Public works 10,290 - 10,290 Health and social services 480 - 480 Culture and recreation 14,147 - 14,147 Community and economic development 10,346 - 10,346 General government 9,183 - 9,183 Debt service 13,038 - 13,038 Capital outlay 24,573 - 24,573 Business-type - 64,784 64,784 Total expenditures/expenses 107,974 64,784 172,758 Excess (deficiency) of revenues over (under) expenditures/expenses (11,370) (5,250) (16,620) Other financing sources and uses, net 11,539 2,726 14,265 Net change in fund balances 169 (2,524) (2,355) Balances, beginning of year 88,915 93,855 182,770 Balances, end of year 89,084$ 91,331$ 180,415$ See Note to Required Supplementary Information. City of Iowa City, Iowa Budgetary Comparison Schedule Budget and Actual - All Governmental Funds and Enterprise Funds Required Supplementary Information For the Year Ended June 30, 2020 (dollar amounts expressed in thousands) Budgetary Basis 80 Final to Actual Variance - Positive Original Final (Negative) 60,296$ 60,296$ (1,039)$ - - 103 3,451 3,451 (16) 2,759 3,052 (305) 1 1 (1) 2,073 2,073 291 36,270 47,110 (11,707) 46,456 46,635 (993) 3,488 3,505 949 2,674 2,826 (93) 157,468 168,949 (12,811) 26,131 26,840 923 10,320 10,790 500 532 532 52 15,564 16,104 1,957 9,089 12,804 2,458 10,018 10,596 1,413 13,039 13,048 10 21,808 64,421 39,848 61,213 80,595 15,811 167,714 235,730 62,972 (10,246) (66,781) 50,161 12,665 14,299 (34) 2,419 (52,482) 50,127$ 133,985 182,770 136,404$ 130,288$ Budgeted Amounts 81 Accrual Modified Accrual Budget Basis Adjustments Basis Revenues 96,604$ (3,471)$ 93,133$ Expenditures 107,974 (8,438) 99,536 Net (11,370) 4,967 (6,403) Other financing sources and uses, net 11,539 (5,117) 6,422 Beginning Fund Balances 88,915 2,834 91,749 Ending Fund Balances 89,084$ 2,684$ 91,768$ Accrual Accrual Budget Basis Adjustments Basis Revenues 59,534$ 2,499$ 62,033$ Expenditures 64,784 (4,452) 60,332 Net (5,250) 6,951 1,701 Other financing sources and uses, net 2,726 3,161 5,887 Beginning Fund Balances 93,855 287,980 381,835 Ending Fund Balances 91,331$ 298,092$ 389,423$ 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, 2020 (dollar amounts expressed in thousands) 82 City of Iowa City, Iowa Note to Required Supplementary Information - Budgetary Reporting For the Year Ended June 30, 2020 In accordance with the Code of Iowa, the City Council annually adopts a budget following required public notice and hearing which includes all funds, except internal service funds and agency funds. The budget basis of accounting is a modified accrual basis. The annual budget may be amended during the year utilizing similar statutorily prescribed procedures. Formal and legal budgetary control is based upon nine major classes of expenditures known as functions, not by fund or fund type. These nine functions are: public safety, public works, health and social services, culture and recreation, community and economic development, general government, debt service, capital outlay and business-type. The legal level control is at the aggregated function level, not at the fund or fund type level. During the year, budget amendments increased budgeted revenues by $11,481,000 and expenditures by $68,016,000. The budget amendments were primarily due to changes in the breadth and timing of capital improvement projects, which the City budgets in full during the initial year of the projects and amends future year budgets for carryover. 83 84 2020 2019 2018 2017 2016 2015 City's proportion of the net pension liability 3.684880%3.706970%3.648635%3.697128%3.704972%3.778137% City's proportionate share of the net pension liability 24,170$ 22,071$ 21,398$ 23,117$ 17,406$ 13,696$ City's covered payroll 11,155 10,743 10,347 10,019 9,716 9,648 City's proportionate share of the net pension liability as a percentage of its covered payroll 216.67%205.45%206.80%230.73%179.15%141.96% Plan fiduciary net position as a percentage of the total pension liability 81.07%81.07%80.60%78.20%83.04%86.27% * In accordance with GASB Statement No. 68, the amounts presented for each fiscal year were determined as of June 30 of the preceding fiscal year. Note: GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City will present information for those years for which information is available. City of Iowa City, Iowa Required Supplementary Information - Schedule of the City's Proportionate Share of the Net Pension Liability Municipal Fire and Police Retirement System of Iowa For the Last Six Years* (amounts expressed in thousands) 85 2020 2019 2018 2017 Statutorily required contributions 2,808$ 2,902$ 2,759$ 2,682$ Contributions in relation to the statutorily required contribution (2,808) (2,902) (2,759) (2,682) Contribution deficiency (excess)-$ -$ -$ -$ City's covered payroll 11,503$ 11,155$ 10,743$ 10,347$ Contributions as a percentage of covered payroll 24.41%26.02%25.68%25.92% City of Iowa City, Iowa Required Supplementary Information - Schedule of the City's Contributions Municipal Fire and Police Retirement System of Iowa For the Last Ten Years (amounts expressed in thousands) 86 2016 2015 2014 2013 2012 2011 2,782$ 2,955$ 2,906$ 2,383$ 2,277$ 1,654$ (2,782) (2,955) (2,906) (2,383) (2,277) (1,654) -$ -$ -$ -$ -$ -$ 10,019$ 9,716$ 9,648$ 9,122$ 9,197$ 8,310$ 27.77%30.41%30.12%26.12%24.76%19.90% 87 Changes of benefit terms: There were no significant changes of benefit terms. Changes of assumptions: The 2018 valuation changed postretirement mortality rates on the RP-2014 Blue Collar Healthy Annuitant Table with males set-forward zero years, females set-forward two years and disabled individuals set-forward three years (male only rates), with generational projection of future mortality improvements with 50% of Scale BB beginning in 2017. The 2017 valuation added five years projection of future mortality improvement with Scale BB. The 2016 valuation changed postretirement mortality rates to the RP-2000 Blue Collar Combined Healthy Mortality Table with males set-back two years, females set-forward one year and disabled individuals set-forward one year (male only rates), with no projection of future mortality improvement. The 2015 valuation phased in the 1994 Group Annuity Mortality Table for postretirement mortality. This resulted in weighting of 1/12 of the 1971 Group Annuity Mortality Table and 11/12 of the 1994 Group Annuity Morality Table. The 2014 valuation phased in the 1994 Group Annuity Mortality Table for postretirement mortality. This resulted in weighting of 2/12 of the 1971 Group Annuity Mortality Table and 10/12 of the 1994 Group Annuity Morality Table. City of Iowa City, Iowa Notes to Required Supplementary Information - Pension Liability Municipal Fire and Police Retirement System of Iowa Year ended June 30, 2020 88 2020 2019 2018 2017 2016 2015 City's proportion of the net pension liability 0.4053890%0.4016869%0.3968158%0.3962696%0.4159256%0.4378904% City's proportionate share of the net pension liability 23,475$ 25,420$ 26,433$ 24,938$ 20,549$ 17,366$ City's covered payroll 30,852 30,190 29,619 28,448 28,495 28,654 City's proportionate share of the net pension liability as a percentage of its covered payroll 76.09%84.20%89.24%87.66%72.11%60.61% Plan fiduciary net position as a percentage of the total pension liability 83.62%83.62%82.21%81.82%85.19%87.61% * In accordance with GASB Statement No. 68, the amounts presented for each fiscal year were determined as of June 30 of the preceding fiscal year. Note: GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City will present information for those years for which information is available. City of Iowa City, Iowa Required Supplementary Information - Schedule of the City's Proportionate Share of the Net Pension Liability Iowa Public Employees' Retirement System For the Last Six Years* (amounts expressed in thousands) 89 2020 2019 2018 2017 Statutorily required contributions 2,959$ 2,912$ 2,696$ 2,645$ Contributions in relation to the statutorily required contribution (2,959) (2,912) (2,696) (2,645) Contribution deficiency (excess)-$ -$ -$ -$ City's covered payroll 31,345$ 30,852$ 30,190$ 29,619$ Contributions as a percentage of covered payroll 9.44%9.44%8.93%8.93% (amounts expressed in thousands) City of Iowa City, Iowa Required Supplementary Information - Schedule of the City's Contributions Iowa Public Employees' Retirement System For the Last Ten Years 90 2016 2015 2014 2013 2012 2011 2,540$ 2,545$ 2,559$ 2,442$ 2,327$ 1,877$ (2,540) (2,545) (2,559) (2,442) (2,327) (1,877) -$ -$ -$ -$ -$ -$ 28,448$ 28,495$ 28,654$ 28,170$ 28,833$ 27,013$ 8.93%8.93%8.93%8.67%8.07%6.95% 91 Changes of benefit terms: There are no significant changes in benefit terms. Changes of assumptions: The 2018 valuation implemented the following refinements as a result of an experience study dated June 28, 2018: • Changed mortality assumptions to the RP-2014 mortality tables with mortality improvements modeled using Scale MP-2017. • Adjusted retirement rates. • Lowered disability rates • Adjusted the probability of a vested Regular member electing to receive a deferred benefit. • Adjusted the merit component of the salary increase assumption. The 2017 valuation implemented the following refinements as a result of an experience study dated March 24, 2017: • Decreased the inflation assumption from 3.00% to 2.60%. • Decreased the assumed rate of interest on member accounts from 3.75% to 3.5% per year. • Decreased the discount rate from 7.50% to 7.00%. • Decreased the wage growth assumption from 4.00% to 3.25%. • Decreased the payroll growth assumption from 4.00% to 3.25%. The 2014 valuation implemented the following refinements as a result of a quadrennial experience study: • Decreased the inflation assumption from 3.25% to 3.00% • Decreased the assumed rate of interest on member accounts from 4.00% to 3.75% per year. • Adjusted male mortality rates for retirees in the Regular membership group. • Moved from an open 30 year amortization period to a closed 30 year amortization period for the UAL beginning June 30, 2014. Each year thereafter, changes in the UAL from plan experience will be amortized on a separate closed 20 year period. City of Iowa City, Iowa Notes to Required Supplementary Information - Pension Liability Iowa Public Employees' Retirement System Year ended June 30, 2020 92 2020 2019 2018 Service Cost 633$ 553$ 502$ Interest 323 297 245 Difference between expected and actual experience (483) 1,161 (377) Changes in assumptions (83) 225 982 Benefit payments (641) (948) (174) Net change in total OPEB liability (251) 1,288 1,178 Total OPEB liability beginning of year 8,878 7,590 6,412 Total OPEB liability end of year 8,627$ 8,878$ 7,590$ City's covered-employee payroll 42,848$ 42,007$ 40,933$ Total OPEB liability as a percentage of covered-employee payroll 20.13%21.13%18.54% Note: GASB Statement No. 75 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City will present information for those years for which information is available. Changes of benefit terms: There were no significant changes of benefit terms. Changes of assumptions: Changes in assumptions and other inputs reflect the effects of changes in the discount rate each period. The following are the discount rates used in each period. Year ended June 30, 2020 2.66% Year ended June 30, 2019 3.51% Year ended June 30, 2018 3.87% Mortality table has been updated from SOA RPH-2017 Total Dataset Mortality Table fully generational using Scale MP-2017 to SOA Pub-2010 General Headcount Weighted Mortality Table fully generational using Scale MP-2019 for general participants, SOA Pub-2010 Public Safety Headcount Weighted Mortality Table fully generational using Scale MP-2019 for public safety participants, and SOA Pub-2010 Continuing Survivor Headcount Weighted Mortality Table fully generational using Scale MP-2019 for surviving spouses. Termination rates, salary merit increases and retirement rates for IPERS employees have been updated to be based on the Iowa Public Employees’ Retirement System July 1, 2019 Actuarial Valuation Report. Termination rates, salary merit increases and retirement rates for MFPRSI employees have been updated to follow the Municipal Fire and Police Retirement System of Iowa July 1, 2019 Actuarial Valuation Report. Health care trend rates have been updated to an initial trend rate of 8.0% decreasing by 0.5% annually to an ultimate rate of 4.5%. City of Iowa City, Iowa Required Supplementary Information - Schedule of Changes in the City's Total OPEB Liability, Related Ratios and Notes For the Last Three Years (amounts expressed in thousands) 93 94 Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds account for revenues derived from specific sources that are required to be accounted for as separate funds. The funds in this category and their purpose are as follows: Economic Development Fund – accounts for revenue and expenditures of economic development activities. Community Development Block Grant Fund – accounts for revenue from the U.S. Department of Housing and Urban Development’s Community Development Block Grant programs. Metropolitan Planning Organization of Johnson County Fund – accounts for the financial activities of the metropolitan/rural cooperative planning organization. 95 Metropolitan Community Planning Development Organization Economic Block of Johnson Development Grant County Total Assets Equity in pooled cash and investments 760$ 1$ 388$ 1,149$ Receivables: Property tax 478 - - 478 Interest 7 - 1 8 Notes - 3,560 - 3,560 Due from other governments - 215 70 285 Total assets 1,245$ 3,776$ 459$ 5,480$ Liabilities, Deferred Inflows of Resources and Fund Balances Liabilities: Accounts payable 12$ 50$ 3$ 65$ Accrued liabilities - 6 22 28 Due to other funds - 161 - 161 Total liabilities 12 217 25 254 Deferred inflows of resources: Unavailable revenues: Succeeding year property taxes 446 - - 446 Grants - 54 - 54 Total deferred inflows of resources 446 54 - 500 Fund balances: Restricted 1,374 3,505 434 5,313 Unassigned (587) - - (587) Total fund balances 787 3,505 434 4,726 Total liabilities, deferred inflows of resources and fund balances 1,245$ 3,776$ 459$ 5,480$ Special Revenue City of Iowa City, Iowa Combining Balance Sheet Nonmajor Governmental Funds June 30, 2020 (amounts expressed in thousands) 96 Metropolitan Community Planning Development Organization Economic Block of Johnson Development Grant County Total Revenues Property taxes 3,772$ -$ -$ 3,772$ Intergovernmental 34 1,268 377 1,679 Use of money and property 45 33 6 84 Miscellaneous - 156 11 167 Total revenues 3,851 1,457 394 5,702 Expenditures Current: Community and economic development 1,914 1,442 667 4,023 Excess (deficiency) of revenues over (under) expenditures 1,937 15 (273) 1,679 Other Financing Sources (Uses) Transfers in 154 - 352 506 Transfers out (2,282) (67) - (2,349) Total other financing sources and (uses)(2,128) (67) 352 (1,843) Net change in fund balances (191) (52) 79 (164) Fund Balances, Beginning 978 3,557 355 4,890 Fund Balances, Ending 787$ 3,505$ 434$ 4,726$ Special Revenue City of Iowa City, Iowa Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2020 (amounts expressed in thousands) 97 98 Nonmajor Enterprise Funds Enterprise Funds account for operations and activities of the City that are financed and operated in a manner similar to a private business enterprise, and where the costs of providing services to the general public on a continuing basis are expected to be financed or recovered primarily through user charges, or where the City has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The funds in this category are as follows: Airport Fund – accounts for the operation and maintenance of the airport facility. Parking Fund – accounts for the operation and maintenance of the “on” and “off” street public parking facilities. 99 Airport Parking Total Assets Current assets: Equity in pooled cash and investments -$ 3,342$ 3,342$ Receivables: Accounts and unbilled usage 24 39 63 Interest - 11 11 Due from other governments 840 3 843 Total current assets 864 3,395 4,259 Noncurrent assets: Restricted assets: Equity in pooled cash and investments 107 1 108 Capital assets: Land 11,995 3,489 15,484 Buildings 5,458 41,647 47,105 Improvements other than buildings 445 328 773 Machinery and equipment 316 1,622 1,938 Infrastructure 17,451 - 17,451 Accumulated depreciation (11,459) (23,160) (34,619) Construction in progress 153 - 153 Total noncurrent assets 24,466 23,927 48,393 Total assets 25,330 27,322 52,652 Deferred Outflows of Resources Pension related deferred outflows 11 172 183 OPEB related deferred outflows 3 44 47 Total deferred outflows of resources 14 216 230 Liabilities Current liabilities: Accounts payable 22 226 248 Contracts payable 470 5 475 Accrued liabilities 4 57 61 Employee vested benefits 3 58 61 Due to other funds 138 - 138 Total current liabilities 637 346 983 Noncurrent liabilities: Liabilities payable from restricted assets: Deposits 8 1 9 Advances from other funds - 1,174 1,174 Employee vested benefits 2 42 44 Net pension liability 48 744 792 Other post employment benefits obligation 12 211 223 Total noncurrent liabilities 70 2,172 2,242 Total liabilities 707 2,518 3,225 Deferred Inflows of Resources Pension related deferred inflows 8 117 125 OPEB related deferred inflows 1 19 20 Total deferred inflows of resources 9 136 145 Net Position Net investment in capital assets 24,359 23,926 48,285 Restricted for future improvements 100 - 100 Unrestricted 169 958 1,127 Total net position 24,628$ 24,884$ 49,512$ CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS June 30, 2020 (amounts expressed in thousands) 100 Airport Parking Total Operating Revenues: Charges for services 371$ 4,354$ 4,725$ Miscellaneous 2 63 65 Total operating revenues 373 4,417 4,790 Operating Expenses: Personal services 85 1,822 1,907 Commodities 785 170 955 Services and charges 462 1,484 1,946 1,332 3,476 4,808 Depreciation 1,004 1,258 2,262 Total operating expenses 2,336 4,734 7,070 Operating loss (1,963) (317) (2,280) Nonoperating Revenues: Loss on disposal of capital assets (189) - (189) Operating grants 896 3 899 Interest income 4 157 161 Interest expense - (345) (345) Total nonoperating revenues 711 (185) 526 Loss before capital contributions and transfers (1,252) (502) (1,754) Capital contributions 134 - 134 Transfers in 100 - 100 Transfers out - (21) (21) Change in net position (1,018) (523) (1,541) Net Position, Beginning 25,646 25,407 51,053 Net Position, Ending 24,628$ 24,884$ 49,512$ NONMAJOR ENTERPRISE FUNDS AND CHANGES IN FUND NET POSITION COMBINING STATEMENT OF REVENUES, EXPENSES, CITY OF IOWA CITY, IOWA (amounts expressed in thousands) For the Year Ended June 30, 2020 101 Airport Parking Total Cash Flows From Operating Activities Receipts from customers and users 373$ 4,396$ 4,769$ Payments to suppliers (808) (1,556) (2,364) Payments to employees (81) (1,765) (1,846) Net cash flows from (used for) operating activities (516) 1,075 559 Cash Flows From Noncapital Financing Activities Operating grants received 150 - 150 Transfers from other funds 100 - 100 Transfers to other funds - (15) (15) Advances from other funds 138 - 138 Repayment of advances to other funds - (249) (249) Net cash flows from (used for) noncapital financing activities 388 (264) 124 Cash Flows From Capital and Related Financing Activities Capital grants received 54 - 54 Acquisition and construction of property and equipment (135) (6) (141) Principal paid on bonded debt - (9,413) (9,413) Interest paid on bonded debt - (376) (376) Net cash flows used for capital and related financing activities (81) (9,795) (9,876) Cash Flows From Investing Activities Interest on investments 6 219 225 Net decrease in cash and cash equivalents (203) (8,765) (8,968) Cash and Cash Equivalents, Beginning 310 12,108 12,418 Cash and Cash Equivalents, Ending 107$ 3,343$ 3,450$ Reconciliation of operating loss to net cash flows from (used for) operating activities: Operating loss (1,963)$ (317)$ (2,280)$ Adjustments to reconcile operating loss to net cash flows from (used for) operating activities: Depreciation expense 1,004 1,258 2,262 Changes in: Receivables: Accounts and unbilled usage - (21) (21) Prepaid item 15 - 15 Accounts payable 424 98 522 Accrued liabilities 1 9 10 Employee vested benefits - 37 37 Net pension liability (4) (78) (82) Deferred outflows of resources 2 58 60 Deferred inflows of resources 6 70 76 Other post employment benefits asset/obligation (1) (39) (40) Total adjustments 1,447 1,392 2,839 Net cash flows from (used for) operating activities (516)$ 1,075$ 559$ Noncash Investing, Capital, and Financing Activities: Capital grants not yet received 80$ -$ 80$ Operating grants not yet received 760$ 3$ 763$ CITY OF IOWA CITY, IOWA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS For the Year Ended June 30, 2020 (amounts expressed in thousands) 102 Internal Service Funds Internal Service Funds account for goods and services provided by one department to other City departments on a cost-reimbursement basis. The funds in this category are: Equipment Maintenance Fund – accounts for the provision of maintenance for City vehicles, equipment and vehicle rental from a central vehicle pool, and two-way radios provided to other City departments. Central Services Fund – accounts for the support services of photocopying, mail and overnight shipping provided to other City departments. Loss Reserve Fund – accounts for the property, liability, Workers’ Compensation and health insurance premiums and claims activity for City departments, including the self-insured retention portion. Information Technology Fund – accounts for the accumulation and allocation of costs associated with telecommunications and data processing, including the operation and replacement of equipment. 103 Equipment Central Loss Information Maintenance Services Reserve Technology Total Assets Current assets: Equity in pooled cash and investments 17,469$ 779$ 16,789$ 3,313$ 38,350$ Receivables: Accounts and unbilled usage - - 143 - 143 Interest 59 2 168 11 240 Due from other governments 42 - - - 42 Inventories 515 - - - 515 Total current assets 18,085 781 17,100 3,324 39,290 Noncurrent assets: Capital assets: Land 45 - - - 45 Buildings 1,298 - - 183 1,481 Improvements other than buildings 50 - - 50 Machinery and equipment 21,148 119 19 1,501 22,787 Infrastructure - - - 3,542 3,542 Accumulated depreciation (12,740) (73) (19) (1,485) (14,317) Construction in progress 876 - - 5 881 Total noncurrent assets 10,677 46 - 3,746 14,469 Total assets 28,762 827 17,100 7,070 53,759 Deferred Outflows of Resources Pension related deferred outflows 141 5 28 140 314 OPEB related deferred outflows 36 3 2 26 67 Total deferred outflows of resources 177 8 30 166 381 Liabilities Current liabilities: Accounts payable 283 21 303 24 631 Accrued liabilities 42 2 3,639 45 3,728 Employee vested benefits 40 1 4 30 75 Total current liabilities 365 24 3,946 99 4,434 Noncurrent liabilities: Employee vested benefits 32 1 3 25 61 Net pension liability 593 19 115 554 1,281 Other post employment benefits liability 174 13 12 124 323 Total noncurrent liabilities 799 33 130 703 1,665 Total liabilities 1,164 57 4,076 802 6,099 Deferred Inflows of Resources Pension related deferred inflows 93 3 18 88 202 OPEB related deferred inflows 16 1 1 11 29 109 4 19 99 231 Net Position Net investment in capital assets 10,677 46 - 3,746 14,469 Unrestricted 16,989 728 13,035 2,589 33,341 Total net position 27,666$ 774$ 13,035$ 6,335$ 47,810$ (amounts expressed in thousands) City of Iowa City, Iowa Combining Statement of Net Position Internal Service Funds June 30, 2020 104 Equipment Central Loss Information Maintenance Services Reserve Technology Total Operating Revenues: Charges for services 6,670$ 231$ 12,113$ 2,632$ 21,646$ Miscellaneous - - - 16 16 Total operating revenues 6,670 231 12,113 2,648 21,662 Operating Expenses: Personal services 1,127 44 232 1,083 2,486 Commodities 1,538 23 - 660 2,221 Services and charges 629 113 10,720 487 11,949 3,294 180 10,952 2,230 16,656 Depreciation 1,774 14 - 263 2,051 Total operating expenses 5,068 194 10,952 2,493 18,707 Operating income (loss)1,602 37 1,161 155 2,955 Nonoperating Revenues: Gain on disposal of capital assets 50 - - 2 52 Operating grants 1 - - - 1 Interest income 341 13 315 44 713 Total nonoperating revenues 392 13 315 46 766 Income (loss) before transfers 1,994 50 1,476 201 3,721 Transfers in 528 - - 412 940 Transfers out - - (66) - (66) Change in net position 2,522 50 1,410 613 4,595 Net Position, Beginning 25,144 724 11,625 5,722 43,215 Net Position, Ending 27,666$ 774$ 13,035$ 6,335$ 47,810$ (amounts expressed in thousands) City of Iowa City, Iowa Combining Statement of Revenues, Expenses Internal Service Funds For the Year Ended June 30, 2020 and Changes in Fund Net Position 105 Equipment Central Loss Information Maintenance Services Reserve Technology Total Cash Flows From Operating Activities Receipts from customers and users 6,658$ 231$ 12,262$ 2,648$ 21,799$ Payments to suppliers (2,054) (127) (10,563) (1,350) (14,094) Payments to employees (1,074) (43) (224) (1,102) (2,443) Net cash flows from operating activities 3,530 61 1,475 196 5,262 Cash Flows From Capital and Related Financing Activities Acquisition and construction of property and equipment (2,359) (8) (66) (172) (2,605) Proceeds from sale of property 173 - - 2 175 Net cash flows used for capital and related financing activities (2,186) (8) (66) (170) (2,430) Cash Flows From Investing Activities Interest on investments 359 16 305 55 735 Net increase in cash and cash equivalents 1,703 69 1,714 81 3,567 Cash and Cash Equivalents, Beginning 15,766 710 15,075 3,232 34,783 Cash and Cash Equivalents, Ending 17,469$ 779$ 16,789$ 3,313$ 38,350$ Reconciliation of operating income to net cash flows from operating activities: Operating income 1,602$ 37$ 1,161$ 155$ 2,955$ Adjustments to reconcile operating income to net cash flows from operating activities: Depreciation expense 1,774 14 - 263 2,051 Changes in: Receivables: Accounts and unbilled usage - - 149 - 149 Due from other governments (12) - - - (12) Accounts payable 113 9 84 (203) 3 Accrued liabilities 8 1 75 9 93 Employee vested benefits (9) (1) 2 20 12 Net pension liability (39) (2) (11) (122) (174) Deferred outflows of resources 32 - 6 35 73 Deferred inflows of resources 58 3 10 47 118 Other post employment benefits liability 3 - (1) (8) (6) Total adjustments 1,928 24 314 41 2,307 Net cash flows from operating activities 3,530$ 61$ 1,475$ 196$ 5,262$ Noncash Investing, Capital, and Financing Activities: Contributions of capital assets from government and others 528$ -$ -$ 412$ 940$ Contributions of capital assets to government and others -$ -$ 66$ -$ 66$ (amounts expressed in thousands) City of Iowa City, Iowa Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2020 106 Agency Fund The Agency Fund accounts for assets held by the City in a trustee or custodial capacity for other entities, such as individuals, private organizations, or other governmental units. The fund in this category is: Project Green Fund – accounts for donations that are received to plant and develop yards and lawns, both public and private, within Iowa City. 107 Balance Balance July 1, 2019 Increases Decreases June 30, 2020 Project Green Assets Equity in pooled cash and investments 121$ 71$ 102$ 90$ Interest receivable 1 - 1 - Total assets 122$ 71$ 103$ 90$ Liabilities Accounts payable 30$ 10$ 30$ 10$ Due to agency 92 61 73 80 Total liabilities 122$ 71$ 103$ 90$ (amounts expressed in thousands) City of Iowa City, Iowa Statement of Changes in Assets and Liabilities For the Year Ended June 30, 2020 Agency Funds 108 Statistical Section Tabs Statistical Section This part of the City of Iowa City’s comprehensive annual financial report represents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government’s overall financial health. Contents Page Financial Trends 111 These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. Revenue Capacity 116 These schedules contain information to help the reader assess the government’s most significant local revenue source, the property tax. Debt Capacity 126 These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. Demographic and Economic Information 132 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place. Operating Information 134 These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial report for the relevant year. 109 110 2011 2012 20131 2014 2015 20162 2017 2018 2019 2020 Governmental activities Net investment in capital assets 123,935$ 135,998$ 133,989$ 138,482$ 153,729$ 163,362$ 183,651$ 203,077$ 208,028$ 220,004$ Restricted 31,179 35,021 22,867 39,958 36,447 42,154 47,676 41,490 38,819 33,578 Unrestricted 36,862 38,906 50,744 39,758 15,520 18,402 16,264 17,646 20,124 21,819 Total governmental activities net position 191,976$ 209,925$ 207,600$ 218,198$ 205,696$ 223,918$ 247,591$ 262,213$ 266,971$ 275,401$ Business-type activities Net investment in capital assets 186,177$ 195,073$ 253,617$ 264,727$ 279,272$ 279,679$ 285,912$ 294,109$ 304,111$ 314,523$ Restricted 20,658 20,176 19,033 19,438 22,389 22,269 21,238 22,219 18,055 17,558 Unrestricted 61,032 58,850 74,370 71,542 57,367 69,472 76,664 73,126 77,224 76,661 Total business-type activities net position 267,867$ 274,099$ 347,020$ 355,707$ 359,028$ 371,420$ 383,814$ 389,454$ 399,390$ 408,742$ Primary government Net investment in capital assets 310,112$ 331,071$ 387,606$ 403,209$ 433,001$ 443,041$ 469,563$ 497,186$ 512,139$ 534,527$ Restricted 51,837 55,197 41,900 59,396 58,836 64,423 68,914 63,709 56,874 51,136 Unrestricted 97,894 97,756 125,114 111,300 72,887 87,874 92,928 90,772 97,348 98,480 Total primary government net position 459,843$ 484,024$ 554,620$ 573,905$ 564,724$ 595,338$ 631,405$ 651,667$ 666,361$ 684,143$ 1 The City of Iowa City reclassified the Mass Transportation Fund from the General fund to an Enterprise Fund effective the fiscal year ending June 30, 2013. 2 The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. City of Iowa City, Iowa Net Position by Component Last Ten Fiscal Years (Accrual basis of accounting) (amounts expressed in thousands) 111 2011 2012 20131 2014 2015 20162 2017 2018 2019 2020Expenses Governmental activities: Public safety 18,867$ 21,186$ 20,989$ 22,721$ 21,193$ 22,029$ 24,002$ 25,191$ 26,265$ 29,252$ Public works 19,145 17,556 10,240 8,258 11,037 10,839 12,032 12,813 16,324 16,071 Culture and recreation 10,811 13,107 14,481 16,586 14,049 14,422 15,525 16,363 16,009 16,233 Community and economic development 16,501 16,305 10,596 10,059 7,093 6,786 8,253 12,019 16,022 9,383 General government 7,356 7,591 7,513 7,687 7,752 6,240 6,124 6,858 7,524 7,693 Debt service 2,841 2,400 2,237 1,797 1,517 1,287 1,481 1,414 1,444 1,452 Total governmental activities expenses 75,521 78,145 66,056 67,108 62,641 61,603 67,417 74,658 83,588 80,084 Business-type activities: Wastewater 10,971 11,069 10,464 21,139 12,131 11,866 11,233 11,392 11,413 10,807 Water 8,523 8,781 9,074 8,723 8,403 8,149 8,921 9,472 9,543 9,302 Sanitation 7,461 8,315 7,279 8,402 8,114 8,735 9,123 9,408 10,858 10,145 Housing authority 7,448 7,911 7,658 7,703 7,873 8,378 8,798 9,535 10,170 10,021 Parking 4,135 4,167 4,579 4,093 4,678 4,460 4,620 5,590 5,461 5,014 Airport 1,049 1,127 1,086 1,209 1,612 1,597 1,402 1,680 1,466 2,511 Stormwater 1,418 1,304 1,318 1,314 2,091 1,989 2,432 1,844 1,832 2,198 Cable television 638 689 692 781 704 - - - - - Transit - - 6,998 7,795 7,379 7,486 7,263 8,071 8,833 9,041 Total business-type activities expenses 41,643 43,363 49,148 61,159 52,985 52,660 53,792 56,992 59,576 59,039 Total primary government expenses 117,164$ 121,508$ 115,204$ 128,267$ 115,626$ 114,263$ 121,209$ 131,650$ 143,164$ 139,123$ Program Revenues Governmental activities: Charges for services Public safety 3,279$ 3,401$ 4,098$ 3,626$ 3,926$ 4,813$ 5,286$ 4,438$ 4,870$ 4,430$ Public works 1,117 1,112 52 61 388 628 724 62 290 243 Culture and recreation 872 825 775 808 801 823 842 836 854 508 Community and economic development - - - 45 50 1,044 36 441 548 59 General government 2,931 2,817 2,763 3,030 2,975 1,252 1,524 1,520 1,717 1,551 Operating grants and contributions 13,517 8,682 4,731 3,231 8,701 9,941 10,828 10,245 13,758 13,113 Capital grants and contributions 6,048 6,078 6,876 5,580 11,556 3,999 9,952 1,459 1,972 1,915 Total governmental activities program revenues 27,764 22,915 19,295 16,381 28,397 22,500 29,192 19,001 24,009 21,819 Business-type activities: Charges for services: Wastewater 12,836 12,670 12,832 12,559 12,189 12,266 12,277 12,626 12,831 12,357 Water 8,054 8,419 8,583 8,443 8,527 9,134 9,275 9,473 9,640 10,048 Sanitation 8,259 8,115 8,181 8,467 9,015 9,215 9,927 10,014 10,017 10,193 Housing authority 208 207 205 213 237 300 321 323 295 280 Parking 5,234 4,743 5,043 5,294 5,502 5,438 5,453 5,648 5,982 4,354 Airport 293 306 314 328 349 333 345 348 361 371 Stormwater 641 811 974 1,093 1,147 1,168 1,544 1,560 1,568 1,730 Cable Television 809 824 816 773 750 - - - - - Transit1 - - 2,117 2,185 2,289 2,099 2,089 2,216 2,171 1,802 Capital grants and contributions: Wastewater 2,394 3,223 30,181 7,105 1,370 3,415 2,226 1,913 1,827 2,550 Capital grants and contributions: Water 973 977 494 539 581 254 869 483 488 965 Capital grants and contributions: Sanitation - 2 - - - - - 22 13 - Capital grants and contributions: Airport 358 1,576 2,452 5,214 137 260 58 49 38 134 Capital grants and contributions: Stormwater 140 436 226 711 792 370 1,251 892 902 876 Capital grants and contributions: Housing authority 11 - - - - - - - - - Capital grants and contributions: Parking 269 4 - - - - - - - - Capital grants and contributions: Transit - - 898 243 - 308 395 3,827 - - Operating grants and contributions: Housing authority 7,438 6,782 6,968 6,721 7,628 8,318 8,532 9,065 9,443 9,875 Operating grants and contributions: Water - - 442 6 2 - - - - 2 Operating grants and contributions: Airport - - 11 56 232 128 69 72 14 896 Operating grants and contributions: Sanitation 10 - 23 27 25 3 - 3 104 20 Operating grants and contributions: Wastewater - - - 62 21 - - - - 8 Operating grants and contributions: Stormwater - - 13 13 279 95 - 2 - - Operating grants and contributions: Parking - - - - - - - - - 3 Operating grants and contributions: Transit - - 1,767 2,118 2,082 2,095 2,235 2,088 2,152 3,107 Total business-type activities program revenues 47,927 49,095 82,540 62,170 53,154 55,199 56,866 60,624 57,846 59,571 Total primary government revenues 75,691$ 72,010$ 101,835$ 78,551$ 81,551$ 77,699$ 86,058$ 79,625$ 81,855$ 81,390$ Net (Expense) / Revenues Governmental activities (47,757)$ (55,230)$ (46,761)$ (50,727)$ (34,244)$ (39,103)$ (38,225)$ (55,657)$ (59,579)$ (58,265)$ Business-type activities 6,284 5,732 33,392 1,011 169 2,539 3,074 3,632 (1,730) 532 Total primary government net expense (41,473)$ (49,498)$ (13,369)$ (49,716)$ (34,075)$ (36,564)$ (35,151)$ (52,025)$ (61,309)$ (57,733)$ General Revenues and Other Changes in Net Position Governmental activities: General revenues: Property taxes 48,011$ 50,516$ 51,017$ 50,551$ 52,205$ 53,114$ 57,649$ 59,046$ 61,739$ 62,846$ Road use tax3 6,068 6,394 6,589 6,745 - - - - - - Local Sales Option tax 8,911 8,644 8,858 466 - - - - - - Other taxes 2,464 2,491 2,609 2,778 2,810 2,717 2,802 2,706 2,935 2,696 Grants and contributions not restricted to specific purposes - - - - 1,048 2,080 1,583 1,547 1,552 1,513 Earnings on investments 1,539 1,823 841 973 1,188 1,045 1,397 2,368 3,257 2,585 Miscellaneous 6,230 4,228 4,390 4,353 5,518 4,464 3,369 3,656 3,329 3,331 Gain on sale of assets 761 2,950 1,312 1,651 135 218 2,151 140 186 111 Transfers (4,020) (3,867) (10,485) (6,192) (10,057) (6,395) (7,053) 1,814 (8,661) (6,387) Reassignments - - - - - 82 - - - - Total governmental activities 69,964 73,179 65,131 61,325 52,847 57,325 61,898 71,277 64,337 66,695 (continued) City of Iowa City, Iowa Changes in Net Position Last Ten Fiscal Years (Accrual basis of accounting) (amounts expressed in thousands) 112 2011 2012 20131 2014 2015 20162 2017 2018 2019 2020 Business-type activities: General revenues: Earnings on investments 954 813 671 494 707 715 938 1,496 2,166 1,794 Gain on sale of assets 314 336 293 725 856 2,463 69 2,438 1 74 Miscellaneous 381 484 918 265 374 362 1,260 456 838 565 Transfers 4,020 3,867 10,485 6,192 10,057 6,395 7,053 (1,814) 8,661 6,387 Reassignments - - - - - (82) - - - - Special items - - - - (574) - - - - - Extraordinary items - (5,000) - - - - - - - - Total business-type activities 5,669 500 12,367 7,676 11,420 9,853 9,320 2,576 11,666 8,820 Total primary government 75,633$ 73,679$ 77,498$ 69,001$ 64,267$ 67,178$ 71,218$ 73,853$ 76,003$ 75,515$ Change in Net Position Governmental activities 22,207$ 17,949$ 18,370$ 10,598$ 18,603$ 18,222$ 23,673$ 15,620$ 4,758$ 8,430$ Business-type activities 11,953 6,232 45,759 8,687 11,589 12,392 12,394 6,208 9,936 9,352 Total primary government 34,160$ 24,181$ 64,129$ 19,285$ 30,192$ 30,614$ 36,067$ 21,828$ 14,694$ 17,782$ 1 The City of Iowa City reclassified the Mass Transportation Fund from the General Fund to an Enterprise Fund effective the fiscal year ending June 30, 2013. 2 The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. 3 The City of Iowa City reclassified Road Use Tax from General Revenues to Operating Grants effective for the fiscal year ending June 30, 2015. City of Iowa City, Iowa Changes in Net Position (continued) Last Ten Fiscal Years(Accrual basis of accounting) (amounts expressed in thousands) 113 20111 2012 20132 2014 2015 20163 2017 2018 2019 2020 General Fund Nonspendable 331$ 314$ 69$ 69$ 69$ 69$ 788$ 793$ 887$ 549$ Restricted 16,268 23,779 25,689 26,533 25,291 18,975 9,974 1,942 1,808 1,747 Committed - - - - - 4,699 5,199 4,962 - - Assigned 3,542 5,191 1,744 3,400 - 1,143 1,342 1,437 3,565 5,708 Reserved - - - - 4,483 - - - - - Unassigned 15,931 14,273 17,113 17,907 19,286 23,366 24,793 28,516 34,358 35,369 Total general fund 36,072$ 43,557$ 44,615$ 47,909$ 49,129$ 48,252$ 42,096$ 37,650$ 40,618$ 43,373$ All other Governmental Funds Nonspendable -$ -$ -$ -$ -$ -$ 344$ 165$ 224$ 278$ Restricted 34,889 34,853 28,108 31,285 27,897 38,266 63,941 64,033 50,966 48,728 Unassigned (1,741) (366) (5,844) (9) - - - (38) (59) (611) Total all other governmental funds 33,148$ 34,487$ 22,264$ 31,276$ 27,897$ 38,266$ 64,285$ 64,160$ 51,131$ 48,395$ 1 The City of Iowa City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions , issued March 2009, effective the fiscal year ending June 30, 2011. This Statement establishes new standards for fund balance classifications based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. 2 The City of Iowa City reclassified the Mass Transportation Fund from the General fund to an Enterprise Fund effective the fiscal year ending June 30, 2013. 3 The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. City of Iowa City, Iowa Fund Balances, Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) (amounts expressed in thousands) 114 2011 2012 20131 2014 2015 20162 2017 2018 2019 2020 Revenues: Property taxes and assessments 59,387$ 61,649$ 62,483$ 53,797$ 55,014$ 55,831$ 60,452$ 61,753$ 64,672$ 65,542$ Licenses and permits 1,412 1,307 1,784 1,660 1,806 3,056 3,521 2,734 2,981 2,352 Intergovernmental 29,870 21,952 19,941 17,636 21,086 20,230 24,140 14,944 16,828 18,603 Charges for services 2,515 2,614 1,800 1,819 2,204 3,357 2,355 2,295 2,690 1,715 Fines and forfeits - - - - - 760 750 695 776 609 Use of money and property 1,479 1,768 782 909 1,080 946 1,235 1,937 2,564 1,872 Miscellaneous 7,749 5,750 6,325 6,040 7,045 2,913 2,101 2,875 2,261 2,440 Total governmental activities revenues 102,412$ 95,040$ 93,115$ 81,861$ 88,235$ 87,093$ 94,554$ 87,233$ 92,772$ 93,133$ Expenditures Current Public safety 18,717$ 20,091$ 20,648$ 21,370$ 21,996$ 21,701$ 22,513$ 23,360$ 24,295$ 25,637$ Public works 14,766 15,462 8,503 8,432 12,071 9,466 9,186 10,052 10,894 10,586 Culture and recreation 12,498 13,075 13,000 13,087 11,821 12,257 13,341 14,208 13,709 13,653 Community and economic development 8,878 8,037 8,219 8,196 5,711 5,346 7,695 11,074 15,723 8,627 General government 7,695 7,553 7,286 7,184 7,608 6,007 5,882 6,017 6,579 6,789 Debt service Principal 10,386 13,294 16,465 13,560 12,564 13,230 13,305 11,895 12,080 11,385 Interest 2,889 2,543 2,339 1,903 1,669 1,475 1,597 1,570 1,589 1,648 Capital projects 21,873 16,006 17,861 14,528 14,762 14,848 18,405 28,225 22,632 21,211 Total expenditures 97,702$ 96,061$ 94,321$ 88,260$ 88,202$ 84,330$ 91,924$ 106,401$ 107,501$ 99,536$ Excess (deficiency) of revenues over (under) expenditures 4,710$ (1,021)$ (1,206)$ (6,399)$ 33$ 2,763$ 2,630$ (19,168)$ (14,729)$ (6,403)$ Other financing sources (uses): Issuance of long-term debt 16,165$ 9,690$ 2,655$ 19,730$ 7,785$ 9,405$ 22,570$ 11,995$ 12,535$ 12,145$ Issuance of refunding debt 10,930 - - - - - - - - - Sale of capital assets 845 3,619 1,369 1,684 165 252 2,292 140 758 111 Insurance Recoveries 594 53 - - - - - - - - Premium (discount) on issuance of bonds 394 165 (42) 385 199 441 120 236 81 927 Payment of refunded bonds (11,085) - - - - - - - - - Transfers in 18,658 19,499 25,198 13,040 13,089 25,133 34,675 34,666 25,663 21,236 Transfers out (22,722) (23,181) (35,493) (16,134) (23,430) (28,502) (47,033) (32,440) (34,369) (27,997) Total other financing sources (uses)13,779$ 9,845$ (6,313)$ 18,705$ (2,192)$ 6,729$ 12,624$ 14,597$ 4,668$ 6,422$ Net change in fund balances 18,489$ 8,824$ (7,519)$ 12,306$ (2,159)$ 9,492$ 15,254$ (4,571)$ (10,061)$ 19$ Debt service as a percentage of noncapital expenditures 16.2%18.6%24.0%20.7%19.8%21.2%19.9%17.1%15.6%15.9% Debt services as a percentage of expenditures and transfers 11.0%13.3%14.5%14.8%12.7%13.0%10.7%9.7%9.6%10.2% 1 The City of Iowa City reclassified the Mass Transportation Fund from the General fund to an Enterprise Fund effective the fiscal year ending June 30, 2013. 2 The City of Iowa City reclassified the Cable Fund from an Enterprise Fund to the General Fund effective July 1, 2015. City of Iowa City, Iowa Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (amounts expressed in thousands) 115 Fiscal Local Option Utility Year Property Tax Road Use Tax Hotel/Motel Tax Sales Tax1 Franchise Fee Total 2011 48,831 6,068 776 8,912 868 65,455 2012 51,374 6,394 811 8,644 822 68,045 2013 51,836 6,589 872 8,858 918 69,073 2014 51,331 6,745 967 466 1,031 60,540 2015 53,056 7,231 1,057 - 902 62,246 2016 53,878 8,320 1,079 - 874 64,151 2017 58,375 8,672 1,137 - 939 69,123 2018 59,730 8,427 1,046 - 976 70,179 2019 62,407 8,820 1,302 - 965 73,494 2020 63,523 9,163 1,135 - 884 74,705 1 1% Local Option Sales Tax went into effect 7/1/09 and was effective through 6/30/13. City of Iowa City, Iowa General Government Tax Revenues by Source Last Ten Fiscal Years (Modified accrual basis of accounting) (amounts expressed in thousands) 116 Assessed Valuation Tax Collection Year: FY2020 FY2019 FY2018 FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 Residential 4,399,451,083$ 4,255,597,838$ 4,001,761,478$ 3,882,757,454$ 3,603,743,609$ 3,488,112,611$ 3,367,051,717$ 3,284,249,136$ 3,182,636,485$ 3,122,874,615$ Agricultural (taxed at Ag rate)2,539,080 2,625,810 3,425,692 3,720,671 3,553,520 3,680,920 2,655,640 2,516,440 2,263,884 2,314,823 Multi-Residential 489,176,499 471,420,082 411,460,472 410,426,868 - - - - - - Commercial 932,699,374 915,964,068 821,949,555 805,734,128 1,129,397,979 1,144,437,631 1,113,600,025 1,149,535,927 1,146,182,052 1,139,935,432 Industrial 76,905,588 71,553,904 72,635,554 73,206,895 74,399,739 80,153,614 72,834,630 73,400,730 73,044,725 72,283,702 Railroads 3,601,348 3,549,414 3,984,932 4,096,577 4,015,580 3,827,506 3,205,451 2,619,932 1,799,383 1,593,188 Utilities w'out Gas & Electric 7,386,408 7,099,293 6,734,894 7,375,066 8,239,789 9,599,528 10,816,940 11,051,685 10,729,898 9,491,730 Gross valuation 5,911,759,380 5,727,810,409 5,321,952,577 5,187,317,659 4,823,350,216 4,729,811,810 4,570,164,403 4,523,373,850 4,416,656,427 4,348,493,490 Less: Military exemption 2,489,088 2,579,836 2,635,396 2,727,994 2,828,002 2,939,122 3,059,502 3,096,542 3,163,216 3,239,146 Net valuation 5,909,270,292 5,725,230,573 5,319,317,181 5,184,589,665 4,820,522,214 4,726,872,688 4,567,104,901 4,520,277,308 4,413,493,211 4,345,254,344 Incremental value 115,175,495 85,379,709 80,577,275 72,666,677 42,307,287 21,131,574 14,113,908 11,712,327 25,408,838 25,408,841 Gas and Electric Utilities 109,124,421 97,050,716 94,582,279 92,987,351 87,728,294 78,642,915 87,100,183 83,538,109 81,240,051 79,196,417 Total Assessed valuation 6,133,570,208$ 5,907,660,998$ 5,494,476,735$ 5,350,243,693$ 4,950,557,795$ 4,826,647,177$ 4,668,318,992$ 4,615,527,744$ 4,520,142,100$ 4,449,859,602$ Percent change 3.824%7.520%2.696%8.074%2.567%3.392%1.144%2.110%1.579%1.684% Taxable Valuation Tax Collection Year: FY2020 FY2019 FY2018 FY2017 FY2016 FY2015 FY2014 FY2013 FY2012 FY2011 Assessment Limitation: Residential rollback 56.9180%55.6209%56.9391%55.6259%55.7335%54.4002%52.8166%50.7518%48.5299%46.9094% Agricultural rollback 56.1324%54.4480%47.4996%46.1068%44.7021%43.3997%59.9334%57.5411%69.0152%66.2715% Multi-Residential rollback 75.00%78.75%82.50%86.25%NA NA NA NA NA NA Commercial and Railroad rollback 90.0%90.0%90.0%90.0%90.0%95.0%NA NA NA NA Industrial rollback 90.0%90.0%90.0%90.0%90.0%95.0%NA NA NA NA Residential 2,490,442,298$ 2,356,529,643$ 2,274,451,551$ 2,155,033,296$ 2,008,493,138$ 1,894,079,854$ 1,776,096,066$ 1,666,036,081$ 1,544,260,536$ 1,464,643,790$ Agricultural (taxed at Ag rate)1,425,151 1,429,547 1,618,090 1,706,955 1,588,496 1,597,501 1,591,636 1,447,988 1,562,422 1,534,056 Multi-Residential 363,613,829 368,969,925 337,946,106 353,335,857 - - - - - - Commercial 832,628,954 819,505,276 734,200,396 720,036,878 1,016,458,199 1,086,556,293 1,113,600,025 1,149,535,927 1,146,182,052 1,139,935,432 Industrial 68,970,889 64,152,540 64,688,055 65,301,535 66,959,765 76,128,877 72,834,630 73,400,730 73,044,725 72,283,702 Railroads 3,241,213 3,194,473 3,586,439 3,686,919 3,614,022 3,636,130 3,205,451 2,619,932 1,799,383 1,593,188 Utilities w'out Gas & Electric 7,386,408 7,099,293 6,734,894 7,375,066 8,239,789 9,599,528 10,816,940 11,051,685 10,729,898 9,491,730 Gross valuation 3,767,708,742 3,620,880,697 3,423,225,531 3,306,476,506 3,105,353,409 3,071,598,183 2,978,144,748 2,904,092,343 2,777,579,016 2,689,481,898 Less: Military exemption 2,489,088 2,579,836 2,635,396 2,727,994 2,828,002 2,939,122 3,059,502 3,096,542 3,163,216 3,239,146 Net valuation 3,765,219,654 3,618,300,861 3,420,590,135 3,303,748,512 3,102,525,407 3,068,659,061 2,975,085,246 2,900,995,801 2,774,415,800 2,686,242,752 Incremental value 115,175,495 85,379,369 80,559,947 72,650,838 33,331,128 21,131,574 14,113,908 11,712,327 25,408,838 25,408,841 Gas and Electric Utilities 42,719,065 41,797,475 41,702,196 44,986,783 46,785,426 47,004,994 46,813,214 47,404,050 48,337,968 46,333,208 Total Taxable Valuation 3,923,114,214$ 3,745,477,705$ 3,542,852,278$ 3,421,386,133$ 3,182,641,961$ 3,136,795,629$ 3,036,012,368$ 2,960,112,178$ 2,848,162,606$ 2,757,984,801$ Percent change 4.743%5.719%3.550%7.501%1.462%3.320%2.564%3.931%3.270%2.950% Total Direct Tax Rate City of Iowa City 15.833$ 16.183$ 16.333$ 16.583$ 16.651$ 16.705$ 16.805$ 17.269$ 17.842$ 17.757$ Sources: Iowa Department of Management Notes: Property is reassessed in the odd numbered years to make adjustments to all property values, according to current market values. As per the Code of Iowa, all real property subject to taxation shall be valued at its actual value and, except as otherwise provided, shall be reassessed at 100% of its actual value. City of Iowa City, Iowa Assessed and Taxable Value of Property Last Ten Fiscal Years 117 (per $1,000 assessed valuation) Fiscal Year:2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Levy Year:2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 City: General Fund 8.10000$ 8.10000$ 8.10000$ 8.10000$ 8.10000$ 8.10000$ 8.10000$ 8.10000$ 8.10000$ 8.10000$ Emergency Levy 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 Debt Service Fund 4.43847 4.64901 4.44287 4.02965 4.12963 3.92833 3.82846 3.57846 3.22846 2.97846 Employee Benefits 3.58146 3.52580 3.19286 3.16331 2.96331 3.11277 3.14415 3.14415 3.34415 3.24415 Capital Improvement 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 0.00000 Other 1.63662 1.56669 1.53291 1.51226 1.51226 1.50986 1.51044 1.51044 1.51044 1.51044 Total City 17.75655$ 17.84150$ 17.26864$ 16.80522$ 16.70520$ 16.65096$ 16.58305$ 16.33305$ 16.18305$ 15.83305$ Johnson County 7.22207$ 6.98984$ 6.74909$ 6.73712$ 6.74168$ 6.90337$ 6.77140$ 6.85143$ 6.53594$ 6.49278$ Iowa City Community School District 14.68972 14.59055 14.07327 13.68792 13.69999 13.86773 13.98935 13.95855 14.85629 14.79097 Kirkwood 0.92566 0.99870 1.07888 1.06473 1.05754 1.06125 1.08048 1.13174 1.20354 1.21331 Other 0.32119 0.33310 0.32919 0.37333 0.32315 0.32784 0.32450 0.33036 0.30557 0.27066 Total Tax Rate 40.91519$ 40.75369$ 39.49907$ 38.66832$ 38.52756$ 38.81115$ 38.74878$ 38.60513$ 39.08439$ 38.60077$ Source: "Tax Levies for Johnson County, Iowa," compiled by the Johnson County Auditor. Note: Does not include the tax rate for agriculture. Taxpayers in the Iowa City Community School District Area City of Iowa City, Iowa Property Tax Rates - Direct and Overlapping Governments Last Ten Fiscal Years 118 Collection Total Tax Current Tax Delinquent Tax Total Tax Year Levied Collections Collections1 Collections 2011 47,789 47,826 100.1 8 47,834 100.1 2012 49,595 49,543 99.9 1 49,544 99.9 2013 50,407 50,139 99.5 3 50,142 99.5 2014 50,307 49,835 99.1 1 49,836 99.1 2015 51,609 51,292 99.4 3 51,295 99.4 2016 52,034 52,074 100.1 0 52,074 100.1 2017 55,330 55,331 100.0 0 55,331 100.0 2018 56,458 56,346 99.8 1 56,347 99.8 2019 59,174 59,252 100.1 2 59,254 100.1 2020 60,297 58,971 97.8 1 58,972 97.8 Source: Certificate of City Taxes and Johnson County Treasurer's Office Note: This schedule is presented on a cash basis of accounting. Taxes are collected by the Johnson County Treasurer and submitted to the City in the following month. Because of the month delay, some years will show Current Tax Collections in excess of the Total Tax Levied. 1 Delinquent tax collection is presented by collection year, rather than levy year, because information is not available from Johnson County Treasurer by levy year. City of Iowa City, Iowa Levies and Collections Last Ten Fiscal Years (Cash basis of accounting) (amounts expressed in thousands) Percent of Levy Collected Total as a Percent of Levy 119 % of Total % of Total Taxable Taxable Taxable Taxable Ten largest taxpayers1 Type of Business Valuation Rank Valuation Valuation Rank Valuation Rise at Riverfront Crossing Owner LLC Real Estate Developer -$ -N/A %55,705$ 1 1.42 % ACT Inc (Am College Testing Prgrm)Educational Testing Service 45,558 1 1.40 50,294 2 1.28 BBCS Hawkeye Housing LLC Real Estate Mangment - -N/A 50,166 3 1.28 Tailwind Iowa City LLC Real Estate Mangment --N/A 42,542 4 1.08 Webber - Iowa LLC Domestic Limited Liability Company - -N/A 28,279 5 0.72 Mid-American Energy Company Public Gas and Electric Utility 44,821 2 1.37 27,773 6 0.71 Vesper Iowa City LLC Real Estate Developer --N/A 27,605 7 0.70 Midwestone Bank Finanacial - -N/A 26,712 8 0.68 Ann Gerdin Trust (formerly Russell Gerdin)Warehousing 20,053 4 0.61 25,350 9 0.65 Dealer Properties IC LLC (Billion Auto)Car Dealerships - -N/A 22,803 10 0.58 SouthGate Development Company RealEstate Developer 21,337 3 0.65 - -N/A MEHSM LC (Sycamore Mall)Shopping Mall 16,411 5 0.50 - -N/A Alpha Inc. Industrial 15,461 6 0.47 - -N/A National Computer Systems (Pearson)Information Services 14,601 7 0.45 - -N/A Plaza Towers LLC Condo/Hotel/Commercial space 14,341 8 0.44 - -N/A Proctor & Gamble LLC Manufacturing Company 14,132 9 0.43 - -N/A United Natural Foods Wholesale Distribution Company 13,095 10 0.40 - -N/A Total 219,810$ 6.72 %357,229$ 9.10 % Sources: 1City of Iowa City Assessor's Office City of Iowa City, Iowa Principal Taxpayers Current Year and Nine Years Ago (amounts expressed in thousands) 20202011 120 121 Customer Name Charges Rank Percentage Charges Rank Percentage Proctor & Gamble 570,948$ 1 7.45 %806,276$ 1 7.53 % Veterans Administration Medical Center 95,107 2 1.24 99,344 2 0.93 Mercy Hospital 68,656 3 0.90 71,356 3 0.67 Campus Apartments 66,689 4 0.87 69,839 4 0.65 Dominium JIT Srv formerly Mark IV Apts 56,604 6 0.74 58,683 5 0.55 Tailwind Iowa City LLC formerly Dolphin Lake --N/A 54,132 6 0.51 Oaknoll Retirement Residence --N/A 40,812 7 0.38 Seville Apts 32,340 10 0.42 40,512 8 0.38 Emerald Court Apts --N/A 39,417 9 0.37 Iowa City School District --N/A 36,411 10 0.34 Rus Property Management/Lakeside Manor 60,725 5 0.79 --N/A Robert's Dairy 51,270 7 0.67 --N/A International Automotive Components formerly Lear Corp 38,615 9 0.50 --N/A University of Iowa Mayflower 41,526 8 0.54 --N/A 1,082,480$ 14.12 %1,316,782$ 12.31 % Total Water System Charges 7,661,898$ 10,705,168$ Sources: City of Iowa City Revenue Division City of Iowa City, Iowa Larger Water System Customers Current Year and Nine Years Ago 20202011 122 Fiscal Water Sales Water System Year Cubic Feet Sold Charges 2011 236,838,370 7,661,898 2012 246,618,257 7,953,738 2013 254,616,773 8,194,467 2014 239,790,719 7,778,364 20151 240,423,612 8,161,522 2016 255,524,943 8,758,683 2017 267,511,531 9,156,005 2018 293,046,636 9,953,510 2019 289,055,329 10,139,587 2020 285,102,926 10,705,168 Sources: City of Iowa City Revenue Department Notes: 1Beginning in March 2015, Water Sales by Cubic Feet Sold also includes unbilled usage. City of Iowa City Sales History and Water System Charges Last Ten Fiscal Years 123 Customer Name Charges Rank Percentage Charges Rank Percentage University of Iowa 2,098,962$ 1 16.46 %1,994,134$ 1 15.95 % Proctor & Gamble 1,201,595 2 9.43 1,144,899 2 9.16 Iowa City Landfill 129,177 4 1.01 180,984 3 1.45 Veterans Administration Medical Center 119,386 5 0.94 108,603 4 0.87 Mercy Hospital 117,814 6 0.92 103,593 5 0.83 Campus Apartments 92,193 8 0.72 77,053 6 0.62 Dominium JIT Srv formerly Mark IV Apts 79,654 9 0.62 65,401 7 0.52 Tailwind Iowa City LLC formerly Dolphin Lake 102,190 7 0.80 52,883 8 0.42 Oaknoll Retirement Residence - -N/A 52,264 9 0.42 Emerald Court Apt - -N/A 51,746 10 0.41 Robert's Dairy 162,147 3 1.27 --N/A University of Iowa/Mayflower Apartments 72,997 10 0.57 - -N/A 4,176,115$ 32.74 %3,831,560$ 30.65 % Total Sewer System Charges 12,748,695$ 12,503,764$ Sources: City of Iowa City Revenue Department City of Iowa City, Iowa Larger Sewer System Charges Current Year and Nine Years Ago 20202011 124 Fiscal Sewer Sales Sewer System Year Cubic Feet Sold Charges 2011 280,303,237 12,748,695 2012 282,134,840 12,784,321 2013 285,472,392 12,883,641 2014 269,494,125 12,382,031 20151 266,830,947 12,278,153 2016 270,547,701 12,022,203 2017 277,712,785 12,404,360 2018 283,246,320 12,524,540 2019 288,537,266 12,822,250 2020 279,106,456 12,503,764 Sources: City of Iowa City Revenue Department Notes: 1Beginning in March 2015, Sewer Sales by Cubic Feet Sold also includes unbilled usage. City of Iowa City, Iowa Sales History and Sewer System Charges Last Ten Fiscal Years 125 General Capital General Total Percentage Fiscal Obligation Revenue Loan Obligation Revenue Capital Primary of Personal Per Year Bonds1 Bonds1 Note Bonds1 Bonds1 Lease Government Income2 Capita2 2011 77,743,957 - 210,784 3,130,849 75,857,306 - 156,942,896 2.34 2,276 2012 74,225,654 - 210,784 1,483,473 69,059,307 - 144,979,218 2.05 2,103 2013 57,688,803 2,614,644 210,784 1,182,315 62,764,738 - 124,461,284 1.70 1,775 2014 64,132,510 2,616,768 210,784 886,157 57,568,517 - 125,414,736 1.62 1,752 2015 59,421,203 2,618,892 210,784 590,000 45,566,903 - 108,407,782 1.40 1,475 2016 55,998,392 2,491,016 210,784 295,000 39,951,661 - 98,946,853 1.23 1,327 2017 52,571,254 15,168,140 210,784 - 34,420,914 14,482,714 116,853,806 1.34 1,544 2018 52,883,524 15,035,264 210,784 - 29,095,062 11,958,305 109,182,939 1.18 1,442 2019 53,402,638 14,902,388 210,784 - 21,155,710 9,413,024 99,084,544 1.04 1,319 2020 55,007,945 14,764,512 210,784 - 16,786,358 - 86,769,599 0.88 1,115 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. 1 Bonds reported net of related premiums and discounts. 2 Population and personal income information can be found on page 132. Governmental Activities Business-Type Activities City of Iowa City, Iowa Ratios of Outstanding Debt by Type Last Ten Fiscal Years 126 Gross General Less: Debt Net General Net Bonded Debt Net Bonded Fiscal Obligation Service Obligation per $1,000 of Debt Year Bonded Debt Fund Balance Bonded Debt Assessed Value Per Capita2 2011 80,875 13,151 67,724 15.22 : 1000 982 2012 75,709 11,009 64,700 14.31 : 1000 938 2013 58,871 6,527 52,344 11.34 : 1000 746 2014 65,019 6,872 58,147 12.46 : 1000 812 2015 60,011 7,052 52,959 10.97 : 1000 721 2016 56,293 6,573 49,720 10.04 : 1000 670 2017 52,571 7,756 44,815 8.38 : 1000 592 2018 52,884 8,609 44,275 8.06 : 1000 585 2019 53,403 9,648 43,755 7.41 : 1000 582 2020 55,008 9,724 45,284 7.67 : 1000 582 Notes: 1 General Obligation bonds, net of related premiums and discounts. 2 Population data can be found on page 132. City of Iowa City Iowa Ratios of General Obligation Bonded Debt1 to Assessed Value and Net Bonded Debt per Capita Last Ten Fiscal Years (amounts expressed in thousands, except per capita) 127 City of Iowa City, Iowa Computation of Direct and Overlapping Debt June 30, 2020 (amounts expressed in thousands, except per capita) Total General Percent Amount Long-Term Applicable Applicable Name of Direct Debt to the City of to the City of Governmental Unit Outstanding Iowa City Iowa City City of Iowa City2 69,983$ 100.00 %69,983$ Iowa City Community School District1 110,980 57.41 63,714 Johnson County1 29,810 42.25 12,595 Clear Creek- Amana Community School District1 77,810 0.04 31 Kirkwood Comm. College1 115,861 14.30 16,568 Total Overlapping Debt 334,461 92,908 Total Direct & Overlapping Debt 404,444$ 162,891$ 1 Long term debt outstanding includes only GO debt. 2Net direct debt includes premiums & discounts Source: Johnson County Auditor's Office. each overlapping government. However,this does not imply that every taxpayer is a resident,and therefore responsible for repaying the debt,of 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. 128 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Assessed Valuation 4,449,860$ 4,520,142$ 4,615,527$ 4,668,319$ 4,826,648$ 4,950,559$ 5,350,228$ 5,494,459$ 5,907,661$ 6,133,570$ Debt Limit 222,493 226,007 230,776 233,416 241,332 247,528 267,511 274,723 295,383 306,679 G.O. Bonds 80,575 75,320 58,550 64,420 59,340 55,350 51,645 51,880 52,470 53,370 TIF Rev. Bonds - - 2,655 2,655 2,655 2,525 15,200 15,065 14,930 14,790 Letters of credit 1,616 805 538 1,943 2,005 582 663 475 603 - Notes payable 211 211 211 211 211 211 211 211 211 211 TIF rebates 867 574 307 170 18,206 13,506 17,356 25,012 27,954 25,877 Total net debt applicable to limit 83,269 76,910 62,261 69,399 82,417 72,174 85,075 92,643 96,168 94,248 Legal debt margin 139,224$ 149,097$ 168,515$ 164,017$ 158,915$ 175,354$ 182,436$ 182,080$ 199,215$ 212,431$ Total net debt applicable to the limit as a percentage of debt limit 37.43%34.03%26.98%29.73%34.15%29.16%31.80%33.72%32.56%30.73% 1As reported in the Annual Financial Report to the State Note: Under Iowa code, the city's outstanding general obligation debt should not exceed 5 percent of total assessed property value. Fiscal Year City of Iowa City, Iowa Legal Debt Margin Information1 Last Ten Fiscal Years (amounts expressed in thousands) 129 Fiscal Year Net Revenue Annual Debt Service2 Ended Available for Ratio of June 30 Revenue Expenses1 Debt Service Principal Interest Total Coverage Parking Revenue3 2011 5,389 2,920 2,469 420 391 811 3.04 2012 4,945 3,034 1,911 500 339 839 2.28 2013 5,122 3,549 1,573 515 324 839 1.87 2014 5,365 2,969 2,396 530 308 838 2.86 20157 5,620 3,828 1,792 540 254 794 2.26 2016 - - - - - - - 2017 5,531 3,683 1,848 1,015 86 1,101 1.68 2018 5,812 3,790 2,022 2,524 576 3,100 0.65 2019 6,205 3,724 2,481 2,545 476 3,021 0.82 20209 - - - - - - - Wastewater Treatment Revenue4 20116 13,281 5,477 7,804 1,840 2,054 3,894 2.00 2012 13,175 5,663 7,512 4,615 1,693 6,308 1.19 2013 13,301 5,340 7,961 4,865 1,547 6,412 1.24 2014 12,835 5,708 7,127 3,250 1,428 4,678 1.52 2015 12,620 6,574 6,046 3,370 1,305 4,675 1.29 2016 12,681 6,513 6,168 3,520 1,175 4,695 1.31 2017 13,383 6,357 7,026 3,625 985 4,610 1.52 2018 13,181 6,622 6,559 3,580 756 4,336 1.51 20198 13,548 6,840 6,708 6,135 539 6,674 1.68 2020 12,917 6,366 6,551 2,510 367 2,877 2.28 Water Revenue5 2011 8,354 5,464 2,890 1,110 902 2,012 1.44 20126 8,649 5,653 2,996 1,200 861 2,061 1.45 20136 9,342 6,348 2,994 845 758 1,603 1.87 20146 8,613 5,818 2,795 1,335 650 1,985 1.41 2015 8,715 5,632 3,083 1,380 610 1,990 1.55 2016 9,323 5,387 3,936 1,715 579 2,294 1.72 2017 9,529 6,332 3,197 1,760 524 2,284 1.40 2018 9,838 6,949 2,889 1,455 394 1,849 1.56 2019 10,078 6,888 3,190 1,510 280 1,790 1.78 2020 10,399 6,752 3,647 1,565 238 1,803 2.02 Notes: 1 Excludes depreciation and interest. 2 Includes principal and interest of revenue bonds only. 3 Parking Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.25. 4 Wastewater Treatment Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.10. 5 Water Revenue bonds ratio of "Net Revenue Available for Debt Service" to "Total Annual Debt Service" is required to be at least 1.10. 6 Refunded Revenue Bonds paid are excluded from the principal of Annual Debt Service. 7 Parking Revenue Bonds defeased are excluded from the principal and interest of Annual Debt Service. 8 Ratio of Coverage excludes the amount called early of $2,670,000. 9 Parking Capital Lease defeased is excluded from the principal and interest of Annual Debt Service. City of Iowa City, Iowa Schedule of Revenue Bond Coverage Last Ten Fiscal Years (amounts expressed in thousands) 130 Fiscal Taxable Year Valuation Available 2012D TIF 2016E TIF Available Ended Available for TIF Tax Increment Revenue Revenue Debt June 30 Certification (1)Tax Rate (2)Revenues (3)Bonds Bonds Total Coverage 2011 - - - - - - - 2012 105,863 33.01 3,495 - - - - 2013 109,518 31.86 3,489 - - - - 2014 110,797 30.37 3,365 75 - 75 44.66 2015 141,518 29.79 4,215 75 - 75 55.95 2016 156,898 30.49 4,784 205 - 205 23.30 2017 195,411 30.41 5,943 204 273 477 12.45 2018 226,439 30.34 6,870 207 384 591 11.61 2019 297,479 29.66 8,822 205 384 589 14.97 2020 341,736 29.93 10,228 207 384 591 17.31 (3) The available tax increment revenues do not reflect an estimate for the portion of the available valuation that would be taxed at the higher SSMID rate. City of Iowa City, Iowa Schedule of TIF Revenue Bond Coverage Last Ten Fiscal Years (amounts expressed in thousands) (1) Total taxable valuation available for certification will decrease in fiscal year 2024-25 due to the retirement of the tax increment of the 2001 Amended portion of the Urban Renewal Area. (2) The tax increment rate in fiscal year 2013-14 reflects the loss of the local school district's instruction support levy (ISPL) of $.12405 due to recent legislative changes. TIF tax rate does not include the SSMID levy rate of $2.00 per $1,000 of value. Starting in fiscal year 2012-13, a portion of the taxable valuation certified will be at the higher rate due to its location in the SSMID. 131 Per Capita Calendar Personal Personal Average School Retail Year Population6 Income1 Income1 Increase Enrollment2 Sales4 2011 69,201 6,694,129 42,942 7.11 13,638 4.8 741,407,021 2012 70,182 7,069,000 44,459 3.53 13,862 4.1 767,122,555 2013 71,454 7,327,594 45,203 1.67 14,057 3.8 793,201,342 2014 72,831 7,762,343 47,108 4.21 14,162 3.5 649,794,164 2015 73,497 8,035,139 48,092 2.09 14,495 2.9 838,853,686 2016 74,587 8,296,973 49,096 2.09 15,186 3.2 853,258,347 2017 75,690 8,713,868 50,819 3.51 15,299 3.0 874,928,988 2018 75,696 9,238,484 53,280 4.84 15,334 2.2 854,538,416 20195 75,130 9,559,747 55,133 3.48 15,619 2.4 865,628,890 20205,7 77,846 9,905,390 57,126 3.62 15,363 8.4 645,274,519 Sources and Notes: 1 Personal Income and Per Capita Personal Income based on metropolitan Iowa City / Coralville and based on figures from Bureau of Economic Analysis. Personal Income expressed in thousands. 2 Iowa City Community School District and local private schools 3 Iowa Workforce Development Center 4 Iowa Retail Sales & Use Report, Iowa Department of Revenue and Finance. Fiscal year ending June 30. 5 Personal Income and Per Capita Personal Income for 2019 or 2020 are not available. Amounts projected based on average increase over previous 9 years. 6 US Census Bureau Population number is not avaible for 2020. Amounts projected based on an average over previous 9 years 7 4th quarter reports were not yet available so amount is only for the first 3 quarters of fiscal year ending June 30. Demographic and Economic Statistics City of Iowa City, Iowa Last Ten Calendar Years Unemployment Rate3 132 Employers Employees Rank Percentage Employees Rank Percentage University of Iowa 26,277 1 29.0 %29,860 1 30.2 % Iowa City Community School District 1,676 2 1.9 2,289 2 2.3 Veterans Administration Medical Center 1,351 3 1.5 2,119 3 2.1 Hy Vee 1,166 7 1.3 1,348 4 1.4 Mercy Hospital 1,266 4 1.4 1,048 5 1.1 Proctor and Gamble - -N/A 976 6 1.0 ACT Inc. (formerly American College Testing Program)1,254 5 1.4 885 7 0.9 City of Iowa City 1,140 8 1.3 731 8 0.7 NCS Pearson 1,200 6 1.3 719 9 0.7 Johnson County - -N/A 612 10 0.6 Internaltion Automotive Components formerly Lear Corp 774 10 0.9 - -N/A System Unlimited 838 9 0.9 - -N/A 36,942 40.9 %40,587 41.0 % Total Employees 90,500 99,000 Sources: Iowa City Area Development Group Various Employers City of Iowa City, Iowa Principal Employers Current Year and Nine Years Ago 2011 2020 133 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Public Safety Police 98 97 103 105 105 105 105 105 107 107 Animal Shelter1 6 6 - - - - - - - - Fire 66 65 65 65 64 64 64 64 64 64 Inspection Services 15.55 15.55 15.55 13.55 13.55 12.85 13.5 13.5 15.6 15.6 Public Works Public Works Admin 2 2 2 2 2 2 2 2 2 2 Engineering5 12.1 12.1 12.1 12.1 12.1 12 16 16 16 16 Flood Recovery 0.4 0.4 0.4 0.38 - - - - - - Culture and Recreation Parks and Rec Admin 2 2 2 2 2 2 2 2 2 2 Recreation 15.42 15.42 15.42 15.42 15.42 14.42 15.42 14.75 14 14.5 Parks 13 13 13 13 13 13 16 16 16 16 Forestry 3 3 3 3 3 3 3 3 5 5 Cemetery 3 3 3 3 3 3 3 3 3 3 CBD Maintenance 3 3 3 3 3 3 - - - - Library 43.14 43.64 43.63 45.13 45.13 44.77 46.17 46.17 46.17 46.05 Senior Center 6.31 6.5 6.5 6.5 6.5 6.5 7 7 7 7 Community and Economic Development 9.1 9.1 8.4 8.95 8.95 10.8 12.63 13.13 13.13 13.13 General Government City Council 7 7 7 7 7 7 7 7 7 7 City Clerk 4 4 4 4 4 4 4 4 4 4 City Attorney 5.6 5.6 5.6 5.6 5.6 5.5 5.5 5.5 5.5 5.5 City Manager2 3 3 5 6 6 10.5 10.5 9 9 9 Personnel 4 4 4 3 3 3 3 3 3 3 Human Rights 2.5 2.5 2 2 2 2 2 2 2 2 Finance 26.24 27.53 23.47 23.97 22.47 23.07 23.13 22.13 22.28 22.28 Government Buildings 4.96 4.83 4.83 4.83 4.83 5.33 4.33 5 4 5 Transit3 56.25 56.25 - - - - - - - - Special Revenue Employee Benefits 0.26 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.55 Flood Mitigation Grants 1.6 1.6 - - - - - - - - Community Development 3.83 3.83 3.33 2.98 2.98 2.83 - - - - UniverCity Program - - 0.2 - - - - - - - Traffic Engineering 4.15 4.15 4.15 4.15 4.15 3.9 4.5 3 3 3 Streets 25.5 25.5 25.5 25.5 25.5 25.25 25.5 29 29 29 MPOJC (formerly JCCOG)6.6 6.6 5.6 5.6 5.6 4.7 4.7 4.7 5.2 5.2 Other Shared Revenues - - 1.6 1.62 - - - - - - Library Development 1 1 1 - - - - - - - Capital Projects Administration5 3 5 6 6 5 4 - - - - Internal Service Funds Information Technology 11.3 11.8 10.86 9.86 9.86 9.86 9.8 10.8 9.8 9.8 Equipment 11.26 11.26 10.75 10.75 10.75 10.75 10.75 10.75 10.75 10.75 Central Services 0.75 0.75 0.76 0.5 0.5 0.5 0.5 0.5 0.5 0.5 Risk Management 2.01 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 Business-Type Activities Parking 32.75 32.75 29.25 26.25 26.25 23.13 21.63 21.63 21.38 19.63 Mass Transit3 - - 51.75 51.25 51.25 51.13 53.63 54.63 53.38 53.38 Wastewater Treatment 25.6 25.4 25.4 24.4 24.65 24.65 25.4 26 26 26 Water 32.75 32.75 32.75 31.75 32 32 31.75 31.75 31.75 31.75 Sanitation 35.85 37.85 37.85 35.85 35.85 33.35 31.5 31.5 32.76 34.76 Airport 1.75 1.75 1 1 1 1 1 1 1 1 Cable Television4 6.69 6.63 6.63 6.63 5.63 - - - - - Stormwater 1.9 2.1 2.1 2.1 2.6 2.6 2.1 1.5 1.5 2.5 Housing Authority 13.25 13.25 13.18 12.19 10.19 10.19 9.6 9.6 9.5 9.5 Total 633.37 637.74 623.91 615.16 607.66 598.93 599.89 601.89 605.55 608.18 Source: City's Financial Plan 1 Beginning in FY13, Animal Services is reported under Police 2 Beginning in FY13, Communications Division has been moved from Finance to City Manager 3 Beginning in FY13, Transit was moved from the General Fund to an Enterprise Fund 4 Beginning in FY16, Cable was moved from an Enterprise Fund to the General Fund 5 Beginning in FY17, Capital Project Administration was moved to Engineering City of Iowa City, Iowa Full-time Equivalent City Government Employees by Function Last Ten Fiscal Years Full-Time Equivalent Employees as of June 30 134 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Public Safety Police1 Physical arrests 6,590 5,911 4,468 6,192 5,595 5,465 4,482 4,488 5,212 2,155 Traffic Violations 3,403 3,761 2,499 3,718 3,356 2,989 2,246 3,103 3,422 862 Fire1 Number of calls answered 4,635 5,173 4,713 5,828 6,016 6,974 6,749 7,122 7,532 5,535 Inspections conducted 1,806 1,970 1,431 2,032 1,903 2,459 874 1,031 1,300 177 Parking Parking Violations 109,553 96,117 88,909 60,680 65,196 57,549 62,930 50,346 61,330 48,042 Wastewater Treatment Daily average treatment in million gallons 10.37 8.28 9.84 10.02 9.76 10.48 8.32 7.77 10.97 8.58 Maximum daily capacity of plant in million gallons 41.1 41.1 41.1 41.1 43.3 43.3 43.3 43.3 43.3 43.3 Number of sewer system customers 23,527 23,529 24,059 24,389 24,533 25,085 25,485 26,069 26,270 26,576 Water Daily average consumption in million gallons 5.51 5.49 5.54 5.64 5.33 5.32 5.50 5.84 5.69 5.33 Maximum daily capacity of plant in million gallons 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 16.7 Customers by Classification Residential 23,875 24,086 24,442 24,790 23,089 23,638 24,025 24,595 24,818 25,133 Commercial 1,498 1,489 1,491 1,491 1,409 1,415 1,425 1,436 1,431 1,448 Industrial 15 15 15 15 14 14 14 15 15 15 Other 156 200 204 202 135 131 134 136 139 138 Total Customers 25,544 25,790 26,152 26,498 24,647 25,198 25,598 26,182 26,403 26,734 Sanitation Number of Customers 14,926 15,030 15,177 15,331 14,811 15,620 15,917 15,960 16,112 16,180 Tonnage 8,969 8,935 8,956 9,160 9,210 9,476 9,623 9,694 8,989 9,682 Landfill Tonnage 147,265 148,953 111,445 115,624 123,692 126,875 137,025 140,658 127,587 128,210 Sources: Various city divisions. Notes: 1 Numbers are based on a calendar year and 2020 figures are compiled through 10/15/20 for FIRE and 10/15/20 for Police. City of Iowa City, Iowa Operating Indicators by Function Last Ten Fiscal Years 135 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Public Safety Police Stations 1 1 1 1 1 1 1 1 1 1 Patrol units 18 18 18 20 20 20 24 23 23 23 Fire Stations 3 4 4 4 4 4 4 4 4 4 Fire apparatus 9 11 11 11 11 10 10 10 10 10 Public Works Streets Miles 272 275 276 279 281 283 286 288 292 293 Street lights 3,412 3,412 3,412 3,412 3,412 3,412 3,412 3,307 3,166 3,202 Culture and Recreation Library 1 1 1 1 1 1 1 1 1 1 Cemetery 1 1 1 1 1 1 1 1 1 1 Acreage 40 40 40 40 40 40 40 40 40 40 Parks 41 41 42 43 46 46 49 50 51 56 Acreage 1,354 1,441 1,506 1,897 1,897 1,902 1,932 1,942 1,947 1,950 Recreation Recreation centers 2 2 2 2 2 2 2 2 2 2 Swimming pools 3 3 3 3 3 3 3 3 3 3 Ball diamonds 30 30 27 27 27 27 27 27 27 27 Tennis courts 12 12 12 12 12 12 9 9 9 9 Soccer fields 20 20 20 20 20 20 20 20 20 20 Pickle Ball Courts - - - - - - 8 8 8 8 Futscal Courts - - - - - - 2 2 2 2 Full Basketball Courts - - - - - - 3 3 3 6 Gaga Pits - - - - - - - 2 2 2 Parking Facilities 5 5 5 5 5 5 6 6 6 6 Spaces 3,086 3,086 3,086 3,086 3,086 3,086 3,686 3,686 3,686 3,686 Wastewater Treatment Miles of sanitary sewer 292 294 295 298 300 301 304 306 307 308 Miles of storm sewer 124 127 128 131 133 136 139 140 142 144 Number of treatment plants 2 2 2 1 1 1 1 1 1 1 Number of service connectors 23,308 23,529 23,851 24,175 24,533 25,085 25,485 26,069 26,270 26,576 Water Miles of water mains 264 266 268 271 273 275 277 279 281 283 Number of city owned fire hydrants 2,680 2,735 3,330 3,385 3,415 3,447 3,503 3,529 3,564 3,611 Sanitation Landfills 1 1 1 1 1 1 1 1 1 1 Acreage 395 411 411 411 418 418 418 418 418 418 Sources: Various city divisions. City of Iowa City, Iowa Last Ten Fiscal Years Capital Assets by Function 136 Compliance Section Tab 148