Loading...
HomeMy WebLinkAboutFY2021 Longterm Debt Disclosure Report Date: January 19, 2022 To: Geoff Fruin, City Manager From: Jacklyn Fleagle, Budget & Compliance Officer RE: Long-term Debt Disclosure Report In accordance with the City Council’s Debt Management Policy, an annual debt report is to be submitted within 210 days after the fiscal year-end to the City Manager and the City Council. The City’s fiscal year 2021 ended on June 30, 2021, and this report is intended to provide information regarding that fiscal year. According to the policy, the annual debt report should include, at a minimum, the following information: • General Long-term Debt Obligations: • Property valuations and trend valuations for total actual and taxable valuations • List of the City’s 10 largest taxpayers • Summary of all of the City’s direct, long-term debt obligations • Debt per capita (GO Debt and TIF Revenue Debt) • Debt per total assessed value (GO Debt and TIF Revenue Debt) • City’s debt versus the legal debt limit • Revenue-Secured Debt Obligations: • Summary of the system • Summary of the system’s rates and charges • The historical trend of system’s sales and charges • Coverage ratios for system • Number of system customers, if applicable • List of system’s 10 largest users, if applicable According to the policy, the annual debt report should also include a list of any potential upcoming debt issues and a summary of any material events that have occurred in the past year. The report may also include any other relevant information that is significant to the City’s debt program or ability to repay its debt obligations. During fiscal year 2021, the City incurred the following significant events regarding its bond obligations and reported them on the Electronic Municipal Market Place (EMMA): • Principal and interest payment delinquencies: None • Non-payment related defaults, if material: None • Unscheduled draws on debt service reserves reflecting financial difficulties: None • Unscheduled draws on credit enhancements relating to the Bonds reflecting financial substitution of credit or liquidity providers, or their failure to perform: None • Substitution of credit or liquidity providers, or their failure to perform: None • Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material January 19, 2022 Page 2 notices or determinations with respect to the tax-exempt status of the Series Bonds, or material events affecting the tax-exempt status of the Bonds: None • Modifications to rights of Holders of the Bonds, if material: None • Bond calls (excluding sinking fund mandatory redemptions), if material, and tender offers; a Notice of Material Event was timely filed for each of these events: None • Defeasances of the Bonds: None • Release, substitution, or sale of property securing repayment of the Bonds, if material: None • Rating changes on the Bonds: None • Bankruptcy, insolvency, receivership or similar event of the Issuer: None • The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material: None • Appointment of a successor or additional trustee or the change of name of a trustee, if material: None • Incurrence of a Financial Obligation of the Issuer, if material, or agreement to covenants events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Issuer, any of which affect security holders, if material: None • Default, event of acceleration, termination event, modification of terms or similar events under the terms of a Financial Obligation of the Issuer, any of which reflect financial difficulties: None In the next 180 days, we are currently anticipating the following potential bond issues: • 2022 General Obligation Bonds – 2022 CIP Program - $10,300,000 Other potential debt issues include: None Attached to this memo are summaries that include the additional financial and debt information mentioned above. This information along with our Fiscal Year 2021 Annual Comprehensive Financial Report (ACFR) will be provided to our bondholders and will be posted on the Electronic Municipal Market Access (EMMA) web site in accordance with Municipal Securities Rulemaking Board (MSRB) rules. This information must be posted by January 26, 2022 in order to comply with the continuing disclosure certificates on our outstanding bonded debt. We are not aware of any material or significant events that will prevent the City from meeting its current outstanding bonded debt obligations. CONTINUING DISCLOSURE SUBMISSION FINANCIAL AND OPERATING REPORT FOR THE FISCAL YEAR JUNE 30, 2021 Relating to CITY OF IOWA CITY Johnson County, Iowa GENERAL OBLIGATION DEBT CUSIP NO. 462308 To the extent not included in the City’s Financial Statements, all information the City of Iowa City has agreed to provide in its annual reports, as it relates to its outstanding general obligation debt is included in this report. Attached is additional information as required to be submitted under previous disclosure undertakings of the City. Pursuant to Securities and Exchange Commission Rule 15c2-12 For further information please contact: Nicole Davies Assistant Finance Director City of Iowa City 410 E. Washington Street Iowa City, IA 52240 Telephone: (319) 356-5085 January 17, 2022 City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 2 DEBT LIMIT The constitutional general obligation debt limit of a political subdivision of the state of Iowa is equal to five percent (5%) of the value of taxable property within its borders. According to and based upon the January 1, 2019 property valuations, for taxes payable in September 2020 and March 2021 the general obligation debt limit of the City for the period which began July 1, 2020 and ends June 30, 2021 is: 2019 100% Actual Valuation of Property ............................... $6,857,898,321 Constitutional Debt Limit ....................................................... $ 342,894,916 Outstanding Bonds/Notes Applicable to Debt Limit: TIF Revenue Debt ................................................................. $ 12,805,000 Total G.O. Debt Subject to Debt Limit.................................... 53,935,000 Other Loans .......................................................................... 210,784 Other Legal Indebtedness (TIF Rebates) .............................. 36,943,555 Total Applicable Debt ............................................................ $ 103,894,339 Remaining Debt Capacity ...................................................... $ 239,000,577 DIRECT DEBT General Obligation Debt Supported by Property Taxes and Tax Increment Date of Original Final Principal Outstanding Issue Amount Issued Purpose Maturity As of 6/30/21 June 2012 $ 9,070,000 Multi-Purpose 6/22 $ 1,005,000 July 2013 7,230,000 Multi-Purpose 6/23 1,725,000 June 2014 11,980,000 Refunded Multi-Purpose 6/24 3,000,000 June 2015 7,785,000 Multi-Purpose 6/25 3,365,000 June 2016 8,795,000 Multi-Purpose 6/26 4,945,000 June 2017 9,765,000 Multi-Purpose 6/27 6,100,000 June 2018 8,895,000 Multi-Purpose 6/28 6,420,000 June 2019 12,535,000 Multi-Purpose 6/29 7,505,000 June 2020 12,145,000 Multi-Purpose 6/30 8,545,000 June 2021 11,325,000 Multi-Purpose 6/31 11,325,000 Total General Obligation Bonds $53,935,000 The remainder of this page was left blank intentionally. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 3 GENERAL OBLIGATION DEBT(1) (Principal Only) Fiscal Year Ending Series Series Series Series Series Series Series Series Series June 30 2012A 2013A 2014A 2015A 2016A 2017A 2018A 2019 2020 2022 ............................................. $1,005,000 $ 855,000 $ 970,000 $ 805,000 $ 950,000 $ 955,000 $ 855,000 $ 925,000 $ 1,800,000 2023 ............................................. 0 870,000 1,000,000 830,000 965,000 980,000 875,000 955,000 1,200,000 2024 ............................................. 0 0 1,030,000 850,000 985,000 1,000,000 895,000 985,000 805,000 2025 ............................................. 0 0 0 880,000 1,010,000 1,025,000 915,000 875,000 790,000 2026 ............................................. 0 0 0 0 1,035,000 1,055,000 940,000 905,000 790,000 2027 ............................................. 0 0 0 0 0 1,085,000 960,000 940,000 790,000 2028 ............................................. 0 0 0 0 0 0 980,000 960,000 790,000 2029 ............................................. 0 0 0 0 0 0 0 960,000 790,000 2030 ............................................. 0 0 0 0 0 0 0 0 790,000 2031 ............................................. 0 0 0 0 0 0 0 0 0 Total ........................................... $1,005,000 $1,725,000 $3,000,000 $3,365,000 $4,945,000 $6,100,000 $6,420,000 $7,505,000 $8,545,000 Fiscal Year Total Ending Series General Obligation Cumulative Retirement Principal & June 30 2021 Debt Amount Percent Interest 2022 ............................................. $ 1,135,000 $10,255,000 $10,255,000 19.01% $11,827,113 2023 ............................................. 1,135,000 8,810,000 19,065,000 35.35% 10,077,612 2024 ............................................. 1,135,000 7,685,000 26,750,000 49.60% 8,682,963 2025 ............................................. 1,135,000 6,630,000 33,380,000 61.89% 7,401,962 2026 ............................................. 1,135,000 5,860,000 39,240,000 72.75% 6,429,900 2027 ............................................. 1,135,000 4,910,000 44,150,000 81.86% 5,290,275 2028 ............................................. 1,135,000 3,865,000 48,015,000 89.02% 4,098,000 2029 ............................................. 1,135,000 2,885,000 50,900,000 94.37% 3,017,150 2030 ............................................. 1,135,000 1,925,000 52,825,000 97.94% 1,985,700 2031 ............................................. 1,110,000 1,110,000 53,935,000 100.00% 1,132,200 Total ........................................... $11,325,000 $53,935,000 $59,942,875 Note: (1) Source: the City. The remainder of this page was left blank intentionally. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 4 INDIRECT GENERAL OBLIGATION DEBT DEBT RATIOS STATEMENT OF BONDED INDEBTEDNESS(1)(2) City Actual Value, January 1, 2019 ............................................................................................................................................................. $6,857,898,321 City Taxable Value, January 1, 2019 .......................................................................................................................................................... $4,258,178,148 Per Capita Applicable Ratio to City Ratio to City (2010 Pop. Total Percent Amount Actual Value Taxable Value 67,862 ) Direct Bonded Debt ....................................... $ 53,935,000 100.00% $ 53,935,000 0.79% 1.27% $ 794.77 TIF Revenue Debt ......................................... 12,805,000 100.00% 12,805,000 0.19% 0.30% 188.69 Overlapping Debt: Iowa City Community School District ............. $170,605,000 58.74% $100,213,377 1.46% 2.35% 1,476.72 Clear Creek-Amana Community School Dist. 82,015,000 0.04% 32,806 0.00% 0.00% 0.48 Kirkwood Community College(3) ................... 141,210,000 14.87% 20,997,927 0.31% 0.49% 309.42 Johnson County ............................................ 31,261,000 43.63% 13,639,174 0.20% 0.32% 200.98 Total Applicable Overlapping Bonded Debt ............................................... $134,883,284 1.97% 3.16% $1,987.60 Total Direct and Overlapping Bonded Debt ................................................ $201,623,284 2.95% 4.73% $2,971.06 Per Capita Actual Value ................................................................................................................................................................................ $101,056.53 Per Capita Taxable Value .............................................................................................................................................................................. $ 62,747.61 Notes: (1) Source: the City, Audited Financial Statements and Treasurer of the State of Iowa – Outstanding Obligations Report the County, School Districts and Community College. (2) As of June 30, 2021. (3) Excludes $30,005,000 in Industrial New Jobs Training Certificates, which are expected to be paid by proceeds from anticipated job credits from withholding taxes. OTHER OBLIGATIONS OTHER DEBT The City has revenue debt payable solely from the net revenues of the City’s Urban Renewal Areas as follows: Date of Original Final Principal Outstanding Issue Amount Issued Purpose Maturity As of 6/30/21 Sept.2016 $12,805,000 Developer Grant 6/36 12,805,000 Total $12,805,000 The City has revenue debt payable solely from the net revenues of the Municipal Water System as follows: Date of Original Final Principal Outstanding Issue Amount Issued Purpose Maturity As of 6/30/21 June 2012 $ 4,950,000 Water Refunding 7/22 $1,070,000 June 2016 3,650,000 Water Refunding 7/24 2,000,000 June 2017 5,910,000 Water Refunding 7/25 4,000,000 Total $7,070,000 The City has revenue debt payable solely from the net revenues of the Municipal Sewer System as follows: Date of Original Final Principal Outstanding Issue Amount Issued Purpose Maturity As of 6/30/21 June 2016 $9,360,000 Sewer Refunding 7/21 $1,825,000 June 2017 4,550,000 Sewer Refunding 7/22 2,920,000 Total $4,745,000 City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 5 IOWA PROPERTY VALUATIONS In compliance with Section 441.21 of the Code of Iowa, as amended, the State Director of Revenue annually directs all county auditors to apply prescribed statutory percentages to the assessments of certain categories of real property. The final values, called Actual Valuation, are then adjusted by the County Auditor. Taxable Valuation subject to tax levy is then determined by the application of State determined rollback percentages, principally to residential property. Beginning in 1978, the State required a reduction in Actual Valuation to reduce the impact of inflation on its residents. The resulting value is defined as the Taxable Valuation. Such rollback percentages may be changed in future years. Certain historical rollback percentages for residential, multi-residential, agricultural and commercial valuations are as follows: PERCENTAGES FOR TAXABLE VALUATION AFTER ROLLBACKS(1) Multi- Ag Land Commercial Fiscal Year Residential Residential(2) & Buildings & Industrial 2013/14 ................ 52.8166% N/A 59.9334% 100.0000% 2014/15 ................ 54.4002% N/A 43.3997% 95.0000% 2015/16 ................ 55.7335% N/A 44.7021% 90.0000% 2016/17 ................ 55.6259% 86.2500% 46.1068% 90.0000% 2017/18 ................ 56.9391% 82.5000% 47.4996% 90.0000% 2018/19 ................ 55.6209% 78.7500% 54.4480% 90.0000% 2019/20 ................ 56.9180% 75.0000% 56.1324% 90.0000% 2020/21 ................ 55.0743% 71.2500% 81.4832% 90.0000% 2021/22 ................ 56.4094% 67.5000% 84.0305% 90.0000% 2022/23 ................ 54.1302% 63.7500% 89.0412% 90.0000% Notes: (1) Source: the Iowa Department of Revenue. (2) New category beginning with fiscal year 2017, to be phased into residential category with valuations beginning January 1, 2022, per House File 418 signed into law on March 8, 2021. BUILDING PERMITS City Building Permits(1) (Excludes the Value of Land) Calendar Year: 2017 2018 2019 2020 2021 New Construction No. of New Permits............................................ 211 151 120 120 159 Valuation: .......................................................... $108,285,647 $115,872,543 $134,485,833 $51,863,761 $ 96,466,791 Remodeling Repair and Additions: No. of New Permits:........................................... 507 467 484 430 421 Valuation: .......................................................... $108,532,366 $ 76,942,267 $ 97,036,048 $35,438,412 $ 39,023,795 Total Permits ..................................................... 718 618 604 550 580 Total Valuations ................................................. $216,818,013 $192,814,810 $231,521,881 $87,302,173 $135,490,596 Note: (1) Source: the City. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 6 PROPERTY VALUATIONS AND TREND OF VALUATIONS ACTUAL (100%) VALUATIONS FOR THE CITY(1)(2) Fiscal Year: 2016/17 2017/18 2018/19 2019/20 2020/21 Property Class Levy Year: 2015 2016 2017 2018 2019 Residential ........................................................ $3,893,541,900 $4,011,317,530 $4,279,194,820 $4,431,104,380 4,995,816,750 Agricultural ........................................................ 3,736,510 3,443,020 2,626,150 2,539,080 1,748,000 Commercial ....................................................... 856,972,664 877,491,737 964,588,039 1,000,704,323 1,104,820,749 Industrial ........................................................... 79,053,598 79,474,988 74,013,639 79,346,989 80,669,700 Multi-residential ................................................. 415,208,021 420,082,751 482,118,763 502,252,347 548,053,873 Railroads ........................................................... 4,096,577 3,984,932 3,549,414 3,601,348 4,488,469 Utilities without Gas and Electric ........................ 7,375,066 6,734,894 7,099,293 7,386,408 6,152,547 Gas and Electric Utility ...................................... 92,987,351 94,582,279 97,050,716 109,124,421 118,583,613 Less: Military Exemption ................................... (2,727,994) (2,635,396) (2,579,836) (2,489,088) (2,435,380) Total ................................................................ $5,350,243,693 $5,494,476,735 $5,907,660,998 $6,133,570,208 $6,857,898,321 Percent Change +(-) ........................................ 8.07%(3) 2.70% 7.52% 3.82% 11.81% Notes: (1) Source: Iowa Department of Management. (2) Includes tax increment finance (TIF) valuations used in the following amounts: January 1: 2015 2016 2017 2018 2019 TIF Valuation ....................................................... $72,666,677 $80,577,275 $83,379,709 $115,175,495 $89,469,635 (3) Based on 2014 Actual Valuation of $4,950,557,795. For the January 1, 2019 levy year, the City’s Taxable Valuation was comprised of approximately 65% residential, 23% commercial, 9% multi-residential, 2% industrial, 1% utilities and less than 1% agriculture and military exemption. PROPERTY VALUATIONS AND TREND OF VALUATIONS TAXABLE (“ROLLBACK”) VALUATIONS FOR THE CITY(1)(2) Fiscal Year: 2016/17 2017/18 2018/19 2019/20 2020/21 Property Class Levy Year: 2015 2016 2017 2018 2019 Residential ........................................................ $2,165,817,742 $2,284,007,603 $2,380,126,625 $2,522,095,595 $2,751,410,912 Agricultural ........................................................ 1,706,955 1,618,090 1,429,547 1,425,151 1,424,328 Commercial ....................................................... 771,275,414 789,742,578 868,129,247 900,633,903 994,338,692 Industrial ........................................................... 71,148,238 71,527,489 66,612,275 71,412,290 72,602,730 Multi-residential ................................................. 358,117,010 346,568,385 379,668,606 376,689,677 390,488,458 Railroads ........................................................... 3,686,919 3,586,439 3,194,473 3,241,213 4,039,622 Utilities without Gas and Electric ........................ 7,375,066 6,734,894 7,099,293 7,386,408 6,152,547 Gas and Electric Utility ...................................... 44,986,783 41,702,196 41,797,475 42,719,065 40,156,239 Less: Military Exemption ................................... (2,727,994) (2,635,396) (2,579,836) (2,489,088) (2,435,380) Total ................................................................ $3,421,386,133 $3,542,852,278 $3,745,477,705 $3,923,114,214 $4,258,178,148 Percent Change +(-) ........................................ 7.50%(3) 3.55% 5.72% 4.74% 8.54% Notes: (1) Source: Iowa Department of Management. (2) Includes tax increment finance (TIF) valuations used in the following amounts: January 1: 2015 2016 2017 2018 2019 TIF Valuation ....................................................... $72,650,838 $80,559,947 $85,379,369 $115,175,495 $84,077,937 (3) Based on 2014 Taxable Valuation of $3,182,641,961. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 7 LEVIES AND TAX COLLECTIONS(1) (Amounts Expressed in Thousands) The following shows the trend in the City’s tax extensions and collections. Levy Fiscal Amount Amount Percent Year Year Levied Collected(2) Collected 2010 ................. 2011-12 ................ $49,595 $49,544 99.90% 2011 ................. 2012-13 ................ 50,407 50,142 99.47% 2012 ................. 2013-14 ................ 50,307 49,836 99.06% 2013 ................. 2014-15 ................ 51,609 51,295 97.16% 2014 ................. 2015-16 ................ 52,034 52,074 100.08% 2015 ................. 2016-17 ................ 55,330 55,331 100.00% 2016 ................. 2017-18 ................ 56,458 56,347 99.80% 2017 ................. 2018-19 ................ 59,174 59,254 100.14% 2018 ................. 2019-20 ................ 60,297 58,972 97.80% 2019 ................. 2020-21 ................ 65,849 66,714 101.31% Notes: (1) Source: the State of Iowa Department of Management and the City. Does not include Levies or Collections for Utility Replacement. Does not include levies and collections for the City’s tax increment finance district. (2) Includes delinquent taxes. LARGER TAXPAYERS(1) Taxpayer Name Business/Service Taxable Valuation(2) American College Testing, Inc (aka ACT, Inc.) .............. Commercial Property ................................................... $ 45,139,688 MidAmerican Energy ..................................................... Utility ........................................................................... 36,567,690 Rise at Riverfront Crossings, LLC .................................. Apartments .................................................................. 30,679,064 BBCS-Hawkeye Housing LLC ....................................... Real Estate Management/Apartments.......................... 27,628,800 MidWestOne Bank ......................................................... Financial Institution ...................................................... 24,040,503 Tailwind Iowa City, LLC ................................................. Real Estate Development ............................................ 23,429,721 Dealer Properties IC LLC ............................................... Commercial Property ................................................... 20,522,421 Graduate Iowa City Owner, LLC .................................... Hotel ............................................................................ 20,475,612 Riverfront Crossing Hospitality Owners LLC .................. Commercial Property ................................................... 17,779,671 Procter & Gamble LLC ................................................... Industrial Property ........................................................ 16,764,588 Total ................................................................................................................................................................. $263,027,758 Ten Larger Taxpayers as Percent of City’s January 1, 2019 Taxable Valuation ($4,258,178,148) .................... 6.18% Notes: (1) Source: the County. (2) Every effort has been made to seek out and report the larger taxpayers. However, many of the taxpayers listed contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. LEVY LIMITS Normal municipal operations and maintenance costs are generally funded through the corporate property tax levy. Iowa State Code does not allow the municipal general fund to be taxed above $8.10 per thousand dollars of taxable value in any one year. In addition to the General Fund, there are several other tax funds that the City can create and use for specific purposes. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 8 TAX RATES Levy Years 2015 - 2019(1)(2) (Per $1,000 Actual Valuation) Fiscal Year: 2016/17 2017/18 2018/19 2019/20 2020/21 Levy Year: 2015 2016 2017 2018 2019 City: General Fund ..................................................... $ 8.10000 $ 8.10000 $ 8.10000 $ 8.10000 $ 8.10000 Emergency Levy ................................................. 0.00000 0.00000 0.00000 0.00000 0.24000 Debt Service Fund .............................................. 3.82846 3.57846 3.22846 2.97846 2.57846 Employee Benefits ............................................. 3.14415 3.14415 3.34415 3.24415 3.34415 Capital Improvement .......................................... 0.00000 0.00000 0.00000 0.00000 0.00000 Other .................................................................. 1.51044 1.51044 1.51044 1.51044 1.51044 Total City .......................................................... $16.58305 $16.33305 $16.18305 $15.83305 $15.77305 Johnson County ................................................. $ 6.77140 $ 6.85143 $ 6.53594 $ 6.49278 $ 6.34581 Iowa City Community School District .................. 13.98935 13.95855 14.85629 14.79097 14.83935 Kirkwood ............................................................ 1.08048 1.13174 1.20354 1.21331 1.25730 Other .................................................................. 0.32450 0.33036 0.30557 0.27066 0.33110 Total Tax Rate(3) ............................................. $38.74878 $38.60513 $39.08439 $38.60077 $38.54661 Notes: (1) Source: Iowa Department of Management. (2) Does not include the tax rate for agriculture. (3) Taxpayers in the Iowa City Community School District area. PROPERTY TAX LEGISLATION From time to time, legislative proposals are pending in Congress and the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described herein. It cannot be predicted whether or in what forms any of such proposals, either pending or that may be introduced, may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for taxes levied by the City or have an adverse impact on the future tax collections of the City. Purchasers of the Bonds should consult their tax advisors regarding any pending or proposed federal or state tax legislation. The opinions expressed by Bond Counsel are based upon existing legislation as of the date of issuance and delivery of the Bonds and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending federal or state tax legislation. During the 2019 legislative session, the Iowa General Assembly enacted Senate File 634 (the “2019 Act”). This bill modifies the process for hearing and approval of the total maximum property tax dollars under certain levies in the county budget. The bill also includes a provision that will require the affirmative vote of 2/3 of the City Council when the maximum property tax dollars under these levies exceed an amount determined under a prescribed formula. The 2019 Act does not change the process for hearing and approval of the Debt Service Levy pledged for repayment of the Bonds. It is too early to evaluate the affect the 2019 Act will have on the overall financial position of the City or its ability to fund essential services. During the 2013 legislative session, the Iowa General Assembly enacted Senate File 295 (the “2013 Act”). Among other things, the Act (i) reduced the maximum annual taxable value growth percent, due to revaluation of existing residential and agricultural property to 3%, (ii) assigned a “rollback” (the percentage of a property’s value that is subject to tax) to commercial, industrial and railroad property of 90%, (iii) created a new property tax classification for multi-residential properties (apartments, nursing homes, assisted living facilities and certain other rental property) and assigned a declining rollback percentage to such properties for each year until the residential rollback percentage is reached in the 2022 assessment year, after which the rollback percentage for such properties will be equal to the residential rollback percentage each assessment year, and (iv) exempted a specified portion of the assessed value of telecommunication properties. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 9 During the 2021 Iowa Legislative session, House File 418 was signed into law on March 8, 2021, applicable to valuations beginning January 1, 2022 (the “2021 Act”). HF418 removes the multi-residential property classification by reclassifying certain properties as subdivision of “residential” property. The multi-residential classification was created as part of the January 1, 2015 valuations, and became unnecessary due to the equalization of the residential and multi- residential classifications as of January 1, 2022. The 2013 Act included a standing appropriation to replace some of the tax revenues lost by local governments due to the rollback. Iowa Code section 441.21A established this standing appropriation for reimbursement to local governments (backfill). However, SF 619, passed by the legislature on May 19, 2021 and subsequently signed into law by Governor Reynolds, phases out backfill payments beginning with fiscal years beginning on or after July 1, 2022. For cities and counties, the backfill is eliminated through annual reductions over five or eight years, depending on assessed valuation growth from 2012 to 2019. School district backfill payments will be eliminated after fiscal year 2022. Taxing authorities that are not schools, cities, or counties will have their backfill payments phased out over eight years. SF 619 also implements a tax credit for property owned by persons who are at least 70 years of age and whose annual household income is not more than 250% of the federal poverty level guidelines published by the U.S. Department of Health and Human Services. The expanded credit is available for claims filed on or after January 1, 2022. The expanded credit is exempt from the provisions of Iowa Code section 25B.7(1), which imposes a State requirement to fully fund changes to property tax credits. The legislation is anticipated to result in reduced property tax revenues as a result of the phased out property tax replacement claims and also due to expansion of the Elderly Property Tax Credit. Notwithstanding any decrease in property tax revenues that may result from the 2013 Act, the 2019 Act or the 2021 Act or Senate File 619, the Bonds are secured by an unlimited ad valorem property tax as described more fully in the “SECURITY AND SOURCE OF PAYMENT” herein. From time to time, other legislative proposals may be considered by the Iowa General Assembly that would, if enacted, alter or amend one or more of the property tax matters described in this Official Statement. It cannot be predicted whether or in what forms any of such proposals may be enacted, and there can be no assurance that such proposals will not apply to valuation, assessment or levy procedures for the levy of taxes by the City. CITY FUNDS ON HAND (Cash and Investments as of June 30, 2021, in thousands) City Operating Funds $196,741 City Restricted Funds 53,725 Total $250,466 The remainder of this page was left blank intentionally. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 10 STATEMENT OF NET POSITION GOVERNMENTAL ACTIVITIES(1) (Amounts Expressed in Thousands) Audited as of June 30 2017 2018 2019 2020 2021 Assets: Equity in Pooled Cash and Investments .................................... $111,030 $109,860 $111,645 $113,883 $130,934 Receivables: Property Tax ............................................................................ 56,639 59,538 60,529 66,479 67,644 Accounts and Unbilled Usage .................................................. 820 817 941 707 1,002 Interest .................................................................................... 428 920 967 547 76 Notes ....................................................................................... 5,524 5,304 5,209 5,300 5,141 Internal Balances ....................................................................... (15,494) (16,069) (20,055) (22,551) (24,229) Due from Other Governments.................................................... 4,519 4,067 7,584 7,125 5,651 Prepaids and Other Assets ........................................................ 811 810 907 13 0 Inventories ................................................................................. 730 602 650 793 786 Assets Held for Resale .............................................................. 750 562 689 480 400 Restricted Assets: Equity in Pooled Cash and Investments................................... 24,560 26,108 18,553 19,743 25,056 Other Post Employment Benefits Asset ..................................... 35 0 0 0 0 Capital Assets: Land and Construction in Progress .......................................... 52,545 73,176 51,291 41,160 38,054 Other Capital Assets (Net of Accumulated Depreciation) ......... 173,598 174,835 210,302 232,717 240,561 Total Assets ......................................................................... $416,495 $440,530 $449,212 $466,396 $491,076 Deferred Outflows of Resources: Pension Related Deferred Outflows ........................................... $ 13,131 $ 11,477 $ 11,255 $ 10,119 $ 12,833 OPEB Related Deferred Outflows .............................................. 0 637 1,467 1,302 1,628 Total Deferred Outflows of Resources ................................... $ 13,131 $ 12,114 $ 12,722 $ 11,421 $ 14,461 Liabilities: Accounts Payable ...................................................................... $ 2,127 $ 5,168 $ 3,399 $ 3,494 $ 2,913 Contracts Payable ..................................................................... 2,521 3,663 5,864 3,725 2,840 Accrued Liabilities ..................................................................... 4,182 4,193 5,231 5,558 5,958 Interest Payable ........................................................................ 133 134 151 158 163 Deposits .................................................................................... 1,230 952 1,008 1,222 1,124 Advances from Grantors ............................................................ 144 124 98 3 9,470 Due to Other Governments ........................................................ 42 29 31 38 45 Notes Payable ........................................................................... 663 475 602 0 0 Noncurrent Liabilities: Due Within One Year: Employee Vested Benefits ..................................................... 1,252 1,253 1,308 1,525 1,546 Bonds Payable ...................................................................... 8,230 9,612 11,534 11,119 11,536 Due in More Than One Year: Employee Vested Benefits ..................................................... 989 987 1,012 1,206 1,204 Net Pension Liability .............................................................. 39,080 38,867 38,890 39,796 47,299 Other Post Employment Benefits Liability .............................. 3,660 5,472 6,401 6,253 7,030 Notes Payable ....................................................................... 211 211 211 211 211 Bonds Payable ...................................................................... 59,509 58,307 56,771 58,653 57,931 Total Liabilities ..................................................................... $123,973 $129,447 $132,511 $132,961 $149,270 Deferred Inflows of Resources: Pension Related Deferred Inflows............................................ $ 1,603 $ 1,565 $ 1,940 $ 3,045 $ 1,253 OPEB Related Deferred Inflows .............................................. 0 246 216 560 492 Succeeding Year Property Taxes ............................................ 56,459 59,173 60,296 65,850 66,912 Total Deferred Inflows of Resources .................................... $ 58,062 $ 60,984 $ 62,452 $ 69,455 $ 68,657 (continued on following page) City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 11 STATEMENT OF NET POSITION GOVERNMENTAL ACTIVITIES(1) (Amounts Expressed in Thousands) (continued) Audited as of June 30 2017 2018 2019 2020 2021 Net Position: Net Investment in Capital Assets ............................................... $183,651 $203,077 $208,028 $220,004 $228,418 Restricted for or by: Employee Benefits................................................................... 2,810 3,119 4,249 3,875 3,973 Capital Projects: Expendable(2) ....................................................................... 30,856 21,463 17,020 11,464 12,266 Nonexpendable(2) ................................................................. 0 0 0 278 218 Debt Service ............................................................................ 7,221 8,423 9,514 9,590 7,388 Police ...................................................................................... 349 283 214 294 271 Other Purposes Expendable ........................................................................... 2,590 4,469 4,359 4,552 6,300 Nonexpendable ..................................................................... 0 0 0 69 69 Grant Agreement ..................................................................... 3,850 3,733 3,463 3,456 3,179 Unrestricted ............................................................................... 16,264 17,646 20,124 21,819 25,528 Total Net Position ................................................................ $247,591 $262,213 $266,971 $275,401 $287,610 Notes: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2017 through 2021. (2) For fiscal years 2017 – 2019 amount is classified as expendable. STATEMENT OF ACTIVITIES GOVERNMENTAL ACTIVITIES(1) (Amounts Expressed in Thousands) Audited for the Year Ended June 30 2017 2018 2019 2020 2021 Function/Programs: Governmental Activities: Public Safety ........................................................................... $ (18,053) $ (20,466) $ (20,862) $ (22,728) $ (25,853) Public Works ........................................................................... 6,746 (3,084) (2,516) (4,737) (2,958) Culture and Recreation ............................................................ (14,573) (15,189) (14,834) (15,451) (15,442) Community and Economic Development ................................. (6,264) (10,166) (14,116) (7,760) (4,792) General Government ............................................................... (4,600) (5,338) (5,807) (6,137) (8,757) Interest on Long-Term Debt ..................................................... (1,481) (1,414) (1,444) (1,452) (1,561) Total Governmental Activities ................................................ $ (38,225) $ (55,657) $ (59,579) $ (58,265) $ (59,363) General Revenues: Property Taxes, Levied for General Purposes ......................... $ 57,649 $ 59,046 $ 61,739 $ 62,846 $ 69,482 Hotel/Motel Tax ....................................................................... 1,137 1,046 1,302 1,135 938 Gas and Electric Tax ............................................................... 726 684 668 677 644 Utility Franchise Tax ................................................................ 939 976 965 884 994 Grants and Contributions Not Restricted to Specific Purposes . 1,583 1,547 1,552 1,513 1,587 Earnings on Investments ......................................................... 1,397 2,368 3,257 2,585 841 Gain on Disposal of Capital Assets .......................................... 2,151 140 186 111 213 Miscellaneous.......................................................................... 3,369 3,656 3,329 3,331 3,030 Transfers ................................................................................... (7,053) 1,814 (8,661) (6,387) (6,157) Total General Revenues and Transfers ................................. $ 61,898 $ 71,277 $ 64,337 $ 66,695 $ 71,572 Changes in Net Position ...................................................... $ 23,673 $ 15,620 $ 4,758 $ 8,430 $ 12,209 Net Position Beginning of Year .................................................. 223,918 246,593(2) 262,213 266,971 275,401 Net Position End of Year ........................................................... $247,591 $262,213 $266,971 $275,401 $287,610 Notes: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2017 through 2021. (2) Restated. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 12 BALANCE SHEET GENERAL FUND(1) (Amounts Expressed in Thousands) Audited as of June 30 2017 2018 2019 2020 2021 Assets: Equity in Pooled Cash and Investments .................................... $32,500 $36,321 $38,979 $42,371 $51,870 Receivables: Property Taxes ........................................................................ 32,965 34,973 36,301 40,081 40,959 Accounts and Unbilled Usage .................................................. 410 496 491 355 508 Interest .................................................................................... 161 276 360 163 24 Notes ....................................................................................... 1,292 1,276 1,329 1,252 1,073 Due from Other Funds ............................................................... 0 0 0 299 174 Advances to Other Funds .......................................................... 0 0 56 0 0 Due from Other Governments.................................................... 1,887 1,941 2,131 3,661 2,080 Prepaid Item .............................................................................. 719 726 818 13 0 Assets Held for Resale .............................................................. 750 562 689 480 400 Restricted Assets: Equity in Pooled Cash and Investments................................... 10,268 1,904 2,028 2,209 2,134 Total Assets ....................................................................... $80,952 $78,475 $83,182 $90,884 $99,222 Liabilities, Deferred Inflows of Resources and Fund Balances: Liabilities: Accounts Payable .................................................................... $ 1,191 $ 1,492 $ 1,497 $ 1,356 $ 1,672 Accrued Liabilities.................................................................... 1,321 1,391 1,466 1,673 1,957 Due to Other Governments ...................................................... 38 29 31 38 38 Interest Payable ...................................................................... 4 5 17 0 0 Notes Payable ......................................................................... 663 475 602 0 0 Liabilities Payable from Restricted Assets: Deposits ............................................................................... 1,224 947 1,004 1,217 1,115 Advances from Grantors ....................................................... 7 113 94 0 19 Total Liabilities ................................................................... $ 4,448 $ 4,452 $ 4,711 $ 4,284 $ 4,801 Deferred Inflows of Resources: Unavailable Revenues: Succeeding Year Property Taxes .......................................... $32,863 $34,764 $36,176 $39,720 $40,568 Grants ................................................................................... 6 9 34 1,791 4 Other ..................................................................................... 1,539 1,600 1,643 1,716 1,628 Total Deferred Inflows of Resources .................................... $34,408 $36,373 $37,853 $43,227 $42,200 Fund Balances: Nonspendable ......................................................................... $ 788 $ 793 $ 887 $ 549 $ 469 Restricted ................................................................................ 9,974 1,942 1,808 1,747 1,455 Committed ............................................................................... 5,199 4,962 0 0 0 Assigned ................................................................................. 1,342 1,437 3,565 5,708 9,883 Unassigned ............................................................................. 24,793 28,516 34,358 35,369 40,414 Total Fund Balances .......................................................... $42,096 $37,650 $40,618 $43,373 $52,221 Total Liabilities, Deferred Inflows of Resources and Fund Balances .......................................................... $80,952 $78,475 $83,182 $90,884 $99,222 Note: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2017 through 2021. The remainder of this page was left blank intentionally. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 13 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GENERAL FUND(1) (Amounts Expressed in Thousands) Audited Fiscal Year Ended June 30 2017 2018 2019 2020 2021 Revenues: Taxes ........................................................................................ $ 34,290 $ 35,363 $37,426 $38,087 $42,635 Licenses and Permits ................................................................ 3,521 2,734 2,981 2,352 2,541 Intergovernmental ..................................................................... 3,574 3,786 4,099 4,009 5,924 Charges for Service ................................................................... 1,665 1,465 1,595 1,113 808 Fines and Forfeits ...................................................................... 750 695 776 609 375 Use of Money and Property ....................................................... 839 1,164 1,599 1,102 456 Miscellaneous............................................................................ 1,692 1,878 1,950 2,031 1,688 Total Revenues ....................................................................... $ 46,331 $ 47,085 $50,426 $49,303 $54,427 Expenditures: Current: Public Safety ........................................................................... $ 22,005 $ 22,762 $23,858 $24,611 $24,764 Public Works ........................................................................... 1,803 1,871 1,922 2,219 2,076 Cultural and Recreation ........................................................... 12,890 13,099 13,096 13,146 12,407 Community and Economic Development ................................. 3,074 2,785 3,561 3,678 3,487 General Government ............................................................... 5,471 5,550 6,144 6,336 6,676 Capital Outlay ............................................................................ 1,463 2,124 1,718 2,088 1,828 Total Expenditures................................................................... $ 46,706 $ 48,191 $50,299 $52,078 $51,238 Excess (Deficiency) of Revenues Over (Under) Expenditures ... $ (375) $ (1,106) $ 127 $ (2,775) $ 3,189 Other Financing Sources (Uses): Issuance of Debt ....................................................................... $ 0 $ 17 $ 0 $ 0 $ 0 Sale of Capital Assets ............................................................... 268 140 758 111 233 Transfers In ............................................................................... 10,725 10,138 11,548 12,578 12,567 Transfers Out ............................................................................ (18,023) (13,635) (9,465) (7,159) (7,141) Total Other Financing Sources and (Uses) .............................. $ (7,030) $ (3,340) $ 2,841 $ 5,530 $ 5,659 Net Change in Fund Balances ................................................... $ (7,405) $ (4,446) $ 2,968 $ 2,755 $ 8,848 Fund Balances, Beginning ........................................................ $ 49,501(2) $ 42,096 $37,650 $40,618 $43,373 Fund Balances, Ending ............................................................. $ 42,096 $ 37,650 $40,618 $43,373 $52,221 Notes: (1) Source: Audited financial statements of the City for the fiscal years ended June 30, 2017 through 2021. (2) Restated. PENSIONS The City participates in two public pension systems, Iowa Public Employee’s Retirement System (IPERS) and Municipal Fire and Police Retirement System of Iowa (MFPRSI). In fiscal year 2021, pursuant to the IPERS’ required rate, the City’s Regular employees (members) contributed 6.29% of covered payroll and the City contributed 9.44% of covered payroll, for a total rate of 15.73%. The City’s contributions to IPERS for the year ended June 30, 2021 were $3,025,270. The City’s share of the contributions, payable from the applicable funds of the City, is provided by a statutorily authorized annual levy of taxes without limit or restriction as to rate or amount. The City has always made its full required contributions to IPERS. At June 30, 2021, the City reported a liability of $27,731,863 for its proportionate share of the IPERS net pension liability. The net pension liability was measured as of June 30, 2020 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The discount rate used to measure the total pension liability was 7%. The City’s proportion of the net pension liability was based on the City’s share of contributions to the pension plan relative to the contributions of all IPERS participating employers. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 14 In fiscal year 2021, pursuant to the MFPRSI’s required rate, the City’s employees (members) contributed 9.40% of covered payroll and the City contributed 25.31% of covered payroll, for a total rate of 34.71%. The City’s contribution to MFPRSI for year ended June 30, 2021 was $2,902,637. The City’s share of the contributions, payable from the applicable funds of the City, is provided by a statutorily authorized annual levy of taxes without limit or restriction as to rate or amount. The City has always made its full required contributions to MFPRSI. At June 30, 2021, the City reported a liability of $28,881,737 for its proportionate share of the MFPRSI net pension liability. The net pension liability was measured as of June 30, 2020 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The discount rate used to measure the total pension liability was 7.5%. 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. OTHER POST-EMPLOYMENT BENEFITS (OPEB) 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. The following table shows the City’s total OPEB liability: Total OPEB Liability Beginning of Year ................................................. $8,627,420 Changes for the year Service Cost .......................................................................... 733,608 Interest .................................................................................. 240,186 Difference Between Expected and Actual Experience ........... 459,049 Changes in Assumptions ....................................................... 304,947 Benefit Payments .................................................................. (667,342) Net Changes ......................................................................................... 1,070,448 Total OPEB Liability End of Year ........................................................... $9,697,868 The remainder of this page was left blank intentionally. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 15 FINANCIAL AND OPERATING REPORT FOR THE FISCAL YEAR JUNE 30, 2021 Relating to CITY OF IOWA CITY Johnson County, Iowa WATER SYSTEM REVENUE BASE CUSIP NO. 462380 and SEWER SYSTEM REVENUE BASE CUSIP NO. 462362 To the extent not included in the City’s Financial Statements, all information the City of Iowa City has agreed to provide in its annual reports, as it relates to its outstanding water revenue, sewer revenue and urban renewal revenue debt is included in this report. Attached is additional information as required to be submitted under previous disclosure undertakings of the City. Pursuant to Securities and Exchange Commission Rule 15c2-12 City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 16 WATER SYSTEM The Water Division is comprised of five parts: Administration, Treatment Plant, Customer Service, Distribution, and Public Information/Education. There are a total of 31.25 (FTE) employees who work in the Water Division. This division serves about 73,998 people and has over 26,951 customer water accounts. The average daily use for fiscal year 2021 was approximately 5.5 million gallons per day (MGD). A peak flow of over 8.6 MGD was experienced during the summer of 2012. Water Sources: The primary source of water for the City is the alluvial aquifer collector wells along the Iowa River. Four collector wells can provide approximately 10.5 MGD. Additional sources include one Jordan aquifer wells which can provide 1.0 MGD; three Silurian aquifer wells which can provide 1.0 MGD; a sand pit that can provide 1.0 MGD; a river intake that can provide 3.0 MGD; for a total of approximately 16.7 MGD maximum capacity. Water Treatment Processes: The facilities include one treatment plant (constructed in 2003) located at 80 Stephen Atkins Drive. The plant is a surface water plant design that includes aeration, lime softening (coagulation/flocculation/sedimentation), and granular activated carbon filtration processes with fluoridation and free chlorination. The Grade IV Water Treatment Facility houses an operations team that performs over 230 water quality tests per day in-house and collects regulatory samples for testing at the University Hygienic Laboratory. This testing ensures that Iowa City’s drinking water meets all IDNR and EPA Safe Drinking Water Act Standards. Distribution System: The water flows through approximately 283 miles of water mains and includes over 28,100 service connections. The distribution piping consists of cast iron, ductile iron and plastic main that ranges in size from 2” to 30”. The treatment plant site has effective water storage capacity of 1.75 million gallons of water; in addition, there are four remote ground storage reservoirs (with pumping stations) that add up to remote effective storage capacity of 6.0 million gallons of water. The water system also provides for fire protection with approximately 3,730 public and private hydrants located throughout the community. Billing and Collections: Customers are billed monthly on a combined utility statement which includes charges for sewer, water, solid waste, and curbside recycling. Under present City policy and City ordinances, utility bills are due when received but contain a delinquency date which provides 15 days for payment. If payment is not made in full within 22 days, a notice is mailed which allows 25 calendar days before service is disconnected. The City’s bad debt write-offs have been less than 0.2% of gross revenues for the past three years. WATER SYSTEM RATES AND CHARGES The following rates and charges were effective July 1, 2020. Water Service Charge Minimums(1) (Includes up to the first 100 cubic feet (c.f.)) Meter Size Meter Size (Inches) Charge (Inches) Charge 5/8" ..................... $ 7.79 2" ................... $ 26.91 3/4" ..................... 8.52 3" ................... 49.74 1" ....................... 10.04 4" ................... 86.75 1-1/2" .................... 20.01 6" ................... 174.56 Note: (1) Source: the City. Monthly Usage in excess of 100 Cubic Feet (c.f.)(1) 101 c.f. - 3,000 c.f. .................. $3.64 per 100 c.f. 3,001 c.f. and over .................. $2.61 per 100 c.f. Note: (1) Source: the City City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 17 Single Purpose Meter Charges(1) First 100 c.f. ........................................ Minimum Monthly Charge Usage in excess of 100 c.f. .................. $3.64 per 100 c.f. Note: (1) Source: the City. Changes in water rates over the last ten fiscal years: Water Rate Changes(1) Fiscal Rate Year Change 2012 .................................................... 0% 2013 .................................................... 0% 2014 .................................................... 0% 2015 .................................................... 5% 2016 .................................................... 5% 2017 .................................................... 0% 2018 .................................................... 0% 2019 .................................................... 0% 2020 .................................................... 5% 2021 .................................................... 0% Note: (1) Source: the City. SALES HISTORY AND WATER SYSTEM CHARGES(1) Fiscal Water Sales Water System Year Cubic Feet Sold(2) Charges 2012 ................................... 246,618,257 .............................. $ 7,953,738 2013 ................................... 254,616,773 .............................. 8,194,467 2014 ................................... 239,790,719 .............................. 7,778,364 2015 ................................... 240,423,612 .............................. 8,161,522 2016 ................................... 255,524,943 .............................. 8,758,683 2017 ................................... 267,511,531 .............................. 9,156,005 2018 ................................... 293,046,636 .............................. 9,953,510 2019 ................................... 289,055,329 .............................. 10,139,587 2020 ................................... 285,102,926 .............................. 10,705,168 2021 ................................... 237,035,139 .............................. 9,459,987 Notes: (1) Source: the City. (2) Beginning in March 2015 the amounts include unbilled usage. WATER SYSTEM CUSTOMERS BY CLASSIFICATION(1)(2) Classification FY2017 FY2018 FY2019 FY2020 FY2021 Residential ............................. 25,971 26,432 26,681 27,080 27,266 Commercial ........................... 1,487 1,494 1,493 1,496 1,489 Industrial ................................ 15 16 15 15 15 Other(3) ................................. 199 199 202 203 195 Total Meters ......................... 27,672 28,141 28,391 28,794 28,965 Notes: (1) Source: the City. (2) Represents the number of meters customers billed as of the end of the fiscal year includes dual purpose and single purpose meters. (3) Other meters consist of rural, schools, government, churches, and City meters. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 18 LARGER WATER SYSTEM CUSTOMERS(1) Fiscal Year 2021 Customer Name Charges Rank Percentage Proctor & Gamble .................................................... $ 739,049 1 7.81% Veterans Administration Medical Center .................. 100,143 2 1.06% Mercy Hospital ......................................................... 78,892 3 0.83% Campus Apartments ................................................ 73,955 4 0.78% Tailwind Iowa City LLC ............................................ 63,774 5 0.67% Dominium JIT Srv .................................................... 60,226 6 0.64% Oaknoll Retirement Residence ................................. 43,145 7 0.46% Seville Apartments ................................................... 39,597 8 0.42% Emerald Court Apartments ....................................... 37,789 9 0.40% Rise at Riverfront Crossing ...................................... 33,922 10 0.36% Total ...................................................................... $1,270,492 13.43% Total Water System Customers $9,459,987 Note: (1) Source: the City. The remainder of this page was left blank intentionally. City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 19 SEWER SYSTEM The City of Iowa City operates a municipal Sewer Utility System consisting of approximately 310+ miles of sanitary sewers, 17 sanitary sewer lift stations, and a wastewater treatment plant. There are a total of 26.00 (FTE) employees who work in the Wastewater Division, 3 in Administration, 5 in Operations, 6 in Collections, 10 in Maintenance and 2 in the Laboratory. This division serves approximately 74,828 people and has approximately 27,000 customers. The system has 3 significant industrial users, 2 non-categorical and 1 categorical. The average daily treatment plant flow for fiscal year 2021 was 7.9 million gallons per day (MGD). The Wastewater Plant was constructed in 1990. The plant was upgraded in 2002 and underwent another expansion in 2014. The City conducts all wastewater treatment at the Wastewater Treatment Plant and monitors and controls operations of the system through process ad permit required sampling and remotely through supervisory control and data acquisition (SCADA) computer systems. The wastewater treatment system design has a maximum daily treatment capacity of 43.30 MGD. The Wastewater Treatment Division is currently under a consent decree for violation of our Zinc discharge limit. There was a capture rate miscalculation that was corrected resulting in changes to industrial user permitted limits. Now corrected, we are in compliance with federal clean water standards and will be requesting the order to be dismissed at the end of the 2nd quarter 2022. Billing and Collections: Customers are billed monthly on a combined utility statement which includes charges for sewer, water, solid waste, and curbside recycling. Under present City policy and City ordinances, utility bills are due when received but contain a delinquency date which provides 15 days for payment. If payment is not made in full within 22 days, a notice is mailed which allows 25 calendar days before service is disconnected. The City’s bad debt write-offs have been less than 0.2% of gross revenues for the past three years. SEWER SYSTEM RATES AND CHARGES The following Sewer System rates and charges were effective July 1, 2015: Monthly Sewer Service Charge Minimum (includes up to the first 100 cubic feet (c.f.)) $8.15 Monthly Usage in excess of 100 cubic feet (c.f.) $3.99 The following table shows historical rate increases over the last ten fiscal years. Sewer Rate Increases(1) Fiscal Year Rate Change 2012 .................................................... 0% 2013 .................................................... 0% 2014 .................................................... 0% 2015 .................................................... 0% 2016 .................................................... 0% 2017 .................................................... 0% 2018 .................................................... 0% 2019 .................................................... 0% 2020 .................................................... 0% 2021 .................................................... 0% City of Iowa City, Johnson County, Iowa Fiscal Year 2021 Annual Financial and Operating Disclosure Page | 20 SALES HISTORY AND SEWER SYSTEM CHARGES(1) Fiscal Sewer Sales Sewer System Year Cubic Feet Sold(2) Charges 2012 ..................................... 282,134,840 $12,784,321 2013 ..................................... 285,472,392 12,883,641 2014 ..................................... 269,494,125 12,382,031 2015 ..................................... 266,830,947 12,278,153 2016 ..................................... 270,547,701 12,022,203 2017 ..................................... 277,712,785 12,404,360 2018 ..................................... 283,246,320 12,524,540 2019 ..................................... 288,537,266 12,822,250 2020 ..................................... 279,106,456 12,503,764 2021 ..................................... 265,605,446 11,819,500 Notes: (1) Source: the City. (2) Beginning in March 2015 the amount includes unbilled usage in totals. NUMBER OF SEWER SYSTEM CUSTOMERS(1) Fiscal Number of Sewer Year System Customers 2012 .................................................. 23,529 2013 .................................................. 24,059 2014 .................................................. 24,389 2015 .................................................. 24,533 2016 .................................................. 25,085 2017 .................................................. 25,485 2018 .................................................. 26,049 2019 .................................................. 26,201 2020 .................................................. 26,596 2021 .................................................. 26,965 Note: (1) Source: the City. LARGER SEWER SYSTEM CUSTOMERS(1) Fiscal Year 2021 Customer Name Charges Rank Percentage University of Iowa .......................................................... $ 1,729,679 1 14.63% Proctor & Gamble .......................................................... 918,828 2 7.77% Iowa City Landfill ............................................................ 115,947 3 0.98% Veterans Administration Medical Center ........................ 99,127 4 0.84% Mercy Hospital ............................................................... 97,216 5 0.82% Campus Apartments ...................................................... 83,604 6 0.71% Dominium JIT Srv .......................................................... 67,983 7 0.58% Tailwind Iowa City LLC .................................................. 65,641 8 0.56% Oaknoll Retirement Residence ....................................... 55,115 9 0.47% Seville Apartments ......................................................... 49,030 10 0.41% Total ............................................................................ $ 3,282,170 27.77% Total Sewer System Customers ..................................... $11,819,500 Note: (1) Source: the City.