Master Proposed Book FY2023

The State of Iowa limits city debt to no more than 5% of the total assessed value of taxable property within the corporate limits as established by the City Assessor. The City Council’s Debt Management policy follows best practices for Aaa rated communities and aims to limit outstanding general obligation and tax increment revenue bonded debt to no more than 0.75% of total assessed property valuations. The budget anticipates outstanding debt of $65 million at Fiscal Year 2023 year-end, which is approximately 0.90% of total valuations and equal to roughly 18% of the allowable debt level established by the State. Iowa City's internal fiscal policy also specifies that the debt service levy shall not exceed 30% of the total property tax levy. The debt service levy included in the Fiscal Year 2023 budget remains unchanged from the prior fiscal year and accounts for approximately 16% of the City’s total levy. The following depicts outstanding general obligation and TIF revenue debt as a percentage of total valuations.

General Bonded Debt Outstanding and Percent of Total Valuation

1.60%

$80.0

1.40%

$70.0

1.20%

$60.0

1.00%

$50.0

0.80%

$40.0

0.60%

$30.0

Millions of Dollars ($)

0.40%

$20.0

0.20%

$10.0

0.00%

$0.0

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 *FY22 *FY23 *FY24 67 62 58 67 67 67 68 67 66 65 67 1.33% 1.44% 1.28% 1.17% 1.25% 1.22% 1.14% 1.11% 0.97% 0.94% 0.90%

Debt (millions)

% of Val

The budget continues to reflect prudent borrowing practices, which help preserve financial flexibility and ultimately lower the cost of borrowing. Over the last several years, Iowa City has worked to reduce its debt load. Recent early general obligation bond redemptions include $2.1 million in Fiscal Year 2016, $2.2 million in Fiscal Year 2017, $5.5 million in Fiscal Year 2018, and $3.9 million in Fiscal Year 2019. These early redemptions save the City a significant amount in interest expenses, which means money is spent on service delivery rather than debt payments. Internal Service Fund Highlights Internal Service Funds serve needs that are internal to the City as an organization. These are non-budgetary funds and are an internal financing mechanism for operations such as vehicle

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