Master Proposed Book FY2023

City’s Debt Policies

There are currently three benchmarks used by the City of Iowa City to evaluate its financial position concerning its debt: 1) the 5% statutory debt limit, 2) the internal restriction on the debt service levy of 30% of the City’s total levy, and 3) the level of outstanding general obligation and tax increment revenue bonded debt against the City’s total assessed valuation. These three benchmarks are included in the Debt Management policy as adopted by the City Council. Statutory limitations which govern the issuance of debt in Iowa include Article XI Section 3 of the state constitution, entitled “Indebtedness of Political or Municipal Corporations.” Language in this section restricts the level of indebtedness for Iowa municipalities to five percent (5%) of “the value of …taxable property within such county or corporation.” This is commonly referred to as the “debt ceiling or debt limit.” The graph below compares Iowa City’s outstanding general obligation (G.O.) and tax increment financing revenue (TIF) debt with the statutory debt limit. Total valuations for Iowa City for fiscal year 2023 are approximately $7.258 billion. The debt limit, or five percent (5%) of this amount, is about $362.9 million. Outstanding G.O. and TIF debt at June 30, 2023, is estimated to be $65.32 million, which is 18% of the debt limit. The ratio of outstanding G.O. and TIF bonded debt versus the State imposed legal debt limit has been on a declining trend since fiscal year 2014.

* FY22, FY23, and FY24 figures are estimates

421