Reply to Cedar Falls Utility Regarding Heartland Policy Study on Iowa Municipal Communications Systems
On September 20, 2005, The Heartland Institute published a policy study by Dr. Ronald Rizzuto, professor of finance at the University of Denver, titled Iowa Municipal Communications Systems: The Financial Track Record. The study reported on the finances of municipal communications utilities in three Iowa cities: Cedar Falls, Muscatine, and Spencer.
Rizzuto's findings specific to Cedar Falls' municipal communications system were that it has operated with a negative annual free cash flow to equity in all but one year since its creation in 1997. Its internal rate of return is -7.24 percent, meaning it has been a poor investment for taxpayers and ratepayers.
According to a news story in the October 2, 2005 issue of the Waterloo Cedar-Falls Courier, "Cedar Falls Utilities has released a full response to a Heartland Institute study that calls the utility a poor investment." When we contacted CFU for a copy of that response, we learned no statement had been issued. Consequently, this reply addresses only statements attributed to Betty Zeman, marketing manager for CFU, in the Courier story.