Heartland Institute Replies to Comments by Cedar Falls Utilities on Rizzuto Research

Published October 14, 2005

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. It is available online at http://www.heartland.org/Article.cfm?artId=17724.

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 Heartland contacted CFU for a copy of that response, however, we learned no statement had been issued.

Nevertheless, Heartland has issued a response to statements attributed to Betty Zeman, marketing manager for CFU, in the Courier story. The full text of Heartland’s response can be downloaded in Adobe Acrobat’s PDF format from http://www.heartland.org/article.cfm?artId=17873.

The response was prepared by Steven Titch ([email protected]), senior fellow – IT and telecom policy for The Heartland Institute and managing editor of IT&T News, a monthly newsletter addressing technology and telecommunications policy issues.

Heartland is supported by approximately 1,500 donors and members. For more information, call Ralph Conner, public affairs director, 312/377-4000, or email him at [email protected].