Court: U of Iowa must comply with subpoena on utilities deal

IOWA CITY, Iowa (AP) — The University of Iowa must comply with a subpoena from the state auditor that seeks the names of investors in a multibillion-dollar utilities privatization agreement it completed last year, the Iowa Supreme Court ruled Friday.

State Auditor Rob Sand acted legally when he subpoenaed details about the 50-year plan granting the right to operate campus utilities to a consortium of French companies in exchange for a $1.165 billion payment, justices agreed.

Given that it was one of the largest transactions in Iowa history, it was appropriate for Sand to seek to audit the deal even before it closed to ensure the school followed bidding processes and had no conflicts of interest with investors, the court found.

“The taxpayers of Iowa, who bear the ultimate financial risk for this transaction, are entitled to know if the agency got the best deal available and if anyone had a conflict of interest,” Justice Edward Mansfield wrote in a concurring opinion.

Under the deal, investors that include financial services companies lent $1.65 billion to the utilities companies, ENGIE and Meridiam, which paid it to the university. The university invested its upfront payment in an endowment that will pay out $15 million annually to fund campus education and research priorities.

In exchange, the university is required to pay the companies $35 million annually to operate plants and infrastructure that distribute electricity, water, steam and compressed air to campus buildings. That sum will rise over time and total payments could exceed $6.8 billion over the 50-year period, with the investors earning steady returns.

The deal will only make financial sense for the university long-term if the endowment earns billions in the market and isn't depleted too quickly through...