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Summary; Little Canada, Minnesota; General Obligation US$3.4 mil GO cap imp bnds ser 2014A due 02/01/2034 Long Term Rating Little Canada GO bnds ser 2009 Long Term Rating Rationale AA+ /Stable AA+ /Stable New Upgraded Standard & Poor's Ratings Services raised its long -term rating to'AA +' from 'AA' on Little Canada, Minn.'s previously issued general obligation (GO) debt based on the application of our local GO criteria released Sept. 12, 2013. At the same time, we assigned our 'AA +' long -term rating to the city's series 2014A GO capital improvement plan bonds. The outlook is stable. The city's unlimited -tax GO pledge secures the series 2014A bonds. The city will use the bond proceeds for the construction of a new public works facility. The rating reflects our assessment of the following factors for the city: • Strong economy, which benefits from participation in the broad and diverse economy of the Minneapolis -St. Paul metropolitan statistical area (MSA); • Very strong budgetary flexibility, with 2012 audited general fund reserves at 47% of expenditures after adjustment for an interfund receivable that the city anticipates will remain at the same level; • Strong budgetary performance, which takes into account the city's projections of at least break -even general fund operations and excludes total governmental fund expenditures for paying off debt with cash on hand; • Very strong liquidity providing very strong cash levels to cover both debt service and expenditures; • Strong management with good financial policies and practices; and • Adequate debt and contingent liability position, including rapid amortization and low overall debt burden as a percentage of market value. Strong economy We consider Little Canada's economy to be strong, with access to the broad and diverse economy of the Minneapolis -St. Paul MSA. The city has projected per capita effective buying income of 108% of the U.S. Per capita market value for the city was $85,835 for fiscal 2013. The city's net tax capacity has declined the past five years, and declined at an average annual rate of 7.1% from payable 2010 to 2013. However, management anticipates a slight increase in net tax capacity for payable 2019. Very strong budgetary flexibility In our opinion, the city's budgetary flexibility remains very strong, with reserves at more than 30% of expenditures for the past several years and no plans to significantly spend them down. The city anticipates slightly higher reserves for WWW. STANDARDANDPOORS .COM /RATINGSDIRECT FEBRUARY 10, 2014 2 1257077 1 300022685