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Summary: Lino Lakes City, Minnesota; Appropriations; General Obligation Credit Profile US$1.98 mil taxable GO imp rfdg bnds ser 2016B due 02/01/2021 Long Term Rating AA/Stable US$1.6 mil GO tax abatement rfdg bnds ser 2016C due 02/01/2023 Long Term Rating AA/Stable US$1.42 mil GO wtr util rev bnds ser 2016A due 02/01/2027 Long Term Rating AA/Stable Lino Lakes City GO Long Term Rating Rationale AA/Stable New New New Affirmed S&P Global Ratings assigned its 'AA' underlying rating to Lino Lakes City, Minn.'s series 2016A general obligation (GO) water utility revenue bonds, 2016B taxable GO improvement refunding bonds, and 2016C GO tax abatement refunding bonds. At the same time, we affirmed our 'AA' underlying rating on the city's outstanding GO debt and affirmed our 'AA-' rating on the city's outstanding appropriation debt. The outlook on all ratings is stable. We rate the series 2015 lease revenue bonds one notch lower than the city's GO debt because of the annual appropriation risk associated with the bonds. A pledge of the city's full -faith -credit -and -resources and its unlimited property tax pledge secure the bonds. For the 2016A bonds the city has pledged net revenues of the water utility system, for the 2016B bonds the city has pledged special assessments against benefitted properties, and for the 2016C bonds the city has also pledged tax abatement revenues though our rating on all series is on the unlimited tax pledged. It is our understanding that bond proceeds from the 2016A bonds will be used to finance water system improvements and the 2016B and 2016C bond proceeds will be used to refund existing GO debt for interest cost savings only. The ratings reflect our assessment of the following factors: • Strong economy, with access to a broad and diverse metropolitan statistical area (MSA); • Strong management, with "good" financial policies and practices under our financial management assessment (FMA) methodology; • Strong budgetary performance, with operating results that we expect could improve in the near term relative to fiscal 2015, which closed with an operating surplus in the general fund but an operating surplus at the total governmental fund level in fiscal 2015; • Very strong budgetary flexibility, with an available fund balance in fiscal 2015 of 67% of operating expenditures; • Very strong liquidity, with total government available cash at 2.7x total governmental fund expenditures and 10.7x WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 21, 2016 2 1741666 I 302253518 Th