09/11/1995 Council Packet - Laserfiche WebLink

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Lino Lakes, Minnesota y iv uuiuL.iNui Daily Rafinj Recap Rating date: August 17, 1995 Moody's rating: Baal (re "'sod from Baa) General Obligatio Bonds Last Rating Change:: June 1989: From Baal to Baa. Update of related ratings: Lino Lakes Economic Development Authority, Minnesota Moody's rating: Baal (revised from Baa) Public Project Revenue Bonds Credit Comment: Key factors supporting the rating revision to Baal from Baa on the general obligation bonds of this Twin Cities metropolitan area city are as follows: Ability to Pay Balloon Maturity from Ample Availa- ble Funds, Avoiding a Need to Refinance, Offsets Concern Over Weak Debt Structure and Results In the Rating Upgrade The use of temporary bonds with balloon maturities continues to be a major factor in assessing the city's credit quality. Reliance on this type of borrowing leaves the city vulnerable to downturns in development as well as market risk, should it need to refinance a balloon maturity. However, concern over the weak debt structure is somewhat mitigated by the existence of an unallocated Area and Unit Charge Fund balance in the Capital Projects Fund which stood at $3.3 million on December 31, 1994. The $3.3 million, comprised of city water and sewer system connection fees, is available to meet the $2.1 million outstanding balloon maturity payable November 1, 1997. The city has used this fund to pay balloon maturities in the past and, in turn, has reim- bursed the fund as special assessments are received. In recent years, debt burden has declined, due to growth in full valuation and rapid bond payout. Exp Elnding Tax Base with Good Socioeconomic Prof ie Loc 'ited 15 miles north of the Cities of Minneapolis and St. 'aul, Lino Lakes' accessibility to the metropolitan area diverse employment centers provides important stab'lity. Income levels and housing values for a growing pop .ilation are above those of the state in general. Gro'vth in the city's taxable valuation has been consis- tent over the past five years. Fav )rable Financial Operations Provide Satlsfac- to iDebt Security Ge ,:ral Fund reserves have grown over the past three yea s and represent in excess of six months of General Fund revenues, providing satisfactory financial cushion. Pro,erty taxes form a sizable portion of operating reve- nue and collections are prompt. Year-to-date general ope ations compare favorably to budget and despite a sm .1 budgeted drawdown, the city estimates that the Decaber 31, 1995 General Fund balance will be con- sist:;nt with, or above, that of the prior year. Up ate of Related Rating At t •iis time, we have also upgraded to Baal from Baa, the dating on the Lino Lakes Economic Development Aut tority Public Project Revenue Bonds, for which the citys obligation to pay debt service is unconditional, in vie ' of the city's moderate debt position, expanding eco lomic base and favorable financial trend. ^�I