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Related Issuers
Rating Action:

Moody's assigns Aaa rating to the City of Burnsville's (MN) GO Bonds, Series 2012A, Series 2012B, and 2012C; negative outlook assigned

Global Credit Research - 10 Oct 2012

Aaa rating and negative outlook apply to $59.7 million post-sale general obligation debt

New York, October 10, 2012 --

Moody's Rating

Issue: General Obligation Tax Increment Bonds, Series 2012A; Rating: Aaa; Sale Amount: $5,130,000; Expected Sale Date: 10-15-2012; Rating Description: General Obligation

Issue: General Obligation Utility Revenue Bonds, Series 2012B; Rating: Aaa; Sale Amount: $3,135,000; Expected Sale Date: 10-15-2012; Rating Description: General Obligation

Issue: General Obligation Improvement Bonds, Series 2012C; Rating: Aaa; Sale Amount: $1,385,000; Expected Sale Date: 10-15-2012; Rating Description: General Obligation

Opinion

Moody's Investors Service has assigned Aaa rating to the City of Burnsville's (MN) $5.1 million General Obligation Tax Increment Bonds, Series 2012A, $3.1 million General Obligation Utility Revenue Bonds, Series 2012B, and $1.4 million General Obligation Improvement Bonds, Series 2012C. Concurrently, Moody's affirms the Aaa rating on the city's outstanding general obligation debt, affecting $59.7 million post-sale. Moody's also affirms the Aa2 rating on the city's outstanding $5.4 million of lease revenue debt. A negative outlook has been assigned.

SUMMARY RATING RATIONALE

The bonds are secured by the city's general obligation unlimited tax pledge. Proceeds of the Series 2012A bonds will finance the construction of an intersection in the city's Tax Increment Finance (TIF) district, and debt service will be payable from TIF revenues. Proceeds of the Series 2012B will finance various water, sewer, and street projects, and debt service is expected to be paid with enterprise revenues. Proceeds of the 2012C bonds will finance various street rehabilitation and reconstruction projects, with debt service payable from special assessments. The Aaa rating reflects the city's diverse local economy that is favorably located in the Twin Cities metropolitan area; strong financial position supported by prudent financial management; and low direct debt burden. The Aa2 lease revenue rating reflects the non-essential nature of project financed (ice rink) and risk of annual non-appropriation for debt service.

The negative outlook reflects consecutive years of significant declines in taxable valuations, weaker and demographic profile compared to neighboring peers, and modest enterprise risk posed by the city's Performing Arts Center that may pose downward pressure on the city's rating.

STRENGTHS

Large and diverse economy in the Minneapolis/St. Paul metropolitan area

Strong financial operations and policies supported by ample reserves

CHALLENGES

Significant multi-year decline in valuations

Socioeconomic indices below medians for comparably rated cities

Modest enterprise risk posed by various major and non-major enterprise funds

Negative outlook

The negative outlook reflects the weakened trend in valuations and economic indicators over the past decade, and likelihood that these trends may continue to decline putting further downward pressure on the rating.

What could change the outlook to stable

- Continued strong financial operations across all funds

- Improved and sustained balanced operations in the Performing Arts Fund

- Stabilization of and increases to the city's valuations

What could change the rating - DOWN

- Material declines in fund balances and liquidity

- Further contraction of the city's already declining tax base and weakening of demographic profile

- Emergence of enterprise pressures on General Fund operations

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, confidential and proprietary Moody's Analytics information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources.

However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

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Soo Yun Chun
Analyst
Public Finance Group
Moody's Investors Service, Inc.
100 N Riverside Plaza
Suite 2220
Chicago, IL 60606
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Andrea Stenhoff
Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns Aaa rating to the City of Burnsville's (MN) GO Bonds, Series 2012A, Series 2012B, and 2012C; negative outlook assigned
No Related Data.

 

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