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Rating Update:

MOODY'S AFFIRMS Baa2 RATING ON WASHINGTON COUNTY HOUSING AND REDEVELOPMENT AUTHORITY'S (MN) (LOWER ST. CROIX VALLEY FIRE PROTECTION DISTRICT) MUNICIPAL FACILITY LEASE REVENUE BONDS, SERIES 2003 IN CONJUNCTION WITH RELEASE OF POOL FINANCING METHODOLOGY

19 Oct 2010

County
MN

Opinion

NEW YORK, Oct 19, 2010 -- Moody's Investors Service has affirmed the Baa2 rating on Washington County Housing and Redevelopment Authority's (MN) (Lower St. Croix Valley Fire Protection District) Municipal Facility Lease Revenue Bonds, Series 2003. The rating has been removed from Watchlist. The rating was placed under review with direction uncertain on May 20, 2010 in conjunction with the publication of a new rating methodology, "Moody's Approach to Rating U.S. Municipal and Not-For-Profit Pool Financings."

RATING RATIONALE

The bonds are a special limited obligation of the Authority, payable from lease payments made by the district to the Authority. Lease payments are subject to annual appropriation by the district. In addition, each underlying entity appropriate annually funds based on each entity's tax capacity and population for debt service to the district.

Moody's has evaluated the Washington County HRA's unenhanced pool using the "Weak Link Plus" rating approach outlined in the methodology, which places a greater emphasis on the probability of default by the weakest participant in the pool. For the Series 2003 pool, the modeled weighted average rating of the pool based on the participant's based on both public and non-public appropriation ratings is A3. The Baa2 rating reflects an additional notch due to the appropriation risk of the pool as a whole, and a further adjustment due to the high percentage of par related to non-rated entities. The rating is also based on adequate legal covenants and limited financial disclosure of the fire district. Participants with non-public Moody's ratings are associated with 52.3% of par. Including both public and non -public ratings, we believe the weakest borrower would be rated in the Baa category.

ADEQUATE LEGAL STRUCTURE

The Fire District is a joint enterprise established by a Joint Power Agreement in 1970. Located approximately 20 miles east of St. Paul (GO rated Aa1/positive outlook) along the Mississippi river, the Lower St. Croix Valley Fire Protection District is comprised of the following five adjacent cities: Afton (GO rated Aa3), Lakeland, Lakeland Shores, Lake St. Croix Beach, and St. Mary's Point. Each municipality annually appropriates funds to the fire protection district based on each city's tax capacity and population (Afton - 48.6%, Lakeland - 25.9%, Lakeland Shores - 5.5%, Lake St. Croix Beach - 13.9%, and St. Mary's Point - 6%) sufficient to pay for operations and debt service payable in four equal installments annually . In addition to the JPA, the cities are bound by a resolution under which a municipality pledges to pay debt service on the bonds and would face legal action, arbitration, or discontinued service for failure to make payments. The resolution states each municipality's pledge to appropriate funds for debt service the district through August 2024, which covers the life of the bond issue. In addition, the lease obligation provides a $100,000 negative pledge, covenanting that the district will have on hand an amount no less than $100,000 on the last day of each fiscal year during the term of the lease.

WHAT COULD CHANGE THE RATING UP

Significant improvement of credit quality of underlying entities

WHAT COULD CHANGE THE RATING DOWN

Significant deterioration of credit quality of underlying entities

KEY STATISTICS

AFTON (GO rated Aa3): 48.6% of principal

2000 Population: 2,839

2008 Full valuation: $620 million

2000 Per capita income, as % of state: 156.6%

2000 Median family income, as % of state: 168.9%

LAKE ST. CROIX BEACH: 14.9% of principal

2000 Population: 1,094

2008 Full valuation: $114 million

2000 Per capita income, as % of state: 111.1%

2000 Median family income, as % of state: 123.1%

LAKELAND SHORES: 5.5% of principal

Debt Service Pledge:

2000 Population: 342

2008 Full valuation: $69 million

2000 Per capita income, as % of state: 128.4%

2000 Median family income, as % of state: 147%

LAKELAND: 25.9% of principal

2000 Population: 1,791

2008 Full valuation: $256 million

ST. MARY'S POINT: 6% of principal

2008 Population: 362

2009 Full valuation: $78 million

Washington County 2000 Per capita income, as % of state: 121.3%

Washington County 2000 Median family income, as % of state: 131.1%

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit 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 ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

Analysts

Soo Yun Chun
Analyst
Public Finance Group
Moody's Investors Service

Rachel Cortez
Backup Analyst
Public Finance Group
Moody's Investors Service

Henrietta Chang
Senior Credit Officer
Public Finance Group
Moody's Investors Service

Contacts

Journalists: (212) 553-0376
Research Clients: (212) 553-1653


Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

MOODY'S AFFIRMS Baa2 RATING ON WASHINGTON COUNTY HOUSING AND REDEVELOPMENT AUTHORITY'S (MN) (LOWER ST. CROIX VALLEY FIRE PROTECTION DISTRICT) MUNICIPAL FACILITY LEASE REVENUE BONDS, SERIES 2003 IN CONJUNCTION WITH RELEASE OF POOL FINANCING METHODOLOGY
No Related Data.
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