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MOODY'S ASSIGNS Aa2 RATING TO LISLE PARK DISTRICT'S (IL) $7.25 MILLION GO LIMITED TAX PARK BONDS, SERIES 2010; $7.3 MILLION GO REFUNDING PARK BONDS, SERIES 2010A; AND $1.97 MILLION GO REFUNDING PARK BONDS (ALT. REVENUE SOURCE), SERIES 2010B

12 Oct 2010

Aa2 RATING APPLIES TO $17.6 MILLION OF OUTSTANDING GO DEBT, INCLUDING CURRENT OFFERINGS

Municipality
IL

Moody's Rating

ISSUE

RATING

Taxable General Obligation Limited Tax Park Bonds, Series 2010 (Build America Bonds-Direct Payment)

Aa2

  Sale Amount

$7,250,000

  Expected Sale Date

11/01/10

  Rating Description

General Obligation Limited Tax

 

General Obligation Refunding Park Bonds, Series 2010A

Aa2

  Sale Amount

$7,275,000

  Expected Sale Date

11/01/10

  Rating Description

General Obligation Unlimited Tax

 

General Obligation Refunding Park Bonds (Alternate Revenue Source), Series 2010B

Aa2

  Sale Amount

$1,970,000

  Expected Sale Date

11/01/10

  Rating Description

General Obligation Unlimited Tax

 

Opinion

NEW YORK, Oct 12, 2010 -- Moody's Investors Service has assigned a Aa2 rating to Lisle Park District's (IL) $7.25 million General Obligation Limited Tax Park Bonds, Series 2010 (Build America Bonds); $7.3 million General Obligation Refunding Park Bonds, Series 2010A; and $1.97 million General Obligation Refunding Park Bonds (Alternate Revenue Source), Series 2010B. Concurrently, Moody's has affirmed the outstanding Aa2 rating affecting $17.6 million of post-sale general obligation debt.

RATINGS RATIONALE

Proceeds from the Series 2010 bonds will finance a variety of capital needs, including the acquisition, renovation, and enhancement of a 40,000 square foot facility. The Series 2010A and Series 2010B Refunding Bonds, which are secured by the district's general obligation unlimited tax pledge, will refund select maturities of the district's outstanding General Obligation Series 2002A and Series 2002 (Alternate Revenue Source) bonds for an estimated net present value savings of $950,000. The Series 2010 Park Bonds are secured by the district's general obligation limited tax pledge, and benefit from a designated levy with an unlimited rate. The amount of the levy is limited by the district's statutorily authorized non-referendum debt service extension base; however there is no rating distinction between the district's limited tax and unlimited tax debt due to the presence of the designated levy and unlimited rate. Assignment and affirmation of the Aa2 rating reflects the district's moderately sized tax base; well managed finances with sound reserves; and a modest debt burden.

SIZABLE TAX BASE BENEFITS FROM PROXIMITY TO CHICAGO

The park district's tax base is expected to remain stable given continued commercial development and proximity to the City of Chicago (GO rated Aa3/stable). Located approximately 26 miles west of downtown Chicago, the district encompasses approximately 12 square miles, which includes the entire Village of Lisle (rated Aa1), small portions of Naperville (rated Aaa) and Woodridge (rated Aa1), and parts of unincorporated DuPage County (rated Aaa). The district's $4.1 billion tax base has experienced comfortable growth in recent years, as evidenced by a moderate 4.6% average annual rate of full valuation growth from 2004 through 2009. While the impact of the broader economy and national recession has slowed tax base growth in recent years, management reports that downtown redevelopment initiatives continue. Additional tax base support is afforded by the district's accessibility to a number of metro area employment centers, including Chicago proper and suburban Cook (rated Aa2/stable) and DuPage Counties.

District management notes that Navistar (long term rated B1/positive), an international automotive parts manufacturer, will be relocating to the district from nearby Warrenville, IL. The company plans to invest $110 million in a 1.2 million-square-foot campus. The move is expected to retain or create over 3,000 permanent jobs. Additionally, several corporations and entities have their headquarters based in the Village of Lisle, including Molex, Inc., McCain Foods, Patrick Engineering, and Armour-Eckrich Meats. The Village of Lisle's wealth levels are notably above state indices, while its August 2010 unemployment rate of 8.1% was below both the state and national rate of 9.9% and 9.5% respectively.

SOUND FINANCIAL POSITION EXPECTED TO CONTINUE

The district's financial profile will likely remain sound given its healthy reserve levels, strong managerial oversight, and financial flexibility that is inherent in Illinois park districts. At the conclusion of fiscal 2008, the district's two primary operating funds (General and Recreation funds) held a combined balance of $1.98 million, or 49.7% of revenues. In fiscal 2009, the district's General Fund posted an operating deficit of $62,000, which brought reserves down to $1.04 million, or 57.2% of revenues. While the district initially budgeted for an operating deficit of $352,000, the positive variance was achieved primarily through expenditure reductions in the areas of personnel adjustments and general cost containment. The district's Recreation Fund experienced an operating surplus of $367,000, which brought reserves up to $1.25 million, or 52.1% of revenues. The district's 2009 combined fund balance of $2.28 million, or a healthy 53.6% of combined revenues, is in line with the district's policy of maintaining no less than 50% of revenues. Management expects to add approximately $400,000 in reserves between both key operating funds in fiscal 2010. The increase is primarily attributable to adjustments in personnel expenditures, primarily from combining positions, monitoring overtime costs, and maintaining vacant positions. The expected surpluses would bring the district's combined fund balance to $2.68 million, or a healthy 63.1% of 2009 combined revenues.

Unlike the General Fund, whose revenues are primarily comprised of property taxes (93% of 2009 revenues), the Recreation Fund's revenue streams are a blend of program fees (57%) and property taxes (39.8%). While program fees represent a passive revenue stream, the district continually monitors its pricing structure relative to neighboring districts and private facilities as well as the mix of offered programs to be responsive to any changes in demand. Additional flexibility is afforded by the district's ability to raise recreation program fees. Management notes that the district's programmatic offerings benefit from strong community support. Projections for fiscal 2011 estimate the General and Recreation Fund concluding with a combined $300,000 operating surplus. A combination of both revenue enhancements and expenditure reductions are expected to yield a combined reserve level of $2.98 million, or a very strong 70% of 2009 combined revenues.

MODEST DEBT PROFILE; NO IMMEDIATE BORROWING PLANS OUTLINED

The district's overall and direct debt burden are modest at 1.3% and 0.4% respectively. Scheduled principal amortization is average compared to the national local government issuer median, with 64.1% of obligations retired in ten years. While no immediate plans for additional debt issuance have been identified, management notes that approximately $2 million is issued every three years for capital purposes. We believe the district's debt burden will likely remain manageable due to the district's continued tax base growth and limited future borrowing plans. All of the district's debt is fixed rate, and the district is not a party to any interest rate swap agreements.

What could change the rating - DOWN

- Material multi-year declines in fund balances and liquidity

-Tax base erosion leading to valuation figures below similarly rated entities

- Significant growth in the district's direct debt burden

What could change the rating - UP

-Economic expansion as reflected in tax base growth

- Increase in General Fund reserves

KEY STATISTICS:

2009 Population (estimate): 23,506

2009 Full Valuation: $4.1 billion

2009 Full Value Per Capita (Estimate): $124,600

Direct Debt: 0.4%

Overall Debt: 1.3%

Payout (10 Years): 64.1%

Post-sale GO debt outstanding: $17.6 million

Fiscal 2009 General Fund Balance: $1.04 million (57.2% of General Fund Revenues)

Fiscal 2009 Combined General & Recreation Fund Balances: $2.28 million (53.6% of combined revenues)

2000 Per Capita Income as a % of State (Village of Lisle): 154.5% (165.3% of US)

2000 Median Family Income as a % of State (Village of Lisle): 156.5% (173.7% of US)

The principal methodology used in rating Lisle Park District, IL was General Obligation Bonds Issued by U.S. Local Governments rating methodology published in October 2009. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website.

REGULATORY DISCLOSURES

Information sources used to prepare the credit rating are the following: parties involved in the ratings, parties not involved in the ratings, public information.

Moody's Investors Service considers the quality of information available on the credit satisfactory for the purposes of assigning a credit rating.

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

Mark G. Lazarus
Analyst
Public Finance Group
Moody's Investors Service

Edward Damutz
Backup Analyst
Public Finance Group
Moody's Investors Service

Contacts

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


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MOODY'S ASSIGNS Aa2 RATING TO LISLE PARK DISTRICT'S (IL) $7.25 MILLION GO LIMITED TAX PARK BONDS, SERIES 2010; $7.3 MILLION GO REFUNDING PARK BONDS, SERIES 2010A; AND $1.97 MILLION GO REFUNDING PARK BONDS (ALT. REVENUE SOURCE), SERIES 2010B
No Related Data.
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