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15 Sep 2010
Aaa RATING APPLIES TO $75.9 MILLION OF OUTSTANDING GO DEBT, INCLUDING CURRENT OFFERING
General Obligation Bonds, Series 2010
Expected Sale Date
General Obligation Unlimited Tax
NEW YORK, Sep 15, 2010 -- Moody's Investors Service has assigned a Aaa rating to the Village
of Northbrook's (IL) $7.2 million General Obligation Bonds, Series 2010.
Concurrently, Moody's has affirmed the outstanding Aaa rating affecting $75.9
million of post-sale general obligation debt. The bonds, which are secured by
the village's general obligation unlimited tax pledge, will pay a portion of
the costs of capital improvements for the village, including a water tower,
equipment, and road surfacing. Additionally, the bonds will refund the village's
outstanding GO Bonds, Series 2001 and GO Bonds, Series 2003 for an estimated net
present value savings of 4.5%.
Assignment and affirmation of the highest quality Aaa reflects the
village's strong financial position with significant revenue raising
flexibility; large tax base with above average socioeconomic indicators;
manageable debt profile; and prudent management.
SIZEABLE AND DIVERSE TAX BASE; AFFLUENT RESIDENT POPULATION
The village's mature tax base is expected to continue to experience
relatively healthy growth in full valuation given continued commercial and
retail investment, high quality residential construction, and
appreciation. Northbrook is located in suburban Cook County (general obligation
rated Aa2), 26 miles north of Chicago (general obligation rated
Aa3/stable outlook), and benefits from ease of access to downtown Chicago. The
village's local economic base is diverse, combining corporate offices and
commercial developments with a wealthy residential base. Northbrook Court, a
large regional mall featuring high-end shopping outlets, anchors a sizeable
The Willow Festival retail center, located at the intersection of Willow and
Waukegan roads, continues to experience development. The retail development
houses a variety of restaurants and shops, including Lowe's, Whole Foods, REI,
and Best Buy stores. Village management notes that Nestlé (long term rated
Aa1, negative outlook) recently purchased a sizable parcel of land within
the village. The facility will serve as headquarters for the company's pizza
division. The company anticipates the investment of $15 million in improvements
and is expected to create 168 jobs at the facility. The healthy retail growth,
continued office expansion, high-valued residential construction and
appreciation contributed to a healthy 10.6% average annual rate of full
valuation growth from 2003 through 2008. Resident income indices far outpace
state and national norms, with per capita and median family incomes equivalent
to 235.2% and 221.4% of national figures, respectively. Similarly, the village's
Census 2000 median home value of $370,800 is equivalent to 310% of the national
STRONG FINANCIAL POSITION; SIGNIFICANT REVENUE RAISING FLEXIBILITY PROVIDED BY
HOME RULE STATUS
The village's financial operations will likely remain sound given its healthy
reserve levels and substantial operating flexibility provided by its home rule
status. Audited results from fiscal 2009 ending April 30 indicate a draw on
reserves of $185,000. Sales tax receipts, the village's single largest General
Fund revenue source at 30% of fiscal 2009 revenues, experienced a
negative budget-to-actual variance totaling $1.3 million. Conversely, building
permit fees, property, utility, replacement, and state use taxes all came in
stronger than budget. Management mitigated the negative revenue variance by
maintaining personnel vacancies and closely monitoring departmental costs,
generating overall expenditure savings totaling $1.3 million. The village
concluded fiscal 2009 with a General Fund balance of $19.1 million, or a healthy
48.7% of revenues.
According to unaudited figures for fiscal 2010, the village's General Fund
experienced an operating deficit of $1 million. Approximately $800,000 of the
deficit was budgeted in order to finance various capital and equipment
purchases. Management notes that the impact of the broader economy continued to
impact the village's revenue collections, as evidenced by actual revenues being
$1.5 million less than budget. Economically sensitive revenue streams such as
sales and income taxes came in $388,000 and $363,000 under budget, respectively.
Management identified these shortfalls mid-year and eliminated 14 full-time
positions for an estimated savings of $1 million. An additional $300,000 was
saved through general cost containment. The ending General Fund balance is
projected to be $18.1 million, or 52.3% of revenues. For fiscal 2011, the
village's budget expected an operating surplus of $30,000. Management notes that
first quarter revenues are tracking above budget. While the budget assumed a 1%
increase in sales tax revenues, management notes that the collections from each
of the past six months has exceeded budget. As a result, management currently
estimates an operating surplus totaling $285,000. The expected surplus
would increase reserves to $18.3 million, or 50% of 2011 budgeted revenues. As a
home rule municipality, the village maintains additional financial flexibility
and is able to adjust a variety of tax rates as needed to increase revenues.
MANAGEABLE DEBT PROFILE WITH NO FUTURE BORROWING PLANS
The village's debt profile is expected to remain favorable as current debt
levels are modest and future debt plans are limited. The village's overall debt
burden stands at a manageable 2.5%, with direct debt similarly favorable at
0.8%. The rate of principal amortization is below average with 55% of
obligations retired within 10 years. The amortization rate reflects, in part,
the 2004 sale of $16.6 million of pension obligation bonds structured with a
balloon payment of $8.8 million in fiscal 2034. All of the village's debt is
fixed rate, and the village is not a party to any interest rate swap agreements.
2009 Population: 34,419
2008 Full valuation: $9.4 billion
Full valuation per capita: $277,671
Overall debt burden (direct): 2.5% (0.8%)
Payout of principal (10 years): 55%
Fiscal 2009 General Fund balance: $19.1 million (48.7% of General Fund revenues)
Fiscal 2009 undesignated General Fund balance: $18.5 million (47% of General
1999 per capita income as a % of nation: 235.2%
1999 median family income as a % of nation: 221.4%
Post-sale GOULT debt outstanding: $75.9 million, including current offering
The principal methodology used in rating Village of Northbrook, 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.
Information sources used to prepare the credit rating are the following: parties
involved in the ratings, parties not involved in the ratings, public
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.
Mark G. Lazarus
Public Finance Group
Moody's Investors Service
Public Finance Group
Moody's Investors Service
Journalists: (212) 553-0376
Research Clients: (212) 553-1653
MOODY'S ASSIGNS Aaa RATING TO THE VILLAGE OF NORTHBROOK'S (IL) $7.2 MILLION GO BONDS, SERIES 2010
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
No Related Data.
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