General Obligation Improvement and Refunding Bonds, Series 2010A
Expected Sale Date
NEW YORK, Sep 24, 2010 -- Moody's Investors Service has assigned an initial A1 rating to the Township of
Hassan's $1.9 million General Obligation Improvement and Refunding Bonds, Series
The bonds are secured by the township's general obligation unlimited tax pledge.
Proceeds will be used to refund the township's outstanding General Obligation
Improvement Bonds, Series 2004 for estimated net present value savings of 5%, in
addition to various public improvements within the township. The A1 rating
reflects the township's modestly-sized tax base outside of Minneapolis (GO rated
Aaa/stable), ongoing annexation by neighboring City of Rogers expected to
completed by January 2012, satisfactory financial operations supported
by healthy reserve levels, and modest debt burden with rapid
MODESTLY-SIZED TAXBASE; ANNEXATION BY CITY OF ROGERS BY JANUARY 2012
Located just south of Minneapolis, the township's modestly-sized taxbase has
been declining at a relatively rapid rate, mostly due to the orderly annexation
by the City of Rogers. The township's $463 million taxbase declined by 8.9% in
2009 and an additional 14.3% in 2010, bringing the average annual rate of growth
to a minimal 0.1% over the past five years. While primarily residential
(38.5%), the township has a significant commercial/industrial (38.5%) as well as
agricultural (6.1%) presences.
Per a joint agreement between the town board and city developed in 2003, the
township is expected to be completely annexed by the City of Rogers by January
2012 as approved by the state. Recognized as an enforceable contract under state
law, the orderly annexation began in 2003, and the third and final phase is
currently under way. The township will officially become a part of the City of
Rogers. Rogers wealth indices exceed state medians with per capita and median
family incomes at 111.4% and 135.4, respectively.
SATISFACTORY FINANCIAL OPERATIONS WITH HEALTHY RESERVES
We expect the township's finances will remain satisfactory due to
healthy reserve levels and recent operating surpluses. The township posted a
modest operating surplus of $66,000 in fiscal 2009, and closed the year with a
General Fund cash balance of $914,000, or a healthy 76.6% of revenues. The
township's primary source of operating revenue is from property taxes (85.9% of
General Fund receipts), while intergovernmental aid is a modest 4.6% of
operating receipts. The township received a modest reduction of $50,000 in
Market Value Homestead Credit in fiscal 2010. Favorably, the township does not
receive Local Government Aid (LGA), therefore is not subject to mid-year state
aid unallotments mitigating vulnerability to state aid pressures. Township
officials report balanced operations thus far in fiscal 2010 and have no plans
to use reserves in fiscal 2011.
We note that the township's cash basis accounting indicates a high point in cash
as property taxes are received in July and December of a given fiscal year.
While we note this high point in cash, the township has in informal target of
maintaining 65% of General Fund receipts in reserves for cash flow purposes. We
expect the township's finances to continue to remain sound due to healthy
reserves levels and adherence to its policies.
MODEST DEBT BURDEN WITH AVERAGE PRINCIPAL AMORTIZATION; LIMITED FUTURE BORROWING
We expect the township's debt burden to remain manageable due to rapid principal
amortization, no debt plans and eventual assumption of the township's debt by
Rogers. The township's direct debt is a low 0.5% with overall debt a higher 3.6%
reflecting school district borrowing, including Osseo ISD 279 (GO rated Aa1) and
Elk River ISD 728. Principal amortization is rapid with 98.8% of all debt
retired in ten years.
Upon annexation, the City of Rogers will assume all of the township's debt which
will be backed by the City of Rogers' general obligation unlimited tax pledge.
Hassan will levy and continue to pay debt service through fiscal 2012 and Rogers
will levy and begin paying debt service beginning fiscal 2013. For more
information regarding the City of Rogers, please refer to our report dated April
2000 Census population: 2,600
City of Rogers 2000 median family income, as % of state: 111.4%
City of Rogers 2000 per capita income, as % of state: 135.4%
2009 Full value: $463 million
Full value per capita: $89,356
Fiscal 2009 General Fund balance: $914,000 (76.6% of General Fund revenues)
Direct debt burden: 0.5%
Overall debt burden: 3.6%
Amortization of principal (10 years): 98.8%
Post-sale general obligation debt: $2.5 million
WHAT COULD CHANGE THE RATING - UP
Substantial growth in the township's taxbase
Substantial improvement in General Fund reserves
WHAT COULD CHANGE THE RATING - DOWN
Erosion of the township's taxbase
Deterioration in General Fund reserves to a level inconsistent with
similarly rated credits
The principal methodology used in rating Hassan (Township of) MN 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
Information sources used to prepare the credit rating are the following: parties
involved in the ratings, parties not involved in the ratings, public
information, confidential and proprietary Moody's Investors Service's
information, confidential and proprietary Moody's Analytics' 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.
Soo Yun Chun
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 INITIAL A1 RATING TO THE TOWNSHIP OF HASSAN'S (MN) $2.6 MILLION GO IMPROVEMENT AND REFUNDING BONDS, SERIES 2010A
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