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Rating Action:

Moody's upgrades the city of Aspen's (CO) GOULT to Aaa, assigns Aa1 to 2019 COP

01 May 2019

Outstanding COP and moral obligation ratings concurrently upgraded

New York, May 01, 2019 -- Moody's Investors Service has assigned a Aa1 to the city of Aspen's (CO) $30.6 million Certificates of Participation, Series 2019. Concurrently, we have upgraded the city's GOULT rating to Aaa, the outstanding COP's backed by essential assets to Aa1, outstanding COP's backed by less essential assets to Aa2, the outstanding housing revenue bonds with a moral obligation backing to Aa2.

RATINGS RATIONALE

The GO rating upgrade to Aaa reflects the city's substantial reserves in the general fund and other governmental funds, as well as the city's track record of financial resiliency and consistently strong reserves through economic cycles despite the volatility it experiences being from a renowned tourist destination. The rating also considers the city's low balance sheet leverage due to a low debt burden and the lack of a pension burden. Finally, incorporated into the rating assignment is the city's keen focus on environmental and social risk mitigation, particularly around snowpack and water supply, forest fires, and affordable housing.

The upgrade to Aa1 on the city's outstanding Series 2017 certificates of participation (COP) and the assignment of Aa1 to the Series 2019 COP reflects a one notch distinction from the GOULT rating, incorporating the city's strong underlying credit profile as well as the added risks of the COP legal structure. In particular, the rating assignment reflects the risk on annual non-appropriation for the leases, though considers the essential nature of the projects financed (police facility and city central administration building), which tempers this risk. The upgrade to Aa2 on the city's outstanding Series 2007 COP reflects a two notch distinction from the GOULT rating, reflecting a similar risk of annual non-appropriation and a less essential pledged asset under Moody's methodology (a theater).

The upgrade to Aa2 on the city's moral obligation rating affecting outstanding housing revenue bonds for the Burlingame Housing Corporation reflects a two notch distinction from the GOULT rating. The rating distinction incorporates a strong legal structure underlying the moral obligation pledge, as well as the more essential nature of the project (affordable housing) under Moody's methodology.

RATING OUTLOOK

Moody's typically does not assign outlooks to issuers with this amount of debt outstanding.

FACTORS THE COULD LEAD TO AN UPGRADE - relating to COP and moral obligation ratings only

- Change in state law that permits a strengthened legal structure

FACTORS THAT COULD LEAD TO A DOWNGRADE

- Trend of structural imbalance leading to a reduction in operating reserves below historic levels

- Material increase in the debt burden

- Failure to appropriate for COP debt service, or the housing revenue bonds DSRF

LEGAL SECURITY

The 2019 certificates are secured by base rental to be annually appropriated by the city. Base rental payment will be appropriated from the general fund, and potentially the IT fund, stormwater fund or the Aspen/Pitkin County housing authority fund (APCHA). In the event of non-appropriation, the lease automatically will be terminated and the trustee will attempt to sell, lease or sublease the leased property (the improvements). The leased property securing the certificates is considered essential and includes the city's central administration building.

The general obligation bonds are secured by the city's full faith and credit pledge, backed by an unlimited ad valorem tax. The outstanding COPs are secured by base rental payments associated with stand-alone leases (police facility and theater, respectively). The housing revenue bonds are secured by a mortgage lien on and security interest in the trust estate (Burlingame Multifamily Housing Project), though is backed by a moral obligation pledge of the city to replenish the reserve fund.

USE OF PROCEEDS

Proceeds of the 2019 certificates will fund the construction of the city's new administration building.

PROFILE

The City of Aspen is situated in the Colorado Rocky Mountains approximately 215 miles west of Denver (Aaa stable), encompassing four square miles and serves as the county seat of Pitkin County (Aa1 issuer rating). Tourism is the mainstay of the economy with the world famous Aspen and Snowmass ski resorts as well as other recreational areas. The city's year round population is estimated 7,359 as of 2018, and the population increases to as high as 20,000 during peak ski and summer seasons with both seasonal residents and visitors.

METHODOLOGY

The principal methodology used in the general obligation rating was US Local Government General Obligation Debt published in December 2016. The principal methodology used in the certificate of participation and moral obligation ratings was Lease, Appropriation, Moral Obligation and Comparable Debt of US State and Local Governments published in July 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain 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 certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain 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.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Denise Rappmund
Lead Analyst
Regional PFG Dallas
Moody's Investors Service, Inc.
Plaza Of The Americas
600 North Pearl St. Suite 2165
Dallas 75201
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Gera McGuire
Additional Contact
Regional PFG Dallas
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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