5.2. & 5.3. SR 11-30-1998 - Laserfiche WebLink

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11-/24/98 12:35 ET REF: ATTN: Lori Johnson City of Elk River NOOD1228.0001 FR:MOODYS T0:6124417425 Page 1 of 2 MOODY'S ASSIGNS BAA1 RATING TO ELK RIVER'S (MN) SERIES 1998 G.O. BONDS $20 MILLION DEBT AFFECTED Elk River (City of) MN Municipality Minnesota Moody's Rating Issue Rating General Obligation Improvement Bonds, Series 1998A Sale Amount $1,375,000.00 Expected Sale Date 11/30/98 Rating Description General Obligation Baal General Obligation Water Revenue Bonds, Series 1998B Sale Amount $820,000.00 Expected Sale Date 11/30/98 Rating Description General Obligation Baal NEW YORK, November 24, 1998 -- Moody's has assigned a Baal rating with a positive outlook to the City of Elk River (MN) $1,375,000 General Obligation ~ rovement Bonds, Series 1998A and $820,000 General Obligation Water Revenue B~.~ds, Series 1998B. The Baal rating assignment with a positive outlook reflects Moody's expectation that the city will maintain a sound financial position, experience continued tax base and population growth, and manage the high debt burden with extremely high debt service expenditures. IMPROVED FINANCIAL POSITION DESPITE PRESSURES OF RAPID GROWTH; Moody's expects continued financial stability due to attention to careful planning and conservative budgeting. Flexibility is afforded in meeting growth-related pressures through the continued monitoring of capital, personnel, and service needs. General Fund balance has grown steadily over the last four years. In fiscal 1997 the General Fund balance was 41.2% of General Fund revenues. Officials hope to maintain this level and utilize any surpluses generated in future years to build up reserves in other funds. The city had $250,000 of margin within the legislatively imposed tax levy cap for the current year. HIGH DEBT LEVELS REFLECT GROWING COPSMUNITY. Moody's believes Elk River's high debt burden, at 7.1%, is manageable due to continued tax base and population growth and rapidly retired principal. The high debt burden is primarily attributable to the significant issuance by the overlapping school district, reflecting increased enrollment needs. Due to growth pressures Moody's expects on-going debt issuance over the next several years. Officials anticipate future borrowing of $5 million within the next two rs for water and sewer extension. Support from special assessments, utility e~cerprise revenues, and tax increments for most of the city's outstanding general obligation debt alleviates pressure on the property tax rate.