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<br />,06~25J\l99 14:23 ET REf: <br />ATTN: Lori Johnson <br />City of Elk River <br /> <br />NOOD8245.0000 fR:HOODYS <br /> <br />TO:6124417425 <br /> <br />Page 1 of 3 <br /> <br />Jllby,S ASSIGNS A3 RATING TO ELK RIVER, MN G.O. BONDS SERIES 1999A <br />UPGRADE TO A3 FROM Baal AFFECTS $19 MILLION IN OUTSTANDING DEBT <br /> <br />Elk River (City of) MN <br />Municipality <br />Minnesota <br /> <br />Moody'S Rating <br /> <br />Issue <br /> <br />Rating <br /> <br />General Obligation Bonds, Series 1999 A <br />Sale Amount $5,725,000.00 <br />Expected Sale Date 06/28/99- <br />Rating Description General Obligation Unlimited Tax <br /> <br />A3 <br /> <br />NEW YORK, June 25, 1999 -- Moody'S has assigned an A3 rating to Elk River, <br />MN's $5,725,000 million General Obligation Bonds, Series 1999A. In addition, <br />Moody'S has upgraded to A3 from Baal $18.95 million of the city's outstanding <br />general obligation debt. Moody'S has also upgraded to Baal from Baa2 the <br />city's $2.43 million outstanding City Hall Lease Bonds, issued by the Elk <br />River Economic Development Authority, which are subject to annual <br />appropriation. <br /> <br />. upgrade reflects the city's diversifying and growing taxbase and the <br />e ectation that this growth will continue. In addition, the city's financial <br />position has strengthened, evidenced by growing reserves in the General Fund. <br />Finally, the city's high debt burden is expected to moderate as the city, with <br />the current offering, has in place the necessary infrastructure to accommodate <br />the planned future growth. <br /> <br />RAPIDLY GROWING CITY BENEFITS FROM PRIME LOCATION <br /> <br />Moody'S expects continued tax base growth for the city due to its favorable <br />location in the high growth corridor between Minneapolis/St. Paul metro area <br />and St. cloud. Growth of this $800 million tax base has been rapid, averaging <br />114 annually over the last five years, reflective of a growing population <br />which has increased 404 since 1990. Housing development, which has averaged <br />between 150 and 200 new homes per year over the last four years, is expected <br />to continue at a similar rate. Continued growth is expected as the city begins <br />its next phase of development of 700 acres for mixed-use purposes which <br />includes a 600 lot subdivision, a business park, and retail area. This growth <br />is expected to be aided by the possible development of a commuter rail system <br />connecting the metro area to St. Cloud, which is currently in the planning <br />stages, and is expected to be completed in 2001. With a station planned for <br />Elk River, the commuting time to the metro area would be approximately 45 <br />minutes. The city's commercial/industrial sector has been expanding with the <br />emphasis on light industrial development and retail. Wealth and housing values <br />remain above the state and ample employment opportunities are reflected in low <br />Sherburne County unemployment rates which at 2.24 in April 1999 equaled state <br />~lS. <br /> <br />IMPROVED FINANCIAL POSITION <br /> <br />Moody'S expects the city'S improved financial position to remain satisfactory <br />due to the city's maintenance of favorable reserves in the General Fund which <br />