2. EDSR 10-15-2007 - Laserfiche WebLink

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-' Global Credit Research ....~, ~=. = = New Issue _.__~ ~_ ~~ ~~ wrti~rs ~ 10 OCT 2007 New Issue: Elk River Economic Development Authority, MN MOODY'S UPGRADES THE CITY OF ELK RIVER'S (MN) GOULT RATING TO Aa3 FROM A1, AFFECTING $27.7 MILLION IN OUTSTANDING GENERAL OBLIGATION DEBT, INCLUDING CURRENT OFFERING ASSIGNS Aa3 RATING TO CITY OF ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY'S (MN) $30 MILLION GENERAL OBLIGATION BONDS, SERIES 2007 Municipality MN Moody's Rating ISSUE RATING General Obligation Bonds, Series 2007 Aa3 Sale Amount $10,000,000 Expected Sale Date 10/15/07 Rating Description General Obligation Opinion NEW YORK, Oct 10, 2007 - Moody's Investors Service has assigned a Aa3 rating to the City of Elk River Economic Development Authority's (MN) $10 million General Obligation Bonds, Series 2007. Concurrently, Moody's has upgraded to Aa3 from Al the rating on the city's outstanding general obligation debt affecting $27.7 million, including the current offering, and upgraded the rating from A2 to Al on the Economic Development Authority's outstanding $9.2 million in lease revenue debt. The Series 2007 bonds are being issued by the Economic Development Authority, but ultimately secured by the city's general obligation unlimited tax pledge. Bond proceeds will finance construction of a YMCA facility. The Aa3 rating reflects the city's sizeable and growing tax base located near the Twin Cities metropolitan region, well-managed and stable financial operations with ample reserve levels, and above average debt burden and principal amortization rate. DIVERSIFYING AND GROWING TAX BASE BENEFITS FROM FAVORABLE LOCATION NEAR THE TWIN CITIES METRO AREA Located 35 miles northwest of the Twin City metro area (Minneapolis general obligation debt rated Aa1, St. Paul GO rated Aa2), and 40 miles southeast of St. Cloud (GO rated Aa3) the City of Elk River acts as the county seat of Sherburne County, and benefits from its location in this high growth corridor. Its sizeable $2.3 billion tax base has grown at a strong 17.8% five year average annual rate, while its current estimated population of 22,550 has increased 37% since 2000, reflecting the strong local housing market, and expanding commercial and industrial sector. Through the successful use of TIF districts and increasing the number of active business parks, city officials expect development to continue at its current rate over the near term. Officials furthermore estimate the city's fully built out population to reach 36,000, though more than half of its land remains available for development. Future growth is expected to be aided by the development of the North Star commuter rail system connecting the Twin Cities to St. Cloud, anticipated to be operational by fall 2009. City wealth levels approximate state medians, with per capita and median family income at 94% and 115.1 % of state levels, respectively. WELL MANAGED AND STABLE FINANCIAL OPERATION EXPECTED TO CONTINUE Moody's believes that the city's financial operations will remain stable and healthy, given the city's demonstrated record of sound management with forward looking planning. Historically it has maintained healthy financial operations. Following five consecutive years of operating surpluses, the General Fund balance increased from $4.6 million, or 46.4% of General Fund revenues, in fiscal 2005, to $4.8 million, or 44% of revenues, in fiscal 2006. Despite the recent reductions in state aid, the city maintained healthy reserve levels and structural balance with prudent management strategies and tight expenditure controls in personnel and capital needs. Additionally, the city maintains over $4.6 million in the Municipal Liquor Fund, and historically has transferred approximately $200,000 on an annual basis into the General Fund, and over half of the balance is liquid and available for operational purposes. Management maintains a General Fund policy of 41.5% of budgeted expenditures, and has never fallen below these levels. City officials anticipate balanced operations for fiscal 2007. Management reports the city has recently completed along-term financial management plan which should provide stability going forward. Given the conservative budgeting