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Home My WebLink AboutA008 - Moody's Rating dated June 23, 1998 06/23/98 12:06 ET REF: N0006291.0001 FR:NOOOYS TO:5152395325 Page 1 of 2 ATTN: Ms . Alice Carroll, director of finance City of Ames MOODY'S ASSIGNS Aaa TO AMES ' GENERAL OBLIGATION CORPORATE PURPOSE BONDS , SERIES 1998A Ames (City of) IA Municipality Iowa Moody' s Rating Issue Rating General Obligation Corporate Purpose Bonds , Series 1998A Aaa Sale Amount $5, 130, 000.00 Expected Sale Date 06/23/98 Rating Description General Obligation NEW YORK, June 23 , 1998 -- Moody' s Investors Service has assigned a Aaa rating, with a stable outlook, to the City of Ames General Obligation Corporate Purpose Bonds , Series 1998A. Assignment of this highest rating is due to the city' s significant economic health and tax base growth, strop_ financi��l management, considerable financial- f lexibilittf-y—, aini avora e debt Q This rating affects $34 .495 million of outstan ing general obligation debt . The preaen.ce_ of,Iowa State University, the state' s second largest higher education institution, imparts considerable stability to the city' s economy and population. Additionally, varied light manufacturing and service activities create some diversity and foster continued growth in city taxable resources . Assessed Valuation averaged healthy 5 .4% annual increases from Fiscal 1993 through 1999, due primarily to new growth. with 15%_of__c-ity-_Land__ still avai lab le_fo_r__sie_v�,QDment, and the construction of a 600, 000 square foot asta manufacturi.T�g_�7 �nr nno�ing Moody' s expects satisfactory tax base rowth to continue over the next few years . Unemployment rates remain below state an national averages , an t e median housing value is 158% of the state average . Income levels are favorable relative to Iowa averages , with median family income measuring 115% of the state level. The city' s strong financial operations are demonstrated by increasing General Fund balances, the use of a local option sales tax to enhance revenue diversity, and the retention of a significant and increasing General Fund operating property tax rate margin. General Fund balances - which represented about 13% of General Fund revenues in Fiscal 1995 and 1996 - grew to 26% in Fiscal 1997 , and are expected to be approximately 30% in Fiscal 1998 . The large increase in balances was partly due to an unexpected 33% jump in sales tax revenues , from $3 .4 milli-on in Fiscal 1996 to $4 .5 million in Fiscal 1997 . This increase was attributable primarily to a one-time change in the state' s distribution of such funds . The city council recently adopted a policy of retaining Gemeral Fund balances at 3 level of at least 15% O Genera—�u ues; while there are currently no plans to drive t e balance down o this level in—the foreseeable future, officials will determine on an annual basis what one-time projects to fund with any excess surpluses . Property taxes represent the largest component of operating revenues , at 41% in Fiscal 1997 . Therefore, it is significant that the city is well below the 06/23/98 12:06 ET REF: NOOD6291.0001 FOOODYS TO:5152395325 Page 2 of 2 8 . 1 mill ceiling on the General Fund operating tax rate . The city rate was 31% below the cap in Fiscal 1998 and will be 40% below it in Fiscal 1999 . While General Fund transfers to the Resource Recovery enterprise fund continue, Moody' s considers it positive that those levels are decreasing, from $108 , 000 in Fiscal 1996 to $71 , 000 in Fiscal 1997 . Given the city' s financial attributes of ample General Fund reserves and significant operating tax rate margin, Moody' s believes the city' s ability to maintain a sound financial position for the foreseeable future is strong. Continued growth in taxable resources and rapid bond payout have kept the debt burden moderate . At 3 . 0% , the debt burden mirrors the national median for similarly-sized cities . Amortization of principal, at 93 .5% in 10 years, is unusually fast. According to the 1999-2002 capital plan, the city will issue approximately $4 million a year in general obligation debt for various infrastructure projects . In addition, more than 30% of voters recently approved a $1 .7 million general obligation issue for construction of a municipal ice arena. City officials anticipate issuing those bonds in Fall 1998 . No revenue bonds are planned for the next five years . ANALYSTS : Julie Beglin, Analyst, Public Finance Group, Moody' s Investors Service Thomas J. O'Donnell, Senior Credit Officer, Public Finance Group, Moody' s Investors Service Nicole Johnson, Director, Public Finance Group, Moody' s Investors Service CONTACTS : Journalists : (212) 553-0376 Research Clients : (212) 553-1625 Z17