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RESEARCH Return to Regular Format • Summary: Arden Hills, Minnesota; General Obligation Publication date: 17-Apr-2007 Primary Credit Analyst: Corey Friedman,Chicago (1)312-233-7010; corey_friedman@standardandpoors.com Secondary Credit Analyst: Steffanie Dyer, Chicago (1)312-233-7007; steffanie_dyer@standardandpoors.com WANSITMWMTM4l'�Il rrpf�fB�� MISP P `-r8l g 4 04 ?*N w° ��*idgr.% -08.a'd�'su,: p x�.,...§�e r) ..t..� ,.. ., a ..w .. .. Arden Hills GO tax incre(XLCAP) Unenhanced Rating A+(SPUR)/Stable Affirmed Many issues are enhanced by bond insurance. Rationale The 'A+' Standard & Poor's underlying rating (SPUR) on Arden Hills, Minn.'s GO tax increment refunding bonds reflects the following: • The city being a high income suburb of Minneapolis, Minn. and St. Paul, Minn., with its own large employment base; • A trend of slowly growing general fund reserves that currently equal a strong 48% of expenditures; and • Moderate debt levels with minimal capital needs. The city's rating is constrained by taxpayer concentration and the reliance on property taxes to fund its operating budget. The 10 leading taxpayers comprise a concentrated 29% of taxable value. The largest taxpayer, Guidant Corp., alone accounts for 11.3% of taxable value. The city's operating budget is funded 70%from property taxes. Arden Hills is eight miles north of the Minneapolis and St. Paul downtown areas. Income levels are above average at 141% and 122% of the national levels for household and per capita effective buying income, respectively. Besides benefiting from employment opportunities in Minneapolis and St. Paul, the city is also a net importer of jobs. The city's population is 9,660, but it has an estimated daytime population of 14,000. Leading employers include Guidant Corp., manufacturer of electromedical equipment(2,000 employees); Land O'Lakes, headquarters (800); and Syntegra, computer equipment manufacturer(750). Nearly 50% of the city's net tax capacity comes from commercial and industrial property. Residential property accounts for 45%. Reflecting the high incomes and large commercial base, market value per capita is high at $118,361, based off a market value that totals more than $1.1 billion. Unemployment in Ramsey County remains below average at 3.9%. The city has experienced solid growth in its net tax capacity in recent years. Guidant's operations have been stable, with the company looking for additional expansion opportunities. The city is mostly built out, but some residential construction occurs as fill-in, with about five homes constructed each year. The city's tax base may diminish in concentration if the city procures land already within its borders but currently owned by the federal government. The U.S. Army closed the Twin City Army Ammunition Plant, which encompasses a large 40% of the city's land area, a few years ago. The land is still owned by the federal government and future ownership of all or parts of the land is uncertain at •