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Home My WebLink About2C, Bond Rating Upgrade -�► EN HILLS Request for Council Action Prepared By: Sue Iverson, Acting City Administrator Council Meeting Date: March 29,2010 Finance Director/Treasurer Bond Rating Upgrade Budgeted Amount: Actual Amount: Funding Source: N/A N/A N/A Recommendation: 1. Presentation by Jon North,Ehlers &Assoc. -------------- ....--.................................---.-- .....................--.----.... ----- .------.------..--.--............................................ Supporting Documents: 1. Seethe attached memo from Sue Iverson dated March 29, 2010. -- 2. S&P Midwest Report Card—includes Arden Hills upgrade report. �; . ENHILLS MEMORANDUM DATE: March 29, 2010 TO: Honorable Mayor and City Council Members FROM: Sue Iverson, Acting City Administrator Finance Director/Treasurer SUBJECT: Bond Rating Upgrade Background The City has held a Bond Rating from Standard and Poors (S&P) of A+. S&P has reviewed the rating and has upgraded the City to an AA+rating. Council Action Jon North of Ehlers and Associates will be present at the meeting to present the rating to the City Council and to answer any questions and explain the new rating and its impacts to both the City Council and the public. Mr. North was previously a rating analyst for Moody's Investor Services. City Council Meeting \\Metro-inet.us\ardenhills\Admin\Council\Agendas&Packet Information\2010\3-29-10 Regular\Packet Information\B ond_Rating_Upgrade.doc Page 1 of 1 �► ' xx ----------------- t' Vreillanc Kesu K ting .............. 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Acti*ons On 37 .................. .................... ... ................................................................................. . .......... .:%..:.:.:..:..:..:.....,:.:.:.:,..:.:....:..........::::..'."..... .................... ...... . ................ ................. .................... ...................... .......... ...........%.................................................. . ......... ........................... ....................................... ......................%....%...................... . ............................. .......... ............................... ....................... ...... . ........... ............... ....................... ...... ................................. . . ............... ................... ........... . ............. ..... ................. ............. ......................................%�..... .... . .......... ....... . ................................. ... .............. ............... ................ ...............:.......... .............. .......... . . ........................................... ................................ ......... ............... ............... . . .... ........................... ........... ................................... ................................ .................................. ........... .... ........................... .............................. ........................... .. .......... ... ............ ............ ............................................... ................................ ... ........... Primary Y Credit Analyst : -233-7 12 ane r*dley@standardandpo ors. comY Chica II J Secondar Y Credit Analyst: --- Y Caroline West Chicago 312-Z -7 47 r li w t r n C C 33 0 ca o ne est@s anda da d oor .c m 9....................................................... I able Of P so Con tents S n i C ontact I format on r m r tin it t 1 www tand rdand oo .co a sd ec.s a s 9 .:::....::...:: ............. .............. P .:............ :..::::. .:.:::.;.:..::::.:::::::::.... ...................... ,:; Survel"llance Rati*ng Actl*ons Mi*dwest Issuers Standard & Poor's Ratings Services has raised the ratings on 22 school districts and municipalities in Illinois, Indiana, Michigan,Minnesota,Missouri, and Ohio,and also affirmed the ratings on 15 issuers in Illinois,Indiana, Michigan,and Ohio. In all cases,the outlook is stable. The rating actions were part of our practice of regularly surveilling existing ratings,and they reflect criteria we published in 2008 on the role of size,location, and quantitative factors in our opinions on general obligation and appropriation debt. Although size and location have weighed heavily on many of our ratings in the past,in our view,these credits can, and often do,exhibit many of the same economic and financial strengths as their larger counterparts. The key to a higher rating,in our opinion,is achieving a balance between location and economic opportunity that helps maintain financial stability (for more information, see "Does Bigger Always Mean Better? Sizing Up The Impact Of Size On Municipal Ratings," published April 22, 2008, on RatingsDirect). - Similarly,while in our view location remains an important credit factor in a rating,we do not believe it is the overriding factor. Although we think that limited access to a metropolitan area can restrict access to a larger employment base,in our view, it does not necessarily translate into an economy that is less stable. In our opinion, striking a balance between location and economic opportunity is critical to maintaining financial stability, and that can happen either near a major metropolitan area, or in a remote county (see "Location, Location, Location:What Does It Mean For My Community's Rating?" published April 22,2008, on RatingsDirect). Ratings on the issuers listed in this article reflect our view of the potential economic impact from the local,state, and national economies. All of the issuers reviewed in this report are in states that have faced recent financial and/or economic difficulties, and some of those difficulties have translated to reduced revenue distributions to local governments. We believe this is particularly important for issuers,most notably school districts,which receive a significant portion of their funding from per pupil revenues distributed by the state.To affirm or adjust ratings upward under these circumstances, Standard &Poor's assesses the impact of statewide financial or economic difficulties on these local issuers,particularly if those difficulties result in reduced revenues for the issuer. Management's response, or lack thereof,is particularly important to our analysis. Those issuers seeing upgrades have,in our opinion,maintained structural balance or clearly communicated to us what they have done, or will do, to regain structural balance. Issuers being affirmed may not, in our view,currently show the financial or economic strength to warrant an increase, but have been able to consistently meet the financial metrics associated with their rating category. Standard & Poor's has communicated with each of the issuers in this article regarding potential revenue fluctuations--both statewide and local--and believes they should be able to maintain a stable financial position commensurate with their new rating level. Although we believe there remains significant uncertainty regarding any potentially positive or negative economic changes that might occur in the Midwest in the next several years, Standard & Poor's expects that most of the issuers discussed in this article will likely be able to withstand any of these changes without what we consider a major negative impact on their financial position or credit rating. Standard & Poor's will continue to monitor our municipal ratings and make rating adjustments, either up or down, as we consider appropriate. 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Bourbonnais Village(AA-) Bourbonnais Village(estimated population:16,600)is located about 55 miles south of Chicago in Kankakee County,III. A John Sauter Village income levels are,in our opinion,good,with median household effective buying income(EBI)at 109%of national levels.Market value grew by an annual average of 16.8%in the past four years to$1.02 billion in 2008,or $61,670 per capita,which we consider strong.Kankakee County's unemployment rate averaged 12.2%in 2009,up from a 2008 annual average of 8.8%.Bourbonnais posted a$610,000 shortfall in fiscal 2008,bringing the unreserved general fund balance to$5.5 million or,in our view,a very strong 100%of expenditures.While unaudited results are not yet available,management has indicated that it expects a$95,000 general fund surplus for fiscal 2009.In addition,we understand that management is expecting close to breakeven operations during fiscal 2010.The village's overall net debt burden is,in our opinion,low at 2.1%of market value and$1,323 per capita.The village's Financial Management Assessment(FMA)score is"standard". DuPage County(AAA) DuPage County(2008 estimated population,936,130)is located 20 miles west of Chicago and encompasses 332 AAA Caroline West square miles.Income levels in the county are,in our opinion,very strong,with median household EBI at 142%of national levels.Market value grew by an annual average of 4.5%since 2007 to$128.7 billion for 2009,which - equates to$137,500 per capita,which we consider extremely strong.The county posted a$14.5 million surplus in fiscal 2008,bringing the unreserved general fund balance(including designations)to$59.2 million or,in our view,a very strong 40%of expenditures and transfers.Management expects to end fiscal 2009 with an unreserved general fund balance of at least$53 million,after spending down$7.5 million of designated unreserved fund balance on capital improvements.We understand that the budget for 2010 is balanced.Notably,as a result of an increase in the sales tax rate,management has not enacted major budget reductions,resulting in steady service levels for county residents.The county's overall net debt burden is,in our opinion,low at 2.7%of market value and$3,662 per capita. The county's FMA score is"good." Northlake Public Library District(A+) Northlake Public Library District serves an estimated population of 26,650 in Cook County and is located 13 miles A Sean Hughes northwest of downtown Chicago.The library district operates one location and employs 13 full-time staff.Income levels in the district are,in our opinion,good,with median household EBI at 106%of national levels.Market value grew by an annual average of 9.6%since 2006 to$1.9 billion in fiscal 2009,or$71,319 per capita,which we consider strong.The district posted a$311,000 surplus in fiscal 2009,bringing the unreserved general fund balance to$1.1 million or,in our view,a very strong 77%of expenditures.Management expects at least breakeven results in fiscal 2010.The district's direct net debt burden is 0.44%of market value.The district's FMA score is"standard". Rock Island County School District No.29(Hampton)(A+) Rock Island County School District No.29(Hampton)serves an estimated population of 2,080 on the Mississippi River A- Sean Hughes in Rock Island County in western Illinois.Income levels in the district are,in our opinion,strong,with median household EBI at 119%of national levels.Market value grew by an annual average of 5.4%since 2006 to$76 million in fiscal 2009,or$36,457 per capita,which we consider adequate.Since fiscal 2005,enrollment increased 31 students to 245 in fiscal 2009.Following a fall 2009 enrollment count of 260 students,management expects level enrollment of between 240 and 260.The district posted a$142,000 surplus in fiscal 2009,bringing the unreserved general fund balance to$640,000 or,in our view,a very strong 37%of expenditures.Management expects surplus operations in fiscal 2010,and has budgeted for breakeven results in fiscal 2011.The district's net debt burden is 0.52%of market value and$190 per capita.The district's FMA score is"standard". Carmel Clay School Corporation(AA) Carmel Clay School Corporation serves an estimated population of 84,040 in southwestern Hamilton County and AA John Sauter consists of Clay Township and the city Carmel,located about 15 miles north of Indianapolis.School corporation income levels are,in our opinion,very strong,with median household EBI at 175%of national levels.Pay 2010 net assessed value totals$6.7 billion while gross assessed value,a more accurate portrayal of true market values,totals about$11.6 billion,or$137,668 per capita,which we consider extremely strong.Since the fall 2004 school year, enrollment increased 963(6.9%)to 14,898 in the fall 2009 school year,and management expects slight growth in the near future.The school corporation completed the 2009 calendar year with an unaudited$5.06 million general fund cash balance(6.5%of expenditures),which was a$1 million increase from the unaudited 2008 calendar year cash = balance after adjusting for delayed pay 2008 property tax distributions.The corporation began the 2010 calendar year with a surplus budget;however,we understand that the state has since announced a midyear reduction in state aid - www.standardandpoors.com/ratingsdirect 3 Surveillance Results In Rating Actions On 3 7 Midwest Issuers funding of about$3.8 million.Management has indicated that it plans on transferring excess reserves from the school's debt service fund into a rainy day fund,which will be used to offset the reduced state aid collections in 2010.We understand that management plans on utilizing a proposed operating levy referendum in May 2010 to offset the lowered state aid funding for future years.However,should the operating levy fail to pass,it is our opinion that management will take the appropriate actions to bring expenditures in line with lowered state funding levels. The corporation's overall net debt burden is,in our opinion,moderate at 3.9%of market value and high at$5,520 per capita.The corporation's FMA score is"standard". DeKalb County Redevelopment Commission(AA-) The DeKalb County Redevelopment District is located in the northeastern corner of Indiana and includes all of DeKalb A- John Sauter County with the exception of the cities of Garrett and Auburn.The district serves approximately 55%of the total county population of 40,285(2000 U.S.Census),and covers approximately 90%of the county's total land area.The district's pay 2008 net assessed valuation totaled$1.2 billion,which was 58%of the total countywide net assessed valuation.We consider county income levels good with 2008 median household EBI at 98%of national levels. Countywide unemployment totaled 13.2%in 2009,up from a 2008 annual average of 7.2%.Following a$1.2 million surplus in 2007,the county finished fiscal 2008 with a$537,000 shortfall,bringing the general fund cash balance to $3.54 million,which we consider to be a very strong 27%of fund expenditures.Additional liquidity is available in the rainy day fund,which totaled$588,000 to conclude fiscal 2008.Although fiscal 2009 results are not yet available, management has indicated its expectation of balanced general fund operations.Direct debt levels total$41 per capita and 0.1%of market value.The FMA score is"standard" Indianapolis-Marion County Building Authority-Library Corp.(AA+) _ The debt issued by the Indianapolis Local Public Improvement Bond Bank for Indianapolis-Marion County Building AA+ Caroline West Authority-Library Corp.,is based on the lowest rating of the participating qualified entities,including the Indianapolis-Marion County Public Library(IMCPL),the City of Indianapolis,and four districts under the jurisdiction of the city of Indianapolis,including the sanitary district,flood control district,metropolitan thoroughfare district,and the park district.IMCPL is rated'AA+'while the other qualified entities are rated'AAA'due to financial oversight and control by the city of Indianapolis.Although the library's cash flow has suffered in recent years due to late tax bill distributions by Marion County,management indicates that operations are stable.At fiscal year-end 2008(Dec.31), the general fund held$2.2 million,or a good 6.9%of expenditures in our view.However,negative$250,000 of this amount was unreserved,or,in our view,a low negative 0.6%of expenditures.In 2008,the district had$12.9 million in property taxes receivable,which was distributed in fiscal 2009.We understand that fiscal 2009 operating results show the library maintaining a fund balance of approximately$2.3 million.Management informs us that if tax bills for pay 2010 are distributed on time by the county,the general fund should hold$12.5 million in cash by the end of the fiscal year,or a very strong,in our opinion,32%of expenditures.The library district is currently weighing a variety of options to restructure future operations in order to compensate for a loss in revenue due to the Circuit Breaker, valued at$3.2 million for 2010.The library's FMA score is"good." Kendallville Public Library(A+) Kendallville Public Library serves an area more than twice the size of the city of Kendallville(population 9,800),which A- Caroline West is located in Noble County in northeastern Indiana,about 25 miles north of Fort Wayne.The district operates two locations and the most recent population estimate is about 17,300,representing a little more than one-third of the county's total population.Income levels in the city of Kendallville are just adequate in our view,with median household and per capita EBI at 76%and 71%of the nation's levels,respectively.Library finances have strengthened in recent years,even as the district built a new facility,due to three consecutive operating surpluses.At fiscal year-end 2009(Dec.31),the library district's general fund held$640,000 in cash,or,in our opinion,a very strong 54% of expenditures.A rainy day fund provides$9,000 of additional liquidity.Management projects that fiscal 2010 will end with a slight surplus.The library district's FMA score is"standard."We understand that management has no plans for additional debt. Marion Public Library Corporation(A) Marion Public Library Corporation,which is coterminous with the city of Marion,serves an estimated population of A- John Sauter 28,713 in Grant County and is located 60 miles northeast of Indianapolis.Marion's income levels are,in our opinion, adequate,with median household EBI at 68%of national levels.Pay 2010 net assessed value totals$914 million while gross assessed value,a more accurate portrayal of true market values,totals about$1.8 billion,or$61,161 per capita,which we consider strong.City unemployment averaged 13.2%in 2009,up from a 2008 annual average of 9.0%.The corporation posted an unaudited$8,000 surplus in fiscal 2009,bringing the unreserved general fund cash balance to$709,000 or,in our view,a very strong 43.3%of expenditures.Additional liquidity is available in the unrestricted gift funds and rainy day fund totaling$371,000.We understand that management expects balanced operations in fiscal 2010.The corporation's direct debt burden totals less than 1%of market value and$84 per = capita.The corporation's FMA score is"standard". Marshall County Holding Corporation(AA-) Standard & Poor's I RatingsDirect on the Global Credit Portal I March 15,2010 4 Surveillance Results In Rating Actions On 3 7 Midwest Issuers Marshall County(estimated population:47,760)is located in north central Indiana,with Plymouth,the county seat, A+ John Sauter situated 25 miles south of South Bend,Ind.County income levels are,in our opinion,good,with median household EBI at 96%of national levels.Pay 2010 net assessed value totals$2.4 billion while gross assessed value,a more accurate portrayal of true market values,totals about$3.8 billion,or$80,465 per capita,which we consider very strong.Countywide unemployment averaged 13.1%through the first 11 months of 2009,up from a 2008 annual average of 7.4%.The county completed fiscal 2009 with an unaudited$5.3 million unreserved general fund cash balance(50.5%of fund expenditures),which was a$337,000 increase from the 2008 fiscal year-end cash balance after adjusting for a delayed 2008 property tax distribution.Additional liquidity is available in the rainy day fund, which held a$3.7 million cash balance at the conclusion of fiscal 2009.Including lower income tax assumptions and circuit breaker impacts,management passed a small surplus budget for fiscal 2010.The county's direct debt burden totals 0.4%of market value and$318 per capita.The county's FMA score is"standard". Merrillville(A-) Merrillville(estimated population:32,147)is located 30 miles southeast of downtown Chicago in Lake County,Ind. A- John Sauter Town income levels,in our opinion,are good,with median household EBI at 106%of national levels.Pay 2009 net assessed valuation totaled about$1.96 billion,while gross assessed valuation,which is a more accurate indicator of true market value,totaled$2.9 billion,or$90,908 per capita,which we consider very strong.The town's unemployment rate averaged 9.8%during 2009,an increase from the 2008 annual average rate of 5.7%.Merrillville's fiscal 2008 state report indicates a general fund cash basis of$347,000,or an estimated 4.4%of operating expenditures.However,according to management,this figure does not include more than$3 million in delayed property tax collections.Management has indicated that had all taxes been received and related cash flow borrowing - repaid by the end of fiscal 2008(ended Dec.31),the general fund cash balance would have totaled a negative $159,920.While fiscal 2009 results are not yet available,we understand that management expects to end with a positive cash balance.Including overlapping debt,the town's debt burden is,in our view,moderately high at 8%of market value and high at$7,286 per capita.Merrillville's FMA score is"standard". New Albany(A-) New Albany,Ind.is Floyd County's county seat and is located on the Ohio River across from Louisville,Ky.The A- Caroline West median household EBI for the city's population of 36,000 is,in our view,adequate at 79%of the nation's level. Market value per capita is low in our opinion at$37,000 per capita,but partially suppressed by the state's implementation of various tax credits.We believe the city's finances remain challenged.Following financial mismanagement in the early 2000s,the city called in a prior city controller to return and clean up management's practices,and succeeded in achieving a 2005 audit with an unqualified opinion from the state.However,late tax bill distributions from the county in the past several years have tested New Albany's ability to reach a positive cash balance,resulting in pressures on the budget.The 2008 audit shows a reserve decline in the general fund,bringing cash to a negative$4.1 million,or a negative 20.5%of expenditures.We understand that had all pay 2008 taxes been received on time,the cash deficit would have been only$1 million.The city's economic development income tax and rainy day funds held a combined$4 million in cash in 2008,offsetting the general fund deficit.For 2009, management projects a general fund negative cash balance of$5.3 million,with$3.3 million in taxes receivable,and $3.7 million available in the Economic Development Income Tax(EDIT)and rainy day funds.If tax bills in 2010 are delivered on time,the city could narrow its negative balance to$1 million,with possibly a combined$4.7 million in EDIT and rainy day fund liquidity.New Albany's FMA score is"standard."The city has some sanitary sewer and stormwater capital needs,but,we understand,no plans for additional general obligation debt. Farmington Hills(AA+) Farmington Hills serves an estimated population of 79,201 in Oakland County and is located 17 miles northwest of AA John Sauter Detroit.City income levels are,in our opinion,very strong,with median household EBI at 140%of national levels. After falling a total of 7.3%from 2007 to 2009,the city's taxable value increased 0.9%in 2010 to about$4.2 billion. Market value,however,fell by 9.4%in 2010 to$8.6 billion,or$108,528 per capita,which we consider extremely strong.City unemployment averaged 11.2%through November 2009,up from a 2008 annual average of 5.9%. Following a planned$2.6 million transfer out for capital purposes,Farmington Hills posted a$1 million shortfall in fiscal 2009,bringing the unreserved general fund balance to$16 million or,in our view,a very strong 32.2%of expenditures.Of the unreserved general fund balance,$6 million is designated for subsequent year and long-term capital projects,leaving the unreserved-undesignated fund balance at$10 million,or 20.1%of expenditures.We understand that management anticipates about a$750,000 draw on the unreserved-undesignated portion of the general fund during fiscal 2010,along with a$3 million draw on the designated portion that will complete an ongoing renovation project to the city hall.The city's overall net debt burden is,in our opinion,low at 1.1%of market value and$1,240 per capita.Farmington Hills'FMA score is"good". Farmington Public School District(AA) Farmington Public School District serves residents of Farmington Hills and Farmington and has an estimated AA Kathryn - www.standardandpoors.com/ratingsdirect 5 Surveillance Results In Rating Actions On 3 7 Midwest Issuers population of 83,115.The district is located approximately 25 miles northwest of Detroit at the intersection of Clayton multiple interstates in Southern Oakland County.Income levels in the district are,in our opinion,very strong,with median household EBI at 135%of national levels.Market value decreased a total of 13%in the past two years to $9.12 billion in 2009,or what we consider a good$109,738 per capita.From fall 2005 to fall 2008,enrollment showed very slight declines averaging 0.7%annually;however,it increased 0.5%in fall 2009 to 11,967 students. Management expects to see further declines in enrollment,and uses a conservative projection provided by an enrollment consultant with respect to budget assumptions.The district posted a$4.2 million deficit in fiscal 2009, bringing the unreserved general fund balance to$29 million or,in our view,a still very strong 19.53%of expenditures.Management expects to draw on general fund reserves by$13.6 million in fiscal 2010,due in part to reduction in state per-pupil funding levels.The district expects to keep general fund reserves at or above 10%-12%of expenditures in fiscal 2011.The district's overall net debt burden is,in our opinion,low at 1.1%of market value and $1,237 per capita.The district's FMA score is"good". Fennville Public Schools(A+) Fennville Public Schools serves an estimated population of 8,922 in Allegan County and is located along the Lake A- Kathryn Michigan shoreline approximately 20 miles south of Holland.Income levels in the district are,in our opinion,good, Clayton with median household EBI at 98%of national levels.Market value grew by an annual average of 5.8%since 2005 to $1.03 billion in 2009,or$115,746 per capita,which we consider very strong.Since fall 2005,enrollment has been mostly stable and showed an overall average increase of 0.4%annually to 1,480 students in fall 2009.Management conservatively projects that enrollment will decline in future years.The district posted a$87,000 deficit in fiscal 2009,bringing the unreserved general fund balance to$849,000 or,in our view,a good 6.77%of expenditures. - Management expects to post a$300,000 surplus to the general fund reserves in fiscal 2010,due primarily to budget - reductions made prior to the fiscal year,and a greater enrollment count than expected.The district's overall net debt burden is,in our opinion,moderate at 2.7%of market value and$3,072 per capita.The district's FMA score is"good". Grosse Pointe Farms(AA+) Grosse Pointe Farms serves an estimated population of 9,000 in Wayne County and is located just 10 miles north of AA+ Kathryn Detroit along the waterfront.Income levels in the city are,in our opinion,very strong,with per capita and median Clayton household EBI at 236%and 194%of national levels,respectively.Market value decreased by an annual average of 12.4%since 2007 to$1.95 billion in 2009,or$217,142 per capita,which we consider extremely strong.The city posted operating surpluses in its general fund for five of the last six fiscal years,and the one draw on reserves was due to a planned one-time capital expenditure in fiscal 2008.At fiscal year-end June 30,2009,the unreserved general fund balance totaled$4.9 million or,in our view,a very strong 42.86%of expenditures.The fiscal 2010 budget calls for breakeven operations;however,management expects the end result to be slightly better than budget due to conservative assumptions made with regard to property tax revenues and interest income.The city's overall net debt burden is,in our opinion,low at 1.95%of market value and$4,230 per capita.Grosse Pointe Farm's FMA score is"standard". Ingham County(AA+) Ingham County(population:275,000)is home to Lansing,the Michigan state capital,and Michigan State University. AA Caroline West Both the state and university are major employers in the county,along with General Motors Corp.In our view,income indicators are adequate with a median household EBI at 89%of the national level.The tax base has contracted given the state's overall economic conditions,declining 6%in the past two years to reach$18.3 billion.However,per capita market value remains strong in our view at$66,300.The county's finances also remain strong,in our opinion, following a general fund surplus of$1.9 million in 2008(primarily due to an accounting treatment change),the unreserved general fund balance totaled$17.6 million,or 30%of expenditures,which we consider very strong. - Additional liquidity is available in the county's delinquent tax revolving fund($4.7 million),budget stabilization fund ($10.5 million),and revenue-sharing reserve fund($17.2 million).Management's preliminary estimates for 2009 show a general fund surplus of$400,000,while the 2010 budget calls for a use of reserves of$988,000.We understand that the county has no major capital needs at this time.Ingham County's FMA score is"good." Johannesburg-Lewiston Area Schools(A-) Johannesburg-Lewiston Area Schools(population:6,439)is located primarily in Otsego County in the north-central A- Kathryn portion of Michigan's lower peninsula,approximately 10 miles east of Gaylord,the area's commercial center.Income Clayton levels in the district are,in our opinion,adequate,with median household EBI at 78%of national levels.Market value grew by an annual average of 1.5%since 2007 to$1.22 billion in fiscal 2010,or$189,370 per capita,which we consider extremely strong.Since fiscal 2007,enrollment has decreased 59 students to 798 in fiscal 2010,and management expects declines to continue in the near future.The district posted a$416,000 deficit in fiscal 2009, bringing the unreserved general fund balance to$571,000 or,in our view,a good 7.4%of expenditures.Management expects to draw on general fund reserves by$349,000 in fiscal 2010,bringing reserves to an adequate 2.9%of expenditures.The district's overall net debt burden is,in our opinion,low at 0.52%of market value and$985 per capita.The district's FMA score is"standard". Standard &Poor's I RatingsDirect on the Global Credit Portal March 15,2010 6 1i Surveillance Results In Rating Actions On 37 Midwest Issuers Lake Michigan Community College(AA) Lake Michigan Community College's 263-acre main campus is in northern Berrien County,east of St.Joseph,Mich. A+ Kathryn and Benton Harbor,Mich.Serving all of Berrien County and a portion of Van Buren County,the college offers job Clayton training and apprentice programs,as well as academic courses for students intending to continue at a four-year institution.Income levels in the college's service area are,in our opinion,adequate,with median household EBI at 86%of national levels.Market value totaled$22.75 billion in 2009,or$133,138 per capita,which we consider extremely strong.The college has seen an approximate 30%increase in contact/credit hours during the past two years;full-time enrollment has also increased but at a slower rate.Full-time equivalent students totaled 2,386 in fiscal 2009.Management is projecting enrollment levels to stabilize or possibly decline within the next few years due to residents of the college district moving out of the area.The college has produced at least six consecutive years of operating surpluses in the general fund and ended fiscal 2009 with an unreserved general fund balance of$18.77 million or,in our view,a very strong 76%of expenditures.Management projects an operating surplus of$2.5 million in the general fund for fiscal 2010.The college's overall net debt burden is,in our opinion,low at 0.8%of market value and$1,051 per capita.Lake Michigan Community College's FMA score is"good". Lansing City-Ingham County Joint Building Authority(AA+) Lansing City-Ingham County Joint Building Authority's bonds are supported by the city's and county's obligation to AA Caroline West make proportionate cash rental payments to the authority in support of debt service requirements.As the requirements are several and there are no make up provisions,the rating on the authority is based on the weakest rating of its two obligors,Lansing(AA+/Stable)and Ingham County(AA+/Stable).Due to the recent upgrade of Ingham County to'AA+'from'AA',the rating on the authority has accordingly been raised to'AA+'from'AA'.In the event that one issuer were to be rated higher than the other,the rating would then reflect the credit rating on the = lower rated issuer.Please refer to Ingham County in this report for more information. Lapeer County(AA) Lapeer County serves an estimated population of 94,791 in Lapeer County and is located north of Oakland and A+ Blake Yocom Macomb counties and the Detroit MSA.Income levels in the county are,in our opinion,good,with median household EBI at 108%of national levels.Market value grew by an annual average of 1.5%since 2003 to$7.64 billion in fiscal 2009,or$80,650 per capita,which we consider very strong.The county posted a$745,000 surplus in fiscal 2008, bringing the unreserved general fund balance to$2.94 million or,in our view,a very strong 17.53%of expenditures. Management is expecting a$900,000 surplus in fiscal 2009 and,we understand,plans to use most,if not all,of this surplus in fiscal 2010.The county also has a budget stabilization fund that can be used for operations with a current balance of approximately$2.2 million.Lapeer's delinquent tax revolving fund had a balance of approximately$13.5 million at the end of fiscal 2008.The county's overall net debt burden is,in our opinion,low at 2.57%of market value and a moderate$2,332 per capita.We understand that at this time,the county has no immediate debt plans.Lapeer County's FMA score is"good". Livingston Educational Service Agency(A+) Livingston Educational Service Agency is an intermediate school district that serves local school districts in Livingston A+ Kathryn County primarily with special education services to approximately 268 students,in an area with an estimated Clayton population of 190,000.Income levels in the agency's service area are,in our opinion,very strong,with median household EBI at 139%of national levels.Market value declined by an annual average of 5.8%in the past two years to$17.2 billion in 2009,or$90,718 per capita,which we consider very strong.The agency has produced five years of operating deficits in an effort to bring reserves to a level concurrent with its formal 10%fund balance policy.At fiscal year-end 2009,the agency had an unreserved fund balance of$715,000 in the general fund and an unreserved-designated balance of$5.44 million in the other primary operating fund,the special education fund. Management expects to post another planned operating deficit of approximately$300,000 to the general fund in fiscal 2010,and expects another small deficit in the special education fund.The district's overall net debt burden is, in our opinion,moderate at 4.3%of market value and$3,886 per capita.The district's FMA score is"standard". South Branch of Mill Creek Intercounty Drainage District(AA) The rating on South Branch of Mill Creek Intercounty Drainage District is based on the weakest link of its two A+ Caroline West obligors,Lapeer County(AA/Stable)and St.Clair County(AA/Stable).Due to the recent upgrade of Lapeer County to 'AA'from'A+',the rating on the drainage district has accordingly been raised to'AA'from'A+'.In the event that one issuer were to be rated higher than the other,the rating would then reflect the credit rating on the lower rated issuer. Please refer to Lapeer County in this report for more information. Wayne(A) Wayne serves an estimated population of 19,051 in Wayne County and is located between Ann Arbor and Detroit A Kathryn along route 12,just 20 miles from each city.Income levels in the city are,in our opinion,good,with median Clayton household EBI at 99%of national levels.Market value declined by an annual average of 4.8%since 2006 to$1.41 billion in 2009,or$78,132 per capita,which we consider strong.The city posted a$50,000 surplus in fiscal 2009, - www.standardandpoors.com/ratingsdirect 7 \: J Surveillance Results In Rating Actions On 37 Midwest Issuers bringing the unreserved general fund balance to$1.2 million or,in our view,a good 5.89%of expenditures. Management expects to post a$350,000 deficit to the general fund in fiscal 2010 due primarily to a projected decrease in property tax revenues.Management expects to keep the general fund balance between 2%-5%of general fund expenditures.The city's overall net debt burden is,in our opinion,moderate at 4.1%of market value and $3,038 per capita.Wayne's FMA score is"good". Ypsilanti District Library(A+) Ypsilanti District Library serves an estimated population of 83,000 in Washtenaw County,seven miles east of Ann A Sean Hughes Arbor and 38 miles west of Detroit.Income levels in the district are,in our opinion,adequate,with median household EBI at 65%of national levels.Market value grew by an annual average of 5.2%since 2004 to$4.97 billion in fiscal 2008,or$56,067 per capita,which we consider strong.The district posted an$832,000 deficit in the general fund in - fiscal 2008,driven largely by the funding of a capital reserve for equipment replacement.This brought the unreserved general fund balance to$2.7 million or,in our view,a very strong 63%of expenditures.Management expects a small .surplus in general fund operations for fiscal 2009.The district has reduced expenditures for fiscal 2010 to offset a projected 7%decline in property tax revenues as well as reduced state aid revenue.The district's overall net debt burden is,in our opinion,moderate at 5.75%of market value.The district's FMA score is"standard". i :...........::::..::........:...::.................::....................................::.%.%:.%::.%:.%%:%:.%:.%:.%:.%:.:::.%:.%:.::.%:.%:.%%:.%%:.%:.%%%:.%:.%:.%:%:.%:.%:.%:.%:.%:.%:.%:.%:.>:.>:.%:.%:.:%:.:.%:.%::.%%>:.::.::.%:.%:.>:.%:.%:.%<:.%:.%:.:%:.%:.%:.r:.><:.%:.%%:::::::::.: ... ......,.......:..............:....:......< < << ><� �<�>>< Arden Hills(AA+) Arden Hills serves an estimated population of 10,124 in Ramsey County and is located just 8 miles north of the A+ Kathryn — Minneapolis-St Paul metropolitan area economy.Income levels in the city are,in our opinion,very strong,with Clayton median household EBI at 137%of national levels.Market value grew by an annual average of 5.8%since 2005 to $1.23 billion in 2008,or$121,701 per capita,which we consider extremely strong.The city does not receive local _ government aid from the state and as a result is reliant on property tax revenue,which makes up 75%of general fund revenues.Arden Hills posted a$320,000 deficit in fiscal 2008 due to one-time capital expenditures,bringing the unreserved general fund balance to$1.8 million or,in our view,an very strong 57.12%of expenditures.Historically, management has made conservative budget assumptions and produced moderate general fund surpluses, management expects to post a surplus of about$80,000 for fiscal year ended Dec.31,2009.The city also maintains more than$7 million in the permanent improving revolving fund,which can be used as additional liquidity if needed. Arden Hill's overall net debt burden is,in our opinion,low at 2.02%of market value and$2,457 per capita.The city's FMA score is"good". Maplewood Municipal Library District(A) Maplewood Municipal Library District serves an estimated population of 8,694 in the city of Maplewood,which is A- John Sauter located in St.Louis County about eight miles west of downtown St.Louis,Mo.Maplewood's income levels are,in our opinion,adequate,with median household EBI at 68%of national levels.The district's assessed valuation has declined by about 12.8%in the past two years to$160.1 million.Estimated market value is about$565.3 million,or -- $75,489 per capita,which we consider strong.We view the tax base as moderately concentrated,as the district's 10 leading tax payers constitute 32.4%of total assessed valuation.The district posted a$21,000 surplus in fiscal 2009, bringing the unreserved general fund balance to$479,000 or,in our view,a very strong 102.8%of expenditures.We understand that management budgeted for a slight use of reserves during fiscal 2010,and that current expectations are in line with the budget.The district's direct debt burden totals an estimated 0.5%of market value and$352 per capita.The district's FMA score is"standard'. - Springfield-Greene County Library District(AA-) Springfield-Greene County Library District serves an estimated population of 259,277 in Greene County,which is A+ John Sauter anchored by the city of Springfield,Mo.County income levels are,in our opinion,adequate,with median household EBI at 84%of national levels.The district's assessed valuation grew an average of 4.1%per year since 2005, reaching approximately$4.1 billion in 2009.Estimated market value is about$17 billion,or$65,160 per capita,which we consider strong.Countywide unemployment averaged 7.8%through November 2009,up from the 2008 annual average of 5%.The district posted a$130,000 shortfall in fiscal 2009,bringing the unreserved general fund balance to$4.7 million or,in our view,a very strong 39.9%of expenditures.We understand that management expects breakeven general fund operations during fiscal 2010.The district's direct debt burden totals less than 1%of market value and$20 per capita.The district's FMA score is"good'. :: :�: i:};:•;:};:;::;:;:;•;.'•?.}4:iyiiii:%::vi::;;i:;i{:$:?i r:}:::}Yi::..:i'::isii:.::':':::•ii'v'::f::L:;:J`r:;:j"F::%f:;{{•?f;:;:yi{ Columbus(AAA/A-1+) The short-term rating on the city of Columbus,Ohio's unlimited-tax GO sanitary sewer adjustable-rate bonds series AAA/A-1+ Caroline West 2006-1 reflects the sufficient liquidity provided by the city's treasury investment portfolio to cover these bonds and existing bonds using self-liquidity.Standard&Poor's Fund Services Group regularly monitors the credit quality, - Standard & Poor's I RatingsDirect on the Global Credit Portal I March 15,2010 8 Surveillance Results In Rating Actions On 37 Midwest Issuers liquidity,and sufficiency of the assets pledged by the city.For more information on the GO rating on the city,please see the analysis"Columbus,OH;General Obligation"published Oct.29,2009. Hamilton Local School District(AA-) Hamilton Local School District is in Franklin County,eight miles south of Columbus,Ohio.In our opinion,income A Caroline West levels in the district are good,with median household EBI at 95%of the national level.Enrollment(average daily membership)steadily increased to 3,236 students in 2008 and management anticipates adding 80 students annually in the near term.We believe the district has managed its finances well despite four past unsuccessful operating levy attempts.The district ended fiscal 2008(June 30),on a generally accepted accounting principles(GAAP)basis of accounting,with an unreserved general fund balance of$2.3 million or 10.9%of expenditures,which we consider strong.On an unaudited cash basis,the fiscal 2009 unreserved cash balance was$5.6 million or,in our opinion,a very strong 24.5%of expenditures.District voters last approved an operating levy in 1993,and we understand that the district does not intend to place a new levy on ballot in the near future.The district's recent five-year forecast (2010-2014)indicates positive cash balances in altfive years.We view overall net debt moderate at$2,198 per capita and 4.1%of market value.We understand that there are no additional debt plans at this time.The district's FMA score is"good". Independence Local School District(AA-) Independence Local School District is located within the city of Independence,approximately 15 miles south of AA- Caroline West - Cleveland.We consider income levels of the district strong with median household and per capita EBI at 128%and 119%,respectively,of the national levels.Enrollment has been stable in the past five years and totaled 1,126 in the - 2009-2010 school year.On a GAAP basis,the district posted operating surpluses in the past two years leading to a total general fund balance of$1.5 million at fiscal year-end 2009,or a strong,in our opinion,9.5%of expenditures,of this amount,negative$356,992 was unreserved,or negative 2.3%of expenditures.As measured on a cash basis,the unreserved cash balance totaled$1.5 million or,in our view,a strong 10.1%of expenditures in fiscal 2009.A 5.5 mill emergency levy was renewed in November 2007 for three years which,according to the five-year forecast (2010-2014),should keep the fund balance positive through fiscal 2011.We view the district's overall net debt moderate at$3,866 per capita but low at 1.8%of market value.We understand that there are no additional debt plans at this time.The district's FMA score is"good". Licking Valley Local School District(AA) Licking Valley Local School District is located four miles east of Newark,20 miles northwest of Zanesville and 40 A- Caroline West miles west of Columbus.The district's median household EBI is,in our view,good at 100%of the national level. Enrollment as measured by average daily membership totaled 2,109 in 2008 and management anticipates enrollment to remain stable in the near future.We believe that the district has managed its finances well over the years,even though the last levy authorization(for an income tax)occurred in 1993.On a GAAP basis,the unreserved fund balance was at$2.9 million or,in our opinion,a very strong 18.8%of expenditures at the end of fiscal 2009.On a cash basis, the unreserved cash balance totaled$3.7 million or 22.9%of expenditures,which we view as very strong. Management's five-year forecast(2010-2014)shows the cash balance remaining positive through fiscal 2013.We believe that the district has a limited need to go back to the voters,given that it is operating at the 20-mill floor and collects an income tax.We consider overall net debt low at$1,405 per capita and 2.7%of market value.We understand there are no additional debt plans at this time.The district's FMA score is"good". Painesville City Local School District(A) Painesville City Local School District is located in Lake County,about 29 miles east of downtown Cleveland.Serving A Caroline West approximately 17,000 residents,the district experienced enrollment increases in the past two years to reach 3,235 students in 2008-2009.Income levels in the district are,in our view,adequate,with a median household EBI at 76% of national levels.On a GAAP basis for fiscal 2009,the district posted a deficit of$2.9 million,reducing the unreserved fund balance to negative$985,045 or a negative 3.1%of expenditures.As measured on a cash basis,the unreserved cash balance totaled$1.7 million or 5.0%of expenditures in fiscal 2009,which we consider good.The district's recent five-year forecast(2010-2014)shows use of fund balance in all five years with positive cash balance until fiscal 2011.Voters most recently approved a renewal levy in November 2007 and the district anticipates approaching voters again in November 2010.We view overall debt burden as moderate at$2,071 per capita and 5.2%of market value.We understand that there are no additional debt plans at this time.The district's FMA score is "good". Parma(A+) Parma serves an estimated population of 80,000 in Cuyahoga County,eight miles south of downtown Cleveland. A+ Sean Hughes Income levels in the city are,in our opinion,good,with median household EBI at 96%of national levels.Market value decreased by an annual average of 1.9%since 2005 to$4.54 billion in fiscal 2009,or$65,459 per capita,which we consider strong.Following an expected$1.2 million draw of general fund balance in fiscal 2008,the city projects to post a$1.3 million surplus in the general fund despite softening income tax revenues in fiscal 2009.Management expects the city to close fiscal 2009 with$3.8 million of fund balance,equating to a strong 9.12%of operating www.standardandpoors.com/ratingsdirect 9 Surveillance Results In Rating Actions On 37 Midwest Issuers expenses,in our opinion.We understand that management plans to continue recently adopted furlough practices and expects at least breakeven results for fiscal 2010.According to the most recent audited figures in fiscal 2007, Parma's overall net debt burden was,in our opinion,low at 0.95%of market value and$619 per capita.The city's FMA score is"standard". Princeton City School District(AA+) Princeton City School District is located 15 miles north of downtown Cincinnati and serves the cities of Sharonville AA+ Caroline West and Springdale and townships of Evendale,Glendale,Lincoln Heights,and Woodlawn.We view income levels in the district as good,with median household EBI at 108%of national levels.Enrollment increased by 1.5%in 2009 to 5,478 students,management projects the student population to rise slightly in the near future.The loss of the personal tangible component of the district's assessed value(AV)due to changing state statutes has posed a _ challenge to the district's financial health;since 2000,personal tangible AV has declined from 26%of total AV to only 6%in 2009.In addition,the district last passed an operating levy in 1999.However,in our opinion,the district's financial position remains very strong despite these factors.On a GAAP basis,although the district posted a deficit of $1.4 million in fiscal 2009,the general fund balance amounted to$34.5 million or still a very strong 47.8%of expenditures in our opinion.Of this amount,$17.8 million(24.6%of expenditures)is unreserved.On a cash basis,the unreserved cash balance totaled$18.6 million or 25.9%of expenditures at fiscal year-end 2009,which we consider very strong.The district's five-year forecast(2010-2014)shows declines in fund balance in each year,with the fund balance becoming negative by fiscal 2012.We understand that the district intends to go on the ballot for a new operating levy and a$120 million bond issuance in 2010.The district's FMA score is"good." Sandy Valley Local School District(A+) - Sandy Valley Local School District(population:8,886)is located 10 miles southeast of the city of Canton in Stark A- Caroline West County and also includes a small portion of Tuscarawus County.Enrollment(based on average daily membership)was at 1,438 in 2008 and management expects it to remain stable.Income levels in the district are adequate,in our view, with median household and per capita EBI at 80%and 73%of the national levels,respectively.The district ended fiscal 2009(GAAP basis)with an unreserved general fund balance of$765,410,or 6.2%of general fund expenditures, which we consider good.On a cash basis,the unreserved cash balance is at$2.4 million or,in our opinion,a very strong 19.3%of expenditures in fiscal 2009.The district's five-year forecast(2010-2014)indicates the cash balance to be negative by fiscal 2013.The district passed a renewal 6.0 mill emergency levy in November 2006 for five years and anticipates going for an emergency levy renewal in 2011 or 2012.We view overall net debt low at$1,304 per capita and 3.0%of market value.The district's FMA score is"standard". Sycamore Community School District(AAA) Sycamore Community School District is in Hamilton County,10 miles northeast of downtown Cincinnati.The district AA+ Caroline West is home to 30,751 residents and serves an enrollment of about 5,700 students.Income indicators are in our opinion very strong,with median household and per capita EBI at 155%and 175%of the national levels,respectively.Market value grew by 2.2%annually in the past five years to reach$5.15 billion in 2009,or in our view an extremely strong $167,522 per capita.We believe the district's financial position is very strong;five consecutive operating surpluses have strengthened strengthened the general fund balance to$54.2 million in 2009,or in our opinion a very strong 76.6%of expenditures on a GAAP basis;of this amount,$31.6 million(44.6%of expenditures)is unreserved.On a cash basis, the unreserved cash balance totaled$38.1 million in fiscal 2009,or in our view,a very strong 54.1%of expenditures. According to management,the most recent operating levy renewal of 5.5 mills,approved by the voters in May 2009, will generate positive cash balances in all five years of the latest five-year forecast(2010-2014).We consider the district's overall net debt low at$1,979 per capita and 1.2%of market value.The district's FMA score is"good". Contact Information Table 2 Credit analyst Location Phone E-mail Kathryn Clayton Chicago (1)312-233-7023 kathryn_clayton@standardandpoors.com Sean Hughes Chicago (1)312-233-7021 seas_hughes@standardandpoors.com John Sauter Chicago (1)312-233-7027 John_sauter@standardandpoors.com Blake Yocom Chicago (1)312-233-7056 blakeyoucom@standardandpoors.com Abhishek Soni and Daniel Zuccarello contributed to this report. Standard & Poor's I RatingsDirect on the Global Credit Portal I March 15,2010 10 Copyright(c►2010 by Standard&Poor's Financial Services LLC(S&P),a subsidiary of The McGraw-Hill Companies,Inc.All rights reserved. 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