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Summary: Centerville, Minnesota; General Obligation -. �, US$7.755 mil GO imp ffdg bnds ser 2tJ11 A dtd 04Jt11 J2019 due al/Q1 /2019 to�! Term Rating AA/Stable � NeN► Centerville GQ: Long Term Reting AA/Stable Affim�ed Rarionale The 'AA' rating assigned to Centerville, Minn.'s series 2011A general obligation (GOj improvement refunding bonds and the affirmed 'AA' rating on the city's previously rated issues reflect the following credit characteristics: � Access to employment throughout the large and diverse Minneapolis-St. Paul area; • Strong to very strong wealth and income indicators; • Historically very strong general fund reserves, supported by good management; and • Moderate overall net debt burden. Elevated carrying charges, in part, offset the above suengths. The city's unlimited tax GO pledge secures the series 2011A bonds. Management plans to use proceeds to current refund the city's series 2004B and series 2007A GO improvement bonds for interest-cost savings. Centerville (population: 3,881) is located about 15 miles north of St. Paul ('AAA/Stable' GO raring) in Anoka '' County ('AAA/Stable' GO raring). The city is primarily residential in nature (83% of market value is residential), and residents have easy access to employment throughout the Minneapolis-St. Paul area. We consider median hous�hold effective buying income (EBI) very strong at 144% of the national average, while per capita EBI is considered good at 110% of the national average. In fiscals 2007 and 2008, indicated market value grew an average ' 12% per year. Howeve� indicated market value decreased 3% in fisca12009 and 8.3% in fiscal 2010 to $351 million. Although indicated market value has deteriorated somewhat, we still consider city market value very strong at $90,408 per capita. In fisca12010, Centerville's tax capacity was $3.8 million, and the city's leading 10 taxpayers accounted for a very diverse 8% of tax capacity. � While city revenues have fallen due to decreases in interest earnings, intergovemmental revenues, and user-fee receipts, the city has responded with expenditure reductions to maintain very suong reserves. To mirigate the effects of a 6% decrease in general fund revenues in fisca12009, the city reduced general fund expendirures by 15% in discretionary spending areas such as salaries and benefits and delayed capital improvement projects. The general fund had a$73,810 surplus in fiscal 2009, increasing the unreserved fund balance to $1.2 million, or a very strong 55% of expenditures. Centerville reported an unaudited $162,000 general fund deficit in fisca12010 due to building permit revenues coming in below budget. Management has adjusted revenue assumprions to account for lower revenues in fisca12011 and expects balanced general fund results. The city currendy sets its operarional levy below the state cap; if the city were to levy at its maximum rate, it would generate an additional $67,000. Property taxes account for 81.5% of general fund revenues while intergovernmental receipts account for 7.5%. Standard & Poor's � RatingsDirect on the Global Credit Portal � March 15, 2011 2 854223�301456571