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Summary: Centerville, Minnesota; General Obligation Credit Profile US$1.51 mil GO imp bnds ser 2013A dtd 06/01/2013 due 02/01/2029 Long Term Rating AA /Stable New Centerville GO Long Term Rating AA /Stable Affirmed Rationale Standard & Poor's Ratings Services has assigned its 'AA' rating to Centerville, Minn.'s series 2013A general obligation (GO) improvement bonds and affirmed its 'AA' rating on the city's previously rated issues. The outlook is stable. The rating reflects the following credit characteristics: • Access to employment throughout the large and diverse Minneapolis -St. Paul area; • Strong -to -very strong incomes and per- capita market value; and • Historically very strong general fund reserves, supported by good management. In our view the city's moderately high debt burden and high carrying charges, in part, offset the above strengths. The city's unlimited -tax GO pledge secures the series 2013A bonds, but management plans to pay a portion of debt service from special assessments. It will use bond proceeds to finance various street improvements. Centerville (population: 3,873) is about 15 miles north of St. Paul in Anoka County. The city is primarily residential (76% of market value is residential), and residents have easy access to employment throughout the Minneapolis -St. Paul area. We consider median household effective buying income (EBI) very strong at 147% of the national average, while per- capita EBI is considered good at 108% of the national average. Collection year 2013 net tax capacity decreased 7.3% to $2.9 million compared with collection year 2012. Despite recent decreases in economic market value related to residential market declines, we still consider market value per capita strong at $74,457. Management has reported leading taxpayers and employers have been stable. While new residential growth has not returned to pre- recession levels, management has seen an uptick in new construction over the past year. Despite some decreases in net tax capacity, Centerville expects to maintain very strong reserves. It is largely property tax dependent, and these revenues accounted for 76.5% of the general fund budget in fiscal 2012 (Dec. 31). Centerville has the authority to raise both its tax rate and dollar levy, and while it has maintained a flat levy in recent years, it has also raised its rate to capture the same revenues from a reduced tax base. Management expects to perform in line with its balanced budget for fiscal 2013. Although management has not begun the fiscal 2014 budget process, it expects to adopt a balanced budget. Centerville added $63,000 to general fund reserves in fiscal 2012, increasing total fund equity to $1.21 million. Of this balance, $1.18 million was available, or a very strong 58.6% of expenditures. WWW. STANDARDANDPOORS .COM /RATINGSDIRECT MAY 14, 2013 2 1131794 1300238792