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Summary: Centerville, Minnesota; General Obligation Credit Profile US$3.715 mil GO taxable imp bnds ser 2009A dtd 08/0112009 due 02/0112025 Long Term Rating AA/Stable New Rationale The 'AA' long-rerm rating assigned ro Centerville, Minn.'s series 2009A general ohligation (Gal improvement hands is based on rhe following raring factors: . Access to employment throughout the large and diverse Minneapolis-St. Paul area, . Economic indicators that are all better than national averages, . Financial performance Standard & Poor's Ratings Services considers to be very strong, and . Financial management practices we consider to be good. The city's unlimited-tax GO pledge secures the series 2009A bonds, but the 2009A bonds could be issued as federally raxable Build America Bonds in which rhe district will receive a subsidy from the U.S. Treasury equal to 35% of the stated interest paid. The tax subsidy will equal approximately $65,000 initially and steadily decrease thereafrer. The city has historically had at least $775,000 of cash in its debt service fund just before the semiannual debt service payments on Feh. 1 and Aug. 1, which can be used ro make debt service payments on the series 2009A bonds if the subsidy is not received in a timely manner. Regardless of the timing of the receipt of this subsidy, the city is permitted to levy the full amount necessary to make principal and interest payments. Centerville is located about 15 miles north of St. Paul in Anoka County, Minn. The city is primarily residential in nature (83% of market value is residential) with housing values that average $300,000-$400,000. With a population of 3,800, the citis residents have easy access to employment throughout the Minneapolis-St. Paul area. All of the city's available economic indicators are favorable. Median household effective buying income is considered very strong at 144% of the national average while per capita effective buying income is considered good at 110% of the national average. In addition, estimated market value of $410 million translates to $106,944 per capita, a value we consider to be extremely strong. Although drawdowns in the general fund balance totaling $400,000 have occurred over the previous two audited years for construction of a public works facility, financial performance remains very strong, in our opinion. As of Dec. 31, 2008, rhe unreserved general fund balance was $1.2 million, or a very strong 44.0% of expenditures. The city is expecting to achieve balanced operations for 2009 after adjusting its budget to account for a reduction in revenues of about $120,000 due to state aid and building permit revenues. We consider the city's financial management practices to be "good" under Standard & Poor's Financial Management Assessment (FMA) methodology. An FMA of good indicates that financial management practices exist in most areas, although all may not be formalized or regularly monitored. Highlights of these practices include regular reporting of budget and investment performance to elected officials, a formal five-year capital improvement Standard & Poor's RatingsDirect I July 14, 2009 2 Standard & Poor's. All rights ressl\led_ No reprint or dissemination without S&P's permission. See Terms of Use/Disclaimer on the last pagEl. 733 i ~)n i :JQUiJ8J? 53