Fitch Rates Bloomington, MN's $16MM GOs 'AAA'.

CHICAGO -- Fitch Ratings has assigned an 'AAA' rating to the City of Bloomington, Minnesota's $12,750,000 general obligation permanent improvement revolving fund bonds of 2004, series 39, and $3,300,000 general obligation tax increment refunding bonds, series 2005A. Fitch also assigns an 'AAA' rating to $27.6 million of the city's outstanding general obligation debt. The Rating Outlook is Stable.

The series 39 and series 2005A bonds will sell competitively on Oct. 18. Springsted, Inc. is serving as financial advisor. Dated Nov. 1, the series 39 bonds will pay interest each Feb. 1 and Aug. 1, beginning Aug. 1, 2005, and mature Feb. 1, 2006-2025. Dated Feb. 1, the series 2005A bonds will pay interest each Feb. 1 and Aug. 1, beginning Aug. 1, 2005, and mature Feb. 1, 2006-2012. While both bond series are secured by unlimited ad valorem taxes, special assessments against benefited properties are pledged to the series 39 bonds and tax increment revenues from the city's tax increment financing district No. O-1 are pledged to the series 2005A bonds. The series 39 bonds will finance water, sewer, and street improvements, while the 2005A bonds will refund currently certain maturities of the series 1995 general obligation tax increment refunding bonds.

The 'AAA' is based on the diverse and wealthy economic base, strong financial performance supported by conservative management practices, and a manageable debt profile. Although Bloomington is a burgeoning suburban community in the Minneapolis region, its population has been very steady as the property tax base increased 7.2% annually in the past ten years. Per capita income levels are above state and national levels, reflecting the strong attractiveness to high income households. Consequently, unemployment rates of the city, 4.3% in August 2004, are below-average, compared with those of the region, state, and nation.

The combination of strong economic growth and modest budgetary increases has contributed to a strong financial position. Although the decline in intergovernmental revenues has strained communities across the nation, Bloomington has offset these pressures and benefited from a vibrant local economy. Property taxes, representing 62% of revenues in 2003, have a good collection history and experienced very little volatility. Spending performance in the past decade has been very manageable, 3.8% annual growth, considering public safety and health expenditures tend to grow at a greater pace in other cities. Overall, the measured pace of budgetary expansion and the discretionary nature of significant portions of the budget reflect considerable financial flexibility.

Government fund balances (i.e., general, special revenue, and debt service funds), while strong, declined from $49.2 million in fiscal 2000 (84.2% of spending; Dec. 31 year-end) to $31.1 million (51.9%) in 2003. Since the city implemented the Government Accounting Standards Board Statement No. 34 accounting standards in fiscal 2003, results may not be comparable. However, general fund balances have been stable in the same period as the $14.7 million ending balance (35.7% of spending) in 2000 approximated the $14.3 million balance (32.5%) in 2003. Government enterprise funds are well managed and generate strong and consistent debt service coverage.

While the capital program anticipates $198 million in spending for the next five years, it will have a limited affect on tax-supported debt. The city's direct debt burden is low, equaling $819 per capita and just 0.7% of property values. About 87% of the city's direct debt will be amortized in 10 years. Debt issued by other governments represents the greater share of the overall burden, but is still very manageable at $3,009 per capita and 2.5% of property values. Pension systems are well financed.