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Rating Action: Moody's upgrades Oconomowoc, WI's GOs to Aa1 from Aa2Global Credit Research - 30 Mar 2022New York, March 30, 2022 -- Moody's Investors Service has upgraded the City of Oconomowoc, WI's outstanding general obligation unlimited tax (GOULT) notes and bonds to Aa1 from Aa2 and assigned a Aa1 rating to the city's $4.6 million General Obligation Promissory Notes, Series 2022A, and $2.7 million General Obligation Community Development Bonds, Series 2022B. Post-issuance, the city's outstanding GOULT debt will total $42 million, all of which is rated by Moody's.RATINGS RATIONALEThe upgrade to Aa1 from Aa2 reflects the city's growing tax base with strong resident incomes and significant new development. The financial performance is healthy and supported by ample reserves and conservative budgeting. The rating also considers the financial strength of the city's enterprises, including its electric utility, that carry high fund balances with little associated debt. The rating also takes into account the city's moderate net direct debt burden, more modest pension burden, and manageable fixed costs.RATING OUTLOOKMoody's typically does not assign outlooks to local governments with this amount of debt.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Continued expansion and diversification of the tax baseFACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATNGS- Significant increases to long-term liabilities - Erosion of the tax base - Large declines in reserves LEGAL SECURITY Debt service is backed by an irrevocable pledge of the city's full faith and credit supported by the city's pledge and unlimited authority to levy ad valorem tax annually on all taxable property in the city in an amount sufficient to pay debt service.USE OF PROCEEDSThe 2022A bonds will finance regular capital improvements, including water mane and street projects. The 2022B bonds will finance the provision of financial assistance to community development projects in TID 7.PROFILEOconomowoc is located 30 miles west of the City of Milwaukee (A2 negative) in Waukesha County (Aaa stable). It provides a full range of municipal services, including public safety, public works and municipal utility service, to approximately 17,000 residents.METHODOLOGYThe principal methodology used in these ratings was US Local Government General Obligation Debt published in January 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1260094. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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