Rating Action: Moody's assigns A1 to Pierz I.S.D. 484, MN's COPsGlobal Credit Research - 26 Aug 2022New York, August 26, 2022 -- Moody's Investors Service has assigned an A1 rating to Pierz Independent School District 484, MN's $2.5 million Certificates of Participation, Series 2022A. Moody's affirms the district's Aa3 issuer rating, and Aa3 general obligation unlimited tax (GOULT) rating. The issuer rating reflects the district's ability to repay debt and debt-like obligations without consideration of any pledge, security, or structural features. Following the sale, the district will have approximately $15.2 million in GOULT and $2.5 million in lease debt outstanding.RATINGS RATIONALEThe Aa3 issuer rating incorporates the district's healthy financial position, solid resident incomes, strong wealth (full value per capita) and growing enrollment trend with projected to remain stable in the near-term. The rating also incorporates the district's local economy anchored in agriculture, though it will benefit from ongoing development and its proximity to the cities of Brainerd (A1) and St. Cloud (Aa2). The district's total leverage is above average compared to its peers, yet debt is expected to remain manageable due to no additional borrowing plans.The Aa3 GOULT rating is equivalent to the Aa3 issuer rating based on the district's full faith and credit pledge supported by the authority to raise ad valorem property taxes without limit as torate or amount.The A1 rating on the Series 2022A certificates of participation (COPs) is one notch below the issuer rating due to the risk of non-appropriation and the more essential nature of the financed projects (school facilities).RATING OUTLOOKMoody's does not typically assign outlooks to local governments with this amount of debt.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Growth and diversification of the local economy- Decline in leverage- Upgrade of issuer and GOULT ratings (lease)FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Significant weakening of resident income or enrollment trends- Material deterioration in financial reserves- Substantial growth in leverage- Downgrade of issuer and GOULT ratings (lease)LEGAL SECURITYThe Series 2022A annual appropriation COPs are supported by district's pledge to make rental payments, subject to annual appropriation. The pledged asset is district facilities, which we deem to be more essential assets. The lease payments are expected to be paid from district's $212 per pupil lease levy, which generates around $292,000 annually. Maximum annual lease payments are around $230,000. The district's outstanding general obligation unlimited tax (GOULT) bonds are supported by the district's full faith and credit pledge and the authority to levy a dedicated property tax unlimited as to rate and amount. The GOULT bonds are additionally secured by statute.USE OF PROCEEDSProceeds of the Series 2022A bonds will finance additions to the district's high school building and other site improvements.PROFILEPierz Independent School District 484, MN is situated in Morrison, Benton, and Crow Wing Counties, located approximately 30 miles south of Brainerd and 30 miles north of St. Cloud. As of fiscal 2022, the district provided kindergarten through twelfth grade education to over 1,200 students.METHODOLOGYThe principal methodology used in these ratings was US K-12 Public School Districts Methodology published in January 2021 and available at https://ratings.moodys.com/api/rmc-documents/70054. Alternatively, please see the Rating Methodologies page on https://ratings.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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For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. 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