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Ripon (City of) WI -- Moody's affirms Ripon, WI's GO at A1, negative outlook remains

·12 min read

Rating Action: Moody's affirms Ripon, WI's GO at A1, negative outlook remains

Global Credit Research - 12 Jan 2021

New York, January 12, 2021 -- Moody's Investors Service, ("Moody's") has affirmed the A1 rating on the City of Ripon, WI's outstanding general obligation unlimited tax (GOULT) debt. Concurrently, we assigned the A1 to the city's $3 million General Obligation Refunding Bonds, Series 2021A. Following the sale, the city will have $15.3 million of outstanding general obligation unlimited tax (GOULT) debt outstanding, of which Moody's rates $12.1 million. The city has a negative outlook.

RATINGS RATIONALE

The city's recently narrowed, but still sufficient, liquidity position, modestly sized tax base with average resident income indices, elevated debt burden with moderate fixed costs and manageable pension liabilities support the A1 rating. The city expects to restore General Fund cash in fiscal 2021. Advances from the General Fund to pay for capital expenses had materially lowered cash levels relative to prior years. The rating also incorporates the city's limited revenue raising flexibility due to state imposed levy limits.

Despite the coronavirus pandemic management reports additional costs have been minimal relative to overall budget, as have revenues losses. Given coronavirus related expenditure savings and federal CARES act funding, the city expects to end fiscal 2020 in line with its original budget of balanced operations.

RATING OUTLOOK

The negative outlook reflects the likelihood that the city's financial position will remain narrow for the near-term, as the city attempts to return to structural balance. Failure to restore structural balance going forward could result in downward pressure on the rating.

FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS

- Significant growth in operating reserves and liquidity

- Moderation of debt levels

- Sustained growth and diversification of the city's tax base

FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS

- Further declines in available reserves and liquidity beyond fiscal 2019 levels

- Deterioration of the city's tax base and resident socioeconomic profile

- Increased debt levels

LEGAL SECURITY

The city's GOULT debt, including the Series 2021A bonds, are secured by the city's general obligation unlimited tax (GOULT) pledge which benefits from a dedicated property tax levy that is not limited by rate or amount.

USE OF PROCEEDS

Proceeds of the Series 2021A bonds will be used to current refund the city's outstanding Tax-Exempt General Obligation Refunding Bonds, Series 2012A (2021-2032 maturities) for interest savings.

PROFILE

Ripon is located in southeastern Wisconsin (Aa1 stable), approximately 20 miles southwest of Oshkosh (Aa3) and 20 miles west of the City of Fond du Lac (Aa3). The city provides municipal services, to a population of over 7,700 residents, which include water and sewer utility services and maintenance of streets and infrastructure.

METHODOLOGY

The principal methodology used in these ratings was US Local Government General Obligation Debt published in July 2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1230443. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. 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. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Jennifer Bernhardt Lead Analyst Regional PFG Chicago Moody's Investors Service, Inc. 100 N Riverside Plaza Suite 2220 Chicago 60606 US JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Gregory Lipitz Additional Contact Regional PFG Northeast JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653

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