Farmington, MN GO Debt Rating Raised To 'AA+' On Stronger Finances And Management

CHICAGO (S&P Global Ratings) April 4, 2019--S&P Global Ratings raised its 
long-term rating to 'AA+' from 'AA' on Farmington, Minn.'s series general 
obligation (GO) debt. At the same time, we assigned our 'AA+' rating on the 
city's series 2019A GO bonds. The outlook is stable. 

"The upgrade reflects the city's growing economic base, very strong financial 
management, and lower debt burden," said S&P Global Ratings credit analyst 
Cora Bruemmer. The city adopted a detailed financial management plan in 2017 
with the goals of lowering its debt burden, cash-financing future projects, 
and managing the growth in its tax levy. The plan provides detailed 
forecasting for both operations and capital improvements, which is necessary 
as the city grows. Management has also focused on retiring debt early for 
costs savings by using internal financing, with minimal effects on the city's 
liquidity. As a result, our view of the city's economy, financial management, 
and debt burden has improved.

The bonds are secured by the city's GO, full faith and credit pledge, which 
benefits from an unlimited ad valorem tax. The series 2019A bonds are also 
payable from net revenue of the city's water utility, but we rate to the GO 
pledge. Several of the city's bonds have additional revenue pledged, but were 
rate them all to the GO pledge. 

The series 2019A bonds will finance a street reconstruction project and 
refurbishment of the city's water tower. 

Farmington, with an estimated population of 24,082 over roughly 14.8 miles, is 
in Dakota County, roughly 25 miles south of the Twin Cities.

"The stable outlook reflects our view that Farmington will maintain its very 
strong reserves supported by strong financial performance and management, so 
we do not expect to revise the ratings within the two-year outlook period," 
added Ms. Bruemmer. 
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