MOODY's INVESTORS SERVICE ASSIGNS A1 RATING TO CITY OF WAVERLY (IA)

General Obligation Bonds, Series 2001B  $15.4 Million Debt Affected

Waverly (City of) IA
Municipality
Iowa 

Moody's Rating

Issue	Rating
General Obligation Bond, Series 2001B	A1
Sale Amount	$1,000,000
Expected Sale Date	11/19/01
Rating Description	General Obligation Unlimited Tax

NEW YORK, November 15, 2001 - Moody's Investors Serviec assigns an A1 rating, with a stable outlook, to the City of Waverly, IA's $1.0 million General Obligation Bonds, Series 2001B.  The bonds, which are secured by the City's unlimited general obligation tax pledge, will be used to finance street improvements as well as improvements to the City's municipal golf course.  Concurrently, Moody's affirms the A1 rating on the City's $14.4 million of outstanding general obligation debt.  The rating reflects the City's favorable financial operations with healthy reserves, moderately growing tax base, and manageable level of rapidly retired debt.

SOUND FINANCIAL POSITION DEMONSTRATED BY AMPLE BALANCES 

The City continues to maintain favorable financial operations, characterized by healthy General Fund balances.  The undesignated General Fund balance in fiscal 2000 was nearly $1.3 million, or 36.7% of General Fund revenues.  City officials indicate that a slight drawdown of approximately $40,000 was budgeted for fiscal 2001 due to rising health care costs.  An additional drawdown of $108,000 for property tax relief is expected in FY 2002.  Management intends to keep the undesignated general fund balance at minimum 25% of operating revenues.  The primary source of operating revenue is property taxes, which account for nearly 44% of operating revenues.  The operating tax levy is at the $8.10 / $1,000 assessed value legal cap, however, the City has modest financial flexibility from the unused $0.27 emergency levy and the ability to shift some employee benefits out of the General Fund levy into a Trust and Agency Fund garnering approximately $62,000 and $154,000, respectively.

MODERATELY GROWING TAX BASE EXPECTED TO CONTINUE 

The City of Waverly, located 15 miles north of the Waterloo-Cedar Falls metro area, has a tax base that encompasses several diverse, large employers.  Overall stability has resulted from the presence of Nestle Beverage Company (parent Nestle S.A. rated Aaa), the City's largest taxpayer and second-largest employer (workforce 401), representing 5% of the tax base.  Additional local employers include a life insurance company, a crane manufacturer, and Wartburg College (enrollment 1,600).  Over the last five years, tax base growth averaged a moderate 4.4% annually, despite the state-mandated rollback in residential and machinery and equipment assessment rates.  The City's wealth levels exceed state averages and the September 2001 employment rate at 3.0% was slightly above the state rate of 2.8%.

MANAGEABLE DEBT LEVEL WITH RAPID AMORTIZATION 

Moody's believes that the City's debt burden of 5.2% is manageable due to expected continued tax base growth, modest future debt plans, contributions from tax increment financing districts and enterprise funds and rapid debt retirement.  Payment of debt is above average with 68.7% of debt paid within 10 years.  While the City has no firm general obligation debt plans, it may issue water and sewer revenue debt during Spring 2002.

KEY STATISTICS

2000 Population:  8,968
2001 Full Valuation:  $362 million
Full value per capita:  $40,434
Debt Burden:  5.2%
Retirement of principal (10 years):  68.7%
FY 00 Undesignated General Fund Balance:  $1.3 million (36.7% of General Fund Revenues) 

ANALYSTS: 

Iliana Pappas, Analyst, Public Finance Group, Moody's Investors Service
Jonathan North, Backup Analyst, Public Finance Group, Moody's Investors Service
James Mintzer, Senior Credit Officer, Public Fianance Group, Moody's Investors Service

Contacts: 

Journalists:                (212) 553-0376
Research Clients:      (212) 553-1625
Please contact the City's finance dept for further information or any questions you may have.