Columbus, Minn., Downgraded to A1 by Moody's

Moody's Investors Service said it has downgraded to A1 from Aa3 the outstanding general obligation unlimited tax debt of the city of Columbus, Minn.

Concurrently, Moody's also downgrades to A3 from A2 the outstanding lease revenue debt of the city. The A1 applies to $12.9 million of outstanding GO debt and the A3 applies to $4.7 million of outstanding lease revenue debt.

The city's outstanding general obligation bonds are secured by a dedicated property tax levy that is unlimited as to rate or amount. The A1 GOULT rating reflects the city's small and declining tax base which is expected to decline further in the near term; above average wealth indices and proximity to the Twin Cities metropolitan area; strong reserve and liquidity position; sizable long-term inter-fund loans with limited prospects for repayment; high direct debt burden; and high fixed costs as a portion of operating expenditures.

The A3 lease revenue rating, notched twice from the GOULT rating, reflects both the annual risk of non-appropriation and the non-essential nature of the pledged asset, which is land intended for economic development.

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