Finance Committee Agenda and Packet 2010 11 15

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Summary: Louisville, Colorado; Sales Tax Credit Profile Louisville Sales Tax Unenhanced Rating Many issues are enhanced by bond insurance. A +ISPURI /Stable Affirmed Rationale Standard & Poor's Ratings Services affirmed its 'A +' underlying rating (SPUR) on Louisville, Colo.'s sales -tax revenue refunding bonds. The rating reflects our assessment of the city's: • Strong historical coverage of proposed debt service, at 7x in 2008; • Some concentration in the city's top sales -tax generators; and • Solid legal provisions, including a fully funded reserve and additional bonds test requiring 1.75x coverage of proposed combined maximum annual debt service (MADS). Securing the bonds is a first -lien pledge on the one -third portion of the city's 3.0% sales tax dedicated by city ordinance to the city's capital projects fund. The remaining two- thirds of these revenues are used for general city operations and are not pledged to debt service on the bonds. Pledged revenues in fiscal 2008 provided coverage of proposed MADS of a strong 7x. The sales -tax base is somewhat concentrated. This concentration is tempered somewhat in that a high concentration of these sales are in nondiscretionary items, such as groceries and utilities, which leads to less potential volatility in sales -tax collections. In our opinion, legal protections are solid, with an additional bonds test requiring 1.75x coverage of proposed MADS and a fully funded debt service reserve. The city has no current plans or authorization for additional sales and use tax debt. Located 20 miles northwest of Denver and 10 miles southeast of Boulder, Louisville enjoys easy access to 1 -36, the main north -south transportation corridor through this sizable and economically strong metropolitan statistical area. The city's residents (18,325) have access to employment in both Denver and Boulder as well as along the growing industrial and technology corridor between the two cities. The city is essentially built out, but reports continued strong growth in the real estate industry. Income indicators are in our opinion, very high, with median household effective buying income (EBI) and per capita EBI at 158% and 153% nation, respectively. Outlook The stable outlook reflects our expectation that the dedicated sales tax revenue stream will continue to stabilize and provide strong coverage of debt service, protected by a good additional bonds test. Standard & Poor's 1 RatingsDirect on the Global Credit Portal 1 May 11, 2010 2 22