Set Public Hearing on the Issuance of Not to Exceed $3,800,000 Water Revenue Refunding Bonds, Series 2021C_Initiate Copyrighted
J une 7, 2021
City of Dubuque Items to be set for Public Hearing # 1.
City Council Meeting
ITEM TITLE: Proceedings to Set Public Hearing on the Issuance of Notto Exceed
$3,800,000 Water Revenue Refunding Bonds, Series 2021 C
SUM MARY: City Manager recommending that a public hearing be set for June 21,
2021, on the proposition of selling not to exceed $3,800,000 in Water
Revenue Refunding Bonds, Series 2021 C.
RESOLUTION Fixing date for a meeting on the proposition of the
issuance of not to exceed $3,800,000 Water Revenue Refunding Bonds
of the City of Dubuque, State of lowa, and providing for publication of
notice thereof
SUGGESTED Receive and File;Adopt Resolution(s), Set Public Hearing for June 21,
DISPOSITION: 2021 Suggested Disposition:
ATTACHMENTS:
Description Type
MVM Memo City Manager Memo
Staff Memo Staff Memo
Resolution Resolutions
Bond Counsel Letter Supporting Documentation
Notice of Public Hearing Supporting Documentation
Moody's Credit Rating Supporting Documentation
dubuque
THE CITY OF �
D�L E All•Aaerin6ih
, �I ��� ►
Maste iece on the Mississi i z°°'"�°lz.z°13
YP pp zoi�*�oi9
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Proceedings to Set Public Hearing on the Issuance of Not to Exceed
$3,800,000 Water Revenue Refunding Bonds, Series 2021 C
DATE: June 2, 2021
Director of Finance and Budget Jennifer Larson recommends that a public hearing be
set for June 21, 2021, on the proposition of selling not to exceed $3,800,000 in Water
Revenue Refunding Bonds, Series 2021 C. $3,720,000 of the proceeds is intended to
provide funds to refund two previously issued bond series that are now callable to
realize estimated interest savings of $374,076 and $80,000 is intended to provide funds
for bond issuance costs.
Repayments of the debt will be Water user fees.
On May 12, 2021, Moody's Investors Service upgraded the City's credit rating of A2 to
A1 on the water enterprise revenue bonds. The report cited strong cash reserves,
strong capital and operating planning, unlimited rate setting authority, narrow but stable
debt service coverage on total debt, and long-term trend of reduced water usage which
could impact revenue performance.
The proceedings have been prepared on the basis that no objections will be filed with
the City Clerk. If there are objections, we will need to summarize them. The Mayor will
then declare the hearing on the issuance of said Bonds to be closed. Immediately
following, a resolution is to be introduced and adopted entitled "Resolution Fixing Date
for a Meeting on the Proposition of the Issuance of Not to Exceed $3,800,000 Water
Revenue Refunding Bonds of the City of Dubuque, State of lowa, and Providing for
Publication of the Notice Thereof."
In the event the Council decides to abandon the proposal to issue said Bonds, then the
form of resolution included in said proceedings should not be adopted. In this event, a
motion needs to be adopted to the effect that such Bond proposal is abandoned.
Section 384.25 of the Code of lowa provides that any resident or property owner of the
City may appeal the decision to take additional action to issue the Bonds, to the District
Court of a county in which any part of the City is located, within 15 days after such
additional action is taken, but that the additional action is final and conclusive unless the
court finds that the Council exceeded its authority.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
�I:/v� �tv�r
Michael C. Van Milligen
MCVM/jml
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
Jennifer Larson, Director of Finance and Budget
2
Dubuque
THE CITY OF �
Du B E ���.�����
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Maste iece on the Mississi i z°°'"Z°lz.z°13
� Pp zoi�*zai9
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Director of Finance and Budget
SUBJECT: Proceedings to Set Public Hearing on the Issuance of Not to Exceed
$3,800,000 Water Revenue Refunding Bonds, Series 2021 C
DATE: June 2, 2021
INTRODUCTION
The purpose of this memorandum is to recommend the setting of a public hearing on
the proposal to issue Water Revenue Refunding Bonds, the proceeds of which will be
used to pay the costs of refunding outstanding Water Revenue Bonds, Series 2010D
dated September 21, 2010, and Water Revenue Bonds, Series 2008D dated November
4, 2008.
BACKGROUND
The Series 2010D Water Revenue Bonds were used to pay costs associated with water
main replacements and other water system improvements and the Series 2008D Water
Revenue Bonds were used to pay costs associated with water main replacements and
repairs, construction of water main extensions, and the acquisition and installation of
pump station radio communications equipment and facilities.
DISCUSSION
Of the bond amount:
• $3,720,000 is intended to provide funds to refund previously issued bond series
2008D and 2010D that are now callable to realize estimated interest savings of
$374,076 and
• $80,000 is intended to provide funds for bond issuance costs.
Repayments of the debt will be Water user fees.
On May 12, 2021, Moody's Investors Service upgraded the City's credit rating of A2 to
A1 on the water enterprise revenue bonds. The report cited strong cash reserves,
strong capital and operating planning, unlimited rate setting authority, narrow but stable
debt service coverage on total debt, and long-term trend of reduced water usage which
could impact revenue performance.
The proceedings have been prepared on the basis that no objections will be filed with
the City Clerk. If there are objections, we will need to summarize them. The Mayor will
then declare the hearing on the issuance of said Bonds to be closed. Immediately
following, a resolution is to be introduced and adopted entitled "Resolution Fixing Date
for a Meeting on the Proposition of the Issuance of Not to Exceed $3,800,000 Water
Revenue Refunding Bonds of the City of Dubuque, State of lowa, and Providing for
Publication of the Notice Thereof."
In the event the Council decides to abandon the proposal to issue said Bonds, then the
form of resolution included in said proceedings should not be adopted. In this event, a
motion needs to be adopted to the effect that such Bond proposal is abandoned.
Section 384.25 of the Code of lowa provides that any resident or property owner of the
City may appeal the decision to take additional action to issue the Bonds, to the District
Court of a county in which any part of the City is located, within 15 days after such
additional action is taken, but that the additional action is final and conclusive unless the
court finds that the Council exceeded its authority.
RECOMMENDATION
I respectfully recommend the adoption of the enclosed resolutions fixing the date of
June 21, 2021 for a public hearing on the proposition of selling not to exceed
$3,800,000 Water Revenue Refunding Bonds and providing publication of notice.
JML
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
Cassie Ross, Assistant Finance Director
2
ITEMS TO INCLUDE ON AGENDA
CITY OF DUBUQUE, IOWA
Not to Exceed $3,800,000 Water Revenue Refunding Bonds
. Resolution fiYing date for a meeting on the proposition to issue.
NOTICE MUST BE GIVEN PURSUANT TO IOWA CODE
CHAPTER 21 AND THE LOCAL RULES OF THE CITY.
- 1 -
June 7, 2021
The City Council of the City of Dubuque, State of Iowa, met in regular session, via
electronic means, an in person meeting being deemed impossible or impractical due to the
COVID-19 pandemic, at 6:30 P.M., on the above date. There were present Mayor Roy D. Buol,
in the chair, and the following named Council Members:
Cavanagh, Farber, Jones, Resnick, Roussell, Sprank
Absent: ___________________________________________
Vacant: ___________________________________________
* * * * * * *
- 2 -
Council Member Resnick introduced the following Resolution entitled "RESOLUTION
FIXING DATE FOR A MEETING ON THE PROPOSITION OF THE ISSUANCE OF NOT
TO EXCEED $3,800,000 WATER REVENUE REFUNDING BONDS OF THE CITY OF
DUBUQUE, STATE OF IOWA, AND PROVIDING FOR PUBLICATION OF NOTICE
THEREOF", and moved that the same be adopted. Council Member Jones seconded the motion
to adopt. The roll was called and the vote was,
AYES: Jones, Farber, Resnick, Buol, Cavanagh, Sprank, Roussell
___________________________________________
NAYS: ___________________________________________
Whereupon, the Mayor declared the resolution duly adopted as follows:
RESOLUTION NO. 184-21
RESOLUTION FIXING DATE FOR A MEETING ON THE
PROPOSITION OF THE ISSUANCE OF NOT TO EXCEED
$3,800,000 WATER REVENUE REFUNDING BONDS OF THE
CITY OF DUBUQUE, STATE OF IOWA, AND PROVIDING
FOR PUBLICATION OF NOTICE THEREOF
WHEREAS, it is deemed necessary and advisable that the City of Dubuque, State of
Iowa, should issue Water Revenue Refunding Bonds, to the amount of not to exceed $3,800,000,
as authorized by Sections 384.82 and 384.83, of the Code of Iowa, for the purpose of providing
funds to pay costs of carrying out project(s) as hereinafter described; and
WHEREAS, Bonds shall be payable solely and only out of the Net Revenues of the
Municipal Water System and shall be a first lien on the future Net Revenues of the Utility; and
shall not be general obligations of the City or payable in any manner by taxation and the City
shall be in no manner liable by reason of the failure of the Net Revenues to be sufficient for the
payment of the Bonds; and
WHEREAS, before the Bonds may be issued, it is necessary to comply with the
provisions of the Code, and to publish a notice of the proposal to issue such bonds and of the
time and place of the meeting at which the Council proposes to take action for the issuance of the
Bonds and to receive oral and/or written objections from any resident or property owner of the
City to such action.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, STATE OF IOWA:
Water Revenue Refunding Bonds, the proceeds of which bonds will be used to provide funds to
pay the costs of refunding outstanding revenue obligations of the City, including Water Revenue
Bonds, Series 2010D dated September 21, 2010, and Water Revenue Bonds, Series 2008D dated
November 4, 2008.
Section 2. That the Clerk is hereby directed to cause at least one publication to be made
of a notice of the meeting, in a legal newspaper,printed wholly in the English language,
published at least once weekly, and having general circulation in the City. The publication to be
not less than four clear days nor more than twenty days befare the date of the public meeting on
the issuance of the Bonds.
Section 3. The notice of the proposed action to issue bonds shall be in substantially the
following form:
- 3 -
- 4 -
(To be published between June 8, 2021 and June 16, 2021)
NOTICE OF MEETING OF THE CITY COUNCIL OF THE
CITY OF DUBUQUE, STATE OF IOWA, ON THE MATTER
OF THE PROPOSED ISSUANCE OF NOT TO EXCEED
$3,800,000 WATER REVENUE REFUNDING BONDS, AND
THE HEARING ON THE ISSUANCE THEREOF
PUBLIC NOTICE is hereby given that the City Council of the City of Dubuque, State of
Iowa, will hold a public hearing on the 21st day of June, 2021, at 6:30 P.M., at which meeting
the Council proposes to take additional action for the issuance of not to exceed $3,800,000 Water
Revenue Refunding Bonds, to provide funds to pay the costs of refunding outstanding revenue
obligations of the City, including Water Revenue Bonds, Series 2010D dated September 21,
2010, and Water Revenue Bonds, Series 2008D dated November 4, 2008. The Bonds will not
constitute general obligations or be payable in any manner by taxation, but will be payable from
and secured by the Net Revenues of the Municipal Water System.
Due to public health concerns related to COVID-19, this meeting of the City Council will
be conducted electronically, pursuant to Iowa Code Section 21.8, as holding the meeting in
person is impossible or impractical. Interested persons may attend or participate in the meeting
by the following method:
Please join my meeting from your computer, tablet or smartphone.
https://global.gotomeeting.com/join/337661181
You can also dial in using your phone.
United States (Toll Free): 1 877 568 4106
United States: +1 (571) 317-3129
Access Code: 337-661-181
Please check the posted agenda in advance of the meeting for any updates to the manner
in which the public may access the meeting.
At the above meeting the Council shall receive oral or written objections from any
resident or property owner of the City to the above action. After all objections have been
received and considered, the Council will at the meeting or at any adjournment thereof, take
additional action for the issuance of the Bonds or will abandon the proposal to issue said Bonds.
This notice is given by order of the City Council of the City of Dubuque, State of Iowa,
as provided by Sections 384.82 and 384.83 of the Code of Iowa.
Dated this 11th day of June, 2021.
Adrienne N. Breitfelder
City Clerk, City of Dubuque, State of Iowa
(End of Notice)
PASSED AND APPROVED this 7th day of June, 2021.
Mayor
ATTEST:
City Clerk
-5-
CERTIFICATE
STATE OF IOWA )
) SS
COUNTY OF DUBUQUE )
I, the undersigned City Clerk of the City of Dubuque, State of Iowa, do hereby certify
that attached is a true and complete copy of the portion of the records of the City showing
proceedings of the Council, and the same is a true and complete copy of the action taken by the
Council with respect to the matter at the meeting held on the date indicated in the attachment,
which proceedings remain in full force and effect, and have not been amended or rescinded in
any way; that meeting and all action thereat was duly and publicly held in accordance with a
notice of ineeting and tentative agenda, a copy of which was timely served on each member of
the Council and posted on a bulletin board or other prominent place easily accessible to the
public and clearly designated for that purpose at the principal office of the Council pursuant to
the local rules of the Council and the provisions of Chapter 21, Code of Iowa, upon reasonable
advance notice to the public and media at least twenty-four hours prior to the commencement of
the meeting as required by law and with members of the public present in attendance; I further
certify that the individuals named therein were on the date thereof duly and lawfully possessed of
their respective City offices as indicated therein, that no Council vacancy existed except as may
be stated in the proceedings, and that no controversy or litigation is pending,prayed or
threatened involving the incorporation, organization, eXistence or boundaries of the City or the
right of the individuals named therein as officers to their respective positions.
WITNESS my hand and the seal of the Council hereto affixed this day of
, 2021.
City Clerk, City of Dubuque, State of Iowa
(SEAL)
CERTIFICATE
STATE OF IOWA )
) SS
COUNTY OF DUBUQUE )
I, the undersigned, do hereby certify that I am now and was at the times hereinafter
mentioned, the duly qualified and acting Clerk of the City of Dubuque, in the County of
Dubuque, State of Iowa, and that as such Clerk and by full authority from the Council of the
City, I have caused a
NOTICE OF PUBLIC HEARING
(Not to Exceed $3,800,000 Water Revenue Refunding Bonds)
of which the clipping annexed to the publisher's affidavit hereto attached is in words and figures
a correct and complete copy, to be published as required by law in the Telegraph Herald, a legal
newspaper published at least once weekly,printed wholly in the English language,published
regularly and mailed through the post office of current entry for more than two years and which
has had for more than two years a bona fide paid circulation recognized by the postal laws of the
United States, and has a general circulation in the City, and that the Notice was published in all
of the issues thereof published and circulated on the following date:
, 2021.
WITNESS my official signature this day of , 2021.
City Clerk, City of Dubuque, State of Iowa
(SEAL)
01893206-1\10422-215
STATE OF IOWA SS:
DUBUQUE COUNTY
CERTIFICATE OF PUBLICATION
I, Kathy Goetzinger, a Billing Clerk for Woodward
Communications, Inc., an Iowa corporation, publisher
of the Telegraph Herald, a newspaper of general
circulation published in the City of Dubuque, County
of Dubuque and State of Iowa; hereby certify that the
attached notice was published in said newspaper on the
following dates:
06/11/2021
and for which the charge is 35.49
Subscribed to be ore me, a Notary is in and for
Dubuque County, Iowa,
this 1Ith day of June, 2021
Not Qublic in and for Dubuq e County, Iowa.
h"• . JANET K. PAPE
4 `r' = Canmlaslon Number 199669
�a�- Ny Comm. Ezp. DEC 11, =2
Ad text : NOTICE OF MEETING OF THE CITY COUNCIL OF THE CITY OF DUBUQUE,
STATE OF IOWA, ON THE MATTER OF THE PROPOSED ISSUANCE OF NOT
TO EXCEED $3,800,000 WATER REVENUE REFUNDING BONDS, AND THE
HEARING ON THE ISSUANCE THEREOF
PUBLIC NOTICE is hereby given that the City Council of the
City of Dubuque, State of Iowa, will hold a public hearing on
the 21st day of June, 2021, at 6:30 P.M., at which meeting the
Council proposes to take additional action for the issuance of
not to exceed $3,800,000 Water Revenue Refunding Bonds, to
provide funds to pay the costs of refunding outstanding
revenue obligations of the City, including Water Revenue
Bonds, Series 2010D dated September 21, 2010, and Water
Revenue Bonds, Series 2008D dated November 4, 2008. The Bonds
will not constitute general obligations or be payable in any
manner by taxation, but will be payable from and secured by
the Net Revenues of the Municipal Water System.
Due to public health concerns related to COVID-19, this
meeting of the City Council will be conducted electronically,
pursuant to Iowa Code Section 21.8, as holding the meeting in
person is impossible or impractical. Interested persons may
attend or participate in the meeting by the following method:
https://global.gotomeeting.com/joirV337661181
You can also dial in using your phone.
United States (Toll Free): 1 877 568 4106
United States: + 1 (571) 317-3129
Access Code: 337-661-181
Please check the posted agenda in advance of the meeting for
any updates to the manner in which the public may access the
meeting.
At the above meeting the Council shall receive oral or
written objections from any resident or property owner of the
City to the above action. After all objections have been
received and considered, the Council will at the meeting or at
any adjournment thereof, take additional action for the
issuance of the Bonds or will abandon the proposal to issue
said Bonds.
This notice is given by order of the City Council of the
City of Dubuque, State of Iowa, as provided by Sections 384.82
and 384.83 of the Code of Iowa.
Dated this I Ith day of June, 2021.
Adrienne N. Breitfelder
City Clerk, City of Dubuque, State of Iowa
It 6/I1
Ahlers&Cooney, P.C.
A H L E R 5 C O O N E Y Attorneys at Law
100 Court Avenue, Suite 600
A T T ❑ R N E Y 5 Des Moines, lowa 50309-2231
Phone: 515-243-7611
Fax: 515-243-2149
www.ahlerslaw.com
Kristin B. Cooper
515.246.0330
kcooper@ahlerslaw.com
May 26, 2021
VIA EMAIL
Ms. Jenny Larson
Director of Finance&Budget
City of Dubuque
50 West 13th Street
Dubuque, Iowa 52001
Re: Dubuque, Iowa-Not to Exceed$3,800,000 Water Revenue Refunding Bonds
Dear Jenny:
We have now prepared and are including with this letter suggested proceedings to be acted upon
by the Council in fixing the date of a meeting on the proposition to issue the above mentioned Bonds and
ordering publication of a notice of hearing consistent with the provisions of Code Section 384.83.
Publication Requirement-Notice of Hearing.
We are attaching a Word copy of the notice of hearing to be delivered to the newspaper for
publication purposes. A certificate to attest the proceedings is also enclosed.
Notice of this meeting must be published at least once in a legal newspaper,printed wholly in the
English language,published at least once weekly, and having general circulation in the City. The date of
publication is to be not less than four clear days nor more than twenty da�before the date of the public
meeting on the issuance of bonds. In computing time, the date of publication should be excluded. If the
last day falls on Sunday,the whole of the following Monday should be excluded.
We will prepare and forward to you in the near future, suggested procedure to be acted upon on
the date of hearing. If you have any questions pertaining to the proceedings enclosed or the above
instructions,please do not hesitate to either write or call.
Very truly yours,
Ahlers &Cooney, P.C.
Kristin Billingsley Cooper
FOR THE FIRM
WISHARD Si BAILY - 1888; GUERNSEV $i BAILV - 1893; BAILY Si STIPP - 1901; STIPP, PERRY, BANNISTER $i STARZINGER - 1914; BANNISTER, CARPENTER,
AHLERS $i COONEY - 1950; AHLERS, COONEY, DORWEILER, ALLBEE� HAYNIE $i SMITH - 1974; AHLERS� COONEY� DORWEILER, HAYNIE� SMITH $i ALLBEE� P.C. - 1990
May 26, 2021
Page 2
KBC:seb
cc: Adrienne N. Breitfelder, City Clerk
Trish Gleason,Assistant City Clerk
Tionna Pooler, Independent Public Advisors, LLC
01893232-1\10422-215
(To be published between June 8, 2021 and June 16, 2021)
NOTICE OF MEETING OF THE CITY COUNCIL OF THE
CITY OF DUBUQUE, STATE OF IOWA, ON THE MATTER
OF THE PROPOSED ISSUANCE OF NOT TO EXCEED
$3,800,000 WATER REVENUE REFUNDING BONDS, AND
THE HEARING ON THE ISSUANCE THEREOF
PUBLIC NOTICE is hereby given that the City Council of the City of Dubuque, State of
Iowa, will hold a public hearing on the 21 st day of June, 2021, at .M., at
which meeting the Council proposes to take additional action for the issuance of not to exceed
$3,800,000 Water Revenue Refunding Bonds, to provide funds to pay the costs of refunding
outstanding revenue obligations of the City, including Water Revenue Bonds, Series 2010D
dated September 21, 2010, and Water Revenue Bonds, Series 2008D dated November 4, 2008.
The Bonds will not constitute general obligations or be payable in any manner by taxation,but
will be payable from and secured by the Net Revenues of the Municipal Water System.
Due to public health concerns related to COVID-19, this meeting of the City Council will
be conducted electronically,pursuant to Iowa Code Section 21.8, as holding the meeting in
person is impossible or impractical. Interested persons may attend or participate in the meeting
by the following method:
[include access info]
Please check the posted agenda in advance of the meeting for any updates to the manner
in which the public may access the meeting.
At the above meeting the Council shall receive oral ar written objections from any
resident or property owner of the City to the above action. After all objections have been
received and considered, the Council will at the meeting or at any adjournment thereof, take
additional action for the issuance of the Bonds or will abandon the proposal to issue said Bonds.
This notice is given by order of the City Council of the City of Dubuque, State of Iowa,
as provided by Sections 384.82 and 384.83 of the Code of Iowa.
Dated this day of , 2021.
City Clerk, City of Dubuque, State of Iowa
(End of Notice)
� � �
� . .
CREDIT OPINION Dubuque (City of) IA Water Enterprise
12 May 2021
Update following upgrade of revenue bonds to A1
�:t:'it=i�i fl.'�:i=�.'1=t.1 C�i i
Summary
Dubuque (Citv of) IA Water Enterprise (A1) has a very strong cash position and strong capital
and operational planning with unlimited rate setting authority.The system has minimal
capital needs with a moderate debt burden and narrow but stable debt service coverage.
Contacts
Michael Armstrong +1312.706.9975 On May 5,2021,we upgraded the water enterprise's revenue debt to A1 from A2.
Associate Lead Anafyst
michael.armstrong@moodys.com Exhibit 1 Exhibit 2
,4debola Kushimo +1.214.979.6847 Total debt service coverage remains adequate Cash reserves have grown steadily since 2016
VP-SeniorAna(yst Revenue Debt Service Coverage Cash($OOOs) Days cash on hand
adebola.kushimo@moodys.com Total Annual Debt Service Coverage 10,000 700 days
� � � �Rate Covenant 9,000
8.00 600 days
CLIENT SERVICES a,000
���� 500 da s
� 7,000 Y
Americas 1-212-553-1653 �, s.00 a
�, m s,000 aoo aays
Asia Pacific 852-3551-3077 o s.00 0
s,000
� 4.00 r 300 days
Japan 81-3-5408-4100 ; ` � a,000
� 3.00
3,000 200 days
EMEA 44-20-7772-5454 � Zoo z,000
Z 1.00 ' � � � � � � � � � � 1,000 100days
0.00 0 days
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Year Year
Only revenue debt service is subject to the covenant of 1.25x, Source:Dubuque(City of)IA's financial statements
so the water enterprise did not breach its mandated rate
covenant.Totalannualdebtservice coverage alsoindudes
loans and portions of general obligation debt.
Source:Dubuque(City of)IA's financial statements and offering
documents
Credit strengths
» Strong cash reserves
» Unlimited rate setting authority
Credit challenges
» Narrow but stable debt service coverage on total debt
» Long term trend of reduced water usage which could impact revenue performance
Rating outlook
Moody's typical�y does not assign outlooks to local governments with this amount of debt.
.. . . . . .. . . . . .. . . . . .. . . . . .. . . . . .. . . . . .. . . . .
... .•
Factors that could lead to an upgrade
» Strengthened total debt service coverage
» Significant system growth
Factors that could lead to a downgrade
» Material reduction of cash reserves
» Narrowing of debt service coverage
Key indicators
Exhibit 3
Dubuque(City of)IA Water Enterprise
9,�stem Characteristics
Asset Condition(Net Fxed Assets/Annual Depreaation) 43 years
9�stem 5ze-O&M(in$OOOs) $5,477
�erviceArea Wealth:MR%of USmedian 94.18°/o
Legal Rovisions
Rate Covenant(x) 125
Debt Service F�serve F�quirement D9�Ffunded at lesser of standard 3-prong test(Aa)
Management
f�te Management Aa
F�gulatory Compliance and Capital Ranning A
Fnancial Strength
2016 2017 2018 2019 2020
OperatingF�venue($000) $8,407 $8,553 $8,906 $8,959 $9,273
9,�stem 9ze-O&M($000) $4,839 $4,653 $5,045 $5,795 $5,477
Net F�venues($000) $3,676 $3,937 $3,922 $3,368 $4,021
Net Funded Debt($000) $21,536 $25,989 $28,071 $26,714 $27,458
Annual Debt Se�vice($000) $1,530 $1,755 $2,424 $3,045 $3,575
Annual Debt Service Coverage(x)�'� 2.4x 2.2x 1.6x 1.1x 1.1x
Cash on Hand 248 days 422 days 550 days 458 days 597 days
Debt to Operating F�venues(x) 2.6x 3.Ox 3.2x 3.Ox 3.Ox
[1]Annual debt service includes debt service for revenue bonds,loans and the water enterprise's share of general obligation bonds.Only revenue debt service is subject to the covenant of
1.25x,so the water enterprise did not breach its mandated rate covenant.
Source:US Census Bureau and Dubuque(City of)IA financial statements
Profile
The enterprise provides water treatment for the City of Dubuque (Aa3), located in northeastern lowa (Aaa stable) across the Mississippi
River from Wisconsin (Aa1 stable)and I�linois (Baa3 stable),serving a resident population of nearly 60,000. Raw water is drawn from
four deep wells with a capacity of 8 million gallons per day and five shallow wells that provide 13 million gallons per day.Water is then
treated at the Eagle Point Water Plant(rated at 20 mi�lion gal�ons per day)and stored in one of three of three elevated tanks,three
stand pipes and an underground reservoir with a combined capacity of 17.5 million ga�lons.
This pubGcation does not announce a credlt rating action.For any credlt ratings referenced in this pubGcation,please see the ratings tab on the issuer/entity page on
www.moodys.com for the most updated credit rating action information and rating history.
2 12 May 2021 Dubuque(City of)IA Water Enterprise:Update following upgrade of revenue bonds to A1
... .•
Detailed credit considerations
Service area and system characteristics:stable service area serves as regional economic center
The city serves as a trade and service center for a large tri-state region and also benefits from its role as the Dubuque County(AaZ)
seat and home to three small colleges with combined enrollment of approximately 5,000 students. Resident income levels are slightly
below national average at 94.Z%of the national median.
Like many water systems across the country, Dubuque has experienced a steady dedine in water usage,spurred largely by increased
conservation efforts. In fiscal 2020,the system billed for 1.74 billion gallons,down 10.6%from a peak of 1.94 billion ga�lons in fisca�
2013.Over that same period,water connections increased 5.4%and revenues, bolstered by rate increases,grew 33.7%.Consistent
with the residential nature of the service area,the customer base is not materially concentrated with the ten largest customers
accounting forjust 10.7%of total water receipts in fiscal 2020.The system has sufficient water supply and treatment capacity to serve
future growth.As of fiscal 2020, based on current depreciation,the system had a remaining useful life of 43 years.
Debt service coverage and liquidity: narrow total debt service coverage will strengthen, cash financing of capital will limit
reserve growth
Debt service coverage and unrestricted liquidity are currently strong,and based on management's projections wil�stabilize and
strengthen over the next several years. In fiscal ZOZO,total debt service coverage,which indudes revenue debt, loans and portions of
general obligation bonds,was sufficient at 1.1x. Improvement of debt service coverage has been supported by annual rate adjustments
induding a 3% hike in fiscal 2020. Based on tentative annual rate increases of 5%,total debt service coverage will steadily increase
annually to reach 1.6x in fiscal 2025. Debt service coverage for revenue bonds was solid at 2.8x up from a weak negative 0.1x in fiscal
2014. Previously weak revenue debt service coverage was significantly impacted by a �arge number of main breaks and fluctuations in
water usage. Management's projections for revenue debt service coverage are stable through fiscal ZOZ3 at about 2x,after which it will
increase steadily to z.5x in fiscal 2026.
Management projects capital projects financed by cash reserves will reduce cash on hand, but due to conservative budgeting practices
we do not believe this reduction will be significant enough to have a material impact on the overall credit profile.
Liquidity
The cash position is strong, but expected to weaken over the next several years due to planned capital projects. Unrestricted system
liquidity was $9 mi�lion and a very strong 597 days of operations.We expect reserves will remain on par with similarly rated peers even
after planned cash financing of capital projects.
Debt and legal covenants: moderate debt burden,standard legal covenants
The debt burden will remain moderate given limited plans for future borrowing.The water enterprise's debt ratio was equivalent to
a moderate 3.Ox system revenue. Legal provisions indude a rate covenant and additional bonds test of 1.25x maximum annual debt
service(MADS) on all senior lien revenue bonds and a debt service reserve requirement equal to the lesser of 10%of principal on
senior lien bonds, maximum annual debt service (MADS)on a�l outstanding parity bonds,or 125%of average annual debt service on
outstanding bonds.The debt service reserve is funded with cash.
Legalsecurity
The system's water revenue debt is secured by a senior lien pledge on net revenues of the water enterprise.
Debt structure
All of the system's debt is fixed rate and long-term and indude $4.Z million of revenue bonds, $11.6 million of general obligation bonds
that are being repaid from water revenue, $10.2 million of capital loan notes from the State of lowa State Revolving Loan Funds and a
$5 million loan from the lowa Association of Regional Utilities.The final maturity among all of these debt issues is in 2040.
Debt-related derivatives
The water enterprise does not have any derivative exposure.
Pensions and OPEB
System emp�oyees are members of the lowa Public Employees Retirement System (IPERS),a multi-employer cost sharing plan.The
utility reimburses the city for pension and other post employment benefits(OPEB) contributions.As of fiscal ZOZO,the system's
3 12 May 2021 Dubuque(City of)IA Water Enterprise:Update following upgrade of revenue bonds to A1
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adjusted net pension liability(ANPL)was $4.9 million,equivalent to 0.5%of operating revenue.The unfunded OPEB liability is
negligible. Direct pension contributions and the implicit costs associated with OPEB were $144,000 and $9,000 in fisca�2020,
respectively,and made up a �ow 2.8%of the water enterprise's operating expenditures.
ESG considerations
Environmental
Environmental risk is generally low for the local government sector and does not factor materially into the water enterprise's credit
profile. Data from Moody's affiliate Four Twenty Seven indicate that Dubuque County has high exposure to heat stress and moderate
exposure to extreme rainfall events compared to other counties national�y, but neither have a material credit impact on the water
enterprise.
Social
Social considerations such as demographics, labor force, income and education are material considerations that influence the region's
economy,demographic,financial and leverage trends.The city's poverty rate of 15.6%slightly exceeds the national average of 13.4%.
As of February 2021, Dubuque County's unemployment rate was 4.7%,on par with the statewide figure and below the nation (6.6%).
We regard the coronavirus outbreak as a socia�risk under our ESG framework,given the substantial implications for public health and
safety.The coronavirus crisis is not a key driver for the City of Dubuque given the measured but minimal impact it had on financial
operations in the latter half of fiscal ZOZO, projections for recovery of affected revenue sources in fiscal ZOZ1 and federal funding
support from the American Rescue Plan Act.
Governance
The Dubuque Water System is an enterprise of the City of Dubuque. City Council has autonomous authority to set rates and charges.
After a covenant breach in 2014, management has partnered with a financial advisor to produce five year cash flow projections to avoid
future covenant infractions.The city manages to maintain a minimum senior lien coverage of 1.35x and operating reserves equal to at
least ZO%of operations.A rate increase of 3% has been approved by the council for fiscal 20zZ.
4 12 May 2021 Dubuque(City of)IA Water Enterprise:Update following upgrade of revenue bonds to A1
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