Loading...
Moody's Investors Service Credit Opinion Report on General Obligation BondsCity of Dubuque City Council Meeting Action Items # 3. Copyrighted May 3, 2021 ITEM TITLE: Moody's Investors Service Credit Opinion Report on General Obligation Bonds SUMMARY: City Manager submitting the credit opinion report from Moody's Investors Service on the outstanding general obligation bonds in conjunction with the issuance of Series 2021 A and Series 2021 B general obligation bonds. SUGGESTED Suggested Disposition: Receive and File DISPOSITION: ATTACHMENTS: Description Type MVM Memo City Manager Memo Staff Memo Staff Memo Moody's Investors Service Credit Rating Report Supporting Documentation THE CITY OF Dubuque DB-.'*--TEAll-America CityU Masterpiece pp iece on the Mississippi zoo�•zoi 2-2013 zoi7*2019ai9 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Moody's Investors Service Credit Opinion Report on General Obligation Bonds DATE: April 26, 2021 Director of Finance and Budget Jennifer Larson is submitting the credit opinion report from Moody's Investors Service on the outstanding general obligation bonds in conjunction with the issuance of Series 2021A and Series 2021 B general obligation bonds. Moody's Investors Service affirmed the City's credit rating of Aa3. Moody's Investors Service reviews all its ratings annually and at the time that new general obligation bonds are issued in accordance with regulations. Moody's conducts these reviews through portfolio reviews in which Moody's reassesses the appropriateness of each outstanding rating in the context of the relevant principal methodologies, recent developments, and a comparison of the financial and operating profile similarly to rated peers. Moody's issues a press release following each credit review announcing its completion. The credit opinion report from Moody's Investors Service was overall positive. The report cited: • Growing economy bolstered by role as a regional economic center for northeastern Iowa. • Revenue raising flexibility through multiple property tax levies and franchise fees. • Full value of the city's tax base had grown at a compound annual rate of 4.1 % from 2014 to 2019, but growth was muted in fiscal 2020, increasing just 1 % to $4.9 billion. • Permit activity slowed during the pandemic but new permits in the latter portion of fiscal 2021 (fiscal year end of June 30) indicate a recovery. • While the coronavirus pandemic has led to the loss of over 2,000 jobs in Dubuque County between February 2020 and February 2021, the unemployment of 4.7% remains well below the national rate of 6.6%. Cash position is strong and has steadily improved and is expected to remain stable. At the close of fiscal 2020 net cash across city operating funds totaled $26.2 million, equivalent to 34% of operating revenue. Below average property wealth and resident income levels. Above average debt burden. Michael C. Van Milligen MCVM/jml Attachment cc: Crenna Brumwell, City Attorney Cori Burbach, Assistant City Manager Jennifer Larson, Director of Finance and Budget I THE C DUj!B9aTE Masterpiece on the Mississippi TO: Michael C. Van Milligen, City Manager FROM: Jennifer Larson, Director of Finance and Budget Dubuque AIFAneri�a City 2007-2012.2013 2017*2019 SUBJECT: Moody's Investors Service Credit Opinion on General Obligation Bonds DATE: April 26, 2021 INTRODUCTION The City of Dubuque received the credit opinion report from Moody's Investors Service on the outstanding general obligation bonds in conjunction with the issuance of Series 2021A and Series 2021 B general obligation bonds. Moody's Investors Service affirmed the City's credit rating of Aa3 on the general obligation bonds. BACKGROUND Moody's provides credit ratings and research covering debt instruments and securities. The purpose of Moody's ratings is to provide investors with a simple system to gauge future relative creditworthiness of securities. The firm uses nine rating classifications to designate least credit risk to greatest credit risk: Aaa, Aa, A, Baa, Ba, B, Caa, Ca, and C. Moody's appends numerical modifiers 1, 2, and 3 to each rating classification. Moody's Investors Service reviews all its ratings annually and at the time that new general obligation bonds are issued in accordance with regulations. Moody's conducts these reviews through portfolio reviews in which Moody's reassesses the appropriateness of each outstanding rating in the context of the relevant principal methodologies, recent developments, and a comparison of the financial and operating profile similarly to rated peers. Moody's issues a press release following each review announcing its completion. DISCUSSION The credit opinion report from Moody's Investors Service was overall positive. The report cited: • Growing economy bolstered by role as a regional economic center for northeastern Iowa. • Revenue raising flexibility through multiple property tax levies and franchise fees. • Full value of the city's tax base had grown at a compound annual rate of 4.1 % from 2014 to 2019, but growth was muted in fiscal 2020, increasing just 1 % to $4.9 billion. • Permit activity slowed during the pandemic but new permits in the latter portion of fiscal 2021 (fiscal year end of June 30) indicate a recovery. • While the coronavirus pandemic has led to the loss of over 2,000 jobs in Dubuque County between February 2020 and February 2021, the unemployment of 4.7% remains well below the national rate of 6.6%. • Cash position is strong and has steadily improved and is expected to remain stable. At the close of fiscal 2020 net cash across city operating funds totaled $26.2 million, equivalent to 34% of operating revenue. • Below average property wealth and resident income levels. • Above average debt burden. ACTION REQUESTED This memorandum is for informational purposes only. Attachments JML CREDIT OPINION 26 April 2021 Contacts Michael Armstrong +1.312.706.9975 Associate Lead Analyst michael.armstrong@moodys.com Adebola Kushimo +1.214.979.6847 VP -Senior Analyst adebola.kushimo@moodys.com CLIENT SERVICES Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 EMEA 44-20-7772-5454 Dubuque (City of) IA Update to credit analysis Summary Dubuque, IAs credit position is very healthy. Its Aa3 rating is equivalent to the US cities median of Aa3. Notable credit factors include a sizable tax base, a wealth and income profile that is slightly below similarly rated peers, an increased financial position that will decline in fiscal 2021 (see Exhibit 1) and somewhat elevated debt and pension liabilities. Exhibit 1 Financial reserves have increased substantially over the past several years and will remain solid despite a draw in fiscal 2021 ■General Fund Cash as % of Revenue ■General Fund Balance as % of Revenue 35 30 25 20 15 10 5 0 2015 2016 2017 2018 2019 2020 2021 (projected) Source: Dubuque (City of) IA's financial statements Credit strengths Growing economy bolstered by role as a regional economic center for northeastern Iowa Revenue raising flexibility through multiple property tax levies and franchise fees Credit challenges Below average property wealth and resident income levels Above average debt burden Rating outlook Outlooks are generally not assigned to local governments with this amount of debt. Factors that could lead to an upgrade Strengthening of resident income levels Material growth in operating reserves and liquidity Moderation of the debt burden Factors that could lead to a downgrade Declines in operating reserves or liquidity Growth in the debt or pension burdens Key indicators Exhibit 2 Dubuque (City of) IA 2016 2017 2018 2019 2020 Economy/Tax Base Total Full Value ($000) $4,192,266 $4,434,972 $4,557,804 $4,790,304 $4,836,468 Population 58,535 58,410 58,340 58,196 57,941 Full Value Per Capita $71,620 $75,928 $78,125 $82,313 $83,472 Median Family Income (% of US Median) 88.5% 90.6% 91.2% 94.2% 94.2% Finances Operating Revenue ($000) $75,159 $78,100 $76,321 $78,540 $77,290 Fund Balance ($000) $14,779 $19,052 $22,027 $25,252 $26,876 Cash Balance ($000) $11,604 $19,096 $21,820 $25,956 $26,202 Fund Balance as a % of Revenues 19.7% 24.4% 28.9% 32.2% 34.8% Cash Balance as a % of Revenues 15.4% 24.5% 28.6% 33.0% 33.9% Debt/Pensions Net Direct Debt ($000)[1] $145,715 $137,134 $128,749 $136,385 $127,631 3-Year Average of Moody's ANPL ($000) $144,854 $162,510 $168,903 $171,277 $173,977 Net Direct Debt / Full Value (%) 3.5% 3.1% 2.8% 2.8% 2.6% Net Direct Debt / Operating Revenues (x) 1.9x 1.8x 1.7x 1.7x 1.7x Moody's - ANPL (3-yr average) to Full Value (%) 3.5% 3.7% 3.7% 3.6% 3.6% Moody's - ANPL (3-yr average) to Revenues (x) 1.9x 2.1x 2.2x 2.2x 2.3x [1] Following an upcoming sale, the net direct debt burden will increase to $133 million, or 2.8% of full value and 1.7x operating revenue Sources: US Census Bureau, Dubuque (City of) IA's financial statements and Moody's Investors Service Profile The City of Dubuque is the county seat of Dubuque County (Aa2). It is located on the Mississippi River in northeastern Iowa (Aaa stable), bounded by Wisconsin (Aa1 stable) on the northeast and Illinois (Baa3 stable) on the southeast. The city is approximately 63 miles northeast of Cedar Rapids (Aa1 stable) and has a population of approximately 58,000. The largest industry sectors that drive the regional economy are manufacturing, health services, and retail trade. Detailed credit considerations Economy and tax base: regional economic center with average income and wealth metrics The city's tax base will remain a credit strength supported by continued tax base growth and the its role as a regional economic center. Additionally, the city is home to two small universities and one small college with a combined enrollment of nearly 5,000 students. Deere & Company (A2 negative) (2,600 employees), is Dubuque's largest employer and has been adding jobs at its Dubuque Works plant. The Dubuque Works plant manufactures forestry and construction equipment, unlike other John Deere facilities that manufacture farm equipment and have been downsizing. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, 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 26 April2021 Dubuque (City of) IA: Update to credit analysis The full value of the city's tax base had grown at a compound annual rate of 4.1% from 2014 to 2019, but growth was muted in fiscal 2020, increasingjust 1% to $4.9 billion. Permit activity slowed during the pandemic but new permits in the latter portion of fiscal 2021 (fiscal year end of June 30) indicate a recovery. While the coronavirus pandemic has led to the loss of over 2,000 jobs in Dubuque County between February 2020 and February 2021, the unemployment of 4.7% remains well below the national rate of 6.6%. Financial operations and reserves: stable financial position with revenue raising flexibility The city's financial position has steadily improved over the last several years to strong levels and, despite a projected drawdown in fiscal 2021, will remain solid. The use of funds for capital projects and equipment in the general fund in fiscal 2021 will reduce reserves by $3.8 million to close with $17.9 million in available fund balance, equivalent to a still healthy 24.9% of budgeted fiscal 2021 revenue. Despite declines in certain revenue sources in fiscal 2020, the city added $809,000 to its available general fund balance. Revenue losses in hotel/motel and gaming were more than offset by increases in local option sales tax revenue, support form the Iowa Coronavirus Relief Fund, a hiring freeze and deferred capital projects and equipment purchases. The delayed capital projets and equipment purchases will be completed in fiscal 2021, which is the primary driver of the planned use of general fund reserves. The fiscal 2022 budget is not finalized, but will be buttressed by funding from the American Rescue Plan Act in the amount of $27.4 million. Property taxes account for the city's largest revenue source, making up 46% of fiscal 2020 operating revenue. While the city levies at the $8.10/$1,000 tax cap for operations, officials report approximately $11.3 million in levy authority that could be accessed with council approval. A portion of the city's available taxing capacity includes access to an unlimited levy to fund employee benefits such as pension costs. The city has exposure to economically sensitive revenues for operations and capital, largely comprised of gaming revenues (9.6% of fiscal 2020 operating revenue) and local option sales tax (12.5% of revenue). Revenue derived from the city's 1% local option sales tax, which does not sunset, is split 50/50 between the city operations and capital projects. Dubuque's gaming revenues are derived from two casinos, the city -owned Q Casino (formally named the Mystique) and the privately owned Diamond Jo Casino. The city receives 50% of the Q Casino's profits, along with other revenues from leases and taxes. Gaming revenue declined modestly in fiscal 2020 due to closure of the two casinos early in the coronavirus pandemic while local option sales tax revenue was bolstered by increased internet sales (see Exhibit 3). Exhibit 3 Economically sensitive gaming and sales tax revenue have historically remained stable, were impacted oppositely by the pandemic Gaming Local option sales tax 12,000 10,000 0 8,000 0 0 6,000 c 4,000 2,000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Dubuque (City of) IA's financial statements Liquidity The city's cash position is strong and has steadily improved and is expected to remain stable. At the close of fiscal 2020 net cash across city operating funds totaled $26.2 million, equivalent to 34% of operating revenue. Debt and pensions: above average debt and pension burdens The city's elevated debt burden is expected to remain stable given continued growth in operating revenue and tax base valuation, combined with an increased use of pay -go capital spending. Following the upcoming sale, the city's debt burden will total 2.8% of full valuation and 1.7x operating revenue. 26 April 2021 Dubuque (City of) IA: Update to credit analysis Essential enterprises, such as water, sewer and storm water are anticipated to support a significant portion of the city's outstanding general obligation (GO) debt, but debt service coverage provided by the sewer and storm water enterprises has not consistently been above the 1.Ox threshold, so we do not consider the debt to be fully self supporting and therefore we include the debt in our debt burden calculation. The city's pension burden is relatively elevated. At the close of fiscal 2020, the city's three year average Moody's adjusted net pension liability (ANPL), our measure of a local government's pension burden, was high at 2.3x operating revenue and 3.6% of full valuation. Fixed costs, inclusive of debt service and retirement contributions are also high at 25% of operating revenue in fiscal 2018. Debt structure Following the sale, the city will have $82.1 million in debt ultimately secured by the city's GO pledge. The city also has $20.8 million of senior lien sales tax increment debt that benefits from the city's moral obligation pledge to consider appropriating from its debt service levy to replenish the debt service reserve if it is drawn upon. The city's direct debt burden also includes $19.5 million of TIF revenue bonds issued for various economic development projects, including the construction of a new public parking ramp at Diamond Jo Casino. The TIF revenue bonds are supported by revenues from the city's tax increment districts and backed by a minimum assessment agreement with the developer. All of the city's debt is long term and fixed-rate. Debt -related derivatives The city has no derivative exposure. Pensions and OPEB Dubuque participates in two defined benefit multiple -employer cost -sharing plans, the Iowa Public Employees' Retirement System (IPERS) and Municipal Fire and Police Retirement Systems of Iowa. On an annual basis, the plans establish local government retirement contributions as a share of annual payroll based on actuarial requirements. Currently, employer contribution rates are under 10% of payroll while employee contributions rates are approximately 7% of payroll for fiscal 2020. The city has routinely made its full required contributions. The Moody's ANPL referenced above uses the cost -sharing plan allocation of plan liabilities and fair market value of assets reported by the city under GASB 68 but reflects the use of the FTSE Pension Liability Index, a high investment -grade long-term taxable bond index, to value the plan's liabilities. While the plans' current discount rates are 7% for IPERS and 7.5% for fire and police, the FTSE Pension Liability Index used to value liabilities was 3.51% as of the plan's last measurement date of June 30, 2019.Our pension adjustments are not intended to replace reported figures, but rather to enhance the comparability of rated entities in our credit analysis since discount rates and plan assumptions often vary from plan to plan. In aggregate, all participating government contributions were near the "tread water"? indicator in fiscal 2020, however, the use of a lower Moody's market -based discount rate resulted in an increase in overall ANPL. ESG considerations Environmental Environmental risk is generally low for the local government sector and does not factor materially into the city's credit profile. Data from Moody's affiliate Four Twenty Seven indicates that Dubuque County has high exposure to heat stress and moderate exposure to extreme rainfall events compared to other counties nationally. Social Social considerations such as demographics, labor force, income and education are material considerations that influence the district'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 social 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 26 April 2021 Dubuque (City of) IA: Update to credit analysis operations in the latter half of fiscal 2020, projections for recovery of affected revenue sources in fiscal 2021 and federal funding support from the American Rescue Plan Act. Governance Iowa cities have an institutional framework score ? of "Aaa," which is very strong. Even with property tax caps on general and emergency levies, cities have strong revenue -raising flexibility due to various additional levies, including an unlimited levy for employee benefits. Unpredictable revenue fluctuations tend to be minor given the stability of the sector's primary revenue source, which are property taxes. Expenditures mostly consist of personnel costs, which are highly predictable. Iowa's public employee collective bargaining law limits the scope of bargaining to base wages for non-public safety employees. Across the sector, fixed costs are generally elevated and driven mainly by debt service. The city demonstrates good governance through the use of a five year capital improvement plan that is updated annually, as well as multiyear projections for potentially volatile revenue sources like gaming and sales tax revenue that are used to pay debt service. Management also has a policy to maintain 22% of general fund expenditures in reserve, which it has exceeded for each of the last four years. 5 26 April 2021 Dubuque (City of) IA: Update to credit analysis Rating methodology and scorecard factors The US Local Government General Obligation Debt methodology includes a scorecard, a tool providing a composite score of a local government's credit profile based on the weighted factors we consider most important, universal and measurable, as well as possible notching factors dependent on individual credit strengths and weaknesses. Its purpose is not to determine the final rating, but rather to provide a standard platform from which to analyze and compare local government credits. Exhibit 4 Dubuque (City of) IA Rating Factors Measure Score Economy/Tax Base (30%)[1] Tax Base Size: Full Value (in 000s) $4,836,468 Aa Full Value Per Capita $83,472 Aa Median Family Income (% of US Median) 94.2% Aa rmances (ju io) Fund Balance as a % of Revenues 34.8% Aaa 5-Year Dollar Change in Fund Balance as % of Revenues 20.4% Aa Cash Balance as a % of Revenues 33.9% Aaa 5-Year Dollar Change in Cash Balance as % of Revenues 28.6% Aaa Institutional Framework Aaa Aaa Operating History: 5-Year Average of Operating Revenues / Operating Expenditures 1.0x A Debt and Pensions (20%) Net Direct Debt / Full Value (%) 2.8% A Net Direct Debt / Operating Revenues (x) 1.7x A 3-Year Average of Moody's Adjusted Net Pension Liability / Full Value (%) 3.6% A 3-Year Average of Moody's Adjusted Net Pension Liability / Operating Revenues (x) 2.3x A Scorecard -Indicated Outcome Aa2 Rating Aaa [11 Economy measures are based on data from the most recent year available. Sources: US Census Bureau, Dubuque (City of), IA's financial statements and Moody's Investors Service Endnotes 1 Our "tread water" indicator measures the annual government contribution required to prevent reported net pension liabilities from growing, based on reported assumptions. An annual government contribution that treads water equals the sum of employer service cost and interest on the reported net pension liability at the start of the fiscal year. A pension plan that receives an employer contribution equal to tread water will end the year with an unchanged net pension liability relative to the beginning of the year if all plan assumptions hold. Net liabilities may decrease or increase in a given year due to factors other than the contribution amount, such as an investment performance that exceeds or falls short of a plan's assumed rate of return. Still higher contributions will always reduce unfunded liabilities faster, or will allow unfunded liabilities to grow more slowly than lower contributions. The degree to which contributions fall below the "tread water" indicator can help quantify a structural operating imbalance stemming from pensions, even under reported assumptions. A contribution below the "tread water" level in effect suppresses expenditures by leaving an implied interest on net pension liabilities unpaid, akin to borrowing at the assumed rate of return for operations. 2 The institutional framework score assesses a municipality's legal ability to match revenues with expenditures based on its constitutionally and legislatively conferred powers and responsibilities. See US Local Government General Obligation Debt (lulu 2020) methodology report for more details. 26 April 2021 Dubuque (City of) IA: Update to credit analysis © 2021 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT -LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL -BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION, IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third -party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications. To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S. To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Moody's Investors Service, Inc., a wholly -owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody's Investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than S%, is posted annually at www.moodys.com under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy." Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94105136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly -owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly -owned by Moody's Overseas Holdings Inc., a wholly -owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly -owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Nan-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively. MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY550,000,000. MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. REPORT NUMBER 1278814 26 April2021 Dubuque (City of) IA: Update to credit analysis CLIENT SERVICES Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 E M EA 44-20-7772-5454 MOODY'S INVESTORS SERVICE 26 April, 2021 Dubuque (City of) IA: Update to credit analysis