U.S.

PUBLIC FINANCE

NOVEMBER 13, 2014

SPECIAL COMMENT

Anatomy of Successful US Cities

Table of Contents:

Summary

SUMMARY
MAJORITY OF LARGE US CITIES
MAINTAINED OR IMPROVED CREDIT
QUALITY SINCE 2008
SUCCESSFUL CITIES HAVE
EXPERIENCED HEALTHY TAX BASE
GROWTH COMPARED TO PEERS
STRONG FINANCIAL MANAGEMENT
SUPPORTED REVENUE GROWTH AND
GROWTH IN RESERVES
SUCCESSFUL CITIES MAINTAINED
MANAGEABLE DEBT RATIOS DESPITE
RECESSION
LONG-TERM LIABILITIES ACCOUNT
FOR MODERATE PORTION OF
OPERATIONAL BUDGETS
APPENDIX
MOODYS RELATED RESEARCH

1
2
3
5
7
7
9
11

Analyst Contacts:
NEW YORK

During and in the wake of the US recession, many large local governments in the country have
proven just how resilient their credit quality has been to the systemic economic downturn and
other challenges such as pension underfunding. In fact, 34 of the 50 largest US cities have
either improved or maintained their credit quality, as measured by our general obligation and
issuer ratings, since the onset of the Great Recession. In the context of this report we refer to
these 34 as successful cities.

+1.212.553.1653

Jennifer Diercksen
+1.212.553.4346
Analyst
[email protected]
Julie Beglin
+1.212.553.4648
Vice President - Senior Credit Officer
[email protected]
Naomi Richman
+1.212.553.0014
Managing Director - Public Finance
[email protected]

The inherent economic strength and effective financial management of these successful cities
supported their resiliency since 2008.

Successful cities benefitted from atypically healthy tax base growth despite the
overarching challenges in the broader economy, financial sector and housing market.
The taxable property bases of these successful cities experienced a median 6.6% increase
since 2008, significantly outperforming the aggregate decline of 3.6% seen by large cities
nationally.

Successful cities strong financial management supported revenue growth and

improved reserve positions. Driven primarily by tax base growth, revenues grew by
7.7%, exceeding expenditure growth of 7.0%, resulting in healthy reserves that were a
median 18.6% of operating revenues in fiscal 2013. These cities balanced their budgets,
even as many other municipalities fell into deficits amidst falling property tax revenues
and state aid. Furthermore, their fixed costs, including debt service, pensions and retiree
health benefits remained relatively manageable, providing these successful cities with
budgetary flexibility.

U.S. PUBLIC FINANCE

Majority of large US cities maintained or improved credit quality since 2008

The ratings of 34 of the 50 largest US cities have improved or remained the same since the Great
Recession began in 2008 (see Appendix). Some 32 of the 34 successful cities were able to maintain their
ratings through the economic downturn, while two experienced rating upgrades. Overall, these successful
cities maintain a median rating of Aa1 (see Exhibit 1), two notches above the sector median of Aa3.
EXHIBIT 1

Since 2008, Ratings of 34 of the 50 Largest Cities Have Remained Stable or Improved 1
City

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.

State

Population

Moodys Rating

Moodys Outlook

New York

NY

8,370,000

Aa2

STA

Los Angeles

CA

3,863,839

Aa2

STA

Houston

TX

2,160,821

Aa2

STA

Phoenix

AZ

1,485,719

Aa1

STA

San Antonio

TX

1,383,194

Aaa

NEG

San Diego

CA

1,326,238

Aa2

STA

Dallas

TX

1,232,243

Aa1

STA

San Jose

CA

1,000,536

Aa1

STA

Honolulu

HI

983,429

Aa1

STA

Indianapolis

IN

843,393

Aaa

STA

Austin

TX

841,649

Aaa

STA

San Francisco

CA

839,109

Aa1

STA

Columbus

OH

802,912

Aaa

STA

Charlotte

NC

796,921

Aaa

STA

Hempstead Town

NY

765,272

Aa1

STA

Louisville-Jefferson County Metro Government

KY

750,828

Aa1

STA

El Paso

TX

672,538

Aa2

NOO

Memphis

TN

657,457

Aa2

NEG

Denver

CO

649,495

Aaa

STA

Washington

DC

646,449

Aa2

STA

Boston

MA

636,479

Aaa

STA

Seattle

WA

626,600

Aaa

STA

Baltimore

MD

621,342

Aa2

STA

Oklahoma City

OK

595,000

Aaa

STA

Portland

OR

592,120

Aaa

STA

Albuquerque

NM

555,417

Aa1

STA

Brookhaven Town

NY

482,820

Aa2

STA

Long Beach

CA

467,646

Aa2

STA

Mesa

AZ

450,310

Aa2

STA

Virginia Beach

VA

447,489

Aaa

STA

Colorado Springs

CO

438,338

Aa2

NOO

Raleigh

NC

423,179

Aaa

STA

Oakland

CA

399,326

Aa2

STA

Tulsa

OK

397,139

Aa1

STA

Source: Ratings from Moodys.com as of 12 November 2014; population data from US Census/Local Government Sources
1

General obligation and issuer ratings.

NOVEMBER 13, 2014

SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

These 34 successful cities, located in 19 different states, are concentrated in the mid-Atlantic,
southwestern, and western portions of the US (see Exhibit 2).
EXHIBIT 2

Successful Cities Located Throughout US

Source: Moodys Investors Service

Successful cities have experienced healthy tax base growth compared to peers
Underpinning successful cities credit stability over the economic downturn was their 6.6% median
increase in tax base growth (full property valuation) between 2008 and 2013, compared with a decline
of 3.6% for all US cities with populations over 100,000 2. Even at the peak of the financial crisis from
2008 to 2009, the tax bases of successful cities increased by a median 6.6%. As in many cities across
the nation, housing markets in eleven of the successful cities have not yet fully recovered from the
downturn, but the remaining 23 cities experienced a sizeable 11.8% median increase in tax base
valuations over this time period. Some of the successful cities that saw more sizable declines between
2008 and 2013, such as Phoenix (Aa1 stable), were able to offset this loss through prompt and
aggressive budget actions.

US Cities with populations over 100,000 include successful cities

NOVEMBER 13, 2014

SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

Case Study 1: City of Phoenix (AZ)

The City of Phoenix (Aa1 stable) has been a time-tested leader in maintaining fiscal balance through a
combination of aggressive and timely budget cuts and politically difficult revenue adjustments, most
recently in response to severe revenue losses experienced during the Great Recession.
The citys financial operations were first impacted by the slowing economy in fiscal 2008 as city sales
taxes began to falter in the second half of the fiscal year. By mid-2009, the city had identified a $270
million (two-year) budget gap and proposed a number of gap closing items that paved the way for a
balanced budget heading into fiscal 2010. Key actions included the elimination of 924 positions
(27.3% cuts to non-public safety departments and 7.5% cuts to public safety), a modest level of onetime savings mostly in the form of lease purchase financing and, importantly, the enactment of a 2%
sales tax on food for home consumption. Further, the city eliminated nearly 600 positions in fiscal
2010, followed by another round of cuts totaling nearly 635 positions in fiscal 2011.
Throughout this difficult period, the city was able to maintain General Fund reserves in excess of 25%
of revenues. Further, the cumulative headcount reductions resulted in its smallest workforce in nearly
40 years (10.3 employees per 1,000 residents), leaving the city well-positioned to face future budgetary
challenges.
Successful cities were by no means immune to the downturn, as their year-over-year tax base valuations
declined slightly in 2011. But, as shown in Exhibit 3, the dip was much less severe than in other cities
and the recovery has been more robust.
EXHIBIT 3

Tax Bases of Successful Cities Fared Better Through Recession than Cities with Populations Over
100,000
Successful Cities

All Cities with Populations over 100,000

8%

Year-Over-Year Change

6%
4%
2%
0%
-2%
-4%
-6%
-8%
2009

2010

2011
Fiscal Year

2012

2013

Source: Moodys Investors Service database

Overall, development tended to gravitate to successful cities when the recession took hold, driving
overall healthy tax base growth. As a result of this more robust expansion, these cities experienced a
2.4% increase in population (2010-13) and 2.1% increase in labor force (2008-13), outpacing
population (2.2%) and labor force (0.6%) growth among peer cities.
Other supporting factors for the successful cities were their diverse tax bases, the significant presence of
large institutions, and their status as regional economic centers. In terms of economic diversity, in
2013 successful cities top 10 taxpayers accounted for 5.4% of the total tax base, compared to a
median 6.5% for all large cities. Having a diverse tax base makes cities more resilient to economic
shocks because it means the government is less exposed to one particular industry or a large individual
taxpayer.

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SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

Large public institutions and agencies that form the economic foundation of the successful cities also
support their credit quality. For example, nine of the cities are state capitals that benefit from the
stability of state government institutions. Similarly, federal government agencies underpin the
economy of the District of Columbia (Aa2 stable). A number of the cities are home to military
installations. Notably, Virginia Beach, VA (Aaa stable) has four military bases employing over 32,000
military personnel and civilians. As one of the few successful cities with a tax base that has not returned
yet to its pre-recession levels, Virginia Beach demonstrates that a major institutional presence can
counteract other negative credit forces. Although government agencies can downsize just as private
enterprises can, they tend to be more stable employers and rarely move locations entirely.
Furthermore, many successful cities benefit from the presence of major educational or health care
institutions. These institutions fuel employment and private investment in the city and surrounding
areas, helping to offset their tax-exempt status. For example, seven out of 10 top employers in Boston,
MA (Aaa stable) are rooted in the healthcare sector. Boston is home to 35 universities and colleges
with over 152,000 students making up 23% of the citys population. The growth of healthcare and
higher education institutions helped boost Bostons tax base by 15.5% between 2008 and 2013.
Houston (Aa2 stable) is another example of a city that benefits from a major healthcare institution, as
the city is home to the Texas Medical Center, one of the worlds largest concentrations of healthcare
and research institutions. The Center includes 54 medicine-related institutions and employs over
100,000 people.
Case Study 2: City of Raleigh (NC)

Between 2008 and 2013, the City of Raleighs (Aaa stable) tax base increased by 45.8% to $51.2
billion. Raleighs tax base growth is boosted by the citys role as state capital of North Carolina (Aaa
stable) and by several major higher education institutions including North Carolina State University
(NCSU). The citys private sector benefits from continued expansion of the neighboring Research
Triangle Park headquartered by various technology and financial firms. Raleighs tax base is very
diverse. The top 10 taxpayers account for only 3.8% of the citys full property valuation. The full
valuation does not include state properties including NCSU.

Strong financial management supported revenue growth and growth in reserves

While many other cities budgets ran deficits over the economic downturn, successful cities generally
managed to balance their budgets. Between 2008 and 2013, many of the successful cities were able to
maintain or expand public services, with average five-year expenditure growth of 7.0%. Their
operating revenues grew even more, by an average 7.7% over the same timeframe. In contrast, the
expenditure growth of other US cities with populations over 100,000 increased by 2.8% and outpaced
revenue growth that averaged 2.0% over the same period (see Exhibit 4).

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SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

EXHIBIT 4

Successful Cities Experienced Steady Growth in Revenues and Expenditures

Operating Revenues

Operating Expenditures

Successful Cities
All Cities with Populations over 100,000

Successful Cities
All Cities with Populations over 100,000

8%

10%

6%

8%
6%

4%

4%

2%

2%

0%

0%

-2%

-2%

-4%

-4%
2009

2010

2011

2012

2013

2009

2010

2011

2012

2013

Source: Comprehensive Annual Financial Reports

In addition, these successful cities effectively navigated their legal and operating environment despite
the economic hurdles. This was demonstrated through the cities ability to match recurring revenues
with expenditures. With balanced budgets in tow, the majority of our successful cities were able to
increase their available fund balance reserve levels from 2008 to 2013. On a nominal basis, the
successful citys cities average median reserves jumped 37.7% between 2008 and 2013, compared with
the larger peer group that only saw a 31.1% increase. By 2013, successful cities average median
reserves had grown to 18.6% of operating revenues, up from 14.5% in 2008. In addition, the
successful cities have experienced positive annual reserve growth since 2008, compared to only one
year of growth seen in all cities with populations over 100,000 (see Exhibit 5).
EXHIBIT 5

Successful Cities Realize Positive Year-over-Year Change in Reserves Since 2008

Year-over-Year Change in Reserves as % of
Operating Revenues

Successful Cities

All Cities with Populations over 100,000

11%
9%
7%
5%
3%
1%
-1%
-3%
2009

2010

2011

2012

2013

Fiscal Year

Source: Comprehensive Annual Financial Reports

NOVEMBER 13, 2014

SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

Case Study 3: City of Austin (TX)

Between 2008 and 2013, Austins (Aaa stable) operating reserves increased by a sizable $61.2 million
to $146.3 million. This improved financial position can be attributed to growing revenues,
conservative budgeting, close monitoring of expenditures, and established formal reserve policies.
Overall, the city saw operating revenues increase by 19.7%, outperforming operating expenditures that
grew at a slower 14.5% over this six-year period. Property taxes are the citys largest revenue source
representing 47.2% of the 2013 operating budget, and experienced a 43.9% increase between 2008
and 2013. This growth was driven by a simultaneous 21.2% expansion in the citys tax base. At the
end of 2013, reserves represented a healthy 19.1%, just slightly below the national median of 21.8%
for cities within population over 100,000.
The city has a formal General Fund policy to maintain an emergency reserve equal to $40 million, a
contingency reserve equal to 1% of annual departmental expenditures, a budget stabilization reserve,
and a small property tax reserve. The city is expecting to end fiscal 2014 with another surplus, owing
to the positive performance of sales taxes and conservative expenditures budgeting.

Successful cities maintained manageable debt ratios despite recession

The 34 successful cities did add debt faster than peers. The 34 cities had a median debt burden, as
measured by net direct debt to full valuation, of 1.6% in 2013, up slightly from 1.5% in 2008, which
is above the national median of 1.0% for all cities. Overall, total outstanding debt for these successful
cities increased by a median 12% between 2008 and 2013, while the debt for other large cities
increased by 9.2%. Above-average debt burdens clearly did not impair their credit strength, and were
mainly the result of tending to the ongoing capital needs of large city infrastructure.

Long-term liabilities account for moderate portion of operational budgets

Successful cities stayed resilient despite their growing pension burdens. Pension expenses are above
average, but not inordinately high among the successful cities. Although eight cities had an adjusted
net pension liability (ANPL) greater than 3.0 times operating revenues, pensions and OPEB expenses
were a combined 23.9% of operating expenditures in fiscal 2012.
Even so, successful cities pension burden might be a more formidable challenge in future downturns.
The successful cities had a median three-year average Adjusted Net Pension Liability (ANPL) of $1.6
billion, or 2.1 times operating revenues compared with a median of about 1.0 times operating revenues
(see Exhibit 5). Net of the outliers with an ANPL greater than 3.0 times operating revenues, the
remaining successful cities have a lower, but still above-average ANPL of 1.7 times operating revenues.
OPEB contributions represented a modest 2.5% of the cities 2012 operating budgets, while the total
OPEB Annually Required Contribution (ARC) represented 4.7%. These successful cities funded a
median of 40.9% of their total OPEB ARC in 2012. Five cities, Phoenix, Baltimore, Virginia Beach,
Los Angeles and the District of Columbia, are funding at least, if not more, than the OPEB ARC.
When excluding these cities, the median funding for the OPEB ARC drops to 36%.

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SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

Case Study 4: District of Columbia

The District of Columbia maintains a strong pension position compared with that of the other
successful cities, with an ANPL (three-year average) of $1.2 billion or 0.18 times operating revenues,
the lowest of all the successful cities.
The District of Columbia has also managed its OPEB liabilities very well. It established a trust in 2006
to pre-fund OPEB obligations and since then has appropriated the actuarially-calculated annual
required contribution each year. The funded ratio of the citys OPEB trust was a very strong 85.7% as
of September 2013. Overall, total fixed costs including debt service, pensions, and OPEB, are a
moderate 11.2% of operating expenditures, providing the city with a significant amount of budgetary
flexibility.

NOVEMBER 13, 2014

SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

Appendix
Rating History for 34 Successful Cities (2008-Present) 3
Moodys
Current Outlook History
Outlook (2008-2014)

City

State

Moodys Current Rating History

Population
Rating
(2008-2014)

New York

NY

8,370,000

Aa2

Recalibrated to Aa2 from Aa3 (April 2010)

STA

No Change

Los Angeles

CA

3,863,839

Aa2

Upgraded to Aa2 from Aa3 (January 2013)

Downgraded to Aa3 from Aa2 (July 2011)
Recalibrated to Aa2 from Aa3 (April 2010)
Downgraded to Aa3 from Aa2 (April 2010)

STA

Revised to STA from RUR (January 2013)

Revised to RUR from STA (October 2012)
Revised to STA from NEG (July 2011)
Revised to NEG from STA (February 2010)
Revised to STA from POS (July 2008)

Houston

TX

2,160,821

Aa2

Recalibrated to Aa2 from Aa3 (April 2010)

STA

Revised to STA from POS (July 2011)

Phoenix

AZ

1,485,719

Aa1

No Change

STA

Revised to STA from NEG (May 2010)

Revised to NEG from STA (September
2009)

San Antonio

TX

1,383,194

Aaa

Recalibrated to Aaa from Aa1 (April 2010)

NEG

Revised to NEG from RUR (August 2011)*

Revised to RUR from STA (July 2011)*

San Diego

CA

1,326,238

Aa2

Upgraded to Aa2 from Aa3 (November

2014)
Recalibrated to Aa3 from A2 (April 2010)
Upgraded to A2 from A3 (August 2008)

STA

Revised to STA from NEG (August 2008)

Dallas

TX

1,232,243

Aa1

No Change

STA

Revised to STA from NEG (April 2010)

Revised to NEG from STA (March 2010)

San Jose

CA

1,000,536

Aa1

Downgraded to Aa1 from Aaa (March

2012)
Upgraded to Aaa from Aa1 (April 2010)

STA

No Change

Honolulu

HI

983,429

Aa1

Recalibrated to Aa1 from Aa2

STA

No Change

Indianapolis

IN

843,393

Aaa

Recalibrated to Aaa from Aa1 (May 2010)

STA

Revised to STA from NEG (July 2013)*

Revised to NEG from STA (February 2013)*

Austin

TX

841,649

Aaa

Recalibrated to Aaa from Aa1 (April 2010)

STA

Revised to STA from POS (August 2008)

Revised to POS from STA (February 2008)

San Francisco

CA

839,109

Aa1

Upgraded to Aa1 from Aa2 (February

2013)
Downgraded to Aa2 from Aa1 (November
2010)
Recalibrated to Aa1 from Aa2 (April 2010)
Upgraded to Aa2 from Aa3 (August 2008)

STA

Revised to STA from RUR (February 2013)

Revised to RUR from STA (October 2012)
Revised to STA from NEG (November 2010)
Revised to NEG from STA (June 2010)
Revised to STA from POS (August 2008)

Columbus

OH

802,912

Aaa

No Change

STA

No Change

Charlotte

NC

796,921

Aaa

No Change

STA

No Change

Hempstead Town NY

765,272

Aa1

Downgraded to Aa1 from Aaa (April 2014)

Upgraded to Aaa from Aa1 (April 2010)

STA

Revised to STA from RUR (April 2014)

Revised to RUR from NEG (January 2014)
Revised to NEG from NOO (December
2013)

Louisville-Jefferson KY
County Metro
Government

750,828

Aa1

Recalibrated to Aa1 from Aa2 (April 2014)

STA

Revised to STA from NEG (November 2014)

Revised to NEG from NOO (May 2013)

El Paso

TX

672,538

Aa2

Recalibrated to Aa2 from Aa3 (April 2010)

NOO

No Change

Memphis

TN

657,457

Aa2

Recalibrated to Aa2 from A1 (April 2010)

NEG

Revised to NEG from STA (December 2013)

Revised to STA from POS (March 2010)
Revised to POS from STA (April 2008)

General obligation and issuer ratings.

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U.S. PUBLIC FINANCE

Rating History for 34 Successful Cities (2008-Present) 3

Moodys Current Rating History
Population
Rating
(2008-2014)

Moodys
Current Outlook History
Outlook (2008-2014)

City

State

Denver

CO

649,495

Aaa

Recalibrated to Aaa from Aa1 (May 2010)

STA

Revised to STA from NEG (February 2013)*

Revised to NEG from RUR (August 2011)*
Revised to RUR from STA (July 2011)*

Washington

DC

646,449

Aa2

Recalibrated to Aa2 from A1 (April 2010)

STA

Revised to STA from NEG (July 2013)

Revised to NEG from STA (September 2011)

Boston

MA

636,479

Aaa

Recalibrated to Aaa from Aa1 (April 2010)

STA

No Change

Seattle

WA

626,600

Aaa

No Change

STA

Revised to STA from NEG (December

2011)*
Revised to NEG from RUR (August 2011)*
Revised to RUR from STA (July 2011)*

Baltimore

MD

621,342

Aa2

Recalibrated to Aa2 from Aa3 (May 2010)

STA

No Change

Oklahoma City

OK

595,000

Aaa

Recalibrated to Aaa from Aa1 (May 2010)

STA

Revised to STA from NEG (July 2013)*

Revised to NEG from RUR (August 2011)*
Revised to RUR from STA (July 2011)*

Portland

OR

592,120

Aaa

No Change

STA

Revised to STA from RUR (August 2013)

Revised to RUR from STA (April 2013)
Revised to STA from NEG (December
2011)*
Revised to NEG from RUR (August 2011)*
Revised to RUR from STA (July 2011)*

Albuquerque

NM

555,417

Aa1

Recalibrated to Aa1 from Aa2 (May 2010)

Upgraded to Aa2 from Aa3 (May 2008)

STA

Revised to STA from NEG (April 2014)

Revised from NEG from STA (January 2011)

Brookhaven Town NY

482,820

Aa2

Recalibrated to Aa2 from Aa3 (April 2010)

STA

Revised to STA from NOO (January 2013)

Revised to NOO from POS (June 2010)

Long Beach

CA

467,646

Aa2

Recalibrated to Aa2 from Aa3 (April 2010)

STA

Revised to STA from RUR (December 2012)

Revised to RUR from STA (October 2012)

Mesa

AZ

450,310

Aa2

Recalibrated to Aa2 from A1 (May 2010)

STA

No Change

Virginia Beach

VA

447,489

Aaa

Recalibrated to Aaa from Aa1 (May 2010)

STA

Revised to STA from NEG (July 2013)*

Revised to NEG from RUR (August 2011)*
Revised to RUR from STA (July 2011)*

Colorado Springs

CO

438,338

Aa2

Recalibrated to Aa2 from Aa3 (May 2010)

NOO

Raleigh

NC

423,179

Aaa

No Change

STA

Revised to STA from NOO (August 2013)

Oakland

CA

399,326

Aa2

Recalibrated to Aa2 from A1 (April 2010)

STA

Revised to STA from RUR (January 2013)

Revised to RUR from STA (October 2012)

Tulsa

OK

397,139

Aa1

Recalibrated to Aa1 from Aa2 (May 2010)

STA

Revised to STA from NOO (November

2012)

No Change

* Outlook revision related to review of indirect linkage to US government bond rating

Source: Ratings from Moodys.com as of 12 November2014; population data from US Census/Local Government Sources Moodys Related Research

10

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SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

Moodys Related Research

Special Comments:

Prominent Eds and Meds Bolster Northeast Cities (174299)

High Poverty, High Ratings 27 Large Cities Have Both (174683)

To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of
this report and that more recent reports may be available. All research may not be available to all clients.

11

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SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES

U.S. PUBLIC FINANCE

Report Number: 177161

Author
Jennifer Diercksen

Associate Analyst
Andrew Pfluger

Senior Production Associate

Amanda Kissoon

2014 Moodys Corporation, Moodys Investors Service, Inc., Moodys Analytics, Inc. and/or their licensors and affiliates (collectively, MOODYS). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. (MIS) AND ITS AFFILIATES ARE MOODYS CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK
OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODYS (MOODYS
PUBLICATIONS) MAY INCLUDE MOODYS CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE
SECURITIES. MOODYS 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. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK,
MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODYS OPINIONS INCLUDED IN MOODYS PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR
HISTORICAL FACT. MOODYS PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY
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AND CREDIT RATINGS AND MOODYS PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES.
NEITHER CREDIT RATINGS NOR MOODYS PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODYS ISSUES ITS
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OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
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MOODYS CREDIT RATINGS OR MOODYS PUBLICATIONS IN MAKING ANY INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER
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All information contained herein is obtained by MOODYS 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, MOODYS is not an auditor
and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moodys Publications.
To the extent permitted by law, MOODYS and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect,
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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
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To the extent permitted by law, MOODYS and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or
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MIS, a wholly-owned credit rating agency subsidiary of Moodys 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 MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees
ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MISs ratings and rating processes. Information
regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an
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For Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODYS affiliate, Moodys Investors Service Pty Limited ABN
61 003 399 657AFSL 336969 and/or Moodys Analytics Australia Pty Ltd ABN 94 105 136 972 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 MOODYS 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. MOODYS 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 clients. It would be dangerous for retail clients to make any investment decision based on MOODYS
credit rating. If in doubt you should contact your financial or other professional adviser.

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NOVEMBER 13, 2014

SPECIAL COMMENT: ANATOMY OF SUCCESSFUL US CITIES