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Moody's affirms Aa2 on Cedar Hill, TX GOs; assigns Aa2 rating to Series 2020 issuances

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March 13, 2020

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New York, March 13, 2020 -- Moody's Investors Service has affirmed the Aa2 rating on Cedar Hill, TX's outstanding general obligation limited tax (GOLT) debt and the city's Aa2 issuer rating. Additionally, we have assigned the Aa2 rating to the city's $10.7 million General Obligation Bonds, Series 2020 and $8.6 million Combination Tax and Revenue Certificates of Obligation, Series 2020. The affirmation affects $109.3 million in outstanding general obligation debt.

RATINGS RATIONALE

The Aa2 rating reflects the city's moderately sized, mostly residential tax base that has experienced strong growth in taxable values, resident incomes near the national median, and a manageable pension burden. Additionally, the rating reflects the city's solid operating reserves, with additional liquidity outside of the operating fund that would be available if needed. The rating also considers the city's elevated debt profile with plans for additional issuance and elevated fixed costs representing mostly debt service obligations.

The lack of distinction between the city's GOLT rating and the issuer rating reflects taxing headroom under the limited cap that provides over two times headroom, offsetting the lack of full faith and credit pledge, and inability of the city to override the statutory limitation.

RATING OUTLOOK

Moody's generally does not assign outlooks to local governments with this amount of debt outstanding.

FACTORS THAT COULD LEAD TO AN UPGRADE

- Continued expansion and diversification of the tax base consistent with Aa1 peers

- Material growth in financial reserves

- Significant reduction in the debt burden

FACTORS THAT COULD LEAD TO A DOWNGRADE

- Contraction in the tax base

- Material decline in financial reserves

- Further leveraging of the tax base

LEGAL SECURITY

The bonds and certificates are secured by a continuing and direct annual ad valorem tax, levied on all taxable property within the limits prescribed by law. The certificates are additionally secured by a limited pledge of net revenues of the city's waterworks and sewer system.

USE OF PROCEEDS

Proceeds from the current issuance will be used to fund several citywide capital initiatives.

PROFILE

The City of Cedar Hill is a political subdivision and municipal corporation of the state of Texas, located 20 miles south of Dallas in both Dallas and Ellis Counties. The city is a full service city that provides its own police and fire protection along with water and sewer services. The city encompasses 35.5 square miles, approximately 50% developed, and has a current population of approximately 53,689.

METHODOLOGY

The principal methodology used in these ratings was US Local Government General Obligation Debt published in September 2019. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Ryan Mills
Lead Analyst
Regional PFG Dallas
Moody's Investors Service, Inc.
Plaza Of The Americas
600 North Pearl St. Suite 2165
Dallas 75201
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Thomas Jacobs
Additional Contact
Regional PFG Northeast
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653