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Rating Action: Moody's assigns Aa1 to the City of Goodyear, AZ's Series 2021 GOULT bonds and Aa2 to Series 2021 excise tax bonds; outlook stableGlobal Credit Research - 17 Mar 2021New York, March 17, 2021 -- Moody's Investors Service has assigned a Aa1 rating to the City of Goodyear, Arizona's $43.2 million General Obligation Bonds, Series 2021 and a Aa2 rating to the $25.5 million Taxable Excise Tax Revenue Refunding Obligations, Series 2021. Moody's maintains Aa1 ratings on outstanding rated general obligation unlimited tax (GOULT) bonds and Aa2 ratings on outstanding rated excise tax revenue bonds affecting $102.6 million and $82.1 million respectively. The outlook is stable.RATINGS RATIONALEThe Aa1 GOULT rating reflects the city's rapidly growing tax base and strong local economy benefitting from its participation in the greater Phoenix metro economy supporting solid resident income and wealth levels. Despite the economic slowdown from the coronavirus pandemic and high reliance on economically sensitive revenues, the city's financial reserves and liquidity experienced exceptional growth in fiscal 2020 benefitting from the strength of the underlying economy and conservative fiscal management. The city's year-to-date fiscal 2021 financial performance is positive, with revenues tracking above the same period in the prior year. However, a prolonged recovery or worsening economic indicators from the coronavirus pandemic could hamper finances. The rating further reflects a high overall debt burden relative to peers. Favorably, pension liabilities and fixed costs are moderate and manageable.The Aa2 excise tax revenue bonds reflect the strength of the city's economy that continues to support strong excise tax revenues. The bonds are secured by a pledge of excise tax revenues that have demonstrated solid growth though mitigated by the volatile and cyclical nature of revenues. The rating further incorporates strong maximum debt service coverage as well as adequate legal provisions.RATING OUTLOOKThe stable outlook reflects our expectation of continued growth in the local economy that will support robust reserves and liquidity. While a prolonged recovery from the coronavirus pandemic and worsening economic indicators could hamper finances and the local economy, the city is well positioned to weather the effects of the pandemic in the near term given robust reserves and strong fiscal management.FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS- Substantial improvement in the city's socioeconomic profile (GOULT)- Significant decrease in debt and pension liabilities (GOULT)- Reduction on dependence on economically sensitive sales tax revenues (GOULT)- Sustained growth of pledged revenues improving debt service coverage (Excise)FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS- Material contraction in tax base values and weakening local economy (GOULT)- Substantial decline in reserves and liquidity below that of national peers (GOULT)- Substantial growth in overall leverage, including debt and pension liabilities leading to growing fixed costs (GOULT)- Substantial decline and negative fluctuations in pledged revenues leading to weakening debt service coverage (Excise)LEGAL SECURITYGOULT bonds are secured by the city's pledge to levy ad valorem taxes on all taxable property without limit on rate or amount under its secondary property tax rate. Revenues collected from the levy for GOULT debt service are held separately from all other revenues and can only be used to pay principal and interest on GOULT debt. Other than proceeds from this levy, no other revenues or funds are legally pledged to repay bonds. State legislation conveys a statutory lien on the debt service levy for GOULT bonds, a credit strength for bondholders.The excise tax revenue bonds are secured by a first lien on the city's transaction privilege (sales) taxes, state-shared sales taxes, state revenue sharing, franchise taxes, permits, fees, fines and forfeitures. Legal provisions are adequate and includes an additional bonds test of 2.0 times of succeeding parity debt service including that of the additional bonds, and an open flow of funds. Pledged revenue are also segregated monthly for payments to the trustee. The lack of a debt service reserve fund is a credit weakness though mitigated by strong debt service coverage.USE OF PROCEEDSProceeds from the General Obligation Bonds, Series 2021 will be used to construct civic square projects including a new city hall, library and council chambers.Proceeds from the Taxable Excise Tax Revenue Refunding Obligations, Series 2021 will be used to refund the outstanding maturities of the Public Improvement Corporation Municipal Facilities Revenue Bonds Series 2011A for interest savings with no extension in maturity.PROFILEGoodyear is a rapidly expanding, medium-size, 190 square mile full-service city, 17 miles west of downtown of the City of Phoenix, AZ (Aa1 negative). The city operates under a charter and is governed by a mayor and six City Council members, who appoint a City Manager responsible for overall operations and supervision of all governmental functions. The city employs approximately 706 FTE including self-supporting enterprises. Estimated population as of 2020 is 92,865 residents.METHODOLOGYThe principal methodology used in the general obligation rating was US Local Government General Obligation Debt published in January 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1260094. The principal methodology used in the special tax rating was US Public Finance Special Tax Methodology published in January 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBM_1260087. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.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.Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.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. 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