Moody's Report

"Moody's Investors Service" 07/15/04 06:16PM

MOODY'S ASSIGNS Aa3 RATING TO THE PARK CITY, UT, G.O. BONDS, SERIES 2004

APPROXIMATELY $21 MILLION IN PARITY DEBT AFFECTED, INCLUDING THE CURRENT OFFERING

Park City (City of) UT
Municipality
Utah

Moody's Rating

Issue Rating

General Obligation Bonds, Series 2004 Aa3
Sale Amount $9,000,000
Expected Sale Date 07/22/04
Rating Description General Obligation Bonds

Moody's Outlook - No Outlook

NEW YORK, July 15, 2004 -- Moody's Investors Service has assigned a Aa3 rating
to the Park City, Utah, General Obligation Bonds, Series 2004 in the
approximate amount of $9 million. The current offering is secured by the
city's unlimited property tax pledge. Bond proceeds will help finance the
acquisition and preservation of open space and the construction of an ice
rink. At this time Moody's affirms the Aa3 rating on Park City's parity debt
and the A1 rating on the city's lease revenue debt totaling $12 and $3
million, respectively. The Aa3 general obligation bond rating reflects the
city's tourism based economy as well as stable and healthy financial
operations that help offset the city's reliance upon economically sensitive
revenue streams. Park City's above average wealth indices, and steady growth
in taxable and full property values, and favorable debt profile were also
incorporated into the rating.

AFFLUENT RESORT BASED ECONOMY

Located 30 miles east of Salt Lake City (GO rated Aaa), Park City is an
internationally known ski-resort community. Nearly half of the events during
the 2002 Winter Olympic Games were located in Park City, which is also home to
the U.S. Ski Team and the U.S. Ski and Snowboard Association. Local employment
is dominated by tourism-related industries with the three major ski resorts,
two of which reside within the city boundaries, representing the top three
employers in the region. The city's tax base is more diverse with
resort-related entities comprising six of the top ten taxpayers (5.6% of total
assessed valuation). The city has continually worked to diversify its tourist
activities and promote other events during the year such as the Sundance Film
Festival and other outdoor sports. Nevertheless, Park City's economy is
centered upon ski-tourism with almost 60% of sales tax revenues generated
during the four month period of December to March. As such, Park City's
economy and primary operating revenue stream remains vulnerable to weather and
other economic fluctuations.

The city's permanent population is modest at 7,714 with the overnight
population swelling to 25,000 during peak season. Sixty-four percent of the
city's homes are secondary in nature, which are taxed at 100% of assessed
valuation compared to 55% for primary residences. The city's full market value
is consistent with other Aa3 rated resort communities at $4.4 billion and has
demonstrated moderate growth of 6.8% over the past five years, due to
reassessments as well as modest development. Growth is expected to continue
over the mid- to long-term given $1.6 billion in new development plans to
construct and expand resort facilities. Similar to other resort communities,
city wealth indices are very high with a full value per capita of $568,484.
Per capita and median family incomes are similarly healthy at 248% and 151% of
state levels respectively.

MODEST DEBT PROFILE; FUTURE BORROWING PLANNED

Moody's expects the city's debt profile to remain favorable given above
average principal payout (81% in ten years), expected tax base growth, and the
city's practice of cash financing many of its capital needs. The current
offerings represent the full issuance of the city's remaining $9 million in
general obligation authorization; $4 million was authorized in 2001 for an ice
facility and the remaining $5 million authorized in November 2002 for the
acquisition and preservation of open space. Including the current offering the
city's direct and overall debt burdens are modest at 0.7% and 1.6%
respectively. The city's capital improvement plan outlines an additional $15
million in infrastructure improvements which the city intends to finance with
sales tax revenue bonds or with tax increment revenues from its redevelopment
agency.

STABLE AND PRUDENT FISCAL MANAGEMENT HELP MITIGATE RELIANCE ON ECONOMICALLY
SENSITIVE REVENUES

The fiscal 2003 general fund balance was satisfactory at $2.7 million (16% of
revenues), slightly below the state mandated maximum reserve level for cities
of 18%. It is management's practice to transfer any general fund operating
surpluses to the capital fund. The city maintains a minimum balance of $5
million in the Capital Projects Funds which, under council policy, are funds
available for pay-as-you-go capital projects or operating contingencies. The
city's "recession plan" indicates that the city may tap into these funds in
the event of a revenue shortfall. Officials anticipate drawing on these
reserves for capital projects, but will maintain a balance of at least $5
million, which in conjunction with the general fund would provide a healthy
reserve of almost $7.7 million (39% of FY03 revenues). Reserve levels are
expected to remain stable in FY04 with an estimated general fund balance of $3
million (16% of revenues).

Operating reserves of this magnitude are especially important given that sales
and resort taxes comprise 39% of general fund revenues. Over the past four
years the city's sales tax revenue collections have increased at an average
annual rate of 3.2%, net of one-time only Olympic revenues received in FY02
($340,000). Estimated sales tax collection figures for 2004 are healthy with
an estimated 5.8% annual increase above 2003 revenues. Moody's notes that six
of the top ten sales taxpayers are tourism related, comprising 22% of total
revenue collections. Other city operating revenues include property taxes
(35%) and franchise taxes (10%).

KEY STATISTICS

2002 Estimated population: 7,714

2003 Full value: $4.4 billion

Average annual growth in full value, 1998 to 2003: 6.8%

Full value per capita: $568,484

1999 Per capita income: $45,164 (248% of state)

1999 Median family income: $77,137 (151% of state)

1999 Median value owner occupied housing as % of state: 307% ($450,900)

Direct debt burden: 0.7%

Overall debt burden: 1.6%

Payout of principal (10 years): 81%

FY03 General Fund balance: $2.7 million (16% of revenues)

ANALYSTS:
Jolene K. Yee, Analyst, Public Finance Group, Moody's Investors Service
Patrick Ford, Backup Analyst, Public Finance Group, Moody's Investors Service
Matthew Jones, Senior Credit Officer, Public Finance Group, Moody's Investors
Service