Rating Action: Moody’s Assigns Aa3 to City of Carroll, IA’s Bonds Global Credit Research – August 26, 2022 New York, August 26, 2022 – Moody’s Investors Service has assigned an Aa3 rating to the City of Carroll, IA’s US$5.4 million general sale local option and service tax bonds, series 2022A. Moody’s maintains an Aa3 rating on the city’s outstanding unlimited tax debt (GOULT). After this issuance, the city will have $10.1 million in outstanding debt to GOULT, of which $9.2 million is rated by Moody’s. RATING RATIONALE The Aa3 rating reflects the city’s modest tax base located in northwest Iowa (Aaa stable), with average wealth and income levels. The rating also takes into account the city’s healthy financial position with strong reserve levels and great flexibility to raise revenue. The rating also includes the city’s modest debt burden with high fixed costs and moderate pension obligations. RATING OUTLOOK Moody’s does not normally assign an outlook to local authorities with this amount of debt. FACTORS THAT CAN LEAD TO AN IMPROVEMENT OF THE RATING – Significant economic activity that leads to an increase in the tax base and an improvement in the income of residents. SECURITY The Series 2022A bonds are expected to be paid first from the city’s local sales, service and use tax (LOSST), but the bonds are ultimately backed by the city’s general obligation lien and payable from a dedicated property tax levy, unrestricted in rate or amount, to pay the service debt. The City will dedicate 75% of annual LOSST revenue to bond debt service, which equates to approximately $1.4 million (based on 2021 collections). Estimated maximum debt service for bond is about $407,000, which would result in 3.5x coverage. The city owes a debt service levy if LOSST revenues are not sufficient to pay the debt service, one year before the next debt payment. USE OF PROCEEDS Series 2022A bonds will finance the expansion and renovation of the city’s recreation center. PROFILECarroll, IA is located in northwest Iowa (Aaa stable) and serves as the county seat of Carroll County. The city provides public safety (police and fire), recreation, public works, sewer (collection and treatment) and water (treatment and distribution), and general government services to more than 9,800 residents. METHODOLOGY The main methodology used in this rating was the local US Government General Debt methodology published in January 2021 and available at https://ratings.moodys.com/api/rmc-documents/70015. Alternatively, see the Ratings Methodology page at https://ratings.moodys.com for a copy of this methodology. REGULATORY ANNOUNCEMENTS For further specification of Moody’s key rating assumptions and sensitivity analysis, see the Methodological Assumptions and Assumption Sensitivity sections of the release form. Moody’s rating symbols and definitions can be found at https://ratings.moodys.com/rating-definitions. For ratings issued for a program, series, category/class of debt or security, this release provides certain regulatory disclosures regarding each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to the program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued to a supporter, this release provides certain regulatory disclosures regarding the credit rating action of the supporter and with respect to each individual credit rating action for securities that derive their credit ratings from the credit rating of the supporter. For the time being me ratings, this release provides certain regulatory announcements regarding the assigned provisional rating and in relation to the final rating that may be assigned after the final issuance of the debt, in any case where the structure of the transaction and the terms have not changed before the assignment of the final rating in a way that would affect assessment. For additional information, see the issuer/agreement page for the relevant issuer at https://ratings.moodys.com. The regulatory announcements contained in this press release relate to the credit rating and, if applicable, the related credit rating or rating score. Moody’s general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at https://ratings.moodys.com/documents/PBC_1288235. Please see https://ratings.moodys.com for any updates on changes to the Moody’s Lead Rating Analyst and the issuing legal entity. Please refer to the issuer/deal page at https://ratings.moodys.com for additional regulatory disclosures for each credit rating. Jennifer Bernhardt Lead Analyst Regional_Midwest Moody’s Investors Service, Inc. 100 N Riverside Plaza Suite 2220 Chicago 60606 Press: 1 212 553 0376 Client Services: 1 212 553 1653 Coley Anderson Regional_Mid Services: 1 212 55 312 053 053: 1 212 212 212 212 212 212 212 212 212 212 212 212 212 2212 Issued by: Moody’s Investors Service, Inc. 250 Greenwich Street New York, NY 10007 USA PRESS: 1 212 553 0376 Customer Service: 1 212 553 1653 © 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively “MOODY’S”). All rights reserved. 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