Fitch Upgrades Orange County, FL Tourist Tax Bonds To`A+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 6, 2000

Orange County, Florida's approximately $303,590,000 tourist development tax revenue bonds, series 2000 are rated 'A+' by Fitch. The bonds are scheduled to sell competitively on July 25.

The bonds are expected

to be rated 'AAA' based on the enhancement of a bond insurance provider. In addition, Fitch has upgraded the county's $616 million outstanding parity tourist development tax revenue bonds to 'A+' from 'A'. The upgrade reflects the convention center's strong competitive position evidenced by documented future demand and the area's dynamic tourism base that adds stability to economically sensitive revenues. Proceeds from this issue will primarily fund an expansion to the county's convention center, which is the second largest convention facility in the nation.

The tourist development tax (TDT) is a 5% tax levied on hotel rooms, campgrounds/trailer parks, and other short-stay residences. The county has amended the indenture for this issue to add the 5th cent, which had previously been used to repay debt issued for various sports facilities within the county, as part of pledged revenue. If coverage from the first four cents exceeds 1.5 times (x) for any two separate 12 consecutive month periods, the county may decide to release the 5th cent and utilize the proceeds for other tourism-related capital needs. The tax's strength is unique to the county, given Orlando's strong tourism and convention drawing power. Further analysis shows that tax revenue, mainly derived from hotel demand, is largely focused on the strength of Walt Disney World and Universal Studios, since approximately 80% of available hotel rooms in the Orlando area are directly related to their respective attractions. Tax receipts have experienced certain fluctuations in its more than 20 years of existence given the inherent volatility, yet have never experienced a year-to-year decline. Various national and foreign economic shocks as well as weather and negative publicity related to crime in other parts of the state have caused fluctuation in visitation that slowed the growth in tax revenue in recent years. These drops in visitation have been largely offset by strong growth in entertainment and tourist related attractions, which has mitigated potential declines in tax revenue. In recent years, TDT receipts have increased regularly, as have the number of lodging rooms and rental rates. However, the tax remains economically sensitive, especially as the local tourist economy approaches full capacity, and future expansion plans are expected to further leverage TDT revenue. Coverage by pledged revenue of 1.59 times (x) maximum annual debt service (MADS) remains good after issuance. The next bond issue to fund the completion of phase V is anticipated in the spring of 2002. Assuming approximately 7% annual growth over the next two years, coverage of MADS is expected to remain 1.43x, including the 2000 and proposed 2002 bond issues. County officials report experiencing greater growth in tax revenue year-to-date than originally estimated. Legal restrictions prohibit the issuance of additional parity debt unless coverage of projected MADS is at least 1.33x.

The Orlando vicinity continues to be one of the world's leading tourist destinations. Attractions such as Walt Disney World, Universal Studios, Sea World, and EPCOT Center combined with the moderate climate continue to draw visitors from all over the world. These numerous entertainment amenities help drive convention center demand. In terms of available exhibit space, the Orange County Convention Center ranks second only to Chicago's McCormick Place in the U.S. and is one of the largest facilities in the world. With this expansion, Orange County's convention center expects to better accommodate demand while remaining competitive with other facilities nationwide that are also undergoing expansions. After completion of the current expansion (phase V), total exhibit space will equal more than two million square feet. A future expansion, which would bring exhibit space to more than 3 million square feet (phase VI), is also envisioned. Phase VI implementation is dependent on convention center demand and financial feasibility.

Although bond security rests solely with the TDT and does not rely on operational revenue, Fitch incorporates convention center operations in its analysis since overall health indirectly supports the stability of TDT revenue. The county operates the convention center as an enterprise fund and has provided it with an annual operating subsidy of up to $6.5 million, although the center has never used more than 4.7 million and expects to utilize only 2.5 million of the county subsidy in fiscal 2000. The county maintains strong overall financial flexibility in its general fund. Overall debt burden is moderate, with the majority exported to the large tourism component of the economy.

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.