Fitch Rates Orlando, Florida's $23.3MM Special Rev Bonds 'AA'.

NEW YORK -- Fitch Ratings assigns an 'AA' rating to Orlando, Florida's approximately $23.3 million capital improvement special revenue bonds, series 2005A, to be sold by limited competitive bid on or after Feb. 1. Bond proceeds will be used to fund a loan to the city's redevelopment

agency for renovation of the Expo Centre at the Orlando Centroplex and to finance a portion of various capital projects approved in the city's 2004 budget. Fitch affirms the 'AA' rating on the city's $103 million in outstanding capital improvement special revenue bonds and the implied 'AA+' rating on the city's general obligations, none of which are outstanding. The Rating Outlook is Stable.

The 'AA' rating reflects Orlando's strong financial management, sizable fund balances, and available cash, innovative financing and investment practices, and an economic base centered on the area's position as a leading tourist destination. Orlando's revenue stream is diverse, balancing stable sources such as property and utility service taxes with more economically sensitive revenue streams that enable the city to capture tourism activity.

Bonds are payable from covenant revenues, subject to annual appropriation. The covenant revenues include all non-ad valorem revenues in the general fund and revenues of the utilities services tax fund, net of any interfund transfers. Legal protections for the bonds under the covenant ordinance are strong and provide for both a debt service reserve and an additional bonds test, as well as for the maintenance of sound levels for general fund balances.

Orlando has a well established history of good financial management, resulting in sizable fund balances. The city ended fiscal 2003 with a $3.2 million general fund surplus and the unreserved general fund balance equaled $59 million, or 23% of expenditures and transfers out. Despite the impact of three consecutive hurricanes, the city, on an unaudited basis, ended fiscal 2004 with a modest surplus, even after a $5 million set-aside for anticipated local hurricane damage costs and a $3 million contribution to capital projects. The fiscal 2005 budget was balanced without raising property taxes by utilizing about $7 million in reserves on a nonrecurring basis. The city is taking steps to structurally balance its expenditure and revenue streams to eliminate the use of reserves to balance future budgets.

In fiscal 2004, the city budgeted a one-time $5 million transfer from the utilities services tax fund balance to the general fund to pay for capital maintenance projects. In fiscal 2005, the city plans to pay $5 million for capital maintenance out of the general fund without any one-time transfers. Debt levels and the capital plan are moderate.

The city's economy has historically been strong, and it is likely that tourism will remain the predominant source of economic activity as the area recovers from the economic downturn. City unemployment rates have declined to 4.2% in November 2004 from 5.0% in November 2003, slightly below the state and national averages. Although Walt Disney World has a major impact on the city's economy, it is not located within city limits and is not part of the tax base. Universal Studios' property, the city's largest taxpayer, makes up a fairly high 7.9% of fiscal 2004 assessed valuation. Total top 10 taxpayers in the city make up a moderate 13.5% of total assessed valuation in fiscal 2004.