Fitch Rates Broward County, FL's $50MM GO Refs 'AA+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Aug. 20, 2003

Fitch Ratings has assigned a 'AA+' rating to Broward County, Florida's approximately $50 million general obligation refunding bonds, series 2003. The bonds are scheduled to price the week of Sept. 8 through negotiation

Fitch affirms the 'AA+' rating on the county's $328 million in outstanding general obligation bonds. Reflecting its review of lease obligation ratings relative to general obligations, Fitch upgrades the rating on $53.4 million in certificates of participation issued by the Broward County Commission Governmental Leasing Corp. to 'AA' from 'AA-'. The Rating Outlook on the bonds and certificates is Stable.

The 'AA+' rating on Broward County's general obligation bonds reflects the county's diverse economic base and sound prospects for continued expansion, an affordable debt burden, and strong financial results. A moderate fiscal 2003 general fund drawdown results mainly from pay-as-you-go capital spending. The county funds a substantial portion of its capital program with self-supporting enterprise system revenues and other pay-as-you-go sources. Pursuant to a November 2000 referendum, the county expects to issue $150 million in general obligation debt for parks and land preservation this fall, which will not significantly affect overall debt levels.

Located on the southeast coast and containing the city of Fort Lauderdale, Broward County is among the largest counties in population in the U.S. Four airports, including the Fort Lauderdale-Hollywood International Airport (FLL, whose system revenue bonds are rated 'A+' by Fitch), are located in the county. FLL has performed well; estimates indicate that FLL will be one of the first airports to exceed pre-Sept. 11 enplanement levels. In addition, demand continues to grow at Port Everglades (port facility revenue bonds rated 'A' by Fitch), a leading international cruise port. Even though population continues to increase at a healthy pace, growth has slowed somewhat as the county approaches build-out, projected between 2010 and 2020.

Assessed value (AV) growth has been substantial over the last five fiscal years, averaging 9.1% annually. This strong AV growth has allowed the county to reduce the total tax rate, and operating millage remains well below the 10-mill limit. The recommended fiscal 2004 budget includes a total millage rate below the fiscal 2003 budget's but above the rolled-back (revenue-neutral) rate. The strength of the economy is further reflected in income levels that are slightly above state and national averages and unemployment rates that have consistently been close to or on par with state and national levels.

The county's financial position is strong. The undesignated general fund balance has grown steadily over the last several years, to $175.7 million in fiscal 2002, representing 18.1% of spending. While the dollar amount of the general fund balance has grown, sizable expenditure increases have moderated the growth in the fund balance as a percentage of total expenditures. Growing expenditure needs, mainly for public safety, have been adequately funded by healthy revenue growth. Officials do not expect the shift in court funding pursuant to state legislation known as Article V to have a significant financial impact on the county. Although plans to completely incorporate the county by 2005 could reduce certain state-shared revenue streams, the estimated revenue declines are modest and should be offset by the projected savings from increased efficiency in service delivery. Currently only 5% of the county's population and 2.6% of its tax base is in unincorporated areas.

County debt levels are moderate, and amortization rates are rapid. The fiscal 2003-2007 capital improvement plan for the county totals $2.7 billion, of which 60% will be funded through bond issuance. About two-thirds of the plan is for self-supporting aviation, port, and water and wastewater (revenue bonds rated 'AA' by Fitch) enterprises. Remaining general obligation debt pursuant to the 2000 referendum after this fall's issue is planned to be issued in the next three years, and officials do not expect to issue any other general government debt.