2009-11-11 00:49:29 -

In the course of routine surveillance, Fitch Ratings affirms its 'A' rating on Harris County, Georgia's $8.9 million of outstanding water system revenue bonds. The Rating Outlook is Stable.

The 'A' rating reflects the water system's (the system) sound legal provisions, solid liquidity levels, growing customer base with moderate concentration, and above average wealth levels. Debt service coverage levels have dropped

below required levels due to state water restrictions, requiring the system to purchase water and inflating expenses. Going forward, the county's ability to maintain adequate coverage, while addressing the systems capacity needs, will be key to the system's financial stability and rating.

The system provides service to about 7,300 customers to the unincorporated customers within the county. The system is predominantly residential with one large customer accounting for a moderate 9% of total system revenues. Financial operations and coverage have been stable with the exception of fiscal year 2008. Debt service coverage dropped to 0.8 times (x) due to state water restrictions, impacting both water revenues and expenses. In response, the county raised its rates by a notable 18% in fiscal year 2008 to offset the coverage decline, which generated approximately 1.2x coverage for the unaudited fiscal 2009 year. Projected coverage is expected to increase as water restrictions were lifted as of spring 2009. There are no additional rate increases projected at this time. Current debt levels remain moderate pending the development of its capital plan. The system's liquidity position was a solid 241 days cash on hand for fiscal year 2008.

The county will need additional water capacity within the next few years to meet a growing customer base. The system is currently operating at 75% of its 3 million gallons per day capacity. Currently, the county is evaluating two options, which include purchasing additional water from the City of Columbus or expanding the existing treatment plant. The expansion of the plant requires the state to increase the county's water withdrawal capacity; this request is pending. Both options are likely to increase expenses by either additional water purchases or by additional debt issuances. The county will develop its capital plan pending the outcome with the state permit.

Harris County is located approximately 75 miles southwest of Atlanta and 30 miles north of the City of Columbus. The county's proximity to these cities has resulted in substantial growth in recent years. Annual customer growth between 3% and 4% is likely to resume with the national economic recovery. Several major developments within the county will drive customer growth over the next few years, including the expansion of Fort Benning's troop strength, a new KIA Plant, and the development of a large commercial/residential community. The county's population in 2008 is estimated at 29,447, with 2007 median income levels at a high 126% of the state average.

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Fitch Ratings, New YorkBarbara Ruth Rosenberg, +1-212-908-0731Bud
Littman, +1-212-908-0500Media Relations:Cindy Stoller,
+1-212-908-0526 cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com