2009-08-28 23:20:02 -

In the course of routine surveillance, Fitch Ratings affirms the 'BBB+' rating to the Wax Lake East Drainage District of the Parish of St. Mary, Louisiana (the district) $3.3 million general obligation (GO) bonds, series 2003. The Rating Outlook is Stable. The bonds are direct, general obligations of the district, payable from an unlimited property tax levied against all taxable property in the district.

The 'BBB+' rating reflects the district's strong financial position and solid operating history, steady assessed value growth, low debt levels and essential nature of the services provided. Negative credit considerations include substantial economic and taxpayer concentration.

Fitch expects the strong assessed value growth to aid the district with the increasing debt service requirements in the future.

The district

is located in the Parish of St. Mary in southern Louisiana, approximately 90 miles southwest of New Orleans. The district encompasses roughly 49 square miles and serves portions of the towns of Berwick and Patterson and the unincorporated area of Bayou Vista. The estimated population is 18,968. The local area economy is characterized by employment and taxpayer concentration in the volatile oil and gas industry and above average unemployment levels. A significant industry downturn could adversely affect district valuation levels.

The district has a solid history of financial operations, as evidenced by annual operating surpluses in two of the past three years and increasing fund balance levels. The district reported operating income of roughly $150,000 in fiscal 2008, due primarily to a property re-assessment of the district which occurs every four years. The total general fund balance for fiscal 2008 was approximately $1.2 million or a very high 350% of spending totals. The district expects to generate another surplus for fiscal 2009, and also expects a balanced budget for fiscal 2010. The ad valorem tax is the district's primary revenue source, comprising roughly 76% of total revenues annually.

The district's top 10 taxpayers are dominated by oil and gas-related firms. Likewise, eight of the top 10 area employers are associated with this industry. Unemployment levels historically have been markedly higher than state and national levels, although that gap has narrowed somewhat in recent years. As of June 2009, the unemployment rate was 8.4%, above the state average but below the national rate. Parish wealth levels, as measured by per capita income, are moderately below average at 92% of the national average.

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Fitch RatingsAndy Kaaz, 512-215-3730, AustinorMedia
Relations:Cindy Stoller, 212-908-0526, New YorkEmail: cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com