2009-10-06 20:56:04 -

Fitch Ratings has affirmed at 'BBB+' the Whitney Intercounty Drain Drainage District (the district), Michigan's Whitney Intercounty drain bonds, series 2007. The bonds are payable first from special assessments levied on benefited property within the district. In addition, if the special assessments are insufficient, Arenac County, Iosco County and Ogemaw County have each pledged their full faith and credit and limited tax obligation to pay their allocated portion of debt service. Each county's obligation is several, thus there is no make-up provision if one of the counties does not pay its allocated portion. The Rating Outlook is Stable.

While the district has pledged its full faith and credit for payment of the bonds, it has no general taxing power. The primary

security for the repayment of the bonds is the collection of special assessments levied on benefited property with the district. Collection of special assessments has equaled one hundred percent as a result of delinquent tax revolving funds that each county voluntarily maintains. However, such funds may be eliminated at any time. In the event special assessments are insufficient, each county is required to advance from its general fund moneys sufficient to fund its share of debt service, and if necessary, to levy ad valorem taxes subject to constitutional tax limitations. Iosco County is obligated to repay nearly 75% of the debt service, Arenac County almost 23% and Ogemaw County 2%.

The rating reflects each of the underlying county's low debt burden, marginal future capital needs, and sound financial position. These considerations are dampened by the limited regional economy, chronically above average unemployment rates, and below average wealth indicators.

Interstate 75 provides access to the tri-county region, which is located 180 miles northwest of downtown Detroit and 70 miles north of Bay City.
Socioeconomic indicators are substandard. County population levels have stagnated in recent years, and per capita income levels are below average, tracking roughly 75% of the national average. County unemployment rates continue to be chronically above average and currently stand in excess of 16% (not seasonally adjusted).

As regional housing prices did not experience unsustainable increases during the boom years, the housing prices also are not experiencing dramatic declines. There has been some reduction in market value; however, taxable value has been and is expected to continue increasing albeit at a much smaller rate of growth.

The financial positions of the underlying counties are varied from a solid 20.7% ending undesignated 2008 General Fund balance for Iosco County, to 10.1% for Ogemaw County, and to 8.5% for Arenac County. All the counties are anticipating roughly breakeven financials for fiscal 2009.

Overall net debt burden for each of the counties is modest with the vast majority of the total debt burden attributable to overlapping school district debt. Currently each county either plans not to issue additional debt or has minimal capital needs for at least the next five years.

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Fitch Ratings, New YorkJessalynn Moro, +1-212-908-1608James
Mann, +1-212-908-0500 ext. 5008orCindy Stoller,
+1-212-908-0526 (Media Relations) cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com