2008-04-24 23:54:18 -

- Fitch Ratings assigns a 'AAA' rating to the City of Birmingham, Michigan's $4 million 2008 unlimited tax general obligation (UTGO) recreation bonds. The bonds are scheduled to sell via competitive sale on May 5, 2008, will mature serially on October 1, 2009 through 2028. Fitch also affirms the 'AAA' rating on Birmingham's $32.5 million outstanding UTGO debt. The Rating

Outlook is Stable.

The 'AAA' rating reflects the city's exceptionally high wealth and income levels, strong financial position maintained through solid management and planning efforts, and high reserve levels.. Although this mature and affluent Detroit suburb is near full development, there is significant reinvestment in the city's downtown with multiple mixed use projects underway thereby sustaining further growth in the city's tax base. Furthermore, sound budgetary practices including excellent pension and other post employment benefits funding and the use of general fund and other internal resources for capital improvements have enhanced the city's long term financial posture.

Birmingham (city), located in Oakland County (county) 20 miles north of Detroit, is an affluent suburban community with a 2008 estimated population of 19,527. The city's historic wealth levels are very high and per capita income levels are at 268% and 275% of the state and nation, respectively. . Taxable market value declined a slight 0.50% in 2008, however, market value of property is also exceptionally high at $288,848 on a per capita basis as of 2006. Although primarily residential and suburban in nature, the city's downtown area hosts retail, commercial, and financial sectors. The unemployment rate in the county in January 2008 was 6.6% and remains well below the state and national levels.

The city's financial position is consistently strong, as growth in property tax receipts, averaging 7% annually since fiscal 1999. At the close of fiscal year 2007 (6/30), Birmingham's unreserved general fund balance was a high 33.6% of municipal expenditures and transfers. The general fund unreserved balance increased to $8.7 million. The city's cash position is strong and significant financial flexibility should continue due to strong management, superior wealth statistics and the city's capacity in its tax rates, as its operating levy remains below the maximum permitted rate.

The city's debt is moderate on a per capita basis at $2,908 but are affordable at 1.01% of taxable market value. Overall net debt of $157.1 million, including a large share for the well-regarded Birmingham School District, rises to $8,046 per capita, or 2.79%. The city's five year 2007-2012 capital program, which is dominated by general infrastructure, parking facilities, parks and recreation, and sewer and water system improvements, totals $42.5 million. The city plans to debt finance approximately $16 million of the costs a portion of which will be secured by parking revenues and fund the balance of the program with internal sources including fees, assessments and grants.

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Fitch Ratings
Ann G. Flynn, 212-908-9152 (New York)
Melanie A. J. Shaker, 312-368-3143 (Chicago)
Cindy Stoller, 212-908-0526
(New York, Media Relations)