2008-04-03 23:25:52 -

- Fitch assigns an 'A' underlying rating to the Oakland Joint Powers Financing Authority's (the authority) (Alameda County, California) $120 million lease revenue refunding bonds (Oakland administration buildings), 2008 series B.

In addition, Fitch has affirmed the following underlying ratings:

--City of Oakland pension obligation bonds, 1997 series A ($118.0 million) at 'A';

-- City of Oakland

pension obligation bonds, 2001 series ($195.6 million) at 'A';

-- The authority's refunding revenue bonds, 2005 series A-1, A-2, and B ($128.1 million to be refunded by the end of April by the 2008 series A-1 and A-2 bonds) at 'A'.

-- The authority's refunding revenue bonds, 2008 series A-1 and A-2 (taxable) at 'A';

--City of Oakland general obligation (GO) bonds ($121.5 million) at 'A+';

-- The authority's (city of Oakland GO bond program) refunding revenue bonds, 2005 series ($111.7 million) at 'A+'.

The Rating Outlook is Stable.

The 2008 series bonds are expected to sell via negotiation on Apr. 16, 2008. The 2008 bonds will refund the authority's lease revenue bonds (Oakland administration buildings), 2004 series A-1 and A-2 (auction rate securities).

The 'A' rating reflects the city's credit fundamentals, a lease structure with standard bondholder protections, leased facilities which are essential city assets, and a general fund pledge for the lease payments.

Oakland's 'A+' GO bond rating also reflects the city's consistently strong financial position, with above-average unreserved general fund balances, and its good fiscal management, including adherence to many conservative financial management policies. While the city has benefited from very healthy assessed valuation (AV) growth, the property market slowdown may create financial pressure given the importance of property tax revenues. Debt is at moderate-to-high levels.

As the urban core of the San Francisco Bay Area's East Bay, Oakland is home to approximately 400,000 residents and a major commercial and trade center, including one of the West Coast's busiest ports. The city's socio-economic characteristics are mixed, with a declining labor force, a consistently higher unemployment rate than in the county and state, and average wealth levels. The city's assessed values have posted impressive gains, averaging over 9% per year between fiscal years 2002-2008. The property market, however, has been slowing in line with national trends.

The city's financial position remains strong. In fiscal 2007, the unreserved general fund balance was $143 million or almost 26% of spending. City management is closely monitoring fiscal 2008 performance and fiscal 2009 budgeting to ensure continued revenue and expenditure balance in an environment shaped by the slowing property market, rising personnel costs, and state funding deficits. To that end, the city is focusing on economic development and property redevelopment.

Debt levels are moderate-to-high. Net direct debt is $2,727 per capita, or a moderate 2.7% of taxable AV. Overall net debt is much higher at $5,484 per capita, or 5.5% of taxable AV.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance, and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Fitch Ratings
Alan Gibson, +1-415-732-1752 (San Francisco)
Amy Doppelt, +1-415-732-5612 (San Francisco)
Scott Monroe, +1-415-732-5618 (San Francisco)
Cindy Stoller, +1-212-908-0526 (Media Relations,
New York)