2008-05-05 23:52:01 -

- In the course of routine surveillance, Fitch Ratings affirms the 'AA' rating on Indian River County, FL's approximately $46.3 million in outstanding limited ad valorem tax bonds, series 2006, the 'AA' rating on $14 million in spring training facility bonds, series 2001, and the 'AA+' rating on approximately $10.9 million in outstanding general obligation (GO) bonds. The Rating Outlook

for all bonds is Stable.

The 'AA+' rating on the GOs reflects the county's sizeable reserve levels, low overall debt levels, limited capital needs, and conservative budgeting practices. The rating also considers the county's somewhat narrowly focused economy concentrated in citrus production and tourism. The 'AA' rating on the limited ad valorem tax bonds recognizes the limitation of the pledged revenues for the repayment of the bonds; the levy is limited to 0.5 mills.

While the Rating Outlook is Stable, Fitch has some credit concerns regarding the direction of the economy given a number of indicators: the unemployment rate has increased to 6.0% in February 2008 from 4.6% a year earlier; building permits and housing values have declined, as they have throughout Florida; sales tax revenue is down 6.5% year-to-date in fiscal 2008; and the county estimates that tourism, which drives the tourism development tax (TDT) and sales tax revenue, is down 4%-5% this year. Fitch will continue to regularly monitor the ratings in light of these concerns.

Some budgetary pressures may arise as a result of recently enacted property tax reform, although Fitch believes that the provisions of the Save Our Homes provision afford the county a substantial cushion to withstand market value declines. In addition, reserve levels are high and substantial use of pay-as-you-go funding for capital needs provides budget flexibility. The provisions of Florida's Amendment 1, which was approved by voters in January 2008, are estimated to result in a $5.6 million reduction of property tax revenues and could put additional strain on the county's budget when implemented in fiscal 2009.

The county's overall debt levels are low at 1.99% of market value and $2,213 per capita and should remain affordable given the county's limited capital needs and a capital plan that is largely financed through internal resources. The updated capital improvement plan (CIP) for fiscal years 2008-2012 totals $576 million, over half of which will be used for transportation. This is approximately $100 million less than previous years' CIPs, mainly due to the recent completion of sizeable projects including the new county administration building and jail expansion. Amortization is rapid at 65% over the next 10 years.

The county experienced strong growth in property values in previous years. However, due to the slowing of the housing market, the county's appraisers estimate property values are down 5%-10% for fiscal 2009. The county has also experienced declines in housing starts and a decrease in building permits of 62% during fiscal 2007. Foreclosure and delinquency rates have also increased in the past year.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public 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, New York
Rachel A. Barkley, 212-908-0514
Amy R. Laskey, 212-908-0568
or
Media Relations:
Cindy Stoller, 212-908-0526