Amend: Fitch Rates San Francisco Bay Area Rapid Transit 2007B GOs 'AAA'; Upgrs Parity Bonds to 'AAA'.

SAN FRANCISCO -- This is a correction for a message issued on July 11, 2007. It corrects the parity bond rating being upgraded in the headline.

Fitch rates the San Francisco Bay Area Rapid Transit District (BART), Calif.'s $400 million general obligation (GO) bonds (election of 2004) 2007 series B 'AAA' and upgrades $87.2 million in outstanding parity bonds to 'AAA' from 'AA+'. In addition, Fitch affirms the $728.7 million in outstanding sales tax revenue bonds at 'AA'. The new issue will be sold through negotiation by a syndicate led by UBS and Morgan Stanley on or about July 25. The Rating Outlook is Stable.

The upgrade reflects BART's issuance of one-half of its GO authorization while keeping tax rates affordable for the area and within expectations provided to the voters prior to the 2004 referendum. This, along with the unlimited nature of the property tax pledge, offsets concerns about the tax base's vulnerability to softening in property values given the area's rapid gains in the last several years. The GO credit strength rests in the size, diversity, and strength of BART's three-county property tax base, and bondholders' first lien and sole claim on property tax revenue.

BART's property tax base consists of San Francisco, Alameda, and Contra Costa Counties and totals $441 billion. Assessed value has risen 8.7% per year on average since fiscal year (FY) 2001 and 6.8% per year since FY1989. While the recent very strong gains leave the area vulnerable to declines, the tax rate remains affordable even when stressed for much slower growth and near-term declines. The service area remains an active and vital area despite recent economic volatility. The population has risen 5% since 2000, although employment gains have been slow. Income levels for all three counties are above the state and national average, although very high home prices partially offset this advantage.

This sale is the second of a $980 million voter authorization passed in 2004. Proceeds are dedicated for seismic improvements, designed to enable major structures to withstand an 8.0 earthquake on the San Andreas fault and a 7.0 event on the Hayward fault. BART expects to issue the remaining $400 million in FY2010. The tax rate for debt service once the full $980 million is sold is projected to remain below the average $7.00 per $100,000 of assessed value and maximum $12.79 per $100,000 indicated to voters prior to the election. However, as voter approved GO bonds, BART is obligated to levy a property tax at any rate necessary to cover debt service. Under stress cases where assessed value declines by 5% per year for the next two years or assessed value growth slows to 2% per year, the projected tax rates exceed these indicated amounts only moderately.

The 'AA' sales tax revenue bond rating is based on the strong coverage provided pledged revenue, the sales tax base's breadth and diversity, and BART's sound financial operations marked by a high farebox recovery ratio. These factors are offset somewhat by strong labor pressures as demonstrate during the last few negotiation cycles when agreement was reached after a short strike or just prior to a strike deadline. Also, ridership exhibits vulnerability to economic conditions, and fares and other fees are considered high.

Fitch views positively BART's added capital resource diversity represented by the voter-approved property tax, which enables BART to provided needed improvements without further leveraging the sales tax.

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.