Amendment: Fitch Rates Cameron County, Texas' $8MM Ctfs of Obligation 'A+'; Outlook Stable.

AUSTIN, Texas -- This is an amendment for a previous message. Fitch assigned its 'A+' rating on December 6, 2006; however, the sale was postponed due to inadequate public notification, which is required by state statute.

Fitch assigns an 'A+' rating to Cameron County, Texas' (the county) $8 million Certificates of Obligation, Series 2007 and affirms the 'A+' rating on the county's outstanding debt constituting $52 million limited tax bonds and $2 million unlimited tax bonds. The series 2007 certificates are scheduled for a negotiated sale on Feb. 20, 2007 via a syndicate led by A.G. Edwards & Sons, Inc. The Rating Outlook is Stable.

The 2007 certificates are direct obligations of the county, payable from the levy and collection of a continuing ad valorem tax limited to $0.80 per $100 assessed valuation on all taxable property within the county. In addition, the certificates are payable from certain limited revenues of the county's park system. Proceeds of the certificates will be used for the construction, renovation, expansion and equipment of various county facilities and parks and to pay issuance costs.

The 'A+' rating considers the county's low direct debt burden, solid tax base growth, sufficient but diminished general fund reserves, and its reliance on bridge system surplus revenues. A three-month loss of federal inmates in fiscal 2004 led to the county's second consecutive annual operating deficit in the general fund, resulting in modest reserves and a diminished cash position. While fiscal 2005 operations resulted in another decline in general fund reserves, county officials indicate that reserve levels will be enhanced by the close of fiscal 2006. Continued stabilization of finances and restoration of reserves to more appropriate levels remains key to maintenance of the current rating.

The county's debt profile remains favorable, especially after deducting enterprise fund-supported debt. Principal payout is above average, with 68% retired in 10 years. General fund performance is tied to the success of bridge system operations which are satisfactory due to toll increases that have offset modest declines in total bridge traffic attributed to heightened security along the Texas-Mexico border.

Cameron is the southern most county in Texas and its largest cities include Brownsville, Harlingen, and San Benito. Trade, manufacturing, and tourism are all major components of the local economy. The Port of Brownsville is an important link with Mexico and affords the only entry point on the border accessible by four modes of transportation. Manufacturing plants are a significant factor on both sides of the U.S./Mexico border, with a major presence of maquiladoras, or 'twin plant' manufacturers, in Matamoros, Mexico. Also, South Padre Island, bird and wildlife sanctuaries, and proximity to Mexico are all prominent tourist attractions. Growth in taxable assessed valuation has enabled the county to maintain a relatively stable property tax rate over the past several years while meeting increased service demands related to population growth. Taxable assessed values (TAV) have grown by a compound annual average of almost 10% since fiscal 2001.

The escape of several federal inmates in March 2004 led the U.S. Marshals Service to pull its remaining inmates from the county's jail system citing insufficient security. After numerous upgrades, these inmates were returned in June 2004; however, their three month absence resulted in the loss of $2.5 million in charges for services which contributed to a $1 million general fund deficit in fiscal 2004. Since then, the federal inmate population has remained stable, although the county has budgeted for approximately 100 fewer federal inmates in fiscal 2007 due to rising numbers of state prisoners. County officials indicate final operating results for fiscal 2006 will include the addition of $4 million to general fund reserves from settlement funds received in a successful lawsuit against the builder of the county's jail where the federal inmates escaped; this reserve amount would represent 10% of total expenditures.

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.