Amendment - Fitch Rates Deltona, FL's Transp Capital Improvement Revs 'A'; Assigns Implied GOs 'A+'.

NEW YORK -- (This is an update to the release that went out on May 26, 2006. It provides the name of the insurer in the 2nd sentence.)

Fitch Ratings has assigned an 'A' rating to Deltona, Fla.'s approximately $18,280,000 million transportation capital improvement revenue bonds, series 2006. The bonds are scheduled to sell on June 27 via negotiation led by D.A. Davidson & Co. and will be insured by MBIA Insurance Corp., whose Insurer Financial Strength is rated 'AAA' by Fitch . Proceeds from the 2006 bonds will be used to fund city transportation improvements. At this time, Fitch assigns to the city an implied general obligation (GO) rating of 'A+'. The city has no outstanding GO debt. The Rating Outlook is Stable.

The 'A' rating on the transportation capital improvement revenue bonds is based on the relatively stable nature of the pledged gas taxes, solid coverage by pledged revenues, adequate legal provisions, and the city's general credit characteristics. While fuel tax revenues, which provide the majority of pledged revenues, are prone to some economic fluctuation, the essential nature of the commodity and sufficient coverage levels mitigate this concern. The 'A+' implied GO rating is based on the city's ample financial flexibility resulting in sizeable general fund balances and a moderate overall debt burden with limited capital need. Also considered are the city's limited economy and below average income levels.

The gas tax revenue bonds are secured by proceeds of the five-cent and six-cent local option gas taxes and transportation impact fees levied on new construction. Coverage from both sources is solid at 1.8 times (x) maximum annual debt service (MADS) by fiscal 2005 pledged revenues. Coverage of MADS, net of impact fees, which are more likely to be volatile, is still adequate at 1.5x. Proceeds of the five-cent and six-cent taxes are divided among Volusia County, the city and 15 other incorporated municipalities pursuant to an interlocal agreement, whereby the city is guaranteed a minimum of 9.4% of the first $22 million in revenue collected by the county. Distribution of revenue above $22 million is determined according to a formula that incorporates the county's and each municipality's taxable assessed valuation, population and the number of current lane road miles. The interlocal agreement sunsets in 2013. In the event that a new interlocal agreement is not adopted, state statute provides that the taxes will continue to be levied, and distribution to the county and each municipality will not be reduced below an amount necessary to meet debt service obligations.

Pledged revenue for the bonds includes transportation impact fees imposed on new construction or development occurring within the city. The city implemented this fee beginning in fiscal 2005. An additional bonds test is adequate, requiring gas tax revenues to cover MADS by 1.35x, or, together with impact fee revenue, provide coverage of MADS by 1.50x. Fitch expects coverage to remain at a satisfactory level through 2013, as the city has no plans to further leverage the gas tax. Fitch notes however, that after 2013 if a new interlocal agreement is not implemented, terms of the state statute will be applied and the city will receive a smaller distribution, although not below an amount necessary to meet debt service obligations.

Deltona was incorporated in 1995 and is the largest municipality, with 79,749 residents, in Volusia County. The city is located 25 miles northeast of Orlando and approximately 28 miles inland from Daytona Beach. The city serves as a bedroom community to over 20,000 commuting professionals. Unemployment rates are historically close to state and national averages, although growth in the number of persons employed has outpaced growth in the labor force over the last three years, prompting a significant decline in the unemployment rate to a low 3.7% in 2005. Very little retail sales activity occurs within the city, and per capita effective buying income levels are below average at approximately 77% and 81% of the state and nation, respectively.

Finances are healthy, with strong general fund balances and ample financial flexibility. The city incurred approximately $11.4 million in hurricane damage in fiscal years 2004 and 2005, funded entirely with general fund reserves. The city's general fund was reimbursed approximately $8.8 million from FEMA, the state and insurance in fiscal 2005, restoring the general fund balance to a high 40% of spending and transfers out. Management is working to implement a set of financial policies that will include the creation of a general fund reserve equal to at least 16% of expenditures and transfers out. Formal adoption of these policies is expected within the next couple of months.

The current offering represents the city's first general government debt issuance. The city's overall debt ratios remain moderate at $1,087 per capita and 3.5% of market value. Although amortization is below average with 38.4% of debt repaid in 10 years, the city does not currently have any future long-term general government debt plans. The fiscal 2006-2010 capital plan totals $75.6 million, with slightly more than half devoted to improving the city's water and sewer system (revenue bonds rated 'A-' by Fitch). Approximately 20% of the plan will address the city's road and transportation needs and the remainder of the plan will finance general government needs, including parks and recreation, public safety and stormwater improvements.

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.