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Austin, Texas Public Improvement Bonds Rated 'AA' by Fitch -- FITCH FINANCIAL WIRE --

 NEW YORK, Oct. 5 /PRNewswire/ -- Austin, Tex.'s $60 million (approximately) Public Improvement Refunding Bonds Series 1993A are rated 'AA' by Fitch. The bonds will be sold through negotiation by a syndicate led by Smith Barney Shearson, Inc. on or about Oct. 13. The credit trend is stable.
 Proceeds from this issue will refund an expected $54.5 million of outstanding bonds. The city expects $2.5 million in debt service savings, 4.6 percent of the refunded par amount.
 Austin's credit strength lies in its economic importance as the state capital and home of the University of Texas and the stability each provides, as well as ongoing economic development. Economic growth has been strong and steady, with nearly all indicators fully recovered from the city's downturn in the mid- to late-1980s. Even the real estate sector, the last area to improve, has shown gains in recent years. Property values are increasing, reversing a five-year trend of assessed value declines. Office vacancy rates in Austin have fallen to about 14 percent from a 33 percent peak, and now are below the national average. The number of homes sold in 1993 rose for the sixth consecutive year, and the average price increased for the second year. The recent closing of Bergstrom Air Force Base appears to have had only a minor economic impact. City voters recently passed an initiative authorizing $400 million in revenue bonds to finance construction of a new airport at the Bergstrom site.
 The city's financial operations continue to be sound despite prior years' declines in the property tax base. Sales tax performance has been very good, benefiting from a statewide expansion of the base and the return of strong trade activity. The city ended fiscal 1992 with a $24.0 million general fund balance, 10.4 percent of operating expenditures. Estimates for fiscal 1993, which ended Sept. 30, show about breakeven operating results and another sound ending balance. Economic improvement, as well as a city ordinance to maintain a general fund reserve equal to at least 6 percent of expenditures, will keep financial operations sound.
 Austin's overall debt levels are high, with debt service expense representing about 18 percent of the operating budget. Overall debt is $2,276 per capita and 5.9 percent of property value.
 -0- 10/5/93
 /CONTACT: Amy S. Doppelt of Fitch, 212-908-0514/

CO: ST: Texas IN: SU: RTG

TM -- NY088 -- 9117 10/05/93 18:20 EDT
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Publication:PR Newswire
Date:Oct 5, 1993

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