City of Las Vegas, Nevada, $322.8MM GOs Rated 'AA' By Fitch.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 4, 2002

Fitch assigns its 'AA' rating to approximately $25,000,000 limited tax general obligation parking bonds, series 2002A, $19,200,000 limited tax general obligation sewer refunding bonds, series 2002B, $4,315,000 limited tax general obligation fire refunding bonds, series 2002C, and $5,010,000 limited tax general obligation transportation refunding bonds, series 2002D. All four offerings are scheduled to sell competitively on November 6th. Approximately $12,255,000 taxable limited tax general obligation refunding bonds, series 2002 also are rated 'AA' and are scheduled to sell competitively on November 13th. This rating also applies to all outstanding general obligation bonds, which (not including the above refundings) total roughly $257.2 million.

The 'AA' rating reflects sustained growth in a large and diversifying economic base, reduced although still significant reliance on the tourism and gaming industry, sound financial performance, moderate debt burden, and prudent debt and financial management policies. The city prudently maintains healthy fund balance levels that help offset concerns over a somewhat elastic revenue base while preserving substantial flexibility within the city's operating property tax levy. Las Vegas' debt burden is moderate and will likely remain so given rapid amortization of outstanding debt. In addition, a substantial portion of outstanding general obligation debt, including several of the current offerings, is at least partially supported from non-property tax revenue.

The City of Las Vegas represents a substantial portion of Nevada's tax and employment base, which has benefited from the region's expanding population and economic growth. Recent development both directly within the city and throughout Clark County continues to support greater employment diversity. This helps offset concerns over dependency on tourism and gaming, fluctuations inherent within these industries and the city's revenue base. Nonetheless, the region's economic health remains reliant on tourism, although its importance has decreased. Negative impacts following September 11 and a downturn in the national economy appear relatively moderate.

Assessed valuation gains have been substantial, the result of new building, as well as rising property values. Assessed values rose a strong 10.5% per year on average from 1997-2003. Building permit activity remains strong though somewhat below recent years' very high levels. City wealth indicators are above average, trending higher than both state and nationwide averages in 2001. Las Vegas and Clark County unemployment levels have historically remained slightly above national levels though bumped up in 2001.

Financial operations have shown healthy surpluses in recent years and although preliminary results for 2002 indicate a slight operating deficit, an offsetting equity transfer is estimated to minimize the impact on the fund balance. The total general fund balance, which ended fiscal 2001 at a healthy 19.4% of expenditures and transfers, is expected to remain a solid 17.6% of total 2002 spending. The city relies on sales and use taxes, property taxes and revenue from licenses, permits and fees and other intergovernmental revenue for the bulk of its general fund revenues.

Direct debt levels are kept low as a majority of the city's general obligation debt is repaid from non-property tax revenues such as special taxes and enterprise revenues. Including overlapping debt, total debt ratios are moderate at $1,675 per capita and 2.96% of market value. Amortization is rapid with nearly 69% of debt retired in 10 years. No major debt financings are planned in the near term.