Correct: Fitch Rates $8.7MM Cameron County, TX COs/Ref Bonds 'A+'.

Business Editors

AUSTIN, Texas--(BUSINESS WIRE)--Dec. 10, 2003

(In a press release issued earlier the $4.9MM for the refunding bonds was not mentioned. Please see amended press release below.)

Fitch Ratings has assigned an 'A+' rating to the $3.8 million certificates of obligation, series 2004 and $4.9 million refunding bonds, series 2004 of Cameron County, Texas. Also, the 'A+' rating on the county's $3.3 million unlimited tax general obligation bonds and $33.4 million certificates of obligation outstanding has been affirmed. The Rating Outlook is Stable. The bonds are scheduled to sell Dec. 11 via negotiation to Banc of America Securities.

Dated Dec. 1, 2003, the certificates will mature serially Feb. 1, 2005-2023, while the bonds will mature serially Feb. 1, 2005-2017. For each series, securities maturing on or after Feb. 1, 2014 will be subject to optional redemption at par plus accrued interest on Feb. 1, 2013, or any date thereafter. Both series of securities are payable from the levy and collection of a continuing ad valorem tax on all taxable property within the county, subject to a $0.80 per $100 taxable assessed valuation limitation. The certificates are further secured by a pledge of and lien on $1,000 of county park system revenues. Certificate proceeds will be used for the construction, renovation, repair, and expansion of county buildings, parking facilities, and truck lanes at a toll bridge. Proceeds of the bonds will be used to refund debt outstanding for interest cost savings.

The 'A+' rating considers the low direct debt burden, adequate financial reserves, and solid tax base growth in Cameron County. Also reflected are the prudent management of county finances and the general fund's reliance on bridge system surplus revenues to balance financial operations and enable a lower property tax rate that might otherwise be required. County tax debt is very low, especially after deducting enterprise fund-supported debt.

Both the general and debt service funds have maintained sufficient unencumbered fund balances; however, general fund performance is tied to the success of bridge system operations, which have recovered satisfactorily after an initial reduction in traffic due to the events of Sept. 11, 2001. Also, growth in assessed valuation has allowed the county to maintain a fairly stable tax rate. While unemployment rates are high when compared with those of other regions, and income levels are low, the local economy has diversified and expanded modestly. With the tourism and cross border trade activity, it is well positioned for continued development, as well as experiencing further demand for services.

Cameron is the southern-most county in Texas and has an estimated 2003 population of 343,806. The largest cities within Cameron County are Brownsville, Harlingen, and San Benito, and it is the 11th largest county in the state. Major components of the economy include trade, manufacturing, and tourism. 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 -- sea, air, highway, and rail. 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 the proximity to Mexico are all prominent tourist attractions.

Solid growth in taxable assessed valuation (TAV) has enabled the county to maintain a relatively stable property tax rate over the past several years while meeting increasing service demands related to population growth. TAVs have grown by an annual average of 8.6% over the last five years, with 7.6% registered for fiscal 2004. The new construction component of the increased valuation has provided a substantial portion of this growth.

Along with property value growth, county finances benefit from transfers of surplus revenues of the bridge system operations. This enterprise function transferred $6.4 million to the general fund in fiscal 2002, or 13.7% of available general fund resources. Property tax revenues constitute just about 50% of general fund resources. Undesignated general fund balances have been maintained at adequate levels, equaling $4.7 million, or 10.5% of expenditures, transfers out, and other uses in fiscal 2002. Preliminary general fund results for fiscal 2003 point to an operating deficit of nearly $370,000, which would nonetheless provide an adequate level of unencumbered, available resources.