Correct: Fitch Rates Anne Arundel County, MD Spec Ob Bonds 'AA+'.

Business Editors

WASHINGTON--(BUSINESS WIRE)--April 12, 2004

(In a press release issued on Thursday, April 8, there was a discrepancy concerning in the par amount of the bonds. The amended release follows.)

Fitch Ratings--Washington, D.C.-April 8, 2004: Fitch Ratings assigns a 'AA+' rating to Anne Arundel County, MD's approximately:

-- $35.7 million special obligation refunding bonds (Arundel Mills 

Project), series 2004;

-- $18.3 million special obligation refunding bonds (National

Business Park Project), series 2004; and

-- $2.6 million tax increment financing bonds (Nursury Road

Project), series 2004.

The offering is scheduled for negotiated sale with Legg Mason Wood Walker Incorporated during the week of April 12. Sale details will be determined at pricing.

The rating reflects the unconditional, full faith and credit guaranty for payment of principal and interest by Anne Arundel County, whose general obligation bonds are rated 'AA+' by Fitch. The only restriction on the county's general obligation pledge is a charter limitation on annual revenue increases from taxes levied on existing property after July 1, 1993. The charter limits such revenues from increasing annually more than the Consumer Price Index or 4.5%, whichever is less. The guaranty, which extends to each series of bonds in this offering, has been approved by county council.

By county council resolution, enforceable under the terms of the trust indenture, the full amount of debt service for each series of bonds must be appropriated annually. The county expects that other sources of revenue will be available to pay debt service. Real estate tax increment is generated in all three development districts and represents the primary source of debt repayment. Bonds issued for the districts that include the Arundel Mills mall and the National Business Park, respectively, also have available a supplemental special tax that could be levied if tax increment is insufficient. The district containing the Nursury Road project does not authorize a special tax. Presently, tax increment in all three districts is sufficient to meet debt service requirements and such capacity will improve as a result of debt service savings from this refunding.

The county's limited tax general obligation rating is based on a healthy economic base, centered on major governmental and national defense-related employers, strong financial planning, and a modest tax-supported debt burden that benefits from adherence to formal debt management policies. Although the county has maintained very strong levels of pay-as-you-go funding, current general fund reserves have fallen, reducing overall flexibility given the property tax levy constraint. County officials are developing plans to build the existing rainy day reserve to its maximum level, currently $34 million or 4% of the 2004 budget, and to create an additional general fund reserve, which would improve total fund balance to about 8% of budget. This level would be more consistent with the current rating.

The county's population growth has been steady, leading to favorable housing demand and significant commercial developments, including the Arundel Mills mall. At place employment in the county well exceeds the residential labor force, highlighting the strength and stability of the job base. Maryland state government is based in Annapolis, the county seat, and significant federal installations, including the National Security Agency, Fort Meade, and the U.S. Naval Academy further anchor the government sector. Additionally, the county is home to Maryland's major commercial airport, Baltimore-Washington International, which is among the fastest growing in the U.S. in terms of enplanements. The residential unemployment rate of 3.2% in December 2003 was well below state and national averages. Per capita income slightly exceeds Maryland's high average and is 121% of the U.S.

Financial operations are sound, despite significant decreases in fund balance levels due to high levels of pay-as-you-go capital funding. Fiscal 2003 ended with reserve levels of $35 million, including both unreserved fund balance and the rainy day fund, equal to 4% of spending, down from $63 million, or 7% of spending in fiscal 2002. The county managed recent revenue weakness and pressures to reduce large unreserved fund balances by appropriating prior year surpluses for non-recurring items. Ample income tax capacity and the well-established rainy day fund partially offset the effects of the charter property tax cap.

The county executive's proposed fiscal 2005 budget, due May 1, is expected to include a request for appropriation of $1.1 million as operating aid to the county's golf course enterprise system. The county has received a letter of demand for payment in this amount from the Maryland Economic Development Corporation (MEDCO) in accordance with the terms of an indenture established by MEDCO's series 2001 revenue bonds. The bonds were sold to finance the construction of a golf course in the county. The county council is not required to appropriate the funds requested by the county executive.

Total tax-supported debt levels are moderate at $1,372 per capita and 1.7% of market value. Amortization is above average, at 66% in ten years, and debt affordability policies have conservative targets. The debt service burden on the budget is low at 6.7%, and capital needs remain manageable.