Correction: Fitch Rates Carrollton, Texas $40MM GO Bonds 'AA+'.

AUSTIN, Texas -- (This is an amended version of a press release issued March 27, 2009, containing revised information on the sale date of the bonds.)

Fitch Ratings assigns an 'AA+' rating to the city of Carrollton, Texas' (the city) $40 million general obligation (GO) improvement and refunding bonds, series 2009. Additionally, the city's 'AA+' rating on $146 million in outstanding GO bonds is affirmed by Fitch. The bonds are scheduled to be sold via negotiation between April 16 and April 21. The Rating Outlook is Stable.

The bonds are secured by a continuing direct ad valorem tax levied against all taxable property within the city, subject to a $2.50 per $100 assessed valuation limitation prescribed by law. Proceeds will be used to finance streets, drainage and parks improvements, a new animal shelter, and the refunding of series 1999 GO and refunding bonds.

The 'AA+' rating reflects the city's favorable financial position and demographics within the Dallas Fort-Worth metropolitan area, low direct debt levels, and a large and diverse tax base. A key factor in the rating assignment is the strength of the city's financial management and demonstrated commitment to sound operating practices and policies. While Fitch notes that the city's largest single taxpayer will end production in March 2009, the company makes up only a small percentage of the total tax base. Management has indicated additional commercial development is expected to more than offset this. Fitch also considered the city's high overall debt levels and recent fund balance drawdowns as concerns; however, these concerns are somewhat mitigated by the city's policy of holding 60 days of expenditures in reserves and transferring the excess for capital projects. The city held excess reserves in fiscal 2006 and 2007, and transferred some of these reserves for capital projects in fiscal 2008.

Carrollton is located northwest of Dallas along Interstate 35 East (I35E), lying in parts of Dallas, Denton, and Collin counties in the Dallas-Fort Worth metroplex. The estimated city population is approximately 120,500. The city is home to a number of manufacturing, distribution, and service concerns and serves as regional and national headquarters for several companies. The companies include the following: Mary Kay Cosmetics, AER Manufacturing, Freddie Mac, Haber Fabric Corporation, Halliburton Energy Services, J.C. Penney, Daimler Chrysler, Frito Lay, and Sara Lee.

The city's tax base, which recorded steady annual growth for the past decade, has posted slower rates of growth over the past several fiscal years as the city has matured. Since fiscal 2003 taxable assessed valuation (TAV) has increased on average 3% annually, well below the growth rates recorded over the previous two decades. Transit Oriented Development related to the three DART stations which are scheduled to open in December 2010 is expected to spur substantial development within the city. This development is expected to result in tax base additions approaching $1 billion. Carrollton's multiple rail lines will allow it to eventually become one of three mass transit rail hubs in the Metroplex.

The city's financial profile remains sound. General fund reserve levels are comfortably higher than the city's target of 60 days of expenditures. The unreserved general fund balance at fiscal 2008 year-end was $17.2 million or 20.3% of spending and transfers out. This reduction from the fiscal 2007 fund balance levels of $21.4 million resulted primarily from transfers from the general fund for $6 million in capital expenditures. Sales tax receipts have flattened within the past year due to the economic slow-down but management expects them to grow slightly in fiscal 2009. Sales tax revenues comprised roughly 30% of total general fund revenues in fiscal 2008. Liquidity remains healthy; general fund cash and investments at fiscal 2008 year-end totaled nearly $19 million.

According to city officials, projected fiscal 2009 results likely will feature a drawdown in reserves, although the general fund balance is expected to remain above the 60-day target. Management also projects sales tax receipts to register a gain of roughly 4%, which will be more than the budgeted increase. The fiscal 2009 budget included a moderate increase in general fund outlays, a pay increase for city employees, and the addition of fewer than 10 full-time positions. Additional funding for the Texas Municipal Retirement System (TMRS) of 1% of wages will also be included in the budget. The impact of the changed methodology for the calculation of the TMRS obligation resulted in changes to the current plan options in fiscal 2008 to offset the increased required contribution rate. In January 2009, the city also elected to close its OPEB program, and began a new defined contribution plan. Fitch believes these plan changes will result in reducing future employee-related liabilities for the city.

Carrollton has low direct debt, but high overall debt levels; principal amortization is above average at more than 70% in 10 years. The city's debt position benefits from annual general fund transfers to capital projects; Carrollton maintains a policy of transferring a sizable amount of surplus revenues for streets and other improvements. The city completed its last authorization in November 2007 to issue $54.5 million in bonds for street, drainage, parks, and other improvements. Following this sale, the city will have $67.7 million remaining from previous authorizations.

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.