Fitch Affirms Jupiter, Florida's GO Bonds at 'AAA'.

NEW YORK -- As part of ongoing surveillance, Fitch Ratings has affirmed the following outstanding general obligation (GOs) bonds for the Town of Jupiter, Florida (the Town):

--$15,075,000 GO bonds, series 2005 at 'AAA';

--$8,410,000 GO bonds, series 2001 at 'AAA'.

The Rating Outlook is Stable.

The bonds were approved by voters in March 1999 and August 2004 to fund the construction of a community center and recreational facilities and to acquire environmentally sensitive lands and lands for open spaces and traffic mitigation. The bonds are secured by a pledge of the Town's full faith, credit, and taxing power.

The 'AAA' rating reflects the Town's conservative fiscal policies which have led to stable operating results, healthy reserve levels and a very low direct debt burden. The rating also incorporates the Town's very affluent tax base, which supports a service-oriented economy centered on tourism and leisure activities that continues to exhibit low unemployment relative to the county, state, and nation.

Fitch notes that the Town has shown a decided willingness to cut spending in recent fiscal periods in response to revenue pressure resulting from legislative property tax reform and Amendment 1 and a strained housing market. However, any prolonged period of declining taxable assessed value (TAV), coupled with increased foreclosure activity which may impede property tax collections and a political unwillingness to raise revenue, may complicate the adoption of balanced budgets and possibly erode financial reserves.

To date, the Town appears to have identified and responded to the challenges presented by the recent statutory and constitutional tax reforms and deteriorating economic conditions, having reviewed operations across functional departments in order to identify efficiencies and prioritize programs, reducing personnel and implementing a non-critical hiring freeze. Actual expenditures in the general fund were well under budget in fiscal 2007 and fiscal 2008 (unaudited) contributing to an aggregate net income totaling $9 million for the period on an expenditure base of $78.6 million.

The unreserved general fund balance as of Sept. 30, 2008 totaled $9.3 million, or 23% of expenditures. The Town targets an unreserved general fund balance at least equal to 25% of the subsequent year's budget. According to the Town the fund balance policy remains a priority despite the difficult revenue environment created by current economic conditions and property tax reforms. The Town points to its ability to rapidly restore service and normalcy to residents following the hurricanes in 2005 and 2006 as reason to maintain the surplus. A balanced budget was adopted for fiscal 2009 that cuts general fund spending by 7% to $41.6 million, adds $700,000 to the general fund balance, and includes $400,000 in contingencies. According to the Town results through the first three months of the fiscal year are accurate to budget. The Town has indicated it has additional budgetary flexibility going forward, primarily the reallocation for operations of a portion of its ad valorem millage dedicated to pay-go capital spending, which produces approximately $1.8 million in annual revenue.

The Town has a current year-round population of 48,792 that increases by 12,000 to 15,000 residents during the winter months. Jupiter is a very affluent community, even by Palm Beach County standards, with median household income levels equal to 134% of the county and 151% of the state. The local economy, traditionally dependent on tourism and leisure spending and construction, has held up well in light of the housing market correction and recession. The Town's 5.7% November 2008 unemployment rate remains lower than the county (7.6%), the state (7.3%), and the nation (6.8%). An increased biotechnology presence led by The Scripps Research Institute is expected to strengthen and diversify economic and educational opportunities. The Town has also recently approved dedicating tax-increment revenues to a 300,000 sq. ft. waterfront development known as Harbourside that will include retail, offices, boat docking, condominiums, and a five-story hotel to enhance the Town's commercial district.

The Town's direct debt burden is very low, equal to 0.4% of fiscal 2009 TAV (full market value not available) and $694 per capita. The Town does not plan any additional debt issuance through 2013. Considerable overlapping debt of Palm Beach County and the Palm Beach County School Board inflates debt levels to 3% of TAV and a high $5,149 per capita.

Fitch issued an exposure draft on July 31, 2008 proposing a recalibration of tax-supported and water/sewer revenue bond ratings which, if adopted, may result in an upward revision of this rating (see Fitch research 'Exposure Draft: Reassessment of the Municipal Ratings Framework'.) At this time, Fitch is deferring its final determination on municipal recalibration. Fitch will continue to monitor market and credit conditions, and plans to revisit the recalibration in first quarter-2009.

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