Fitch Rates Addison, Illinois' $4.6MM UTGOs 'AA+'.

Business Editors

CHICAGO--(BUSINESS WIRE)--Aug. 13, 2002

Fitch Ratings assigns an 'AA+' rating to the Village of Addison, IL's $4,610,000 General Obligation Refunding Bonds, Series 2002, scheduled for negotiated sale on or about August 15, 2002 through a syndicate led by Bernardi Securities, Inc. and Griffin, Kubik, Stephens & Thompson, Inc. Dated Sept. 15, 2002, the bonds mature serially Dec. 15, 2002 - 2017 and pay semiannual interest beginning Dec. 15, 2002. Bonds maturing on or after Dec. 15, 2012 are subject to optional redemption beginning Dec. 15, 2011. The bonds represent a general obligation of the village, payable from an unlimited ad valorem tax levied on all taxable property within the village. Proceeds will refund a portion of the village's outstanding general obligation debt. Fitch also affirms its 'AA+' rating on the village's $20 million of outstanding general obligation debt.

The 'AA+' rating reflects the village's growing economic base, sound financial position and low debt burden. Addison's location near the center of the Chicago metropolitan area spurred its development as an important distribution and industrial center. Its proximity to O'Hare International Airport and the regional highway network helps attract upscale residential buildings and prime hotel and office development, resulting in an expansion of the village's tax base over the last decade. The village maintains a sound financial position, bolstered by several untapped home-rule taxing powers that provide significant financial flexibility. Direct debt levels should remain low as the village plans to finance its minimal capital needs through internal resources.

Addison, with a population of 35,914, is located in eastern DuPage County, approximately 25 miles west of downtown Chicago and 14 miles southwest of O'Hare International Airport. The village is a major distribution center for the Chicago metropolitan area due to its central location and proximity to the airport, railroads, and three interstate highways. The village has one of the largest industrial parks in the county and is attracting prime office and hotel development. The leading employer is United Parcel Service of America, Inc. (UPS), with more than 2,700 employees, followed by several mid-sized companies that provide a mix of products and services. Residential employment, however, reflects opportunities available throughout the Chicago metropolitan region. The unemployment rate in the village was 6.1% as of May 2002, with the Chicago metropolitan statistical area (MSA) at 6.3%, the county at 4.7% and the state 6.0%. The village's unemployment rate historically tracks the Chicago MSA and state averages. The 2000 census reported per capita personal income figures for the village at $23,547, placing it at 101.9% of the state's level and 109.1% of the nation's. The service sector represents the largest share of earnings at 36.3%, followed by wholesale trade at 12.9%, and durable goods at 8.5%.

Growth in the tax base has been fairly good, increasing at an average annual rate of 4.5% since 1995. The tax base is diversified with residential use accounting for 58% of assessed value, industrial at 33%, and commercial at 9%. Furthermore, the village's top 10 taxpayers hold just 5.5% of the total assessed valuation. Over the past year, the village added three restaurants, a hotel and a grocery store to its commercial base and is slowly annexing adjacent unincorporated areas to its residential base.

Addison is a home-rule community that is in sound financial condition. Over the past four fiscal years, the village used built-up fund balances to finance capital projects, including the construction of a new village hall and the purchase of a piece of vacant railroad property for village use. This resulted in the undesignated fund balance portion of the general fund for fiscal 2001 (April 30) equaling $4.6 million, or 27.9% of expenditures, down slightly from the $4.8 million balance, or 32.7% of expenditures, in fiscal 1998. The village continues to maintain its fund balance according to its policy, 25-30% of expenditures. Fitch expects the village to report stable operations in the general fund for fiscal 2002, complimented by a transfer from the water fund for its share of the cost of the village hall construction project. Fitch believes the village will post a small operating loss for fiscal 2003 resulting from reduced sales and income taxes due to the sluggish economy during the first half of the fiscal year. While tax collections recently began to stabilize, management continues to review potential revenue enhancements as a means to internally finance routine capital maintenance and sustain current service levels. In addition, the village has the ability to tap a number of revenue sources, including home rule sales tax, utility tax, and a telecommunication tax, providing a margin of financial flexibility.

Over the past three years, the village posted substantial fund balance deficits in its special revenue fund. These deficits relate to advances from the village's redevelopment fund, a capital projects fund, to two special revenue funds established to account for tax increment financing (TIF) districts. In fiscal 2001, the village adjusted its accounting practices and moved the TIF funds to the capital projects fund to clarify the related assets and liabilities. The reallocation of this $8 million liability resulted in the special revenue fund returning to a positive fund balance while lowering the capital project fund's reserves. The village reports the TIF districts are generating revenues above original projections.

The village's direct debt levels are low, with debt per capita equal to $559 and 0.8% of full value. Overall debt is moderate at $1,439 per capita and 2% of full value. The capital plan, including a road maintenance program, is funded from internal sources. The village does not anticipate issuing any further debt through 2005.