Fitch Rates Akron, OH's $3.5MM and $37.6MM LTGOs 'AA-'.

Business Editors

CHICAGO--(BUSINESS WIRE)--Sept. 5, 2003

Fitch assigns an 'AA-' rating to the City of Akron, OH's (the city) $3.5 million Street Improvement Special Assessment Bonds, Series 2003 Limited Tax General Obligation. The bonds are scheduled to sell on September 11 in a negotiated underwriting led by RBC Dain Rauscher Inc. Bond proceeds will pay a portion of the cost to make certain street, storm sewer, sanitary sewer and water system improvements, in anticipation of levy and collection of special assessments from certain property owners.

Fitch also assigns an 'AA-' rating to the city's $37.6 million General Obligation (Limited Tax) Various Purpose Improvement Bonds, Series 2003 which are scheduled to sell October 1 in a negotiated underwriting led by NatCity Investments, Inc. Proceeds of the series 2003 various purpose improvement bonds will finance various projects of the city including street improvements, parks and recreation, and public facilities.

Both issues are full faith and credit general obligations of the city, payable from ad valorem taxes within the 10.5-mill limitation imposed by the city charter. Under state law, the debt service levy on un-voted general obligation debt is placed before all other levies for the full amount of debt service. The Rating Outlook is Stable for both issues. In addition, Fitch affirms the 'AA-' rating on the city's $205 million outstanding general obligation bonds.

The 'AA-' rating reflects Akron's moderate debt burden, stable financial position, and diversifying economy. The city's economy continues its transition from being largely manufacturing based to one with more diversity. Numerous redevelopment projects bode well for continued economic success and growth, and recent economic gains have increased Akron's income tax and user fee revenues. Unemployment for the city is moderate ranking higher than state and national levels. The city's debt load is manageable, since it allocates a portion of income taxes for capital purposes by city charter and uses joint economic development districts (JEDDs) to share the costs of utility improvements with neighboring townships. Balanced General Fund operations are anticipated for fiscal 2003, as steady economic growth continues and as management continues to promote operating efficiencies.

Akron is a mature city, the county seat of Summit County in northeastern Ohio, and located approximately 35 miles south of Cleveland. The city's economic and employment base is shifting from its manufacturing origins, primarily rubber and tire products, to a more diverse balance with an increased service sector. While The Goodyear Tire & Rubber Co. and Bridgestone/Firestone Inc. are still among the top employers, jobs at these companies are related more to residential employment, which increased 1.1% annually since 1991. Services - particularly in health, financial, and legal areas - and trade have led the gains. Recent service-sector growth offsets substantial employment losses, primarily in manufacturing, during the 1980s and early 1990s.

Akron's financial operations remain stable, despite a decline in the 2001 general fund balance primarily due to accounting adjustments resulting from the implementation of and compliance with the Governmental Accounting Standards Board (GASB) Statements No. 33, 34, and 37. In fiscal 2002, the general fund balance increased to $11.8 million from the $10.9 million recorded in the prior year. This increase is primarily attributable to transfers to the general fund from excess JEDD revenues and the close-out of an internal service fund. The city anticipates balanced financial operations for 2003 despite potential further reductions in state aid.

Akron's direct debt burden equals a moderate $1,435 per capita and 3.14% of full property value. Overall debt equals $1,773 per capita and 3.88% of full property value. The city reduces the burden on the property tax base by earmarking 27% of income tax revenue for capital purposes, including debt service. Moreover, the city finances substantial capital improvements on a pay-as-you-go basis through special assessments.