Fitch Rates Akron, Ohio's $165MM Income Tax Rfdg Bonds 'A+'; Outlook Stable.

CHICAGO -- Fitch assigns an 'A+' rating to Akron, Ohio's (the city) approximately $165 million community learning centers (CLC) income tax revenue refunding bonds, series 2007. The bonds are scheduled for negotiated sale on or about Jan. 4, 2007 through Seasongood & Mayer, LLC. The bonds are special obligations of the city, payable from the city's income tax levy. Voters approved a 0.25% dedicated income tax levy, which together with a $3 million annual payment from the Akron City School District will be sufficient to meet the debt service of this issue. If these monies are insufficient, the city's 2.00% income tax levy is available. Proceeds will refinance outstanding CLC debt. Fitch also affirms the 'A+' rating on the city's approximately $215 outstanding CLC income tax debt. The Rating Outlook is Stable.

The 'A+' rating on the bonds and the Stable Outlook reflect very strong debt service coverage from pledged revenues, satisfactory legal provisions, and the city of Akron's solid credit characteristics. Furthermore, the rating reflects the city's strong management practices and solid partnerships with other local governmental units.

The CLC bonds are secured by the city's 0.25% income tax levy on all taxable income within the city. In May 2003, city voters approved the 30-year levy with a 64% passage rate. By a cooperative agreement between the city and school district, the school district will transfer $3 million annually from its permanent improvement levy to the trustee. The on-going permanent levy - which is restricted to finance school facilities, equipment and property improvements - has generated an average of $5.3 million annually over the last five years. The school levy is in place through May 2033.

The combined coverage from the 0.25% city income tax receipts and the $3 million district contribution are estimated to generate $15.6 million in 2006, providing 1.18 times (x) coverage. In the event that the aggregate CLC tax receipts and school contributions are insufficient to pay debt service on the bonds, available moneys in the CLC Project Fund or moneys generated by the city's 2% municipal income tax levy provide additional bondholder protection. Combined, the pledged 0.25% income tax levy and the available 2% municipal income tax levy are projected to provide approximately 5.5x coverage on the CLC bonds and outstanding income tax obligations. Additional bonds are planned by the city, but conservative revenue growth assumptions and additional bonds test should still produce comfortable coverage levels in subsequent years.

The high coverage projections reflect 2.5% growth in the city's income tax levy, compared with 4.3% annual growth since 1982. The legal provisions include the creation of a reserve equal to the least of maximum annual debt service, 125% of average annual debt service, or 10% of bond proceeds, if revenues fail to meet coverage tests. These tests include an additional bonds test that requires both 3.0x coverage of maximum annual debt service from all revenues on a historical basis and 1.0x coverage of annual debt service from projected CLC revenues, including accumulated CLC revenue. Akron also exhibits strong credit characteristics which include a diversifying economy, stable financial position, and a moderate debt burden on the property tax base.

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