Fitch Rates Akron, Ohio's $32MM Rfdg COPs 'A'.

CHICAGO -- Fitch Ratings assigns an 'A' rating to Akron, Ohio's $32,140,000 refunding certificates of participation (COPs), series 2005. The bonds are scheduled to price on or about June 23 in a negotiated underwriting led by Seasongood & Mayer, LLC. The Rating Outlook is Stable. The certificates are secured by lease rental payments, subject to annual appropriation, made by the City of Akron to the Akron Development Corp. for use and occupancy of the Canal Park stadium. Proceeds will refinance the city's outstanding series 1996 COPs. Fitch also affirms the 'AA-' rating on the city's outstanding general obligation debt.

The 'A' rating on the certificates reflects the city's commitment to the project, which gives incentive to appropriate debt service annually; strong legal features including a lease term that matches debt retirement; and the overall creditworthiness of the City of Akron. Akron's general obligation 'AA-' rating reflects its 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.

Akron, the county seat of Summit County in northeastern Ohio, is a mature city 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 Goodyear Tire & Rubber Co. remains one of the top employers with about 4,000 workers, the employment base has diversified and residential employment increased 1.1% annually since 1991.

Services, particularly in health, financial, and legal areas, and trade have led the gains. In particular, Summa Health System (4,815 employees) and Akron General Medical Center (4,810) have increased their local presence and expanded hiring in recent years. Service-sector growth has offset substantial employment losses, primarily in manufacturing, during the 1980s and early 1990s. Akron's unemployment rate equaled 7.3% in March 2005, compared with Summit County's 6.6% and Ohio's 6.7% in the same period.

Akron's financial operations remain stable, with unreserved general fund balance exceeding $8 million or 6% of spending in each of the past six years. Income taxes, which provided 53% of general fund revenue in fiscal 2003 (Dec. 31 year-end), grew at a steady average 2.4% annually since 1998. As a result of income tax growth and spending restraint, the city's total general fund balance increased to $14.4 million (11.1% of expenditures and transfers out) in fiscal 2003, from 2001's $10.9 million (7.9%). The city anticipates balanced financial operations for 2004 and indicates positive income tax growth in year-to-date 2005 collections.

Akron's debt load is above average but manageable, since it allocates 27% of income tax revenue for capital purposes by city charter and uses joint economic development districts (JEDDs) to share the costs of utility improvements with neighboring townships. The city's direct debt burden equals a moderately high $2,271 per capita and 5.1% of full property value. Overall debt equals $2,569 per capita and 5.8% of full property value.

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