Fitch Rates Akron-Summit County Public Library, Ohio's $22.5MM UTGOs 'A+'.

CHICAGO -- Fitch Ratings assigns an 'A+' rating to Akron-Summit County Public Library, Ohio's $22.5 million library refunding bonds, series 2005 (general obligation unlimited tax). Fitch also affirms the 'A+' rating on $34.1 million of the district's outstanding general obligation bonds. The bonds will sell on or about May 19 in a negotiated underwriting through A.G. Edwards & Sons, Inc. Proceeds will advance refund a portion of the district's outstanding Library Improvement Bonds, series 1998A. The Rating Outlook is Stable.

The 'A+' reflects the Akron-Summit County Public Library District's (the district) diversifying and stable economy, limited operating risks as a single-purpose government, and low debt levels. The district's most recently available audit covers 2000 and 2001 and presents finances on a cash basis, limiting the transparency of the current financial position and somewhat hampering financial analysis, although year-end cash balances appear substantial. In Ohio, the state is required to audit library districts every two years and a backlog at the state auditor's office has delayed the district's audits, which are expected to be completed within the next two months. Fitch will review the audits upon completion.

The district won voter approval of a 1.4 mill operating levy in March 2004, expected to generate $11.2 million annually over its six-year life beginning in March 2005. The new levy should relieve financial pressure caused by declines in designated state income tax revenues, the district's largest source of income, and the defeat of its previous smaller operating levy in 2003. These factors contributed to a $1.6 million shortfall in fiscal 2004, bringing the total unaudited general fund cash balance to a still healthy $2.4 million and 12.6% of spending. Additional library facilities are expected to increase operating expenses. However, management's flexibility to govern expenses mitigates concerns regarding financial constraints.

The district, which is located in northeastern Ohio about 35 miles south of Cleveland, serves a population of over 388,000. The district's service area includes approximately 67% of Summit County's (rated 'AA' by Fitch) tax base and wholly encompasses the cities of Akron (rated 'AA-' by Fitch) and Fairlawn. The district's boundaries also include approximately 0.4% of Portage County's tax base. Continued diversification in the area from rubber and tire manufacturing to a growing service sector provides more employment opportunities, generates increased residential investment, and improves the overall attractiveness of the area. SUMMA Health System (6,102) and Goodyear Tire and Rubber Company (4,000) account for the district's largest employers. Wealth indicators in the area are higher than state and national averages, with Summit County's per capita income representing 109% of both the state average and 106% of the national average.

The district's debt levels are modest. Direct debt equals $165 per capita and 0.26% of market value. Overlapping debt totals $1,411 per capita, and 2.24% of market value. Repayment of debt is faster than average with 58% of principal retired in 10 years. The district's debt levels should remain low, as recent bond issues have financed most major capital needs.