Fitch Rates Alachua County, Florida's $63.3MM Public Improvement Rev & Rfdg Bonds 'A+'.

NEW YORK -- Fitch Ratings assigns an 'A+' rating to Alachua County, Florida's $63.3 million public improvement revenue and refunding bonds, series 2007 A & B. The bonds, secured by local half-cent sales tax revenue and expected to be insured by FSA, are scheduled to price competitively on or about Jan. 9 and mature serially Aug. 1, 2007 through Aug. 1, 2029. Public Financial Management is the county's financial advisor. Proceeds of the series 2007A bonds will fund the construction of a park and aquatic center, an addition to the correctional facility, and a replacement fire station. Also, Fitch affirms the 'A+' rating on the county's approximately $42.2 million of outstanding public improvement revenue bonds, which will be defeased with proceeds from the series 2007B bonds. The Rating Outlook is Stable.

The 'A+' rating on Alachua County's public improvement revenue and refunding bonds reflects the county's strong 2.3 times (x) coverage by fiscal 2006 revenues of maximum annual debt service (MADS) occurring in fiscal 2015. The county's low debt burden and stable economy add to general credit strengths. The potential for annexations poses a risk to the county, as population declines would impact the county's share of the half-cent sales tax revenues. However, recent attempts at annexing land have been unsuccessful. The county's high tax rate, which is reaching the state-imposed millage cap, limits the county's financial flexibility.

Located midway between the Gulf and Atlantic Coasts in north central Florida, Alachua County's economy is focused around a stable education and healthcare employment base. Major employers include the University of Florida (12,212 employees and 49,650 students); Shands Healthcare (7,500 employees); and the Alachua County School Board (4,195 employees). The county's unemployment rate historically has been lower than state and national levels and was a low 2.7% in September 2006 versus the state and national averages of 3.4% and 4.6%, respectively. Income indicators are slightly below state and national averages, partly due to the large student population.

Alachua County's financial characteristics are strong. The county's unreserved general fund balance is a sound 15% of expenditures, transfers out, and other uses, and unaudited 2006 figures show a $3.4 million gain in the total general fund balance to $17.5 million. However, the county's basic tax rate is a high 8.8887 mills in fiscal 2007, providing little taxing flexibility under the state's 10-mill cap.

Debt levels are low and the county has manageable future capital needs. Including this issue, overall debt is $1,288 per capita and 2.55% of taxable assessed value (TAV). Without the overlapping debt of the City of Gainesville, which is largely supported by specific tax and other revenue sources, overall debt ratios fall to $579 per capita and 1.14% of TAV. The county has identified roughly $350 million in capital needs for the fiscal 2007-2011 period and has plans for three sales tax bond issuances, including this issue. The next issuance, planned for January 2008, will be roughly $19 million for transportation projects; transportation needs represent 57.2% of the county's five-year capital plan. The final issue will be roughly $41 million for the construction of a new court-support building and renovations of other county facilities.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.