Fitch Rates Bristol, Connecticut Issue of 2006 GOs 'AA'; Affirms GO at 'AA'.

NEW YORK -- Fitch rates Bristol, CT's $25 million general obligation (GO) bonds, issue of 2006 'AA'. The bonds are scheduled for competitive sale on Nov. 28. The bonds mature serially July 15, 2007-2022, with semiannual interest payments on Jan. 15 and July 15, commencing July 1, 2007. Fitch also affirms the 'AA' rating on the city's approximately $40.4 million outstanding GO bonds. The Rating Outlook is Stable.

The 'AA' rating is based on the City of Bristol's financial flexibility, low debt burden, and strong financial management. While the city has notable debt issuance plans in the medium term, future capital needs are manageable and the city amortizes its debt at a rapid pace which should ensure a low to moderate debt burden in future years. Effective fiscal management and prudent budgetary practices have contributed to consistently positive operating results, evidenced by the steady unreserved fund balance position above the 10% policy set by the city. These credit strengths are balanced by the city's economic indicators, which are below average for the rating category, as well as a concentration in its employment and tax base around one company, Entertainment Sports and Programming Network (ESPN).

Located in Hartford County with direct access to major highways, Bristol is 16 miles from Hartford, CT and 25 miles from New Haven, CT. The ESPN worldwide headquarters remains the largest taxpayer and private employer of the city, accounting for 9% of city jobs and 7.5% of total property assessed valuation. It continues to invest in the city as evidenced by a recent $500 million expansion of its technology infrastructure. However, the establishment of the state-designated enterprise zone as well as the planned redevelopment of the downtown mall should help broaden Bristol's economic base and improve its labor market conditions. The city's 2005 unemployment rate of 5.5% was above the county, state, and national average levels. Population growth has been modest over the past five years and per capita income levels are below the high state average but well above the nation's levels.

Bristol practices conservative financial management, and maintains strong reserve levels. The fiscal 2005 unreserved general fund balance reached 16.5% of spending, well above its policy goal of 10%. Fiscal 2006 projections show a $2.6 million operating surplus driven by improved property tax collections peaking at 98.1% and increased conveyance tax receipts. The fiscal 2007 budget calls for a 3% tax levy increase to offset expenditure growth for education and increase pay as you go contributions to capital spending. The city's three pension plans are significantly overfunded, and the asset value to actuarial liabilities ratios range from 1.3 times (x)-1.9x. Bristol plans to start a trust fund for its other post employment benefits (OPEB) liability in 2008 through a $1.1 million contribution from general fund balance and will incrementally appropriate increases to its current OPEB spending levels to meet its actuarially required contribution within 15 years.

Overall debt is low at $1,140 per capita and 1.64% of full market value. The city's five-year capital improvement plan (CIP) totals $101.1 million and includes anticipated costs from future education facilities improvements, the full extent of which will be known upon the completion of a needs study in 2007. The current plan also reflects manageable future demands, including those from road and other infrastructure improvements. Of the total CIP, $48 million of the cost will be funded through bond issuances, with the remaining funded by state aid and pay as you go contributions from the city government. Debt amortization is rapid with 74.2% of principal retired in 10 years, yet the debt service burden on the budget is low at about 4% of fiscal 2005 spending.

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