Fitch Rates Chesterfield County, VA's $6.1MM COPs 'AA+'.

Business Editors

CHICAGO--(BUSINESS WIRE)--March 11, 2003

Fitch Ratings assigns a 'AA+' rating to Chesterfield County, Virginia's $3,070,000 certificates of participation, series 2003A and $3,030,000 certificates of participation, series 2003B. The certificates are expected to sell competitively on March 13, 2003. The series 2003A mature serially Nov. 1, 2004-2021 and the series 2003B mature serially Nov. 1, 2004-2023. Fitch Ratings also affirms the 'AA+' rating on the county's $13.7 million certificates of participation, series 2001, and the 'AAA' rating on the county's $341.7 million in outstanding general obligation bonds.

The 'AA+' rating on Chesterfield County's series 2003A and 2003B certificates of participation (COPs) reflect the strong lease provisions and essential nature of the project. The county's appropriation-backed debt for essential purposes, such as this issue of COPs, is strongly correlated to the county's overall credit profile. The county's general obligation debt, rated 'AAA' (affirmed by Fitch Ratings Jan. 7, 2003), continues to achieve the highest level of credit quality due to the county's excellent financial position, advanced operating and capital planning, strong economic growth, moderate debt levels, and very rapid debt amortization.

Certificate proceeds from the series 2003A issue will fund expansions and renovations at the county's juvenile detention home and renovation of the county's existing juvenile courts building for use as a juvenile detention facility. The $16 million project is underway and should be completed by the end of 2003. Proceeds from the series 2003B issue will finance a portion of the cost of the acquisition, construction, installation, furnishing and equipping of a new county jail to replace the existing county jail. The new jail is not expanding its capacity and will house approximately 155 inmates. The total cost of the project approximates $25 million, with the state reimbursing $6 million of the total cost. The county plans to issue an additional $12 million to $13 million in COPs next year for the completion of the jail project.

The COPs are secured by rental payments, subject to annual appropriation, made by Chesterfield County to the lessor, SunTrust Leasing Corporation, which assigned its rights and obligations to a trustee, SunTrust Bank. In the event of non-appropriation, the trustee could take possession of the project, and the county would be unable to use it for its essential governmental purposes.

Located southwest of Richmond, the county lies in one of the commonwealth's vital economic regions. Population growth remains strong and has begun to stabilize after explosive expansion in prior decades, increasing 27% from a 1990 census population of 209,599 to an estimated 266,549 in 2001. Unemployment rates are much lower than state and national averages, and income levels exceed those of the state and nation.

The county's financial position is strong. Since fiscal 1991, the county has recorded annual operating surpluses. A $3.3 million general fund operating surplus in fiscal 2002 increased the general fund balance, which equals approximately 22.8% of annual spending. The undesignated portion of fund balance equates to 8.5% of spending, exceeding the targeted level of 7.5%. Total revenues for fiscal 2003 are reportedly in line with the budget and, when coupled with spending restraints, should yield surplus operations.

Debt levels are moderate, and the county has debt policies in place to ensure affordability. Debt as a percentage of market value and debt service as a percentage of expenditures are well below the county's affordability targets. Overall debt amortization is rapid, with 70% of principal retired within 10 years. The county's six-year (2003-2008) capital improvement plan (CIP) totals $568.7 million. The next referendum is scheduled for the fall of 2004 and will probably exceed $200 million to fund both school and county projects. No new money general obligation bonds are scheduled to be issued until that time.