Fitch Rates Chicago Park District, IL's $65.3MM GOs 'AA'.

Business Editors

CHICAGO--(BUSINESS WIRE)--April 7, 2003

Fitch Ratings has assigned a 'AA' rating to the Chicago Park District, Illinois' $36,805,000 general obligation limited tax park bonds, series 2003A and $28,470,000 general obligation unlimited tax park bonds, series 2003B, which are expected to sell on or about April 15 in a negotiated offering led by Banc One Capital Markets, Inc. Dated the date of issuance, the bonds will pay interest each Jan. 1 and July 1, beginning Jan. 1, 2004. The series 2003A bonds will mature Jan. 1, 2017-2023; and the series 2003B bonds will mature Jan. 1, 2004-2015. Redemption terms will be set at pricing. The limited tax pledge represents ad valorem taxes unlimited as to rate but limited as to amount; the unlimited tax pledge applies to ad valorem taxes unlimited in both rate and amount. The series 2003A bonds will advance refund about $1.9 million of series 1996 alternative revenue bonds (personal property replacement tax as the alternate revenue) and will produce about $34.9 million of funds to finance the district's 2003 capital improvement program. Under the Debt Reform Act, the amount of limited ad valorem taxes relates to the debt service extension base set by the 1994 levy year. The series 2003B bonds will refund outstanding series 1993 bonds.

The 'AA' long-term rating on $749.7 million of outstanding general obligation and alternate revenue debt reflects the Chicago Park District's continued success in implementing operational efficiencies. Management has instituted several cost-saving measures, including the privatization of non-core functions, and continues to diversify non-tax revenue sources. These initiatives have produced markedly improved financial operations, as evidenced by decreasing operating costs, revenue growth with limited increases in the property tax levy, and strong general fund balances. The rating also reflects Chicago's broad economy and substantial tax base -- the park district is coterminous with the city -- as well as the park district's manageable debt burden.

The district's financial performance has been solid, allowing the district to build its undesignated corporate fund reserves. The district's total corporate account general fund balance grew to $106.0 million (52.1% of expenditures) in fiscal 1999, compared with $39.9 million in fiscal 1993 (26.2%). Although the corporate account fund balanced operations before transfers in 2000, a $50 million contribution to the capital fund led to a shortfall of $39.1 million; weaker personal property replacement taxes (PPRT) in 2001 also contributed to a $4.4 million shortfall. The ending unreserved balance of $58.1 million in 2001 represented 29.8% of expenditures. The 2002 fiscal year, while still experiencing weak PPRT collections and lower interest income, is expected to have balanced operations by year-end. The district has reduced discretionary spending and limited salary and wage increases.

The debt burden is moderate, but manageable. Direct debt is $298 per capita, and overall debt is $3,839 per capita or 6.8% of property market values. The park district's annual capital spending peaked in 2001 at $169 million, compared with $71.7 million in 1999, and has declined to a steady pace of $35 million in 2003. General obligation bonds will meet 44% of the district's $80 million capital spending in 2003.