Fitch Rates Frederick County, Maryland GO Refunding Bonds 'AA+'.

WASHINGTON -- Fitch Ratings assigns an 'AA+' rating and a Stable Rating Outlook to Frederick County, Maryland's approximately $22.1 million general obligation (GO) public facilities refunding bonds of 2006, which are scheduled for bids on Feb. 14. Dated Feb. 1, 2006, the bonds mature serially from Nov. 1, 2018-2022. Bond proceeds will be used to advance refund the 2018-2022 maturities of the county's series 2002 GO bonds for economic savings. Fitch also affirms the 'AA+' rating on approximately $306 million in outstanding GO bonds. The Rating Outlook is Stable.

The 'AA+' rating reflects Frederick County's ability to maintain a strong financial position and moderate debt levels while effectively managing significant growth. The county is evolving from a somewhat rural area to an important employment center within the Baltimore-Washington region. Although income levels are slightly below the state average, Fitch expects these levels to rise as the employment and economic bases continue to grow. The county retains significant financial flexibility through tax capacity and strong financial reserves. Prudent debt affordability guidelines coupled with a capital improvement plan (CIP) funded largely by internal resources should keep the debt burden manageable. Further depth and diversification of the economy, including the attraction of higher paying jobs, will be viewed favorably in future reviews.

Frederick County is one of the fastest growing counties in Maryland, fueled by competitive home prices, ample developable land, and proximity to the region's key governmental, technological, and biomedical economic assets. The county has had major service job growth and increasing expansion in many employment sectors, most notably the biotechnology industry, due to the presence of Fort Detrick. Fort Detrick is the home of the National Cancer Institute and the U.S. Army Medical Research Institute of Infectious Diseases, and the leading medical research laboratory for the nation's biological defense program. As a result of the growing economy, the county enjoys unemployment levels that are well below the state and national averages.

Financial management remains a key credit strength for the county, as officials are able to meet school and utility growth demands while maintaining affordable debt levels and strong reserves. The county's fiscal 2005 unreserved fund balance equaled 26% of spending, easily in compliance with a state-imposed general fund rainy day reserve requirement of 5% of spending. Results for the year included a $22 million operating surplus, reflecting strong growth in property and recordation taxes. Surplus revenues are largely allocated to one-time costs in subsequent budgets. The fiscal 2006 budget was approved with no tax rate increases. The county retains significant tax capacity with a regionally competitive property tax rate and an income tax rate at 2.96%, which is below the 3.2% state cap.

Overall debt levels remain moderate at $2,101 per capita and 2.6% of full market value. The county's fiscal years 2006-2010 CIP totals $725 million, of which approximately one-third is dedicated to Frederick County Public Schools improvements, with another 7% dedicated to Frederick County Community College. About 45% of the CIP will be debt financed. Amortization is above average at about 69% retired in 10 years.

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.