Fitch Rates Hillsborough County, Florida $106.6MM Special Assessment Revs 'A-'.

NEW YORK -- Fitch Ratings has assigned an 'A-' rating to Hillsborough County, FL's approximately $106.6 million capacity assessment special assessment revenue bonds, series 2006. The bonds, expected to be insured, are scheduled for competitive sale on or about April 11 with Public Financial Management serving as financial advisor. Proceeds will pay for the acquisition, construction, equipping, and renovation of capital expansion projects within designated districts created by the county, called Capacity Assessment Units (CAUs,) and fund a debt service reserve. The series 2006 bonds are repayable from capacity assessment fees levied within 106 CAUs. The Rating Outlook is Stable.

The 'A-' rating reflects the adequate debt service coverage from a fixed pledged revenue stream, high revenue collection rates, and the strong collection method, which includes a timely tax certification sale process in the event of non-payment. The rating also considers the narrowness of the pledged revenue that initially provides a narrow margin for debt service payments. Pursuant to a capacity assessment ordinance enacted in March 1996, the county has created 106 CAUs throughout the unincorporated portion of the county. The 106 CAUs include approximately 34,681 parcels of land equal to $3.3 billion in taxable assessed value and representing approximately 4.5% of the county-wide tax base.

The series 2006 bonds are secured by a senior lien on all capacity assessment fees levied and collected within the CAUs included in the bond resolution. Capacity assessment fees are imposed on parcels of land within the CAU to reimburse the water and wastewater system for capital costs incurred after expanding capacity to the service area. The water capacity fee is fixed at $1,750 per equivalent residential connection (ERC), and the wastewater fee is set at $1,800 per ERC. Parcel owners have the option of paying the fees upfront or over a 20-year period.

Capacity assessment fees are included in the annual property tax bill, and taxpayers are required to pay all taxes and non-ad-valorem assessments without preference of any particular tax or fee amount. Assessment fees are levied to cover total debt service by 1.05 times (x). The narrow debt service coverage and risk of delinquency is partially mitigated by the county's right to sell tax lien certificates, which include the assessments, by June 1 of each year. For the 2005 tax roll year (fiscal 2006), the top 10 assessment fee payers comprised exclusively residential home developers accounting for 7.9% of assessment fee revenue. Approximately 97% of the payers are residential.

The county's 'AA+' general obligation rating reflects its strong financial practices, low tax-supported debt burden, and growing and diversifying economy. The service and trade sectors account for the largest components of the county's employment base. Tampa is home to numerous regional headquarters of multinational finance and insurance companies, providing employment opportunities to residents countywide. Population in the unincorporated portion of the county grew 12% since 2000, reaching 726,889 in 2004. The county's unemployment rate is well below the state and nation and resident wealth indicators remain slightly better than average. Tax base growth in the county has been strong, averaging 11% annually over the past five fiscal years.

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