Fitch Rates Idaho State Building Authority's $62.8MM Bonds 'A+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 11, 2002

Idaho State Building Authority's (the authority) $62,810.000 state building revenue bonds, expected by negotiation Dec. 17 through Lehman Brothers, are rated 'A+' by Fitch Ratings. This issuance consists of three separate state building revenue bond series: $36,815,000 series 2002A, $17,195,000 series 2002B (taxable), and $8.8 million refunding series 2002C. Bonds of each series will be due as serials and terms Sept. 1 in years and amounts that are yet to be determined; optionally callable at par on dates still to be determined.

The structure of state lease payments provide a sound basis for repayment of the bonds. Financings and projects to be leased require specific authorization by the state legislature, leases renew automatically absent action by the state at least ten months prior to scheduled expiration, and a debt service reserve for each project (to be met through a surety bond) is established at the lesser of maximum debt service, 125% of average annual debt service, or 10% of outstanding principal. Most importantly, lease payments for debt service are required to be made in their entirety within 30 days of the beginning of each fiscal year. All lease rental payments derive from state appropriations to the relevant departments.

The series 2002A and series 2002B (taxable) bonds will be used to acquire and develop a multi-story office complex in Boise for offices of the Idaho Dept. of Water Resources (IDWR), related research and educational facilities for the University of Idaho, offices to be leased to other governmental users, and retail and commercial space. Security derives from a facilities lease between the authority, state, IDWR, the University and the Water Resources Board, with an operating agreement allocating the annual rent among the users. The series 2002C refunding bonds will refund the $9.2 million callable portion of 1992 series C bonds on the March 1, 2003 call date, for current debt service savings, and will be on parity with the $2.5 million non-callable 1992 series C bonds due Sept. 1, 2007; the bonds were originally issued for prison facilities in Boise and Orofino. Lease payments for the prison facilities bonds derive from state appropriations to the department of corrections.

The authority is the state's long term debt issuing vehicle. Tax-supported debt, amounting to $160.8 million with the new money portion of this issue, presents only a very minor burden of $124 per capita and 0.5% of personal income. While the economy had traditionally depended on agriculture, forest products and mining, expansion in the past decade principally centered around high technology electronics and services. With the industry-wide weakness prevalent and resulting employment losses in that sector, employment levels have been essentially flat with a 1.6% gain in 2001 compared with the 3.8% average annual increases from 1992-2000. While October 2002 represents a 0.2% increase over 2001, there was a 1.3% employment decline when compared with October 2001. The economic weakness has been reflected in weakened tax collections in fiscal 2002 and to date in fiscal 2003, requiring appropriation holdbacks, transfers, and use of reserves. While fiscal 2002 closed with a zero unobligated cash balance, continuing weakness in fiscal 2003 necessitated a further 3.5% holdback (excluding education), and expected depletion of the remaining balances in other funds, including the permanent building fund and the stabilization fund. Revenues were revised down to $1.76 billion, 3.9% over fiscal 2002, and collections through Oct. were essentially on target. The governor identified $169 million in available resources, and convened a task force to examine other actions.